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Facts About the Economics of Renewable Energy

This article is a discussion of some of the issues concerning bio fuels and their production, effects, and consequences. They are not the cure-all for fossil fuel short-comings.

Tony Kanaan won the Iowa Corn Indy 250 on Father’s Day at the Iowa Speedway in Newton, Iowa. Dario Franchitti had the lead when his car experienced a gear box failure after 69 laps. The IZOD Indy Car(R) Series is the only motorsports circuit using 100 percent fuel-grade ethanol.

In a press release on June 15, 2010, Todd Becker, President and CEO of Green Plains Renewable Energy praised racing as an excellent platform to demonstrate the benefits of ethanol as a clean energy source for high performance vehicles. Green Plains is the fourth largest ethanol company in the United States. On April 25 Green Plains reported a substantial increase in profits over the last year; however, Green Plains is the most successful of the ethanol and biodiesel companies in the United States. Terry McDonald’s report on the industry was published on June 18, 2010 on Energy Boom.

Green Plains’ profits are dependent on the Renewable Fuels Reinvestment Act and the Green Jobs Act of 2010 which gives a $.45 per gallon tax credit and an extra $.10 per gallon for small companies plus a secondary tariff on imported ethanol.

A study conducted by Cornell University and the University of California-Berkeley published in Natural Resources Research cites the study results as saying that ethanol and biodiesel are not the answer to the need to reduce dependence on oil. The bio fuels are not sustainable. The process takes more fossil fuel than it produces in bio fuels. For the ethanol it takes between 29 and 57 % more fuel than is produced. For biodiesel the loss is even worse; it takes between 27 and 118% more fuel than is produced. Bio fuels cannot be expected to replace fossil fuels in view of the cost.

The study encourages the industry to look to production of electric power from photovoltaic cells, wind power and burning biomass for thermal energy, and producing fuel from hydrogen conversion. The high cost of producing fuel from biomass appears to makes it unappealing as an energy source, but it is still a political hot topic. Congress may force the U.S. economy already under siege into greater danger by forcing the issue with the bills coming to the floor this year. The use of bio fuels is damaging to the environment even though some plant materials are able to be grown on land that is not used for food. The loss of jungle and native habitats is a serious environmental concern. The use of food crops for fuel is suspected of raising the cost of food and causing food shortages in some areas. There is more cost to the equation than just production.

As these issues come before Congress, it is hoped that the members will evaluate the issues from more than a panic stricken fear of fossil fuel contamination. These issues deserve thoughtful consideration.

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Comments (2)

Very informative.

Renewable energy is very important to save money and to save the world. In addition, people should also be responsible in saving energy. Thank you for writing this article I learned a lot, voted and shared.

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