Economist's View: Paul Krugman: The Sum of All Ears

リンク: Economist's View: Paul Krugman: The Sum of All Ears.

Paul Krugman discusses the president's plans to use ethanol to replace gasoline, something he describes as "a really bad idea":

The Sum of All Ears, by Paul Krugman, Corn Cop-Out, Commentary, NY Times: For those hoping for real action on global warming and energy policy, the State of the Union address was a downer. There had been hints and hopes that the speech would be a Nixon-goes-to-China moment, with President Bush turning conservationist. But it ended up being more of a Nixon-bombs-Cambodia moment.

Too bad... The only real substance was Mr. Bush’s call for ... ethanol to replace gasoline. Unfortunately, that’s a really bad idea. There is a place for ethanol in the world’s energy future — but that place is in the tropics. Brazil has managed to replace a lot of its gasoline consumption with ethanol. But Brazil’s ethanol comes from sugar cane.

In the United States, ethanol comes overwhelmingly from corn, a much less suitable raw material. In fact, ... researchers ... estimate that converting the entire U.S. corn crop — the sum of all our ears — into ethanol would replace only 12 percent of our gasoline consumption.

Still, doesn’t every little bit help? Well, this little bit would come at a very high price compared with ... conservation. The Congressional Budget Office estimates that reducing gasoline consumption 10 percent through ... fuel economy standards would cost ... about $3.6 billion a year. Achieving the same result by expanding ethanol production would cost taxpayers at least $10 billion a year...

What’s more, ethanol production has hidden costs. ...[T]he Department of Energy ... says that the net energy savings from replacing a gallon of gasoline with ethanol are only ... about a quarter of a gallon, because of the energy used to grow corn, transport it, run ethanol plants, and so on. And these energy inputs come almost entirely from fossil fuels, so it’s not clear ... ethanol does anything to reduce carbon dioxide emissions.

So why is ethanol, not conservation, the centerpiece of the administration’s energy policy? Actually, it’s not entirely Mr. Bush’s fault.

To be sure, ... Mr. Bush’s people seem less concerned with devising good policy than with finding something, anything, for the president to talk about that doesn’t end with the letter “q.” And the malign influence of Dick “Sign of Personal Virtue” Cheney, who no doubt still sneers at conservation, continues to hang over everything.

But even after the Bushies are gone, bad energy policy ideas will have powerful constituencies... Subsidizing ethanol benefits two well-organized groups: corn growers and ethanol producers (especially the corporate giant Archer Daniels Midland). As a result, it’s bad policy with bipartisan support. For example, earlier this month legislation calling for a huge increase in ethanol use was introduced by five senators, of whom four, including ... Barack Obama and Joseph Biden, were Democrats. In a recent town meeting in Iowa, Hillary Clinton managed to mention ethanol twice...

Meanwhile, conservation doesn’t have anything like the same natural political mojo. Where’s the organized, powerful constituency for tougher fuel economy standards, a higher gasoline tax, or a cap-and-trade system on carbon dioxide emissions?

Can anything be done to promote good energy policy? Public education is a necessary first step, which is why Al Gore deserves all the praise he’s getting. It would also help to have a president who gets scientific advice from scientists, not oil company executives and novelists.

But there’s still a huge gap between what obviously should be done and what seems politically possible. And I don’t know how to close that gap.

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Previous (1/26) column: Paul Krugman: On Being Partisan

Posted by Mark Thoma on January 28, 2007 at 04:15 PM in Economics, Environment, Policy | Permalink | Comments (4)

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There was a bit more involved in the energy proposal than what Paul says.

2007 State of the Union Policy Initiatives

ENERGY: Twenty In Ten: Strengthening America's Energy Security
HEALTH CARE: Affordable, Accessible, And Flexible Health Coverage
EDUCATION: Building On Results: A Blueprint For Strengthening NCLB
IMMIGRATION: President Bush's Plan For Comprehensive Immigration Reform
HIV/AIDS: Leading The Worldwide Fight Against HIV/AIDS
MALARIA: The President's Malaria Initiative Is Saving Lives
DEFENSE: Strengthening Our Military
SPENDING REFORMS: Reforms To Spend Tax Dollars Wisely

"Energy: President Bush will ask Congress and America's scientists, farmers, industry leaders, and entrepreneurs to join him in pursuing the goal of reducing U.S. gasoline usage by 20 percent in the next ten years – Twenty in Ten. We will reach the President's Twenty in Ten goal by increasing the supply of renewable and alternative fuels and by reforming and modernizing Corporate Average Fuel Economy (CAFE) standards for cars and extending the current light truck rule. The President's energy plan also includes stepping up domestic oil production in environmentally sensitive ways and doubling the current capacity of the Strategic Petroleum Reserve (SPR)."

Twenty In Ten: Strengthening America's Energy Security

Goals:

Reducing U.S. Gasoline Usage By 20 Percent In The Next Ten Years – Twenty In Ten.

Stopping The Projected Growth Of Carbon Dioxide Emissions From Cars, Light Trucks, And SUVs Within 10 Years.

Reducing Gasoline Consumption Through The Growth Of Alternative Fuel Sources.

Doubling The Current Capacity Of The Strategic Petroleum Reserve (SPR) To 1.5 Billion Barrels By 2027.

Congress Must Reform CAFE For Passenger Cars. The Administration has twice increased CAFE standards for light trucks using an attribute-based method. An attribute-based system (for example, a size-based system) reduces the risk that vehicle safety is compromised, helps preserve consumer choice, and helps spread the burden of compliance across all product lines and manufacturers. Congress should authorize the Secretary of Transportation to apply the same kind of attribute-based method to passenger cars.

Increasing The Supply Of Renewable And Alternative Fuels By Setting A Mandatory Fuels Standard To Require 35 Billion Gallons Of Renewable And Alternative Fuels In 2017 – Nearly Five Times The 2012 Target Now In Law. In 2017, this will displace 15 percent of projected annual gasoline use.

Reforming And Modernizing Corporate Average Fuel Economy (CAFE) Standards For Cars And Extending The Current Light Truck Rule. In 2017, this will reduce projected annual gasoline use by up to 8.5 billion gallons, a further 5 percent reduction that, in combination with increasing the supply of renewable and alternative fuels, will bring the total reduction in projected annual gasoline use to 20 percent.

Energy Efficiency and Renewable Energy by subject
U.S. Department of Energy

Posted by: Movie Guy | Jan 28, 2007 8:30:12 PM

And let's not forget this report:

Study of Feasibility and Effects of Reducing Use of Fuel for Automobiles
The Energy Policy Act of 2005
Report to Congress
August 2006
National Highway Traffic Safety Administration
U.S. Department Of Transportation

Posted by: Movie Guy | Jan 28, 2007 8:34:32 PM

Vehicle Gasoline Consumption

Where we are today, absent further action by Congress:

Summary of Fuel Economy Performance by Manufacturer, 1978-2005, USDOT

Summary of Manufacturer CAFE Fines Collected, 1983-2005, USDOT

Fuel Economy Standards

Final rule
Average Fuel Economy Standards for Light Trucks
Model Years 2008-2011
National Highway Traffic Safety Administration
DEPARTMENT OF TRANSPORTATION