Ethanol May Not Beat Gas

The ethanol feedstock's place of origin is an important variable to consider, because if ethanol production was to increase from current levels, land-use restrictions and other market pressures would likely force ethanol producers to expand feedstock output to less-efficient geographic regions.

By comparing the net energy value of Iowa corn ethanol and motor gasoline, Groode found that the two fuels are equally efficient. However, when the ethanol feedstock's place of origin is moved to less-efficient farming regions, corn ethanol actually becomes less energy-efficient than gasoline.

The MIT report also shows that corn ethanol has no clear greenhouse gas benefit over gasoline unless alternate products that displace fossil fuel inputs are also considered.

Though burning ethanol releases no greenhouse gasses, the process of making ethanol demands natural gas, electricity and petroleum. This represents a major difference between ethanol and gasoline -- ethanol creates greenhouse gasses when it's being made, while gasoline produces them when it's burned as fuel.

Corn ethanol only starts to see a greenhouse gas advantage if one of its byproducts, dried distillers' grain with solubles (DDGS), used for livestock feed, is also manufactured and sold. If a market exists for DDGS, it's possible to allocate a share of the greenhouse gasses originally attributed to ethanol back to the DDGS.

The amount of greenhouse gasses reallocated to the DDGS byproduct depends on the value that DDGS garners in the market. Most models that employ a reallocation credit use a number between 20% and 40% of greenhouse gasses produced. The more gasses that are reallocated to the byproduct, the more competitive corn ethanol becomes relative to motor gasoline.

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