Some corn with your CAFE, monsieur?

Isn't genetic engineering great?Tom Daschle and Vinod Khosla propose in today’s Times that the CAFE fuel economy standards be reworked to include incentives for increased ethanol use.

The 1973 oil embargo gave us the 1975 CAFE standards and the resulting, albeit short-lived, surge in fuel economy. Will this summer’s combination of $4/gallon gas, Al Gore’s Inconvenient Truth, and a few more violent hurricanes provide another tipping point for progress on fuel efficiency standards?

Certainly biofuels hold promise as a tool to reduce greenhouse gas emissions, although there is some skepticism and a thriving debate over ethanol’s role in battling climate change. Our read: today’s ethanol is marginally good, offering somewhere on the order of a 10% to 26% emissions reduction over regular gasoline. Future developments in biofuels, like the switch grass that got a plug in the recent State of the Union address, hold much more promise as low-carbon fuels.

But is CAFE really the right place to drive ethanol usage? CAFE is a system that regulates which vehicles get produced. It has no explicit linkages to actual fuel use, and the resulting disconnect is particularly strong for flex-fuel vehicles, which get credit for being fuel-efficient under CAFE, regardless of whether consumers ever take advantage of their flex-fuel capabilities.

Khosla and Daschle charge that CAFE “does nothing” to encourage renewable fuel change. Well, that’s true in actuality, but it’s not for lack of structure in CAFE. In 1988, Congress enacted the well-intentioned Alternative Motor Fuels Act (AMFA). This program created incentives to develop vehicles capable of filling up with the ethanol blend known as E85. The result? 3.4 million flex-fuel vehicles produced, and only 182 stations at which to fill up their tanks.

So the real issue is fuel infrastructure, not automative technology. What are the barriers to deployment in retail gas? A barrel of ethanol sells for less than half the cost of a barrel of oil in Brazil. What is preventing the US from following Brazil’s example? Perhaps carbon markets can help by establishing a firm and market-driven price signal for carbon so a new generation of green capitalists have the incentive to produce and distribute low-carbon or no-carbon fuels. With today’s ethanol production having a marginal but positive impact, there is a path for biofuels to be a part of the solution. But simply putting more flex-fuel cars on the road doesn’t get us closer to that goal.

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  1. Richard Blake - May 9, 2006

    Earth Biofuels, (EBOF) an over-the-counter alternative energy company and manufacturers of Willie Nelson’s “BioWillie” brand of biodiesel is probably one of the hottest stocks on the market right now. In September of ’05 it was around 17 cents and today at my last check it was well above $5 a share. Biodiesel may hold a greater potential for emissions reduction than ethanol, although both are certainly more than worth looking at. Adolph Diesel, the inventor of the diesel engine originally designed it to run on peanut oil. Canola which would be the best source of biodiesel is widely used in the normal crop rotation of wheat.

  2. Mark - May 10, 2006

    Its well known that the lax CAFE standards of allowed automakers to put all the technological improvements in the last decade into increased horsepower rather than fuel efficiency. Has anyone ever tried to measure the increased traffic fatalities due to the major increases in horsepower in the average vehicle over the past 10-15 years? This would turn on its head the argument that CAFE standards induce car makers build lighter cars that decrease safety…

  3. Diana - May 10, 2006

    In the ethanol discussion, the air pollution concerns unfortunately often get left out. Ethanol usage will increase ozone (main component of smog) and increase PAN (an eye-irritant in smog) production over gasoline usage. These are pollutants that many cities all over the country already having a hard time dealing with. Also, gallon-per-gallon, ethanol is less efficient than gasoline (it has less energy density), so we would have to supply a lot of ethanol if it is simply used as a replacement to gasoline instead of a supplement to other efficiency measures…which is why I don’t think it belongs in CAFE.

    I have also recently seen a talk Khosla gave about ethanol…and I have to question his motive a little bit on this article. He seemed very interested and willing to try to change policy to make his ethanol investments make him money, but I don’t think he was to concerned about global warming or our oil addiction…

  4. Adam - May 10, 2006

    The comment about Khosla has a grain of truth, but is mostly unfair. Khosla has been evangelizing bioethanol for a while now, and, yes, he has made large investments in this industry that stand to pay a large dividend if biofuels take off.
    However, his reasons for investing in this industry in the first place are undoubtedly due to his concern over global warming. Khosla made his billions in computer technology, and could probably happily go on investing in computer technology. It’s hard to see his newfound interest in renewable energy as anything other than an attempt to promote social change through his favored means: entrepreneurship. This is a mission TerraPass can sympathize with.
    On the other hand, it is worth knowing that Khosla has placed his bets and has a strong incentive to see those bets pay off. While I don’t think the correctness of his motives are in question, it is certainly possible to have a good-faith disagreement over the role that biofuels will play in our clean energy future.

