The idea that ethanol will play a role in the nation’s energy future and in North Dakota’s economic future is a given. But the magnitude of these roles remains uncertain. North Dakota should poise itself to take full advantage of its ethanol potential.
In a recent interview with The Business Journal, Senator Byron Dorgan (D—ND) stated, “North Dakota has all the elements for ethanol production, especially cellulosic…ethanol is a big part of America’s energy future.” North Dakota must be prepared to take full advantage of this potential while safeguarding environmental interests and ensuring that the local economy benefits from the production of ethanol rather than Wall Street business interests.
Arguments against the economic viability of ethanol are dissipating as oil prices reach record highs and technological advances make ethanol production more efficient.
Critics of ethanol like David Pimentel (Cornell) and Tad Patzek (University of California—Berkeley) have argued that, once all the inputs are considered, ethanol consumes more energy to produce than it contains. According to a 2005 study by Pimentel and Patzek, published in Natural Resources Research, ethanol has a net energy balance of a negative 29%, and a negative 20% when adjusted for the values of by products such as biochemicals.
David Morris, vice president of the Institute for Local Self-Reliance (ILSR) in Minneapolis and Washington DC, argues that Pimentel and Patzek’s methodology is flawed. In a report titled The Carbohydrate Economy, Biofuels and the Net Energy Debate published by the ILSR, Morris contends that many of the inputs in the Pimentel/Patzek study were overvalued, that industry production projections were based on past industry wide averages using old technology rather than the current state of the art facilities that are being built, and that not all the benefits of ethanol are considered.
While this debate over the net energy balance of ethanol may rage on, some things should be apparent to all of us. The price of oil is reaching new highs; our dependence of foreign oil threatens national and economic security; and our farmers could benefit from additional markets. While there is no chance that ethanol could be the answer to all of our energy needs, there is no doubt that the tipping point is here. Ethanol is viable.
Dorgan claims, “Ethanol will make a positive contribution to the state’s economy—but how much is uncertain. Ethanol [production] is not a big job generator, but ethanol can mean additional markets for family farms.”
The federal government’s role in promoting ethanol is through tax credits, renewable fuel standards and production goals. Without these incentives the ethanol industry would not have been able to outgrow its infancy to its current state of toddlerhood (where it is just beginning to walk on its own). North Dakota needs to be prepared before it is off and running.
Dorgan expressed disappointment at what had been done on the state level to promote ethanol—or put more succinctly—what had not been done. “There is no renewable fuel standard from the state—they should.” Dorgan went on to say that the state should provide “encouragements”. He believes the state should consider legislation patterned after the Missouri statute.
Missouri Revised Statutes: Chapter 142 Motor Fuel Tax—Section 142.028 provides a monthly grant to ethanol producers based on estimated fuel production for the upcoming calendar year. Most important is a provision that requires that the principal place of production and corporate business be in state, and that ownership is at least “51% agricultural producers actively engaged in agricultural production.”
Such a provision helps to ensure majority ownership by producers. This is key if the local economy is to reap maximum benefit and maintain local control of a regionally important industry rather than surrendering stewardship of that industry to Wall Street private equity firms.
The importance of shifting our economy and infrastructure away from oil and toward alternative and renewable energy sources has never been more apparent. A 2004 study cited by Pimentel and Patzek predicted that 2007 would be the peak year for oil consumption, and that supply would be extremely limited thereafter. That time is here, and war in Iraq, a looming stand-off with Iran, instability in the Middle East and strained relations with many of our oil producing trading partners make it clear that any reduction in our dependence in foreign oil is in our best interest—both in terms of security and economic well-being.
Ethanol is only a part of the solution to our energy dependence, but a significant part. North Dakota must be prepared to make a major contribution to the nation’s and region’s energy future—and to expect fair return.
To contact or comment on this article, visit www.FMBizJournal.com or contact Michael direct at mmelon15@hotmail.com.
No comments:
Post a Comment