Energy Independence and Presidential Politics

Friday, April 28, 2006

Energy Independence and Presidential Politics

Instead of Senate Republicans' empty-headed gesture of a $100 rebate to taxpayers, our country's leaders could learn a lesson on how to achieve energy independence from Brazil:
When President Bush recently visited the National Renewable Energy Laboratory in Colorado, he stressed the need for the United States "to end our addiction on oil" and explore alternative fuels. The United States doesn't have to look far to find an example of a major nation that has done just that.

Brazil, South America's largest economy, launched an ethanol motor fuel program in 1975 and, against heavy odds, has developed a cost-efficient alternative to gasoline. It appears now as though Brazil's sugar industry, once viewed as a remnant of the country's colonial past, may have a prominent place in the world's energy future.

About half of the country's 21,000 square miles of sugar cane under cultivation is used to make ethanol that, according to the World Bank, is being produced at a cost of $1 per gallon compared to $1.50 for gasoline.

Getting to that point required decades of steady pressure from Brazil's government, in ways that would be hard to duplicate in the United States. In the 1970s, with Brazil being hit hard by Mideast oil shocks, the ruling military dictatorship launched a national program to reduce the country's dependence. It encouraged the construction of ethanol plants by doling out low-interest loans to sugar companies, financed a national distribution network and imposed subsidies to keep the price of the fuel low.

... The government also switched its emphasis from alcohol-only to "flexible fuel" vehicles, mandating that all gasoline must be mixed with at least 25 percent ethanol. Now cars that can run on ethanol, gasoline or a mixture of the two account for 70 percent of all cars manufactured there. That has made motorists happy, because they can easily shift to whichever fuel is cheaper.
But there's a significant factor impeding the ability of the U.S. to do likewise:
U.S. ethanol is made almost entirely from corn, not sugar. Because of the need to convert the corn's starch into sugar before creating a usable alcohol fuel, it costs 30 percent more than its sugar-based counterpart.
Of course, there's a political subtext to all of this. As John McCain discovered in 2000, Iowa voters want presidential candidates to support federal incentives for ethanol production from corn.

But, as the previous story notes, corn is a more costly way to produce ethanol, and the resulting higher cost works against the goal of moving motorists from gasoline to ethanol. Yet a successful candidate could support continued incentives for corn, while also calling for federal incentives to significantly increase domestic sugar production. Since we'd need to drastically increase the supply of ethanol, this gap could be filled largely by more sugar production.

Sugar cane, of course, grows in semi-tropical climates -- states like, oh, Florida and Louisiana. Florida is a pivotal swing state, and one with many more electoral votes than Iowa. If a Democrat outlined such a proposal and the GOP presidential nominee opposed it, the Republican would be opposing a lot of jobs and economic activity in Florida. Not a wise move.

Even if we simply produced more mixed fuel (part ethanol, part refined oil), we still could lessen our dependence on oil. There are some tricky details to the push toward ethanol, but our dependence on imported oil has negative consequences that make this change worth exploring.

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