There's Whiskey in the Car-o

New Biofuel Developed from Whiskey Byproduct

This is a great breakthrough and could go a long way towards making alternate energy more viable.

Too often politicians, in their zeal to “do something”, encourage or promote ideas that aren’t economically sound or have very serious unintended consequences. Ethanol fuel is a neat alternative to oil, but are the costs worth it? The market price for a gallon of ethanol is about the same as a gallon of fossil fuel, but ethanol requires massive amounts of nitrogen and incredibly vast swaths of land to grow the corn.

Opportunity cost tells us that the more corn that goes for fuel, the less goes towards food, driving up prices around the world. This is especially damaging because corn is often a cheap staple for developing countries. If the price rises too high, many people will not be able to afford to eat at all.

The obvious political solution to this is to simply cap prices, but that comes with its own set of economic troubles. For instance, if prices were simply capped, some corn producers might not find it in their interest to continue producing and simply leave the market. Reducing supply when corn is already scarce would be a disastrous unintended consequence. In economics, unfortunately you can’t have your cake and eat it too. Resources are scarce and opportunity costs are everywhere. In order to gain one thing, you must give up something else.

I admire the effort to free ourselves from fossil fuel, but it must done in an economically smart way. Spain, who literally bankrupted its economy, provides a great example of the dangers of trying to sell out to alternate energy.

That’s why this new breakthrough is so encouraging. By being able to turn the byproducts of whisky distillation into fuel, we have a jump on the game. To use ethanol or solar or wind energy, massive amounts of capital and land must be consumed. The entire process must be built up from square one which is a huge reason alternate energy is not yet cost-effective.

With this new energy, called biobutinol, the capital for producing it already exists in massive quantities. Since it’s an unwanted byproduct of an already commercially viable industry, there is no need to invest in capital or use scarce resources in its creation.

According to the researchers, the new fuel provides more output power than does gas and could be easily used in existing cars without expensive retrofitting as is required for ethanol. Since it’s basically already commercially viable and can be used in existing cars, there is no need to completely overhaul our network.

Electric cars and biofuel cars are not catching on in large part because the entire infrastructure would need to be completely replaced if these energies are to become viable. The expense of such a drastic change is not yet justified.

This new biobutinol is encouraging indeed. It takes the waste from one industry and turns it into a cost-effective, valuable product in another industry. Talk about turning lead into gold. Of course this isn’t a total solution and it’s still a new and largely untested product so there is much yet to be seen, but it’s at least an encouraging tidbit and a step in the right direction.

Alternate energy is a good thing – a great thing – but it’s not a magical solution to our economic problems. We should encourage research in this area and celebrate its successes, but we should do so cautiously with our feet grounded. Let’s not sell out our entire economy to reach some utopist goal if we have to give up much more than we gain.