Ethanol: The Alternative Fuel 4 comments

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Everybody knows about the high and still rising oil prices nowadays, and some, especially drivers, are being hurt financially by it. There are doomsday projections of US$100 oil, and these have scared governments into accelerating programs to explore alternative sources of energy.

The August 8 edition of Newsweek highlighted such a source --- ethanol. Already, Brazil is embarking on a major program to supplant oil with ethanol as the fuel in cars and even aircraft, and its many ethanol production plants have led to some even calling them "the Saudi Arabia of ethanol". Major economies including the US and Germany are promoting the use of ethanol in vehicles, and crops are being grown for production of such fuel -- so-called "energy crops".

There are several strong points of ethanol as a fuel, as pointed out in the article. Firstly, it can be processed from a variety of crops, including corn, sugar-cane, rice husks, sugar beet and possibly even sweet potato. It belongs to a class of what is known as biomass fuels. This also leads to the second advantage, which is that conventional engines can run on it without much ill effects. After all, oil is also a type of biofuel (fossils compressed under high pressure turn to oil over millions of years). Hence, ethanol can be mixed with oil in car engines for normal operation, hence cutting the fuel bill (an equivalent barrel of ethanol costs US$25, less than half the price of oil now). Indeed, this is being practised in Brazil and Germany (where it is known as biodiesel). These advantages put it ahead of completely new alternative energies like fuel cells, which involve reinventing machines and reinvesting a great deal of money.

So it is that ironically, after having progressed from an agricultural economy to industrial economy to information economy, we are now going full circle and looking to agriculture to solve the biggest problem in modern society -- energy. Indeed, if the price of oil remains high and progress continues to be made on the supply side (more efficient production and refining techniques) and demand side (additional areas where it could replace oil as a fuel, eg. heating and power generation) for ethanol as a fuel, ethanol as an alternative energy source could well be a megatrend for the future.

References:
(1) Newsweek Aug 8 issue: The Next Petroleum