Cellulose will strain ethanol's political unity

Bob Tippee

The US ethanol craze will become a political battle under current presuppositions.

The high-minded rationale for burning food for energy is that the tactic inaugurates a grand transition. (The low-minded and more accurate rationale is that burning food for energy lets politicians keep grain growers and distillers rich and happy.)

In the grand transition envisioned by the high-minded rationale, ethanol made from pricey grain establishes a market position into which ethanol made from cheap cellulose someday will move. For now, cellulose costs too much to process.

While grain ethanol's transitional market position depends on generous tax credits and market mandates, even greater favors await ethanol from cellulose.

In these early years of the grand ethanol transition, things are splendid for corn growers and mostly so for distillers. Disadvantageous combinations of corn and ethanol prices occasionally make members of the latter group sweat. Still, construction of ethanol plants remains active, and the federal mandate for ethanol in vehicle fuel grows each year and almost surely will be expanded by a bedazzled Congress.

Best yet for ethanol interests, nobody in Washington, DC, seems concerned about how much all this affects the Treasury and the costs of food and fuel.

So what happens if, say 5 years from now, researchers perfect the enzyme that makes cellulosic ethanol economic?

At that point, the political unity that turned ethanol into vehicle fuel fractures under the strains of ethanol-on-ethanol competition. Corn growers have to weigh the value of stover as an ethanol feedstock against the costs of market loss and replacement soil nutrients. Plant operators must consider retrofitting, rebuilding, or closing.

Here's the big one: If the cellulose dream comes true, corn will lose value.

By the time cellulose makes sense as a feedstock for fuel ethanol, consumers who don't grow grain for a living will welcome cheaper corn. Maybe politicians will have come to their senses by then and be ready to let it happen.

Also by then, however, corn growers and distillers who see no profit in the transition to cellulosic ethanol will have plenty of money for a political fight.

(Online May 14, 2007; author's e-mail: bobt@ogjonline.com)

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