Market Snapshot


As the automotive industry continues the debate regarding which alternative fuel should replace gasoline, some scientists have been studying the effects and environmental impacts of those alternatives in question. As Neil Winton of Detroit News Online states, “evidence continues to mount that car manufacturers are barking up the wrong tree with their push to convince motorists that ethanol-powered cars are a great way to pursue a green agenda.”

In Europe, some car makers including Saab, Ford and Volvo, have been making claims that burning ethanol made from sugar or corn derivatives will cut greenhouse gas emissions by up to 80%. These claims are being called into question. Some experts have pointed out that taking into account the whole lifecycle of renewable crops, with the substitution of land currently used for food, plus the extra fertilizer, water, transportation and energy needed to convert it into industrial alcohol, the likely result is that more CO2 will be emitted than from conventional fossil fuel.

In Sweden, buyers are offered everything from a $1,460 subsidy to lower fuel taxes to free parking and no road tolls to encourage the purchase of ethanol-powered vehicles and still sales are behind those of diesel-powered vehicles. One of the main reasons: diesel engines offer more than a 50% improvement in fuel consumption over ethanol power. Peter Schmidt, editor of Automotive Industry Data (A.I.D.) says that “cars modified to run on E85 consume, on average, between 20 and 30 percent more fuel than those operating on gasoline.” Sweden currently has a plan to become fully energy self-sufficient by 2020, with renewable fuels accounting for the majority. The country is pushing to have 25% of its gas stations providing ethanol by 2008. Currently, less than 1% of all stations there provide ethanol. 

According to the article, “Jerry Taylor, senior fellow at the Cato Institute based in Washington, DC, isn’t impressed by arguments in favor of ethanol.” He has very harsh criticism for the push for ethanol. In fact, he says that “the U.S. ethanol program exists to transfer money from taxpayers to farmers and ethanol processors.” He also points out that the use of ethanol will not reduce greenhouse gas emissions and that gasoline is not the biggest contributor to industrial greenhouse gas emissions. In fact, coal consumption is the biggest contributor to greenhouse gases, and a lot of coal goes into ethanol production. A study conducted by Stanford University found that more use of E85 will produce worse air quality and lead to other problems including increased ozone-related mortality and hospitalization, as well as a 9% increase in asthma cases in Los Angeles and 4% increase nationwide. Taylor also states that “ethanol is a ‘green’ fuel only to the extent that it produces green-colored currency for corn farmers and ethanol processors.”

In the coming years we should expect to see more studies conducted regarding renewable and alternative fuels. The only thing that is for certain is that the future of fuels is uncertain. 

Source:  Winton, Neil. (July 3, 2007). “Diesel Efficiency Likely to Trump Even Subsidized Ethanol.”  Detroit News Online. Retrieved July 9, 2007 from