Manitoba should scrap its
plan to subsidize ethanol manufacturing
By Kenneth Sigurdson
The
industrial ethanol model being proposed by the Manitoba government will be
a costly misadventure for all Manitobans, as this industry requires
massive long-term subsidies for viability. An eight-month analysis of
ethanol manufacturing by the National Farmers Union has concluded there is
no positive economic or environmental case to be made for manufacturing
ethanol.
The
plan announced by Manitoba will have the province subsidize the industry
with a 20 cent per litre subsidy on every litre of ethanol produced. In
addition the federal government provides a 10-cent per litre subsidy by
removing the excise tax on ethanol. The total subsidy will be 30 cents for
every litre of ethanol manufactured. Since a litre of ethanol has about
63% of the energy (BTUs) of a litre of gasoline, the equivalent energy
subsidy will be 47 cents a litre. This 47-cent a litre subsidy would
currently buy the gasoline. I can think of no other industry where
government provides a subsidy equivalent to the acquisition price of the
product being produced.
Manitoba
Government officials argue that ethanol blended gasoline is good for the
environment by reducing CO2 emissions. However, a 1997 report
prepared by the Office of the Legislative Auditor in Minnesota concluded,
“ In any case a substantial amount of energy is used in ethanol
production and this is mostly fossil fuel used in growing corn, producing
fertilizer and distilling alcohol.” The report concludes, “Ethanol’s
potential to contribute to the problem of atmospheric CO2 is
extremely limited.” The General Accountants Office in the US reached a
similar conclusion. In addition ethanol adds aldehydes and alcohol to the
atmosphere, both carcinogens.
Mr.
Tim Sale, Manitoba Energy Minister often quotes a wheat ethanol report
done for Natural Resources Canada, which underestimates and omits many
energy inputs required to grow wheat thus making the ‘energy balance’
positive for ethanol production. This report done by S&T consultants
overestimates Manitoba wheat yields by using a yield of 40 bushels to the
acre. Manitoba Crop Insurance data indicates Prairie Spring wheat yields
36 bushels an acre on a ten-year average. The S&T report indicates to
grow this 40-bushel wheat crop requires per acre inputs of 48 lbs. of
nitrogen, 12 litres of diesel fuel and about $4.50 in agricultural
chemicals. The Manitoba Agriculture document Guidelines for Estimating
Crop Production Costs indicates it takes 70 lbs. of Nitrogen, 22 litres of
diesel fuel and $32.00 in chemicals and fungicides per acre to produce a
crop of wheat in Manitoba.
Inputs
excluded by this S&T study are energy to haul inputs 600 miles by
truck, wastewater treatment, pollution control, and the manufacture and
repair of farm equipment. Farm equipment can add 36,000 BTUs of energy or
about 30% of the energy required to grow a bushel of wheat. Mr. Sale’s
office and Ag Minister Wowchuck have been informed of the discrepancies
and inaccuracies in this report but it appears they have no intention of
providing factual information to Manitobans. Under full and realistic
energy accounting, wheat (grain) ethanol will increase green house gas
emissions. That is, more energy is expended in growing the crop and
processing it than the ethanol provides. I do not believe the Manitoba
government has discovered perpetual motion with their ethanol initiative.
Recently
the largest ethanol manufacturer in the US, ADM, reached a 340 million
dollar agreement with the Environmental Protection Agency to install
pollution control equipment at its ethanol plants. The EPA also fined ADM
for violations of the Clean Air Act. The Manitoba government has made no
commitment to require ethanol plants to control air emissions with thermal
oxidizers that are expensive to purchase and costly to operate. In
addition ethanol plants use large amounts of fresh water and produce large
amounts of nutrient rich wastewater. This should not be viewed as someone
else’s problem (local government’s) and is directly related to ethanol
manufacturing.
The
government maintains that ethanol manufacturing has become very efficient
which begs the question- if ethanol manufacturing is efficient, why the
subsidies and why is Mr. Sale lobbying Ottawa for even more subsidies? One
of the most modern efficient ethanol plants in Canada is the API plant at
Red Deer Alberta. Being modern and efficient did not prevent this plant
from going into receivership. If ethanol plants actually created energy
they would use ethanol as a fuel source rather than natural gas.
The
Manitoba government also promotes ethanol as a value added initiative for
farmers and jobs for rural Manitoba. However, as a farmer I question how I
can benefit by investing thousands of dollars in an ethanol plant so I can
sell cheap grain to that same plant. Another problem identified by U of M
Agriculture economists Kraft and Rude is that Manitoba does not have feed
grains for ethanol manufacturing. They state that the likely raw
ingredient for Manitoba ethanol plants will be imported subsidized US
corn. Corn is the cheapest grain with the highest starch content for
ethanol manufacturing. It should be noted that US corn yields 120 bushels
an acre while wheat yields 36 bushels an acre. An acre of wheat provides
90 gallons of ethanol while an acre of corn provides 300 gallons of
ethanol per acre. Wheat as the raw ingredient for ethanol manufacturing is
a non-starter.
The
jobs created by this subsidized industry come at a high cost. The Manitoba
government ethanol information indicates an 80 million-litre ethanol plant
employs 30 to 35 people while a 160 million-litre ethanol plant employs 40
to 50 people. With a subsidy of 30 cents a litre of ethanol manufactured,
the cost of jobs range from $680,000.00 to $1.200,000.00 per job per year.
In
Manitoba we have many projects for the Canadian Food Grains Bank producing
food for some of the 3 billion hungry people of the world. What are the
ethical and moral implications of setting up these subsidized food
burners? Why create the illusion that Manitoba can create energy to burn
in a SUV.
The
Manitoba government plans to mandate ethanol, proposing the subsidies will
lessen and the consumer will probably pay for the gasohol through higher
prices. Ethanol manufacturing is wasteful of fossil fuel resources and
cannot be considered renewable energy. Manitoba farmers can’t afford to
grow cheap grain for ethanol plants. Manitoba taxpayers cannot afford to
subsidize ethanol production and drivers can’t afford to burn it in
their cars either. Ethanol manufacturing is an expensive misadventure for
Manitoba.
Kenneth Sigurdson who operates a
grain farm near Swan River, studied ethanol in his capacity as Regional
Coordinator for the National Farmers Union, tel.:
204 734 3644
<>