Constant Conservative

Regardless of how the election goes today, I hope that those seemingly blind supporters of ethanol as an alternative energy will get sobered up. WSJ has some thoughts on the matter:

“It’s such a waste that the government gave free handouts and subsidies to grow a business that wasn’t sustainable,” said one investment banker familiar with the sector.

It is one of the few things Wall Street investment banks have gotten right lately, while private investors including Bill Gates and Richard Branson were bullish on ethanol as recently as January. We were thinking of this in reading about how this weekend ethanol producer VeraSun Energy filed for Chapter 11 bankruptcy protection. It was hardly a surprise, given that a month ago, VeraSun was predicting a steep loss and hired Morgan Stanley to evaluate its options. And the company isn’t alone; the entire ethanol sector is getting its comeuppance. Goldman Sachs Group analysts today dropped coverage of all ethanol companies because of the plunge in market valuations for ethanol companies and what the analyst see as their dim future.

[...]

And when Wall Street banks started placing their own bets on renewable energy companies, they invested in such companies as Heliovolt, BPL Global and Vulcan Power. The chosen technologies were solar power, geothermal energy, wind power, power-grid support and emissions trading. Few, if any, were ethanol companies.

It would be lovely if ethanol were cost-effective. It is not. It may become so with some breakthrough that has yet to happen. Meanwhile, unless you have money to burn, it looks like ethanol is not where you want to put your alternative energy money.