In Ethanol Investing: Counterpoint, Robert Rapier, a chemical engineer who has worked on alternative fuels, explains two common misconceptions about ethanol:
The first misconception is that ethanol has the potential to make us energy independent, or to displace significant amounts of foreign oil. The second is that Brazil’s energy independence “miracle” can be replicated in the U.S.
On the first point:
According to a 2002 USDA report on corn ethanol, “The Energy Balance of Corn Ethanol: An Update”, it takes 77,228 BTUs of fossil fuel inputs (natural gas, gasoline, and diesel) to produce 83,961 BTUs of ethanol. This gives a ratio of ethanol output/fossil fuel inputs of only 1.09.
On the second point:
The question then arises: “Just how much did widespread use of ethanol in Brazil contribute toward their energy independence?” The answer is: “Not much”. In 2005, Brazil produced 4.8 billion gallons of ethanol, or 114 million barrels. However, a barrel of ethanol contains approximately 3.5 million BTUs, and a barrel of oil contains approximately 6 million BTUs. Therefore, 114 million barrels of ethanol only displaced 67 million barrels of oil, around 10% of Brazil’s oil consumption. In other words, Brazil’s energy independence miracle was 10% ethanol and 90% domestic crude oil production. Brazil did not farm their way to energy independence.