Tuesday, March 06, 2007

Green ethanol – from coal?!

An interesting development from the US:

( The latest trend in the green world of ethanol is a surprising one: coal.

Minnesota's first coal-fired ethanol plant soon will begin operation in Heron Lake, and it won't be the last. The high price of natural gas is enticing new plant owners to embrace coal power. But while it may make economic sense, the choice of this fossil fuel to make a renewable one has some people shaking their heads.

The move comes as Minnesota steps up its efforts to embrace cleaner and greener sources of energy and reduce carbon emissions. Critics say it's a lousy idea to make renewable fuel in ways that generate more greenhouse gases than using gasoline.

"The country is investing in ethanol not only as a way to reduce our reliance on oil, but as a way to reduce our greenhouse emissions and our overall emissions," said David Morris, a renewable energy specialist at the Institute for Local Self-Reliance in Minneapolis. "I don't deny there is a savings for these ethanol plants using coal instead of natural gas. But at the same time, the country is providing an enormous incentive for making the ethanol in the first place," with a variety of subsidies.

Until now, all of Minnesota's 16 corn-based ethanol plants were powered by natural gas, at least initially. But the soaring and unpredictable price of natural gas has everyone looking at alternatives.

The most popular alternative for existing plants is generating heat with biomass, a green choice being used at plants in Little Falls, Winnebago and, soon, Benson.

But coal is making inroads among the newest ethanol plants, including one in Heron Lake, with another scheduled to begin construction this summer near Erskine in northwest Minnesota…

State regulators allow the owners of ethanol plants to choose their own power sources. Admittedly, coal "would not be our preferred alternative," said Myrna Halbach, ethanol sector manager for the Minnesota Pollution Control Agency.

"We're very much behind the governor's efforts on renewable fuels," she added. "But ultimately, that's a business decision they would make."

"The volatility of natural gas concerned (Heron Lake)," Halbach said. Using coal "gave them a way to control operational costs."

What’s the message from this? I think one lesson may be that we need to be careful about subsidies: if you subsidise ethanol, you’ll get more ethanol. But it doesn’t necessarily follow that you’ll get lower emissions. Rather than picking and subsidising particular technologies, a better solution may be to impose a carbon tax or similar measure that places a cost on emissions from all sources.

Another lesson is that we need to look carefully at the full life cycles of technologies:

( California Gov. Arnold Schwarzenegger and his state's Legislature have embraced a plan to rate all motor fuels by greenhouse gas emissions over their entire life cycles, from production to transportation to ignition.

Measured that way, ethanol made from plant residue would earn an excellent rating. Ethanol from corn would do moderately well. And corn ethanol made in a coal-fired plant? That would rate poorly — even lower than ordinary gasoline, according to Schwarzenegger's office.

An across-the-board carbon tax, as I understand it, would avoid the need for these calculations. You wouldn’t need to worry about whether ethanol plants were powered by coal or by natural gas, because they would already have paid their carbon tax on the fuel they used for power: it would already be embedded in the price of the product.

(via env-econ.net)

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