Ethanol gives the economy a boost
Ken Field
Financial Post
666 words
8 February 2012
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Ethanol is under attack again. The latest broadside is from the George Morris Centre in Guelph, Ont., claiming that the biofuel is responsible for rising beef and pork prices.
This biofuel is far too important to allow misinformation to tarnish its reputation and diminish its support among consumers, industry and government.
Ethanol's chief benefit is environmental. Its use as an additive in gasoline reduces greenhouse gas (GHG) emissions alone by 62%. To place this in context, the transport industry is a large source of Canada's GHG, at more than 30% of all emissions. Further, about 80% of oil-related GHG comes from combustion, including automobile tailpipes.
But GHG reduction is only part of the story. Ethanol reduces every type of tailpipe emission, and its impact on the air we breathe is immediate and tangible. Not long ago, the Greater Toronto Area would experience up to 20 "Smog Days" during summer months, posing a serious health risk to asthma and COPD sufferers, and generally making urban life miserable. Last summer, there were no smog alerts in the GTA and 5.5 million Canadians breathed easier. Ethanol was a major factor in cleaning the air above Canada's biggest metropolis.
A lesser-known fact is that the smaller, lighter car engines with high horsepower coming on to the market today require a higher-level octane gasoline. The traditional way to increase octane is to boost the level of aromatics in the fuel, specifically benzene, toluene and xylene. All three of these compounds are carcinogenic. The alternative method of increasing octane is to add ethanol, which has an octane of 114 and delivers plenty of extra power. That's why Indy and NASCAR racers use ethanol.
Ethanol also reduces the price of gasoline at the pump. With about 15 billion gallons of ethanol in the North American gasoline pool today, gasoline is about 10¢ cheaper per litre in Canada and about 40¢ cheaper per gallon in the United States.
Then there is the issue of Canada's energy security. Today, Canada imports more than half of the oil it uses on a daily basis. This oil comes primarily from politically risky countries such as Saudi Arabia, Nigeria, Algeria and Venezuela, raising concerns around the security of long-term supply.
Today, ethanol reduces demand for foreign-sourced gasoline in Ontario by almost 10%, and across Canada by 5%. At the same time, we are supporting the production of Ontario's and Quebec's largest crop, which is corn. This strikes me as both sound economics and a sound geopolitical strategy.
Then there is the claim mentioned above that the ethanol industry is harmful to livestock farmers because demand for corn to produce ethanol is driving up the price of this animal feedstock. This is simply not supported by the facts.
Throughout North America, the use of genetically engineered corn seeds has boosted production of industrial corn (not for human consumption) by roughly 70%, to about 14 billion bushels today from eight to nine billion bushels a decade ago. Since ethanol production uses about five billion bushels of corn annually, the same as the increase from biotechnology advances, its impact on corn prices is negligible. Without the ethanol market, there would be a significant glut in today's corn market and greatly reduced income for Canada's grain farmers.
Ethanol production uses only the starch from the corn kernel, returning all the protein, fibre, minerals and vitamins right back into the feed market as Dried Distillers Grains, or DDGs. Over one million tons of DDGs are produced in Canada every year. The ethanol industry produces food and fuel.
Finally, some 30,000 farmers profit from the ethanol industry. At a time when rural Canadians are struggling to keep their farms operating, this is a significant advantage.
? Ken Field is the chairman and founder of Greenfield Ethanol Inc. and a board member of the Canadian Renewable Fuels Association.
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