Summary
Despite many speeches by government officials promoting alternative engeries, the economics of these sources make them completely dependent on goverment subsidies for their development and use. Example: when US wind energy subsidies expired in early 2008, financing collapsed until the US Congress passed new tax credits for wind energy programs. Likewise, the use of corn to make ethanol for bleinding into gasoline is completely dependent on subsidies to be even close to oil- and gas-based gasoline; a special tariff keeps Brazilian ethanol (made from sugar cane) from entering the US, even though would be far cheaper to use. Investors have been burned many times in the past by putting money into projects that were dependent on government largess and alternative energy projects are no exception. Investors would do well to remember the Carter adminsitration's US Synthetic Fuels Corporation that was defunded in the next administration. Caveat emptor.
Analysis
Another adverse out come of the increased use of ethanol for US motor fuel is the economic stress put on such biopolymer producers as NatureWorks, which is dependent on corn as its feedstock. NatureWorks is owned by ADM; Cargill, an ADM competitor, has recently announced a joint venture in Brazil for biopolymers based on sugar cane. In both cases, the desired material is sucrose -- corn yields 15% but sugar cane yields 25%, so US producers are at a natural disadvantage without government subsiidies. Sooner or later, these subsidies will be withdrawn as they make no real economic sense, and then the beneficiaries will be severely hurt.
