BioTown USA

BioTown USA, also known as Reynolds, Ind., is getting ready to build a power plant that will convert cow manure into electricity, another step on its bumpy path to becoming the country’s first community to run completely on renewable energy.

It’s a noble goal, though the town has had trouble turning this vision into reality. It’s a flyspeck of a town, with a population just a bit more than 500, and according to one report, about a third are using Ethanol in their cars.

But the town took a major step back towards the grid in October, when a major refiner, VeraSun, suspended construction on a Ethanol plant in Reynolds, saying that prices for the fuel were too low to justify adding the production capacity.

Yes, gas prices are skyrocketing, but that hasn’t translated to the Ethanol market, where everyone apparently had the same idea, and increased their own production, driving up supplies and driving down prices. It certainly doesn’t help that increased production has also driven up the price of corn, further hindering manufacturers, and also contributing to global inflation for basic food products.

But back to BioTown. The community is clearing ground for an anaerobic digester, a machine that basically lets microorganisms eat poop, and in the process creating methane, which can be converted into electricity. The farming has always had a plentiful supply of manure, so this project is a two-fer, combining waste disposal with renewable energy.

Here’s the big question: can BioTown serve as model for the rest of the country? That remains to be seen. First, it’s not at all clear that the community can actually achieve its goal of meeting all of its energy needs with renewable sources. And second, even if it can, I wonder whether that model can scale upwards to support larger cities, or even if it can be exported at all. I know there aren’t many cows in my neighborhood (though there may be other sources of organic waste). Still, it’s heartening to see people making the effort, and I’ll be watching out for future BioTown developments.

Better Tax Policies

Gas prices are still on the rise, and I’m pleased to see Congress trying to do something that demonstrates more long-term vision than cutting the gasoline tax and encouraging people to drive, and consume, more.

Here’s a quick recap of current policies on the agenda in Washington. Last week, Congress approved a huge farm bill (actually, they voted to override a veto – take that, Mr. Bush!), which includes a production tax credit of a penny per gallon for biofuels derived from cellulose. The same bill also cut the tax credit for standard, corn-based ethanol by 6 cents, to 45 cents per gallon.

I like both of these policies, and I like it even more that they were packaged together. A year ago, gas was expensive and ethanol was hailed as the energy industry’s savior. Today, gas is even more costly, but so are corn, rice, bread and many other basic food products. It doesn’t take a genius to figure out that farmers will sell their crops for energy production instead of food if it means they’ll make more money, and the higher price of gasoline has led to a surge in demand for ethanol. The crazy inflation at the supermarket this year was something that could have been easily predicted.

That’s why cellulosic fuels, which can be made from wood chips, switch grass, and many other plants that people don’t eat, are a very promising alternative. These two tax policies encourage people to develop energy sources made from crops that can be converted into fuel, without putting a dent in our dinner plate.

And in other encouraging news, lawmakers seem to have little interest in approving the gas-tax holiday that the presidential candidates have touted.

Wise Tax Policy – Not!

I’ve been thinking lately about the gas tax – the one that both John McCain and Hillary Clinton want to waive during the summer when Americans (read: voters) hit the roads on vacation. It’s about 18 cents a gallon, and getting rid of it is something that would be immediately noticeable to anyone (read: voters).

Most people think of taxes as a way for the government to generate revenue, which they are. But taxes have another purpose, to steer behavior. The state imposes fees on things they want to discourage. Case in point: the well-publicized congestion pricing plan in New York, which may or may not be completely dead. To limit traffic, the city proposed a fee for people entering Manhattan by car. If they really want to drive in New York, they’ll be willing to pay for the privilege, or so the theory goes. And if they don’t want to pay the fee, they’ll take public transportation, which is exactly what the city wanted.

So apply that logic to the gas tax. If we really want to encourage people to be mindful about their driving habits, if we really want to encourage the auto industry to produce fuel-efficient vehicles, then we shouldn’t be getting rid of the gas tax, we should be RAISING it! Making people vote with their wallets will make them think twice about what’s really important, but making gas cheaper will just make people drive more.

And what kind of message does it send to waive the tax? I guess that people running for president don’t really care about the environment nearly as much as they care about making people (read: voters) happy. At least in the short term.

Because in the long term, it seems pretty clear that expensive oil will be with us for a while, and we need some really smart alternative energy ideas to make sure that gas and other forms of power remain reasonably affordable. And lowering taxes on gas – that’s not a smart idea.