The U.S. should emulate Brazil's "energy independence miracle" declared headlines, editorialists, environmentalists and policymakers all throughout the first half of 2006. The Brazilian "miracle" was achieved in part by substituting ethanol (produced by fermenting sugar cane) for gasoline (made from imported oil).
Let's look at the elements of the Brazilian miracle and see if it is possible for the United States to replicate it. First, Brazil's economy is one-tenth the size of ours, and Brazil's motor fleet is about 100 vehicles per 1,000 people. Brazil's cars and trucks consume about 15 billion gallons of motor fuels annually. Also, Brazil produces 1.7 million barrels of oil per day, enough to fulfill about 90 percent of the country's daily requirements. Finally, Brazil produces 4.5 billion gallons of ethanol from sugar cane and blends it with gasoline in a 20 percent ethanol/80 percent gasoline mixture to burn in flex fuel automobiles.
In contrast, there are 765 vehicles per 1000 people in the U.S. consuming about 150 billion gallons of gasoline per year. The United States already produces about 4.5 billion gallons of ethanol (about the same as Brazil) which meets only about 3 percent of U.S. transport fuel needs. The U.S. pumps about 5 million barrels of oil per day domestically and imports another 15 million barrels daily.
Replacing one-third of our gasoline consumption with ethanol, as Brazil has done, would reduce oil imports—but "energy independence" would remain a mirage. One bushel of corn yields about three gallons of ethanol. In 2004 U.S. farmers harvested 11.8 billion bushels of corn. In other words it would take the country's entire corn crop to produce 35 billion gallons of ethanol, an amount equal to about one-fifth of the gasoline Americans currently burn each year. This would also leave no corn for food and some residues for feed. Burning food for fuel raises some interesting moral questions in world in which 800 million people are still malnourished.
Assuming that it would be undesirable to turn our entire corn crop into fuel and feed residues, growing another 12 billion bushels of corn for ethanol production would require plowing up an additional area double the size of the entire state of Illinois. So ethanol produced from corn is not the answer to drastically lowering U.S. oil imports. However, biotechnologists are hard at work on creating processes that will break down cellulose, the complex carbohydrates that make up a good part of the stems and leaves of plants, into sugars that can be fermented into ethanol. In his 2006 State of the Union address, President George W. Bush suggested that switch grass might be a good source of cellulosic biomass to produce ethanol.
Last year, the U.S. Departments of Energy and Agriculture estimated that it would take one billion tons of dry biomass to produce enough ethanol to replace one-third of current U.S. demand for transport fuels. Assuming a high yield of 10 tons per acre of switch grass would mean harvesting 100 million acres of land for fuel each year—an area about the size of California. In 2005, the USDA reckoned that there were 39 million acres idle in the conservation reserve program and 67 million acres of cropland being used as pasture, so dedicating that much land to grow fuel crops is not impossible. But planting idle cropland and pasture with fuel crops could have some deleterious effects on the natural environment and wildlife and possibly spark a fight between the naturalist and energy wings of the environmentalist movement.
Strangely, the Fed's billion-ton biomass vision doesn't factor in the amount of energy needed to make ethanol. Just how much energy it takes to churn out ethanol is hotly contested, but for simplicity's sake let's assume that the process produces twice as much energy as it uses. That means that with even the most optimistic calculation, in which one billion tons of biomass are converted into ethanol, the amount produced could ultimately replace one-sixth of annual U.S. oil imports. That's not nothing, but it's not "energy independence"—and it's not much of a "miracle," either. Finally, it has to be asked, if producing ethanol is such a profitable idea, why does it need federal subsidies?