USA Today finally noticed a study that was released by the Pardee Rand Graduate School couple of weeks ago that ranked ethanol third behind diesel and hybrids in a cost-benefit analysis. Based on the increased fuel consumption and the total life cycle costs of ethanol produced from corn, it was deemed to be the most expensive option.
Given the number of flex-fuel vehicles that General Motors sells, it's no surprise that they came out with a response defending ethanol and pointing out flaws in the study. According to GM, the study didn't account for the widely varying prices of ethanol in different regions. More importantly, the study only looked at current dry milled corn ethanol rather than cellulosic ethanol. While this is a somewhat valid point, the reality is that there is no commercially available cellulosic ethanol yet.

The study was based on currently available options. As cellulosic ethanol moves into the mainstream in the coming years the equation will obviously change. However, increased availability of biodiesel from feedstocks other than soy will also influence the balance as will plug-in hybrids and hybrids with newer battery technologies. The study is only a snapshot of a point in time and five or ten years from now the picture will be different.

[Source: General Motors, USA Today]

GM Statement Regarding E85 Ethanol Cost-Benefit Analysis

Attributable to Alan Adler, manager, Biofuels Communications

The cost-benefit analysis of E85 ethanol prepared by the Pardee Rand Graduate School and cited in the Friday, Nov. 30 edition of USA Today fails to take into account several positive factors of the renewable fuel made from 85 percent ethanol and 15 percent gasoline.

E85 is not yet widely available in the United States – less than 1 percent of fueling stations offer it today – and prices vary widely. Some gasoline stations peg the price of E85 to gasoline, so when gasoline goes up or down in price, E85 rides with it. Elsewhere, especially in regions where ethanol is more widely available, the price of E85 is as much as a dollar a gallon less.

"We believe ethanol as a renewable fuel is the best near term alternative to oil as a transportation fuel and replacing gasoline with ethanol positively contributes to lowering greenhouse gas emissions," said GM Chief Economist Mustafa Mohatarem. "You cannot take a snapshot in time and define a mature market,"

When the Rand study was previewed at GM in October, the authors were told their work did not account for the significantly lower cost of second-generation ethanol that will be made from cellulosic and biomass feed stocks. Most estimates show the cost of making Gen2 ethanol at $1 or less a gallon before distribution costs.

(GM did not specifically sponsor the Rand study but does contribute $25,000 a year to Rand annually.)

General Motors is the auto industry leader in offering E85-capable vehicles with more than 2.5 million of the 6 million on the road in the U.S. For 2008, GM offers 11 FlexFuel models able to run on any combination of ethanol and gasoline up to 85 percent ethanol. GM produces about 400,000 E85-capable models a year and will double that to 800,000 a year by 2010. By 2012, GM expects to build more than 2 million FlexFuel vehicles a year.

"By 2012, it will be easier to say which GM vehicles are not E85-capable than to list which ones are FlexFuel," said Beth Lowery, GM vice president of Environment, Energy and Safety Policy. "And we are just as committed to helping build the infrastructure for E85."

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