  5. DarthKleber - June 13, 2006

    Who cares wether or not khosla is concerned about global warming or just investing for the money. Atleast someone is trying to spread the word and help this nation see that instead of investing billions of dollars in oil that we get from countries that are unstable and hate us , which will eventually run out We need to start investing in our own country , and start doing things for ourselves. Only good things can come from it . Lets see. Better for the environment, creates jobs , lowers our depence,and its renewable . Who cares if you lose 10% in fuel mileage, most american cars get crappy gas mileage anyways , so i think the public should be atleast given the choice wether or to use E85 or not. Most likely if someone knows their car can run on it , they will buy it and if they aren’t lead foots , most likely they won’t hardly notice the difference . Being pessimistic about something like this won’t help solve this countries problem in which is our , at this time “have no choice dependence on oil” If anyone is interested in supporting this go to

  6. pradwastes - June 14, 2006

    With regard to how to distibute E85, write your congressman about this:
    To my knowlege there is no vehicle made that needs 89 octane fuel but nearly all galoline retailers have it available. It may take a federal law to persuade the oil companies to distribute the E85 and use the same underground tanks that are used for the midgrade gasoline at this time. There would have to be a way for the oil companies to make some money.
    The knowlege that E85 is available nearly everywhere should solve the problem of there being a demand for duel fuel cars and provide business oportunities to retrofit the older cars. It wouldn’t take long for us to no longer need to import the fossil fuels. In Brazil and Argentina they make ethonal from the prairy grasses. Why can’t we?

  7. Anonymous - July 3, 2006

    You could get much better MPG with alcohol fuels if Detroit follows the Saab approach to flex-fuel technology, . The last sentence in the previous link is referring to Direct Alcohol Fuel Cells. Hydrogen fuel cell vehicles are a joke because of the costs needed for infastructure changes. Coal fired power plants generate over 60% of the electricity needed for electrolysis to produce Hydrogen gas. Alcohol produced by fermentation is carbon neutral.

    I also think that butanol is obviously superior to ethanol for fuel. The BP and DuPont partnership should make that obvious to everyone, .

  8. 1985 Gripen - July 5, 2006

    In response to the #7 comment above, I would like to add that “Detroit” already knows about the SAAB approach: SAAB is entirely owned by General Motors. SAAB already sells flex-fuel vehicles (9-3 and 9-5 passenger cars) to the public (not just to fleets) in Sweden (where they’re selling like hotcakes), Great Britain, and Germany. All flex-fuel SAABs are turbocharged and all feature fuel-efficient 4-cylinder engines. In the case of the aforementioned 9-5 BioPower concept, they’re eeking 310 horsepower out of a 4-cylinder, 2.3 liter engine (135 hp/liter). You wrenchheads out there will know that that’s some serious efficiency!
    Why they haven’t brought these to the States is still a mystery. GM would apparently rather tout their flex-fuel pickup trucks and SUVs instead of turbocharged passenger cars.
    SAAB USA officials have claimed that it’s going to take a couple of years to make the cars conform to U.S. DOT requirements. Right. The “big three” have been selling flex-fuel cars in the States for years, so why would it take that long to make the SAABs conform?

  9. George - July 10, 2006

    In response to comment #1, Earth Biofuel’s stock recently tanked (down ~55% in the last two months), along with its friend Pacific Ethanol (down ~40% in the last 2 months). The ethanol boom is primarily being driven by hype, as well as the renewable fuel standard passed in the Energy Bill of 2005. Corn ethanol could not make it on its own, a metric that we often criticize much cleaner forms of energy like wind and solar with. Electricity generated with wind is currently competitive with natural gas generation.

    Another important fact is that more and more new ethanol plants are being built to run on dirty, coal technology. As natural gas prices have rose higher and become more volatile, ethanol manufactures have looked to find ways to reduce their risk. Two examples are the newly proposed Yellowstone Ethanol plant near Williston, ND and the Aventine plant in Pekin, IL. Coal is nearly twice as inefficient as natural gas in terms of greenhouse gas emissions and much dirtier for air pollution. Corn ethanol will become a joke in terms of mitigating global warming if this current trend of coal power ethanol production continues.

  10. Anonymous - August 13, 2006

    Tom Daschle is shameless in his promotion of corn, er, ethanol, as are so many politicians in the corn belt. He once wrote that farmers, through corn ethanol, have showed us the way to energy independence. Aside from needing to make a clear distinction between “energy” and “oil”, ethanol cannot scratch the surface of our oil or energy needs. As a rule, those who hype ethanol are really hyping corn. Archer-Daniels Midland gets a big check, corporate farmers get a big check. Tom Daschle? Votes and a check? But we get nothing for all the subsidies we put into biofuels.
    Thanks for this informative article. Now I know why automakers are glowing about E85 when only 4% of our fuel is ethanol at a cost of 20% of our corn crop.

  11. Question Consumption - January 2, 2007

    Come on people- ethanol, hydrogen; all short term solutions. There was a time in this country when people had a moral compass and acted on it. The technology for an all electric car already exists. Couple that with replacing coal fired plants with solar, wind, biomass, and geothermal and you have a much better solution. We have the means- lets make the right choice. Will it take a war effort not seen in this country for a long time? Yes! But the last time I looked, you don’t avoid doing the right thing because it’s hard. Or is everyone content with staring at the idiot tube and voting for the hot new singer on American Idol while we continue to poison our children with the food we give them, the water they drink, and the air they breathe? “I choose the road less taken”.