Expert outlines policy directions for encouraging biofuels

By WALT WILLIAMS Chronicle Staff Writer

With $4-a-gallon gasoline predicted to be just around the corner, interest in so-called “biofuels” is on the upswing, but current federal policy might be discouraging its development.

That was the take-home message a national expert on energy policy delivered to a room full of farmers Friday, during a one-day conference on whether growing raw materials for biofuels makes economic sense.

Purdue University economist Wally Tyner said energy use worldwide will continue to increase in coming decades and fossil fuels will continue to provide a majority of that energy. Biofuels, however, could be one of several sources of energy that decrease reliance on fossil fuels even though they alone will never be the “silver bullet” that solves the problem.

“The better image is ‘silver buckshot' - you are going to have a lot of things that will be part of this picture,” Tyner said.

Friday's conference at the Hilton Garden Inn was hosted by Montana State University Extension with the support of several organizations and drew about 70 to 80 farmers and other attendees. The issue was timely even if the timing of the conference was a coincidence, coming during a week when oil prices shot up to nearly $100 a barrel and energy experts were suggesting that gas prices could reach $4 a gallon by spring.

“Biofuel is a topic we see daily now,” Extension Director Doug Steele said. But, he added, good information is hard to come by, pointing out that a Google search for the term will direct Internet users to Wikipedia, an online encyclopedia anyone can edit regardless of expertise.

“If that is the best source of information we have, we need to be concerned,” Steele said.

Tyner's speech focused primarily on corn-based ethanol, which isn't widely produced in Montana but receives 51 cents in federal subsidies for every gallon made.

Those government subsidies are not necessarily the best policy to pursue because they have helped drive corn prices to high levels and will likely choke off profitability in the fuel, he said.

Tyner outlined several policy alternatives lawmakers could pursue, including decreasing the current fixed subsidy or tying subsidy amounts to oil prices.

One option would be to create a two-part subsidy with the amounts determined by how much biofuels reduce reliance on foreign oil and by how much they reduce the greenhouse gas emissions that cause global warming.

The production of corn-based ethanol and biodiesel creates nearly as many greenhouse gas emissions as the burning of gasoline, so their subsidy amounts would come primarily from decreasing reliance on foreign oil. Cellulosic ethanol, made from substances such wood chips, has a huge environmental benefit and would therefore get the greatest subsidies.

Another option is to create an alternative or renewable fuel standard, which is a mandate that requires a certain amount of the fuel the nation uses to come from sources other than oil.

Unlike subsidies, no taxes are needed to pay for a fuel standard, with the cost instead being borne by consumers.

“It puts the risk at the price we pay at the pump,” he said.

Tyner didn't say which policies were better than others, believing it was just his job to give policymakers choices.

Reader Comments