November 23, 2010

Al Gore : For Corn Ethanol Before He Was Against It

Former Vice President and 2000 Presidential Candidate Al Gore shifted positions on ethanol according to an article in Reuters.

"It is not a good policy to have these massive subsidies for (U.S.) first generation ethanol," said Gore, speaking at a green energy business conference in Athens sponsored by Marfin Popular Bank.

"First generation ethanol I think was a mistake. The energy conversion ratios are at best very small.

"It's hard once such a programme is put in place to deal with the lobbies that keep it going."

He explained his own support for the original programme on his presidential ambitions.

"One of the reasons I made that mistake is that I paid particular attention to the farmers in my home state of Tennessee, and I had a certain fondness for the farmers in the state of Iowa because I was about to run for president."

So why the change of heart? My guess would be because corn prices are on the rise and there has been a rekindling of the food versus fuel debate.

The last time corn prices were on the rise was in 2008. At that time a huge food versus fuel debate was going on and ethanol opponents at the time called on Gore to end his support for corn ethanol. This can be seen in this article from April 25, 2008.

Last year, Mr. Runge and a colleague, Benjamin Senauer, wrote an article in Foreign Affairs, "How Biofuels Could Starve the Poor."


Mr. Senauer said climate change advocates, such as Vice President Gore, need to distance themselves from ethanol to avoid tarnishing the effort against global warming.

Many studies at the time and since then have shown that ethanol had only a small part in the overall food price increase that happened at the time. Even Gore pointed out in the Reuters article that many factors contributed to the food price increases. And of course corn price spikes occurred in the past even though ethanol production at the time was minimal. Despite all that, ethanol opponents were pretty successful at the time at creating the perception that ethanol was the reason for increasing food prices.

So just as his earlier support had nothing to do with the merits, his reversal now most likely has nothing to do with merits either. Unfortunately perception is reality and at the moment ethanol is bad for his image.

Update 11/24.2010 : Steve Milloy has an interesting take on this issue on his blog Green Hell. He contends that Gore reserved course on corn ethanol to boost his investments in second generation ethanol.

If we turn to the investment portfolio of the venture capital firm of Kleiner Perkins Caulfield and Byers (KPCB) where Al Gore is a partner, we find that KPCB has invested in Mascoma Corporation, whose business is cellulosic ethanol.

In 2008, Mascoma received $61 million in financing from a group that included KPCB. In 2006, KPCB was part of a $30 million financing package for Mascoma.

So while Al Gore appears to be lamenting bad policy that he supported, instead he is really just trashing corn ethanol in hopes of advancing cellulosic ethanol and his investment in Mascoma.

It is hard to say how true this is since it is impossible to truly know what his motivations are. But he is a partner of KPCB and KPCB has investments in Mascoma. And considering that he admits that his previous support was swayed by Presidential aspirations it isn't really that much of a stretch to assume that his current support could be swayed by profit aspirations.

See Also :
World Bank Concludes The Impact Of Biofuels On Food Prices Not As Large As Thought
Congressional Budget Office Studies Ethanol's Contribution To Last Years Food Price Increases
Report Concludes Specualtion A Major Contributor To Higher Food Prices
Recap Of Recent Food Price Studies

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