Does Backing Biofuels with Public Money Work?

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Congress is using financial incentives to encourage the biofuels industry as a way of responding to concerns about global warming. Are public dollars really buying the environmental benefits we expect?


Congress is considering another round of federal support for the biofuels business, which produces oil substitutes like ethanol and biodiesel. The government gave the industry a big boost in 2005 and it's likely to get even more backing this year.

But as NPR's Martin Kaste reports, Congress is still conflicted over what it wants to achieve with the homegrown fuels.

MARTIN KASTE: Forget about kissing babies. These days, politicians want to be photographed in a biofuel plant somewhere, preferably holding up a bottle of golden ethanol or biodiesel.

(Soundbite of applause)

Representative NANCY PELOSI (Democrat, California; Speaker of the House): Thank you very much, John. Thank you for the opportunity to be here at Imperium Renewables.

KASTE: In this case, it's House Speaker Nancy Pelosi on a visit to a biodiesel plant in Seattle. She says she likes biofuels because they solve two national problems.

Rep. PELOSI: Is that this about cleaning the environment. So it's not just about reducing our dependence on foreign oil, it's having alternatives.

KASTE: Two birds with one stone - import less foreign oil and cut down on greenhouse gases. It's the key to biofuel's political appeal. But experience shows that those two goals are not always so compatible. Doug Tiffany is an economist at the University of Minnesota who studies biofuels. He says government incentives have triggered a race to build new ethanol plants across the Midwest.

Mr. DOUG TIFFANY (Economist, University of Minnesota): It's been kind of dramatic how fast it got rolling there.

KASTE: But while all this new ethanol may be replacing some foreign oil, he says, it's not doing much about greenhouse gases.

Mr. TIFFANY: There are some ethanol plants that have been built that are using coal instead of natural gas for their processed heat.

KASTE: By processed heat, Tiffany means the energy that's used to heat the corn to make ethanol.

Mr. TIFFANY: It's perfectly legal but by using coal, more greenhouse gases have been emitted. So you say, well, maybe the original intension was somewhat subverted, if that was the intention after all - greenhouse gas reduction.

KASTE: Congress is now considering more subsidies and mandates to boost alternative fuels. And the green issue of climate change is running headlong into the red, white and blue issue of energy independence. One example is syn fuel, liquid fuel made from coal. It's all-American but it also puts out a lot of greenhouse gases. Syn fuel has wide support ranging from President Bush to Senator Barack Obama. But it also raises the central question: Which problem takes priority, climate change or energy independence?

Representative JAY INSLEE (Democrat, Washington State): I think we're capable of having our cake and eat it too.

KASTE: Jay Inslee is a Democratic representative from Washington State and a member of the newly formed Select Committee on Energy Independence and Global Warming. He says America can do both. It's just a matter of waiting for the right technology.

Rep. INSLEE: The biofuels industry now is what I call the first stage of the rocket. It's - but it's only the first stage. We have to get to a second and third stage to really take a bite out of global warming.

KASTE: But Inslee adds that he would like to see alternative fuels meet certain greenhouse gas standards. That would focus policy on the end result on what comes out of tailpipes, which would push things more to the green side of the equation. But right now, the emphasis seems to be on the red, white and blue. Speaker Pelosi says she wants Democrats to unveil their energy independence proposal by the Fourth of July.

Martin Kaste, NPR News, Seattle.

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