June 11, 2007
Ethanol’s promise looks hollow
Research from Iowa State University has sounded a warning about the viability of the investment currently pouring into ethanol production in the US. "We think the expected returns to an ethanol plant are zero or negative in 2008," said Bruce Babcock, economist and director of the Center for Agricultural and Rural Development at Iowa State, in Ames, Iowa, quoted on the Inside Greentech blog. Robert Rapier of the R-Squared Energy Blog is also quoted in the article; he expounds on his biofuel scepticism here. One of the less compelling arguments against biofuels is in the Washington Post: it says the current support for ethanol and other biofuels would cost $140bn if extended over the next 15 years. On the scale of the US budget, that’s a rounding error.
All the same, it goes to support the warning raised by the International Energy Agency that we reported in last week’s FT: biofuels are not going to wean the world off oil any time soon.
