On the Doubtful Validity of Bio-ethanol as an Environmental Measures: Can CO2 be reduced by this method?

The purpose of this study was to conduct a quantitative assessment of the CO2-reducing effects of bio-ethanol in its lifecycle, including CO2 emissions generated in the process of ethanol production, and examine its efficacy as an environmental measure. In the study, the significance of the "Biomass Nippon Strategy", which has been implemented by the Japanese government, as well as the feasibility and economic efficiency of its plan were also discussed. Although the government has set the "revitalizat ion of agriculture, forestry, and fisheries, including farming, mountain, and fishing villages" as a goal for the "Biomass Nippon Strategy", the results of the study, judging from the amount of the subsidy, suggest that the domestic production of ethanol using fallow fields only increases the financial burden on Japanese taxpayers rather than revitalizing the agriculture industry. The results indicate that an emphasis should be placed on the expansion of food production to revitalize the agricultural sector, instead of providing financial support for an ineffective reduction project. If burning by-products from the production of ethanol generates energy, it will increase the rate of CO2 reduction. However, the domestic production of ethanol and its use proposed in the government's plan are expected to have only limited CO2-reducing effects.


Introduction
The principle o f carbon neutrality is based on the idea that "the combustion of biomass, a plant resource, does not increase the amount of CO 2 in the at mosphere". The reason, according to the principle, is that although CO 2 is emitted by burning bio-ethanol, as in the case of fossil fuels, these greenhouse gas (GHG) emissions are assumed to be recaptured by newly growing plants, the raw material of bio-ethanol. The princip le has been evaluated as an effective environmental measure since its adoption in the "Kyoto Protocol Target Achievement Plan". In response to the current trend, Japan has been producing and using bio-ethanol based on its policy: "The Bio mass Nippon Strategy" [1].
However, the princip le of carbon neutrality was defined only focusing on parts of the entire system, i.e., the growth stag e o f p lants as materials and th e p rocess o f fu el consumption. In reality, a large amount of CO 2 is emitted fro m a massive amount of fossil fuels consu med in the process of ethanol production. To define b io-ethanol as an

Research Methods
The following methods and formu las were used for the assessment, as adopted from prev ious study [2].
In the assessment of the CO 2 -reducing effects of bio-ethanol as an alternative to gasoline while taking into account its entire lifecycle, the actual CO 2 reduction rate "α" is calculated using the following formu la: α = 1 -(1/γ) (Ep/ Eg) (1) "γ" is the energy-profit ratio of bio -ethanol, "Eg" is CO 2 emissions per unit calorific value of gasoline[kg-CO 2 /kcal], and "Ep" is CO 2 emissions per unit amount of energy input in ethanol production[kg-CO 2 /kcal].
In the calculation of the energy-profit ratio "γ" (amount of energy produced/amount of fossil fuel input), the energy of byproducts (corn oil, gluten, lignin, bagasse, and feed) should not be included in the amount of energy production because they are created in the process of bio-ethanol production. Since bio-ethanol was assessed as a fuel, the lower caloric value (5,067 kcal/ℓ-ethanol) was used in the present study. The ratio of CO 2 emissions generated fro m primary energy sources in ethanol production to gasoline is: Ep/ Eg = ∑(Xi×(Epi/ Eg)) (2) "Xi" is the component ratio of primary energy sources: "i", and "Epi" is CO 2 emissions per unit calo rific value of primary energy sources (i)[kg-CO 2 /kcal]. The larger this value, the larger the amount of fossil fuels used in ethanol production and CO 2 emissions generated.
The CO 2 reduction rate "R"[kg-CO 2 /ℓ-ethanol] when bio-ethanol is used as an alternative to gasoline and taking into account the entire lifecycle is calculated by incorporating α into the following formu la: R = A×α (3) A is the amount o f CO 2 reduct ion : "1.541[kg-CO 2 /ℓ-etha nol]", when bio-ethanol is used as an alternative to gasoline.
The cost-effectiveness of CO 2 reduction in the entire lifecycle o f b io-ethanol was then assessed. The actual cost-effectiveness of CO 2 reduction, "Ceff", is calculated using Formu la 4: Ceff = Ce/(A×α) (4) "Ce" is the cost of bio-ethanol production[yen/ℓ-ethanol]. When α=1 in formu la (1) and (4), a carbon-neutral state is adopted. If 1>α>0, the use of bio-ethanol as an alternative to gasoline has less CO 2 -reduction effects and its economic efficiency is low. In the case of α<0, the pro ject being nonsense.

