Just tax carbon vs. the great ethanol scam

/. is running the following:

"Over at BusinessWeek, Ed Wallace is creating quite a stir, reporting that not only is ethanol proving to be a dud as a fuel substitute, but there is increasing evidence that it is destroying engines in large numbers. Before lobbyists convince the government to increase the allowable amount of ethanol in fuel to 15%, Wallace suggests it's time to look at ethanol's effect on smog, fuel efficiency, global warming emissions, and food prices. Wallace concedes there will be some winners if the government moves the ethanol mandate to 15% — auto mechanics, for whom he says it will be the dawn of a new golden age."

Yes, and a comment by gravesb cooks right to the solution:

just tax carbon

Stop the subsidies, tax carbon to account for externalities, and then let the market decide. The negative effects of biofuels have been on display ever since the Dutch dropped palm oil. Instead of the government pushing this obviously failed product, they should make sure that consumers bear the entire cost of their decisions and let companies develop a way to reduce fossil fuel consumption. And less biofuels means the price of my beer goes down, dammit! Won't someone think of my beer?

Algae a viable biofuel?

Ethanol from corn is nothing but a shakedown, and other biofuels are marginal, but what about algae? --

Yield of vegetable oil in gallons per acre per year:

• Algae: 100,000

• Palm: 700

• Rapeseed: 130

• Sunflower: 110

• Soybeans: 50

• Corn: 29

Source: GlobalGreen Solutions; Valcent Products

Is there anything to this? And why in dry West Texas?

The two companies behind it, El Paso's Valcent Products and Canadian alternative energy firm Global Green Solutions, have developed a system they claim will allow for cheap mass production of algae in just about any corner of the world.

Why not in the wet East?

Pigou means less planning

NoPigouClub:

But here's Jaccard's big claim: He supports Pigovian taxes because they involve "no role for planners." We'll have more on this untruth in later postings, but let's begin with one question: Who sets the price--i.e. the tax?

and

And then another question: What do we do with the money collected through the Pigovian tax? Let's get the Ministry of the Environment and the Department of Industry...but, hey, no planners, please.

Unless all NoPigouClub members are anarchists, they will admit that taxes need to be collected. The level of energy tax should not be set by the EPA or Commerce Department, but by Congress ... just as Income and other taxes are now set, mostly according to what Congress thinks it can get away with and how much is needed to cover spending minus borrowing. There is no additional planning, just a shift from one sort of taxes to another.

And the shift is better if you care about the environment, the economy, or simply distrust planners.

Why?

1. Taxes on income and capital suppress positive externalities (ex: economic growth).
2. Pigouvian taxes substitute for regulation and prohibition of greenhouse gas and other pollutant emissions.
3. (Redundant, but Kitchen Linker must drive home the point) Without pigouvian taxes, we will continue to have damaging tax on labor and capital AND extremely inefficient and politically determined non-solutions to our environmental problems (ex: the SugarCorn mafia)

Come to grips with reality NoPigou and switch clubs!

SugarCorn Mafia

Bring it to justice. James Surowiecki in the New Yorker:

Our current policy is absurd even by Washington standards: Congress is paying billions in subsidies to get us to use more ethanol, while keeping in place tariffs and quotas that guarantee that we’ll use less. And while most of the time tariffs just mean higher prices and reduced competition, in the case of ethanol the negative effects are considerably greater, leaving us saddled with an inferior and less energy-efficient technology and as dependent as ever on oil-producing countries. Because of the ethanol tariffs, we’re imposing taxes on fuel from countries that are friendly to the U.S., but no tax at all on fuel from countries that are among our most vehement opponents. Congressmen justify the barriers to foreign ethanol with talk of “energy security.” But how is the U.S. more secure when it has to import oil from Venezuela rather than ethanol from Brazil? These tariffs are bad economic policy, bad energy policy, and bad foreign policy. Talk about your Domino effect.

Of course ethanol from tropical sugar, not eight times less efficient midwestern corn, could be an important component of reducing greenhouse gas emissions. Time to congress with Congress.