Ethanol is not the answer

Two years ago, Brazil garnered kudos from policy analysts when the country announced that it was officially energy independent. It took a single scare to motivate the Brazilians to get off of foreign oil – the 1973 oil crisis. Over the past three decades, Brazilians have exhausted themselves in developing an alternative to gasoline through ethanol derived from sugarcane.

Unfortunately for us, the United States has been slow to learn the importance of energy independence. We often ignore looking outside our borders to see if someone else is doing something better. Now, with ethanol, we’re facing the opposite problem – we’re looking at other countries to see what they’re doing right, but failing to distinguish differences in political economies that permit or inhibit success.

For Brazil, sugar-based ethanol solves both problems with oil that Americans are trying to address – the ethanol is green and homegrown. But Brazil got lucky. They did not set out in ’73 to create greener fuels, only to become energy independent. It just so happened that the most viable domestic resource that could be produced to supplement their domestic oil production was the “green” sugarcane.

So after finally concluding that we want to become energy independent and studying the nation that did it the best, the United States has decided to take a page from the Brazilian playbook and go after ethanol, only we don’t have sugarcane to make it. So what do we do? Well, we can’t import it (that kind of defeats the whole idea of energy independence). So ... is there something we can use to make domestic ethanol, something that would be plentiful in the United States?

This is where we should have paused and started looking at another form of alternative energy – hydrogen, solar, electric, etc. But we didn’t. We decided to go with corn.

To make ethanol from corn requires much more work and chemicals than making it from sugarcane. Also, corn is only a seasonal product that is a staple of our diet – which means we won’t have as much of it to consume.

I think you see where this is going. Corn-based ethanol is much more expensive than ethanol from sugarcane.

Therefore, in order to compete against Brazilian ethanol imports coming into the United States, we have put up ethanol tariffs and quotas. That means that in an attempt to create greener fuels that lead us away from foreign oil, we’ve chosen an alternative that can only give us independence if it doesn’t compete in a free market.

Going to ethanol was a great decision for the Brazilians – they got off of foreign oil and, as luck would have it, created a greener fuel which only became important recently. But that doesn’t mean that we can do the same. It’s good that we began to look at other countries to see what they do well, but we need to understand differences between countries, too. Here, we should have known that ethanol wasn’t right for us. If we want energy independence and a greener fuel, we need to look at what else America has to offer.