Status and Assessment of Domestic
Bio-ethanol

The Scale of Pl ants and Feasibility of Securing Raw Materials
In the U.S., Brazil, and the E.U. (27 countries), bio-ethanol production was steadily increasing as of 2008 ( Table 1). The U.S., Brazil, and the E.U. use corn, sugar cane, and wheat as the primary ingredient, respectively, to produce ethanol. They are the world's largest producers of each crop, and have a large amount of stock that exceeds domestic consumption (Tables 2, 3, 4). In fact, the E.U. started to use surplus wheat to produce ethanol as a measure to stabilize its price.     Source: Prepared from the referen ces [12 ], [13] and [14].
On the other hand, Japan produced only 30 kℓ of bio-ethanol in 2006 [4], and demonstration plants for its production across the country are currently operating supported by government subsidies. Although the government plans to increase the annual production of bio-ethanol to 50,000 kℓ by 2010, it is likely to be difficult to accomplish this goal, accord ing to an estimate of the annual production capacity (approximately 36,000 kℓ) based on the scale of the plants (Table 5) [11]. It is obvious from the current status of the plants that it is impossible to reach the mid-and long-term goal: six million kℓ of do mestic ethanol production.
In Japan, mo lasses, sub-standard wheat and other agricultural crops, cellulosic materials including rice straw and wood, and rice and other crops as raw materials are listed as the main candidates for the primary ingredient of ethanol. Changes in food self-sufficiency rates are shown in Table 6. Self-sufficiency for almost all food items remains low. However, self-sufficiency for rice is high, with a stock at the end of every year. Source: From the referen ce [15].
The following is an estimate of the ethanol production capacity based on the surplus stock of rice: Changes in rice stocks at the end of terms are shown in Table 7. There were 1.63 million tons of rice in stock at the end of 2008. Oenon Holdings Inc. in Hokkaido is involved in a demonstration project: b io-ethanol production using min imu m access rice (a quota of rice to be imported fro m foreign countries in exchange for import restrictions by placing high tariffs) as a raw material. Tab le 8 shows minimu m access rice in stock in Japan.
There were 970,000 tons of min imu m access rice (calculated by deducting the amount used fro m the import) in stock as of October 2008. The total amount of surplus rice available (2.6 million tons) is calculated by adding this to the above-mentioned stock. Based on the current ethanol yield fro m rice: 0.447 ℓ/t [16], the ethanol production capacity using the surplus stock in Japan is estimated to be approximately 1.16 million kℓ (≈ 2.6 million tons × 0.447 ℓ/ton). The following is an estimation of the ethanol production capacity based on the available amount of cellulosic bio mass resources. Table 9 shows the total amount of domestic cellu losic bio mass resources in 2008. There are 26.60 million tons of cellulosic b io mass resources including those that have already been used for other purposes. The total available amount of cellu losic bio mass resources was calculated as appro ximately 14.86 million tons by mu ltip lying the annual yield by the availability rate. As the ethanol yield fro m wood materials was 0.290 ℓ/ton [16] [19], the ethanol production capacity using cellulosic bio mass resources available in Japan was calcu lated to be around 4.31 million kℓ (≈ 14.86 million tons × 0.290 ℓ/ton). *1 There is a rounding error between the amount of import and total amount of rice for speci fic purposes. Source: Calculated from the referen ce [18]. The total of this and the above-mentioned capacity for ethanol production using domestic surplus rice amount to 5.47 million kℓ -still less than the amount of ethanol required for the E10 plan (six million kℓ). It is difficu lt to secure sufficient amounts of crops and cellulosic materials in Japan. The sufficient volu me of ethanol required for the E10 plan cannot be produced even using the total amount of these materials available in Japan.
In 2007, the Nat ional Federation of Agricu ltural Cooperative Associations (ZEN-NOH/JA) in Niigata Prefecture init iated a demonstration project in which they produce bio-ethanol fro m high-y ield ing rice g rown on id le agricultural land. A sufficient amount of a raw material may be secured by the large scale production of rice using idle land across Japan. However, it is not known if there is a sufficient area of idle land suited for laborsaving agricultural methods to maintain the cost of the raw material or rice as low as possible. Regard ing the production of bio-ethanol fro m crops grown on idle agricultural land, a serious error has been identified in the estimation of the production cost, as explained in the following paragraphs. Therefore, it is difficult to promote this type of ethanol production on a large scale.

