Why ethanol is a bad idea

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We’ve just finally collectively twigged to the fact that burning a non-renewable resource that also pollutes the thin veil of protective air we have over this planet is, in retrospect, a bad idea.  So what to do?   … Wait! Why don’t we burn food instead?

Ethanol is a renewable bio-fuel, with the main targeted source being corn.  Yes, ethanol does burn somewhat more cleanly, but in its purer form it is only about 2/3 as efficient at gasoline, and in its current blend that you can buy at Sunoco SUN, 90% is still regular gasoline.  So we’re not really doing all that much about the burning oil bit.

Many people seem to think turning corn into calories is great stuff, if the Chicago Board of Trade weekly corn chart is any indication. From $2-$4 per bushel in a year – impressive.   However, people in Mexico depend on corn to make their tortillas.  Ouch.  Enter left: unintended consequences.  Brazil produces ethanol from sugar,which makes a bit more sense, as it helps the agricultural economy and we could all do without the sugar (a waist is a terrible thing to mind).  But it still doesn’t discourage use of the internal combustion engine – the real problem.

Many will argue that farmers need a break, but agriculture itself is causing serious environmental problems.  Aquifers are being depleted, as is the soil itself – both nutritionally and through erosion.  In China for example, 1/3 of the country is desert and increasingly becoming so due to  ”desertification” caused by clearing forests for agriculture.  We forecast thunderstorms and snowstorms.  In Beijing they forecast sandstorms.

Using corn for ethanol is a band-aid solution that addresses only the symptoms, with negative consequences for poor populations who depend on it for food, and which pressures the land and water tables.  Bad idea.

A better idea is resurrecting the electric car that General Motors GM in its infinite wisdom killed.  The infrastructure for electricity already exists to support it (as opposed to hydrogen – supported by the Bush administration and its oil buddies and conveniently decades away),  The technology for fast, quiet, non-polluting cars was proven beyond a doubt by GM’s 400-unit test-market in California.  Rent the documentary “Who Killed the Electric Car” - if you don’t mind spending an evening shaking your head and muttering (or screaming) ”idiots!”. 

True, you have to generate the additional electricity and that energy has to come from somewhere.  Hydro-electric is currently the cleanest commercial source, gas burning next, and solar and wind-generation are progressively moving into position to pick up some of the slack.  Check out an interesting little wind-generation and co-generation company in Canada called Northland Power Income Fund NPI.UN. Also worth looking at is Trina Solar TSL in China (once the IPO feeding-frenzy dies down).

Some of the electricity we would need for transportation can come from savings on the consumption side.  LED lighting significantly reduces electricity consumption.  The city of Raleigh, in conjunction with Cree Inc.  CREE  (a manufacturer of semiconductors and LED technology) is converting its municipal lighting to LED.  I talked about CREE in my previous post “Got one! – a climate change stock“.

Of course now that I’m mostly in cash and on the sidelines, the market is rallying.  Standard operating procedure.  On the Motley Fool CAPS site, my short picks were biting back today as the market rose - a “flight to junk”? 

Cheers,
Allocator

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