I was recently in front of the television (a rare occurance) watching a documentary on Pixar’s humble origins and its jaw dropping string of successes since its inception. To casual observers, it seems like the studio came out of nowhere to redefine their market. The reality is quite different – they’ve been working at it since the 1980s. I was struck by something Steve Jobs said about Pixar’s rise to fame, which I’ve paraphrased in this blog post’s title. He should know – it took him a quarter century to build his legacy. The same will be required to developing our national energy strategy, and Jobs’ turn of phrase also brought back to mind President Bush’s stated goals for a rapid switch to E85 ethanol. His statement during the 2006 State of the Union address: ” to make this new kind of ethanol practical and competitive within six years.”
Let’s dissect current energy consumption and extrapolate what it would take to switch to E85 ethanol using some back-of-napkin type math. The U.S. consumes 388.6 million gallons of gasoline per day for transportation, according to Energy Information Administration. Since 1 bushel of corn can produce 2.5 gallons of ethanol, the U.S. would need 132 million bushels of corn per day, or 48 billion bushels per year, to produce sufficient quantities of ethanol to displace 85% of petrol use. Compare that figure to U.S Department of Agriculture projections that U.S. corn production is expected to be 11.715 billion for the 2008/2009 period. This is before we adjust for a growing economy and thus increased demand for fuel. In other words, it isn’t going to happen. The theoretical maximum we are able to produce is about two thirds of what we’ll need, and that’s before we actually consider the fact that we have to use corn for trivial uses like say, food.
Which brings me to what I really want to talk about in this blog post: Brazil.
Brazil’s policymakers understood all too well during the 1973 oil shocks that they need to be ready for the next shock. They also understood that apparent “overnight successes” are actually the culmination of many years of hard work, as Steve Jobs notes. After 30 years and billions of dollars worth of incentives, the country is now beginning to execute on a plan which will lead to the complete energy independence. In 2003, Flex Fuel Vehicles (FFVs) were introduced which can run on 100% ethanol or gasoline or a combination of both fuels. The result of careful planning and methodical progressis starting to create critical mass in the retail market. Figures from Brazil’s National Petroleum Agency (ANP) for September showed national gasoline prices at an average of Brazilian reais (R) 2.49/liter ($5.20/gal). That compares with R1.33/liter for ethanol in the same month, according to the ANP. In states such as Sao Paulo, the country’s ethanol powerhouse, the biofuel in September was available at an average of R1.09/liter versus R2.37 for a liter of gasoline. It simply doesn’t make sense for retail customers to purchase imported energy any longer.
Now I’m not advocating we try to import our way out of the fossil fuels trap by swapping Brazil for the gulf states, nor are the Brazillians interested in obliging. From the New York Times..
“We are not interested in becoming the Saudi Arabia of ethanol,” said Eduardo Carvalho, director of the National Sugarcane Agro-Industry Union, a producer’s group. “It’s not our strategy because it doesn’t produce results. As a large producer and user, I need to have other big buyers and sellers in the international market if ethanol is to become a commodity, which is our real goal.”
Ideally, we would develop an efficient mass transit system which would displace our current automobile culture, but let’s be realistic – Americans love wide open spaces as much as we love our cars. Instead of hoping for an idealistic solution or a silver bullet, I’m instead hoping we can hold the next President and congress accountable for the kind of long term planning we’re seeing south of the border. One other thing is clear from the Brazillian example; even if we move decisively, any shift to national energy independence is going to take some time, and we should be prepared to ride out the short term.
Ok, that’s the end of my rant.. I hope it was thought provoking!