Energy watch

A couple of interesting stories for our energy future.

The Des Moines Register reports that corn prices are rising so fast that it could put a crimp in ethanol production:

Net operating returns for the ethanol industry will drop to 28 cents a gallon this year, down from 61 cents last year, according to a report prepared for Congress by the University of Missouri's Food and Agricultural Policy Research Institute.

The economists see the operating margin slipping eventually to 19 cents a gallon by 2012. Plants need to make about 20 cents a gallon to cover capital costs, so the decline in margins will discourage construction of plants, said Pat Westhoff, the institute's program director.

"That slows investment dramatically," he said.

Careful readers (or even casual ones) will notice what was left out of this story:  Corn prices are rising so fast in large part because of demand for ethanol.  Still, it'll be interesting to see how this chicken-or-egg situation plays out.

Meanwhile, a study by MIT concludes that coal could be doomed as an energy source because no matter how much clean-coal technology advances, it'll never be clean enough to satisfy ever-tightening environmental rules:

The report by the Massachusetts Institute of Technology says coal, which accounts for half of the country's electricity production, will remain the fuel of choice to produce electricity in the United States because it is relatively cheap and abundant.

But if carbon limits are imposed to address climate change, that could change unless the government and industry develop a program to capture and store the tens of millions of tons of carbon dioxide that now spew from coal-burning smokestacks into the atmosphere….

A central message of the MIT report is that carbon capture from coal burning is technically and economically possible, but that it has yet to be proven on the broad commercial scale that would be needed if limits on carbon emissions are imposed.

The Democratic-controlled Congress is considering a number of proposals that would impose a cap on greenhouse gas emissions, primarily carbon dioxide, along with various provisions aimed at reducing the economic cost.

The report appears to have been prepared on the assumption that other fossil fuels will continue to be produced in their current abundant quantities, indeed that they'll increase as demand increases.  But as James Howard Kunstler pointed out in The Long Emergency, once it becomes obvious that Peak Oil has passed (ditto for natural gas), and the choice in some parts of the world becomes a choice between dirty coal and no electricity, dirty coal will likely win out.

The Daily Reckoning