Ethanol’s bad trip

[Spiel]

Ethanol’s bad trip

 

Posted: August 07, 2008, by Ronald Nurwisah

nationalpost.com

 

 

By William Robson

 

Summer should offer a chance to forget the antics in our federal and provincial capitals, and some of the boondoggles that result. But some issues, such as government mandates to mix ethanol with gasoline, have a way of following you. For users of gasoline-powered engines, such as chainsaws, water pumps — and, most critically, boats — summer may bring ethanol-related problems closer than ever.

 

These problems are a classic instance of unintended consequences. Regulations made with one eye on polls and interest groups and the other on administrative convenience often pay no attention to how badly simple bureaucratic edicts fit a complex world.

 

Ontario has required sellers of gasoline, on average, to mix 5% ethanol in their fuel since 2007. Although higher content in some gasoline stations can currently offset straight gasoline in others, advocates want higher content. Many provinces have similar or more stringent mandates, and by 2010 Ottawa will mandate 5% ethanol across the country.

 

Dalton McGuinty took a brave stance by backing away from a plan to boost the Ontario mandate to 10%. For many users, even 5% ethanol is trouble. More extreme across-the-board mandates will make things worse. New racks have appeared at hardware stores displaying fuel additives promising to solve ethanol-related problems. There are a lot of them, because ethanol in gasoline can cause damage, especially out on the water.

 

For users of marine fuel, ethanol’s key flaw is its affinity for water. Boats — no surprise — operate in wet environments. Marine fuel tanks often admit air; some must do so to work properly. In a boat, that air is typically damp. Water combines with ethanol, and if the mixture is not agitated and burned quickly, the water-laden ethanol will separate and sink to the bottom of the tank. Marina owners try to ensure they get pure gasoline, but boaters who bring gasoline from the highway to save a few bucks are risking more than they know.

 

The drawbacks of ethanol-blended fuel do not stop there. Ethanol is an aggressive solvent that can break down parts commonly found in marine, chainsaw and pump engines. Some of these engines have labels warning against gasohol, but many older ones do not. And a warning is little use to those who cannot get pure gasoline in any event.

 

Worse than the bureaucratic clumsiness is that the premise behind forcing ethanol on consumers is misguided. Replacing gasoline and other fossil fuels with ethanol is supposed to be greener — emitting less of the greenhouse gases many think are warming the planet. But corn-based ethanol, the major focus of Canadian policies, has a large environmental footprint. Corn must be grown, harvested, milled and fermented to make ethanol, which must be distilled and further processed before mixing with gasoline. Each stage requires such inputs as land, fertilizer and other fuels. And each input has environmental impacts — including greenhouse gas emissions — of its own.

 

Douglas Auld of the University of Guelph recently took a critical look at the corn-based ethanol in a C.D. Howe Institute commentary. Problematically, different attempts to measure the full “life-cycle” impacts of various fuels yield different answers about whether substituting corn-based ethanol for other fuels reduces greenhouse gas emissions at all. And even if it does, the reductions come at a high cost.

 

Some of that cost is fiscal. Professor Auld calculates that reducing CO2 emissions by subsidizing ethanol will cost around 10 times the current world market price for greenhouse gas abatement. Since ethanol yields less energy per litre than gasoline, governments will recoup some costs through more revenue from volumetric excise taxes on fuel. But lower energy density means more fill-ups, burning more fuel and more taxes that consumers have to pay to travel the same distance.

 

Which brings us to other costs from distorted prices and decisions: Most notable is the diversion of agricultural land to ethanol production, and the resulting upward pressure on food prices. These impacts are harder to measure in dollars, but they nevertheless cast further doubt on the wisdom of mandated fuel ethanol.

 

Finally, there are costs that may never show up on the policy balance sheet — such as gasoline-powered fire pumps that break down, chainsaws that seize up and outboard motors that cut out.

 

Happily, we can still modify, or even withdraw, the regulations that threaten to force ethanol blended with gasoline on all Canadians in the years ahead. Ethanol advocates, politicians and public servants who have staked their professional careers on biofuels will insist that the policy brings a large benefit at a small price.

 

But for a boater whose engine fails in bad conditions, the unintended consequences of a mandate to buy unreliable fuel could impose a cost few of us would readily pay.

 

 

Financial Post

— William Robson is president of the C.D. Howe Institute. Douglas Auld’s study is available at www.cdhowe.org.