Production Costs and Ec onomic Efficiency of Imported Ethanol
The government plans to substantially increase the domestic production of bio-ethanol that can compete with other fuel products in Japan and other countries in terms of the price and quality until 2030. Figure 1 shows the price structures of gasoline and bio-ethanol imported fro m Brazil, and the estimated production cost of domestic bio-ethanol.
As of the end of November 2009, the wholesale price of gasoline was 67.2 yen/ℓ, and the price of ethanol imported fro m Brazil was 76.4 yen/ℓ. The cost of producing bio-ethanol using American corn was 32 to 38 yen/ℓ, and 60 to 85 yen/ℓ when wheat fro m the E.U. was used as the raw material. Regarding ethanol fro m Brazilian sugar cane, its lowest production cost was reported to be 17 yen/ℓ [21], because energy generated by combusting bagasse, a byproduct of ethanol production, was used to substantially reduce energy costs. On the other hand, the production costs (including raw material costs) of domestic bio-ethanol from mo lasses, sub-standard wheat, and edible wheat were 90.4, 98.0, and 415 yen/ℓ, respectively. In part icular, the cost of edible wheat (369 yen/ℓ) was seven times higher than that of sub-standard wheat (52 yen/ℓ). Co mmon agricu ltural crops have an economic d isadvantage as raw materials because their costs are very high. The production cost of domestic bio-ethanol is significantly higher than that of other fuels and foreign bio -ethanol, and it was calculated on the assumption that the project would be part ially supported by the government. Figure 2 shows the estimated production costs of domestic cellu losic bio-ethanol according to the scale of the plant, calculated by NEDO. As the scale of a plant becomes larger, and with subsequent reductions in equipment depreciation and personnel expenses, production costs are expected to decrease. However, even the largest bio-ethanol plant in Japan using cellu losic resources as raw materials produces only 1,400 kℓ of b io-ethanol annually (Table 5).
According to the results of an interview survey involving Bio-ethanol Japan in Kansai, the cost of p roducing bio-ethanol in the co mpany was higher than 100 yen/ℓ. As a reference, the target cost of producing cellu losic bio-ethanol set by related ministries and agencies, including the Ministries of "Agriculture, Forestry and Fisheries", "the Environment", and "Economy, Trade, and Industry", is 100 Environmental M easures: Can CO 2 be reduced by this method? yen/ℓ [11].
As the production cost of domestic bio-ethanol is 57.3 yen/ℓ, when produced at a plant with a production capacity of 20,000 kℓ/year, it can co mpete with the current (as of the end of November 2009) prices of gasoline (67.2 yen/ℓ) and imported ethanol (76.4 yen/ℓ) ( Figure 1). Therefore, if domestic bio-ethanol can be actually produced at this estimated cost, its large-scale production should not be difficult. Ho wever, the amount of raw materials required for its production is calculated at 68.97 million tons/year (≈ 20,000[kℓ/year]/ 0.290[ℓ/t]), which is more than four times the estimated amount of cellulosic bio mass materials currently availab le (14.86 million tons/year) ( Table 9). It is difficult to secure a sufficient amount of cellulosic raw materials, which is expected to be an obstacle in expanding the scale of plants and reducing their production costs in the future.
Japan plans to import bio-ethanol fro m Brazil until the stable supply of domestic b io-ethanol is secured. As there is a shortage of around 750,000 kℓ of ethanol supply to accomplish the Kyoto Protocol target, if the shortfall is imported fro m Brazil, 57.3 b illion yen (≈ 76.4 yen/ℓ × 750,000 kℓ) will be required, based on the current cost (CIF: cost, insurance, and freight) of impo rting ethanol fro m Brazil ( Figure 1).
The current CO 2 reduction rate of bio-ethanol imported fro m Brazil is appro ximately 1.39[kg-CO 2 /ℓ] [2]. Therefore, the CO 2 reduction rate of 750,000 kℓ of impo rted ethanol, calculated using a quantitative assessment method, is around

