The Economics
In Brazil and the US there is an increasing movement toward the use of ethanol as an additive or total substitute for gasoline to power the fleet of passenger cars in both countries. The introduction of ethanol as a motor fuel in Brazil in the 1970's put the auto industry through some development difficulties but today the technology is mature and stable. The flex-fuel cars on the road today, in Brazil and the US, are efficient at any level of fuel mixture. In the state of São Paulo, where the bulk of Brazilian ethanol is produced, ethanol costs less than 60% of gasoline, making it a very attractive alternative, if your car will burn it.
If on the consumption side the case is clear, the energy efficiency of the production side is less so. The latest reliable studies indicate that the energy balance of the production of ethanol from corn is marginally positive: the process produces more energy than it consumes. If you consider only the liquid fuels used, gasoline and diesel, Vs. the ethanol produced, the balance is very positive, something like 7 for 1. Additionally, considering the result of the phasing in of cellulosic ethanol, it can be said with a fair degree of certainty that the use of ethanol as a substitute for gasoline, fully or partially, is energetically, if not economically, justified.
The purely economic justification depends on two further factors, neither of which will be discussed here: the price of petroleum and the level of subsidies allocated to ethanol. In any case, when you consider that petroleum is finite, whereas the production of ethanol is sustainable (?), there seems no choice but to support the use of ethanol as a motor fuel.
Based on the economics, and current levels of subsidies, it is safe to say that ethanol will play an increasing role as a motor fuel., but there is a negative side, and that needs to be understood and minimized if a disaster is not to be created.
The Social Costs
In examining the social costs involved in the use of ethanol as a motor fuel we must categorize these costs and look at who will pay them. As we see it, the major social costs involved are:
Pollution
We have to look at pollution from more than one aspect.
Since ethanol is not a fossil fuel, the gases emitted from the production and combustion process do not add to the greenhouse effect. As long as the vehicle is properly adjusted to not produce carbon monoxide, what comes out the tail pipe will eventually be reabsorbed back into the plants used for its production. (This is looking at the question on a global basis.)
When looked at locally however, we see a transfer of pollution from the cities, where most of the fuel is burnt, to the countryside, where the ethanol will be produced. Anyone who has spent any time near one of these plants can testify to the smoke, dust, noise and unpleasant odor emanating from the factory (and fields) all during the process (24/7 during harvest time!). It can not be allowed for this to be another example of the transfer of dirty and polluting industrial processes from the developed world to developing countries. (Examples: Lead/Acid batteries, Feedlot style beef and chicken production.) The technology exists to cleanly produce ethanol, it must be applied both to the corn process in the US AND the sugarcane based industry in countries like Brazil.
Environmental Damage
In addition to pollution, we must consider what is happening and will continue to occur in the overall land use equation. Taking Brazil as an example, in the period from 1995 to today, the land used in Brazil for the production of soy and sugar has grown from 50,409,498 acres to 73,266,746 acres, about a 46% increase in just 10 years. This represents about the
same acreage as the US dedicates to planting corn today.
This tremendous expansion is pressuring the environment, most notably in the Amazon, where approximately 2,000,000 acres a year are cleared for soy production. The Atlantic rain forest has already been virtually destroyed. The increase in sugarcane production, estimated by some to be in the throws of going from 15,400,000 acres to 54,340,000 acres in the not too distant future is pressuring in another area. Land is being converted from pasturage and marginal cropland to sugarcane production. This throws people off the land and creates the requirement of feedlot fattening for the traditionally range fed cattle herd. This is less healthy for the cattle, the people, and occasions a further increase in soy acreage for feed.
With all this land being cleared and planted, climate change is occurring (We will shortly publish a short piece on water consumption and rainfall in the sugar lands of northeastern Brazil) and natural habitat is disappearing. This has a tremendous impact on plant and animal bio-diversity - birds are particularly hard hit.
Food Price Inflation
It is said that, at the current price of oil, the price of corn could double and it would still be profitable to produce ethanol from corn. Imagine the impact on food prices, worldwide, if basic commodities like corn double in price. Also, what crops will be displaced in favor of corn, soy and sugar in the near future? This will place an incalculable burden on less wealthy areas of the world.
Employment - Sub employment - Slavery
A sugarcane worker in the state of São Paulo Brazil makes about 9 dollars a day during the cutting season, which lasts from 4 to 6 months. In the off
season he earns nothing. Mechanization will eventually kill off even these 'jobs'. In the past, when slaves were used (until 1889 in Brazil) the slave owner had to feed and clothe his 'property' in the off season - but not today! Today labor 'contractors' bring bus loads of workers to the fields where they are paid for each ton of cane cut. The job has no benefits, unless you count the six month unpaid vacation when there is no cutting being done. Recent studies indicate that even healthy males above 35 years of age
Industrial scale sugar and soy production forces the rural population off the land and into the slums of the cities and towns. The employment that remains is virtual seasonal slavery.
Conclusion
The use of Ethanol as a partial substitute for gasoline is probably justified on an economic basis, at least as a stop-gap measure. The social costs, however, can be extraordinarily high and must not be allowed overcome the monetary gain for a few companies and individuals. If left purely to the profit driven private sector, the human and environmental damages will be astronomical. Regulations must be established to mitigate these damages. These regulations need to be enforced broadly across the board, without the possibility for locally corrupt officials to undermine them.
In the future we will look more closely at some of the factors discussed above to get a better understanding of the true overall societal impact of using ethanol as a substitute for gasoline. We will also be asking: Is the current liquid fuel / internal combustion engine model the right one for personal transportation?
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