New Anti-Ethanol Studies Reach Wrong Conclusion on Greenhouse Gases

A new policy brief from Institute for Local Self Reliance criticizes the authors of two recent studies published in Science for advancing a conclusion not supported by their own studies. ILSR's paper notes that the vast majority of today’s ethanol production comes from corn cultivated on land that has been in corn production for generations. Since little new land has come into production, either directly or indirectly, the current use of ethanol clearly reduces greenhouse gas emissions.

“The studies usefully estimate how much carbon will be released when new land is brought into crop production,” says David Morris, ILSR’s Vice President and author of Ethanol and Land Use Changes. “But the authors’ declarations that ethanol increases greenhouse gas emissions, a conclusion that has made headlines around the world, is not supported, and may be contradicted, by their own data.”

“Since little new land has come into production, either directly or indirectly, the current use of ethanol clearly reduces greenhouse gas emissions,” says Morris, who served six years on an Advisory Committee on biomass to the U.S. Departments of Energy and Agriculture.

The studies fail to recognize the very low greenhouse gas emissions from advanced ethanol plants, plants that can reduce emissions by over 50 percent as compared to gasoline. Nor do the studies factor in the higher greenhouse gases that will be emitted when crude oil is extracted from unconventional sources like tar sands.

A controversial part of these studies examines the indirect impacts of growing energy crops. For example, if corn acreage displaces soybeans in the U.S., the authors assume that an equal amount of soybeans will have to be grown in the rest of the world to make up for that loss in animal feed. But a byproduct of corn ethanol production is a high protein animal feed called distiller’s grains. Indeed, distiller’s grains produce more protein per acre of corn harvested than is produced from an acre of soybeans.

The most contentious part of the studies may be the conclusion that when countries import less food and feed from the U.S., growing more themselves, that greenhouse gases increase. “The conclusion is not only counterintuitive, but will undoubtedly stir up considerable opposition by farmers and advocates of local food around the world,” says Morris, who also has served as an advisor to the energy administrations of Presidents Ford, Carter, Clinton and George W. Bush.

Similar critiques have been released by U.S. Department of Energy Researchers (see here and here)

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312 Projects Given Go-Ahead to Issue Clean Renewable Energy Bonds

Last month the Internal Revenue Service today announced 312 projects that are now eligible to be financed with tax-credit bonds under the Clean Renewable Energy Bonds (CREB) program. Approximately, $477 million was available for this round of applications. The CREB program was created by the Energy Tax Incentives Act of 2005 and expanded under the Tax Relief and Health Care Act of 2006.

The IRS reviewed applications for nearly twice the amount that was available. This second round of applications included 342 from 33 states, pertaining to 395 projects.

In November 2006, the IRS announced the first round of projects, which allocated $800 million of volume cap (some of which was subsequently relinquished) to 610 projects. State and local governments as well as electrical cooperatives are able to issue tax-credit bonds under the program.

Internal Revenue Code Section 54 authorized the total allocation of $1.2 billion of tax-credit bond volume cap to fund projects that can generate clean renewable energy. State and local government borrowers are limited to no more than $750 million of the volume cap with the rest going to qualified mutual or cooperative electric companies.

The other nice feature outside of favoring public entities is that CREB volume cap allocations are awarded on a “smallest-to-largest” project basis.

There were 156 proposed projects in California, 57 in Minnesota, 23 in New Jersey, 17 in Washington, 13 in Nebraska, 12 in Montana, 11 in Illinois and 10 in Wisconsin. Applications ranged in size from $15,000 to $38.5 million.

Governmental borrowers submitted applications totaling $728 million to finance 367 projects with an average project size of about $2 million. Governmental borrowers in 28 states will receive $263 million of volume cap allocations ranging from $15,000 to $2.95 million. Approved projects of governmental borrowers include: 138 solar facilities, 88 wind facilities, 41 landfill gas facilities, 12 hydropower facilities, three closed-loop biomass facilities, three trash combustion facilities and one open-loop biomass facility.

Cooperative borrowers submitted applications totaling about $170 million to finance 28 projects with an average project size of about $6.1 million. Cooperative borrowers will receive about $143 million of volume cap allocations for projects in 13 states ranging from $300,000 to $30 million. Approved cooperative projects include: 14 wind facilities, four landfill gas facilities, six hydropower facilities, one solar facility and one open-loop biomass facility.

The latest round of applicants were given the option for the IRS to disclose their information publicly and 310 projects signed the consent form. A list of projects can be found at the link below.

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