IS GM’S ETHANOL BET GOING TO GO SOUTH?
That’s the mantra at General Motor these days.
Not only do they want to make cars that run on it, they want to make the oil companies sell it to you. If the oil companies won’t cooperate, then they’d like the federal government to force it on them.
But, could it be a huge mistake?
That’s the suggestion that comes from two distinguished reports, one in the journal Science, authored by scientists at Princeton and Woods Hole Research Center, and the other from the University of Minnesota and the Nature Conservancy.
Ethanol contributes more to greenhouse gases than gasoline.
That’s what they say.
(more after the jump)
Corn based ethanol, it seems, releases a lot of carbon when land is cleared to grow the corn, and it takes away the “carbon sinks” that absorb carbon.
So, to break even on greenhouse gases from making corn-based ethanol, it’ll take about 150 to 400 years, depending on the locality.
Yup, as much as four centuries.
In other words, the world would be better off with gasoline.
Of course, General Motors has an answer. They’ve got this plan whereby ethanol can be produced from waste, such as old tires, rather than from corn.
That’s the name of the company that promises to create the miracle.
Pilot plant is supposed to be up and running this year, and then the big volume plant goes on line the year after.
General Motors has a lurid history of making money, albeit not recently.
In 1952, President Eisenhower appointed Charles Wilson, the president of General Motors, as his defense secretary. Within the next couple of years, an interstate highway system was adopted, one ostensibly designed to speed the movement of goods to ensure adequate national defense. (That’s right – the interstate system was promoted back then as a national defense measure.)
And within a few years after that, Dinah Shore made “See the USA in your Chevrolet, America’s Asking You to Call” into the real national anthem.
GM ended up owning half the car market, and having to restrain itself from having more, so that the government wouldn’t break up the company under the antitrust laws.
Now they’re doing it again.
They’re not fools at GM. They didn’t decide to build the roads, nor did they invest in the construction companies that did build the roads. They just made the cars that ran on the roads, the commodity with the largest profit margin.
Now, they’re doing it again.
The new energy bill mandates ethanol. It also mandates non-corn based ethanol, which is a license to steal for a company like Coskata, GM’s latest romance.
36 billion gallons by 2022 – perhaps, not coincidentally, two years after the new CAFE regulations are in full effect – that’s what the energy bill requires in ethanol production.
But, then, you ask:
If it is such a good deal, why isn’t GM putting its own money into Coskata?
One would think that a company that lost over $30 billion last year would be anxious to have a profit opportunity.
But, it doesn’t seem to be working it that way.
At least, that’s the theory.
But, perhaps there’s more to the story.
Coskata will have to run the risks and prove the point.
But, where it comes down is in the fine print.
Wouldn’t GM love to own the fuel company, too?