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- You have to admire Kay Bailey Hutchison's chutzpah, if nothing else. The veteran U.S. senator from Texas, a state that holds one-third of known U.S. petroleum reserves, thinks the federal government should stop subsidizing production of biofuels such as ethanol.
Hutchison is apparently fine with the visible and hidden subsidies Uncle Sam has provided Big Oil for generations - such as reduced corporate income taxes, federal funding for programs specific to the oil industry, increased national security costs to protect oil shipping lanes and the shifting of environmental costs to taxpayers. But when it comes to investing in a possible energy competitor, Hutchison and friends are suddenly laissez-faire capitalists.
The future of biofuels in the United States is being threatened by perceptions and politics versus science and sound energy policy. That's a problem for the United States, which must secure its long-term energy independence, and for Wisconsin, which could become a collateral victim if the drive-by assaults on biofuels continue.
Twenty-four Republican senators, Hutchison and presumptive presidential nominee John McCain included, recently called for a halt to the expansion of ethanol production as a response to rising food prices. Never mind that most economists question whether ethanol is a major contributor to food inflation: Rising food prices are a pocketbook issue in a down economy, and people are clamoring for a scapegoat.
The story is much the same in Wisconsin, where some policymakers have questioned the state's investment in biofuels. Before the public's mind is closed on an infant industry, some important facts should be heard:
Fuel versus food is mostly a fallacy
Most economists agree a number of factors have contributed to rising food prices, not the least of which is a steady drawdown of world rice reserves (rice is not used for biofuels), the protein demands of a growing and more affluent Asian population, rejection of genetically improved crops by some developing nations, global climate change, and rising oil prices.
Commodity prices typically make up about one-fifth the cost of food to consumers; transportation, packaging, and labor account for the rest. With oil prices surging past $120 per barrel of sweet crude, the ripple effect is finally hitting the food chain.
Finally, it's worth noting that corn used to produce ethanol is not entirely removed from the food chain. A byproduct of the ethanol distillation process is distillers grain, a high-nutrient, concentrated form of ground-up corn used as livestock feed by farmers here and abroad.Cellulose versus corn is the future
No one believes corn-based ethanol will forever remain the world's primary biofuel, given the need for greater energy efficiency and rapid changes in technology. Wisconsin has the potential to produce next-generation biofuels, such as cellulosic ethanol
, from sustainable forests, corn stover, switchgrass, waste from timber harvests, and even pulp used for papermaking.
Research at the $130 million Great Lakes Bioenergy Research Center
, headquartered in Madison, will help to remove the bottlenecks in the production of those advanced biofuels.Research subsidies versus production subsidies
The alternative energy grants and loans that will become available through state government, like most of those at the federal level, are aimed at financing research. Gov. Jim Doyle's Wisconsin Energy Independence Fund will target relatively small ($100,000 to $500,000) grants and loans at a variety of emerging technologies, and indirectly leverage some of the work taking place at the Great Lakes Bioenergy Research Center.
Corn ethanol production subsidies should and will go away in time, but peer-reviewed research is the seed corn for the next generation of biofuels.Science versus perception
The Wisconsin Legislature
is taking a deliberate approach to sorting through the claims and counterclaims. The bipartisan Legislative Council is forming a Special Committee on Domestic Biofuels to help set a logical course.
I would urge the Legislature not to make any sudden or drastic changes to our state's renewable fuels policies until (the committee) has had an opportunity to discuss both the benefits and the costs of renewable fuel development in our state, said Sen. Pat Kreitlow
, D-Eau Claire. We will rely on responsible, scientific, long-term perspectives to guide our deliberations.
Today's biofuels will not be tomorrow's biofuels. Technology, economics, environmental concerns, and more will dictate market changes in fairly rapid order. The trick is avoiding a political and public opinion stampede while giving science a chance to work.Recent articles by Tom Still
Tom Still: Should VC-owned small businesses receive government grants?
Tom Still: In a biotech state, computer guys get respect
Tom Still: Food versus fuel and other biofuel fallacies
Tom Still: Tough times spur angel, venture investing
Tom Still: If climate change is the issue, environmentalists should rethink nuclear
Tom Still is president of the Wisconsin Technology Council
. He is the former associate editor of the Wisconsin State Journal in Madison.
The opinions expressed herein or statements made in the above column are solely those of the author, and do not necessarily reflect the views of Wisconsin Technology Network, LLC.
WTN accepts no legal liability or responsibility for any claims made or opinions expressed herein.