Ponying Up for Alternative-Fuel Research

By Warren Brown
Sunday, February 26, 2006

I've long opposed giving government money to corporations. Ideally, they should be able to fund whatever they need the old-fashioned way -- through profits.

But we have a real energy crisis facing us, though it may not be readily apparent as long as the lights are on and the highways are humming. We actually are running out of oil. It has little to do with manipulation of oil futures, stocks, per-barrel prices or even violent upheavals in oil-producing nations. The bottom line is that the world is producing less of the stuff as global demand for it is increasing.

We are not likely to run dry of crude in the next 50 years or so, if we are to believe the oil industry analysts. But we probably will experience spot shortages and pay higher prices for anything and everything powered by or made from petroleum.

That is the whispered bad news behind President Bush's $2.1 billion Advanced Energy Initiative budget proposal, which he presented last month in his State of the Union address.

The president, as politicians are wont to do, framed his proposal in the often-jingoistic language of national security. He would have been more effective with straight talk, such as: "People, we've got a serious problem. We're fast approaching the point where we won't have enough oil to heat our homes in winter, or cool them in summer, or fuel our cars and businesses. There's going to be hell to pay. We've got to do something."

Maybe that way he would have felt emboldened to ask for more than $2.1 billion, and Congress would be more inclined to give it. In short, the president should have used the same kind of scare tactics to get us moving along the road to alternative fuels and energy self-sufficiency that he used to put us on the path to seemingly endless wars in Afghanistan and Iraq.

It is for that reason I am willing to shelve, at least temporarily, my bias against government funding of corporations. I mean, heck, we're funding them anyway through our military interventions in other countries. At least through the Advanced Energy Initiative we'd be funding them in useful, peaceful pursuits.

For example, Energy Secretary Samuel W. Bodman announced last week that his department, as a part of the administration's energy initiative, will allocate $160 million over the next three years to construct up to three biorefineries in the United States. The money, essentially a series of federal matching grants to corporations, is seed cash to develop viable cellulose-derivative ethanol plants by 2012.

"Viable" means those plants eventually would be profitable as well as productive. "Cellulosic ethanol," as it is called in the energy business, comes from non-food-based biomass, such as agricultural waste, trees, forest residues and perennial grasses. The resulting fuel could be used for transportation, generation of electricity and other power needs. The Department of Energy thinks cellulosic ethanol potentially can take the place of 30 percent of our nation's current use of fossil fuels by 2030.

That may be pie-in-the-very-blue- sky speculation. But it's worth the cost of investigation. So is the Agriculture Department's plan to provide nearly $188 million in loan guarantees and grants for other renewable energy and energy-efficiency projects.

Again, nearly all of the money will go to corporations that seemingly already have more than enough of it. Bodman's announcement, for example, was made in Decatur, Ill., while visiting an ethanol plant operated by Archer Daniels Midland Co., one of the world's biggest agricultural processors and producers of biofuels.

Perhaps it is simply biblical that the rich ultimately get richer. After all, rare is the individual or small company with the financial and technical wherewithal to come up with a meaningful development in alternative fuels. If Bush's Advanced Energy Initiative will help Archer Daniels Midland and other companies to that, I support it. The alternative to alternative fuels, an energy-stricken nation unable to fend for itself, is much less palatable.

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