Amount of Subsi dies in a Demonstration Project i n Niigata Prefecture
In 2007, the Nat ional Federation of Agricu ltural Cooperative Associations (ZEN-NOH/JA) in Niigata Prefecture started a demonstration project in which they produce bio-ethanol fro m high-y ield ing rice g rown on id le agricultural land, and distribute E3 fuel. Tab le 10 shows the estimated costs of producing bio-ethanol fro m domestic rice; the target cost set in the government policy is 100 yen/ℓ, whereas the cost was estimated to be 114 yen/ℓ by Niigata JA (ZEN-NOH) -the operating body. According to the breakdown of the production cost, the raw material cost is 20 yen/kg. However, the cost of p roducing rice as a raw  material was calcu lated while taking into account government subsidies. For reference, Tab le 11 shows changes in the production costs of domestic rice, published by the Ministry of Agriculture, Forestry, and Fisheries. The mean production cost of domestic rice during the past three years was 277 yen/kg, which means that the above-mentioned raw material cost of 20 yen/kg is less than one thirteenth of the actual rice production cost. Since the mean retail p rice of ed ible rice is 350 yen/kg [24], it is obvious that its production will be unprofitable without government subsidies. Table 12 shows the revenue and expenditure of growing rice as a raw material of bio-ethanol, proposed by Niigata ZEN-NOH (JA) to farmers. There is a difference of approximately 60,000[yen/10a] between the equip ment and material costs estimated by Niigata ZEN-NOH (JA), 26,000[yen/10a] including the costs of farm equip ment, and the national mean (2008), 85,500[yen/10a] ( Table 11). The equipment and material costs calculated by ZEN-NOH (JA) are 50% of the total costs of seeds and seedlings, fertilizers, pesticides, and fuels, and exclude the costs of other materials, land imp rovement and water use, borrowing and lending, public dues, build ings, farm equip ment, and production control, as the expenditure of growing edible rice. There is also a difference of appro ximately 30,000[yen/10a] between The farmers produce the high-yield ing rice for the raw material (y ield per area: 800[kg/10a]) during the period when edible rice is not produced without purchasing new farm equip ment, materials, and devices for its production. In other words, they produce rice for the raw material of ethanol as a sideline business at a lo w production cost. Despite their cost-saving efforts, they run a deficit of 2,600[yen/10a], according to the above-mentioned estimate. A lthough they can produce the raw material at a lower cost, co mpared to edible rice, because it does not require a drying process, its production is far fro m making profits.
The budget for the demonstration plant in Niigata that produces 1,000 kℓ/year of ethanol is 1.3 billion yen ( Table 5). The annual cost of depreciation on equipment (excluding the interest) will be 86.7 yen/ℓ (≈ 1.3 billion yen/1,000[kℓ/year]/15 years), if the cost is depreciated over a period of 15 years. An estimate of 43.4 yen/ℓ is supported by the government, as it provides subsidies to cover half of the expenditure o f the project. In addition, 3% (1.6 yen/ℓ), which is the percentage of ethanol included in gasoline, of the gasoline tax (53.8 yen/ℓ) is subsidized by the government. Table 13 su mmarizes the subsidies provided to support the demonstration project. The government provides subsidies of 128.9 yen/ℓ fo r the project of Niigata ZEN-NOH (JA), which is imposing a heavy burden on the public. The 4th goal for "The Bio mass Nippon Strategy" is the "revitalization of agriculture, forestry, and fisheries, including farming, mountain, and fishing villages". However, the pro motion of domestic bio-ethanol production using idle land, as stated in the policy, causes an adverse effect: "an increase in the economic burden on the public", rather than revitalizing agriculture. The subsidies provided for the production and use of bio-ethanol have not generated, and will not generate, the expected CO 2 -reducing effects (refer to [3.4]).

