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Should government continue subsidizing ethanol? (Wrap-up of 5/23-5/27 online debate)

Posted at 9:00 AM on May 27, 2011 by Michael Caputo

What chance has ethanol had? How you answer that question probably defines your view on public support for the alternative fuel.

Ethanol still hasn't had a real shot to compete with big oil, say those who want government to continue financially supporting the biofuel.

Those who want an end to government subsidies of ethanol say the fuel has failed to establish itself after 30 years. It's chance has come and gone.

And underpinning this discussion over ethanol subsidies - the subject of our Insight Now debate during the week of May 23 - is the very real chance that Washington changes how ethanol is publicly supported. Will Congress and the president redirect funds for the biofuel ... or turn off the money spigot?

What follows is a synopsis of debate points ... but if you prefer to see the "debate in full" just click here.

Chances are...

Most of the $6 billion in Washington funds for ethanol actually goes to fossil fuel companies to accept a fuel mixture that contains up to 10 percent of ethanol. This subsidy - the "blenders credit" - nearly ended a year ago. Now some in Congress are taking aim again at the credit, while some Republicans who want to be president have stumped in Iowa to talk about this government support of ethanol.

Ending the credit to oil companies is fine with Chris Thorne, public affairs director for Growth Energy, a Washington-based ethanol advocacy group who argued for government support of ethanol in our online debate.

Thorne would move the money toward creating pumps for fuel that's largely made up of ethanol (rather than a small additive in fossil fuel). It would be a separate pump infrastructure for true ethanol he said. And it would finally give ethanol a chance to compete with oil-based fuel:

"American motorists are a captive market - captive to oil...Once access to the market is reformed, ethanol can beat oil for market share."

No it won't, say those who want government subsidies for ethanol to end, such as Rolf Westgard, an energy analyst and educator from St. Paul, who argued this side in the debate.

In 30 years the ethanol industry has not proved it can produce the biofuel in a way that would compete with oil. Westgard summed it up like this: "It takes a whole lot of biomass to make a small amount of transportation fuel." Basically, he argued, ethanol has had its shot.

And as a way to argue for the end of subsidies, Westgard said the federal government already has a mandate in place that compels the use of ethanol as an additive to fossil fuel ( part of the 2007 Energy Act).

"There's no need to assess taxpayers for billions to provide a market,"Westgard wrote.

The government's touch is beyond money

Late last year, as part of the budget agreement with Congress, President Obama continued a tariff on ethanol made from Brazil. The Brazilian ethanol, made from sugar cane, has been thought of as a cheaper biofuel than our corn-based ethanol.

This tariff makes Melanie Shirley crazy. Shirley is a marketing consultant from St. Paul who has a passion for renewable energy. She's also part of MPR's Public Insight Network.

Shirley writes:

"The tariffs keep us from importing affordable ethanol and the process used to create ethanol uses more energy than the ethanol ends up creating. It has become a complete mess of regulations and subsidies that no longer work."

Some in our debate thread say that the sugar cane ethanol from Brazil is becoming just as expensive as American ethanol.

And, by the way, the tariff might be an issue in the near future. It's set to expire at the end of 2011.

Another public policy around ethanol was explained by Peter Melby, also an MPR Public Insight source, who works as a technician at a locally-owned ethanol facility.

Melby said public policy requires manufacturers to make the ethanol undrinkable before they can ship it. Why? Pure ethanol is like a kind of highly concentrated alcohol. You know... moonshine. The law keeps people from stealing the stuff by putting in chemicals that make the ethanol undrinkable. It's called "denaturing."

Melby says this step is unnecessary.

"Why can't we bypass the step that requires us to 'denature' our product?" Melby said. "This will save us the expense and hassle of purchasing the gasoline and blending it into our product, which is required solely to make it legal to transport."

Food and the environment

During this discussion we heard some of the typical sore spots in the ethanol debate:

***Some argued on either side of assertion that ethanol skews the food supply.
***Commentators both sides of the assertion that ethanol is friendly to the environment.

That's just a taste of this robust debate. What would you add?

THE DEBATE IN FULL - The Assertion: The state and federal government should continue subsidizing ethanol.

Monday: Opening Statements

Tuesday: Rebuttals

Wednesday: Rebuttals

Thursday: Closing Statements

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