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Glen Stubbe, Star Tribune

How 'cash for clunkers' could rev our engines

  • Article by: JASON HILL
  • June 15, 2011 - 9:22 PM

How can America achieve greater energy independence?

In the long term, renewable electricity and next-generation biofuels from nonfood sources hold the most promise for reducing our dependence on foreign oil. At the same time, more fuel-efficient vehicles, as mandated by government standards, will help reduce overall fuel demand.

Yet widely available electric vehicles and next-generation biofuels and are years off, and major gains in vehicle efficiency are unlikely to be seen right away because it currently takes nearly two decades for our national automobile fleet to turn over completely.

Yet, our immediate concerns are pressing. Rising oil prices threaten to derail our economic recovery.

The path we have taken so far to reducing dependence on foreign oil -- producing more ethanol -- has been largely ineffective. It has also come at great cost to another thing we hold dear -- food security.

We now use 40 percent of the corn we grow here in the United States for ethanol, but this is only enough to offset a little under 4 percent of our transportation needs. Last week corn hit an all-time high price of nearly $8 per bushel.

What if, instead of trying to grow our way out of our foreign oil dependence, we were to accelerate our need for less?

Amazingly, simply by increasing the average fuel efficiency of the cars and trucks we drive from 20 to 21 miles per gallon we could offset an amount of gasoline nearly equal to the 13 billion gallons of ethanol we are on track to produce in the country this year.

Americans support corn ethanol through a variety of state and federal mandates, as well as with a 45-cent-per-gallon tax credit.

The U.S. Government Accountability Office recently noted that this tax credit is redundant. Eliminating it would save taxpayers nearly $6 billion per year but not reduce the amount of ethanol produced.

Yet this week the U.S. Senate voted down a bill to end the credit, and last month it voted down a bill to end subsidies to the petroleum industry that would have saved another $4 billion a year.

Now imagine that, instead of giving these tax credits to the ethanol and petroleum industries, we used these funds to accelerate the adoption of more fuel-efficient vehicles.

Such a program encouraging rapid vehicle turnover is not without precedent. Back in 2009, the "Cash for Clunkers" program paid out $3 billion to replace around 700,000 gas-guzzlers (average miles per gallon: 16) with newer models (average mpg: 25).

However, because it targeted vehicles that would have been scrapped in 2.5 years on average anyway, only about 400 million gallons of gasoline were saved.

Speeding up the adoption of higher fuel efficiency in new vehicles -- beyond current standards -- would be much more effective. Say if, instead of giving $10 billion in tax credits to the ethanol and petroleum industries each year, we were to offer this same amount to people who purchase more-efficient vehicles.

If we were to give an average credit of $1,000 and achieve an average gain of 3 mpg above current standards for all vehicles purchased this year, we would save more fuel than all the ethanol we produce.

There are likely to be many other benefits of such a program as well.

Cash for Clunkers prevented around 4.4 million metric tons of carbon dioxide from being emitted into the atmosphere, or about 0.4 percent of US annual vehicle emissions. There is no credible evidence showing that corn ethanol reduces greenhouse gas emissions.

Even if the current corn ethanol tax credit did have some effect on increasing our energy independence (it doesn't), and even if the petroleum industry still needed our support (it doesn't), the benefit of focusing on vehicle efficiency in the long term is clear.

The current subsidies are a one-time deal -- burn a gallon of ethanol or gasoline and the benefit is gone. The benefits of increasing vehicle efficiency last over a vehicle's entire life.

Former President George W. Bush noted in his 2006 State of the Union Address that we are addicted to foreign oil.

Perhaps it's best if we now see corn ethanol for what it really is -- a methadone of sorts that may have helped ease our initial withdrawal but does little to address the underlying cause of addiction, which is our wanton consumption of liquid fuels.

It's time to go for the cure -- and at a much lower cost to the taxpayer.

Jason Hill is assistant professor of bioproducts and biosystems engineering at the University of Minnesota. The views presented are Hill's alone.

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