CO 2 -reducing Effects in the E10 Plan
In ethanol production using cellulosic materials (scrap wood, timber, rice straw, and chaff), lignin is produced in the process of pretreatment, and rice straw and chaff in raw material p roduction when using rice. If energy generated by combusting these byproducts is used, in the form of electricity, in the process of ethanol production, it will reduce the required energy input from the outside, leading to an improvement in the energy-profit ratio. Table 14 shows the energy-profit rat io of do mestic bio-ethanol when energy is generated by co mbusting its byproducts and used. In calculation of the energy-profit ratio, the energy of byproducts was not included in the amount of energy production, and the lower calo ric value (5,067 kcal/ℓ-ethanol) was used, as described in the preceding paragraphs. The values in the brackets in the table represent the energy-profit ratio when byproducts are converted into electricity and used as energy in the process of ethanol production, while the energy produced does not include surplus electricity. Even if energy is produced from byproducts and used, the energy-profit ratio of bio-ethanol is lower than that of gasoline (6.57) -a fuel to be replaced [2]. Bio-ethanol is not an efficient fuel, with its energy-profit ratio being higher than two. Table 15 shows the net CO 2 reduction rate α and CO 2 reduction rate R (excluding CO 2 emissions in ethanol production), calculated using Formu las (1) and (3), respectively, based on the ratio of CO 2 emissions generated fro m primary energy sources to gasoline (Ep/ Eg: 0.888) (refer to 3.2) and "γ" (the energy-profit ratio in the brackets in Table 14).
According to the estimation results, the net CO 2 reduction rate α was higher than zero, which suggests that CO 2 -reducing effects are expected to some extent. Specifically, the net CO 2 reduction rate for wood (classified into cellulosic materials including scrap wood and timber) and corn (a material rich in starch as with rice) produced in the U.S. was lower than zero [2], and CO 2 -reducing effects are not expected. However, these results are not actual measurements, and the validity of the energy-profit rat io should be critically discussed.
The amount of ethanol required for the E10 plan is approximately six million kℓ, although the proportions of raw materials to be used have not been determined. Table 16 shows the CO 2 -reducing effects of each raw material that the E10 p lan is expected to produce, estimated based on the reduction rate R (excluding CO 2 emissions in ethanol production) for each material (Table 15).    According to the estimat ion results, the E10 is expected to reduce CO 2 emissions by only up to 0.52%, on the basis of the total domestic CO 2 emissions in 1990 (the base year stipulated in the Kyoto Protocol). The effects are even smaller (a 0.45% reduction at best) if based on the total domestic CO 2 emissions in 2008. The plan is expected to reduce GHG by less than 3%, even on the basis of the total CO 2 emissions related to transportation in 2008. Although technological innovation may increase the CO 2 -reducing effects of bio-ethanol to some extent, they are expected to remain lo w. This means that Japan continues to invest substantial subsidies in an effort to accomplish the ineffective E10 p lan. Table 17 shows the actual cost-effectiveness of CO 2 reduction in the lifecycle of ethanol while taking into account CO 2 emissions in the process of its production, calculated using Formula 4 and based on ethanol production costs (refer to [3.2]) and the net CO 2 reduction rate α (refer to Reference 21 and Tab le 15). The nominal cost-effectiveness was calculated by employing the principle of carbon neutrality (based on the assumption that the net CO 2 reduction rate α=1) adopted by the government. In other words, the value was calculated by excluding CO 2 emissions produced in the process of ethanol production.

Assessment of the Cost-effectiveness of CO 2 Reduction
The table shows significant differences between the nominal and actual cost-effectiveness of bio-ethanol-based CO 2 reduction, wh ich has been imp lemented in a nu mber of countries, revealing perception gaps. The reduction rate α was lower than zero for some types of corn and wood (a cellu losic material) produced in the U.S., which does not support the effectiveness of the production and use of bio-ethanol as a CO 2 reduction measure. Regarding American corn in part icular, the reduction rate α was very low (α was around 0.0710 or lo wer), and so was the cost-effectiveness. This also applied to wheat produced in EU countries.
The table also shows the cost-effectiveness of CO 2 reduction using bio-ethanol imported fro m Brazil -part of "The Bio mass Nippon Strategy". In the EU's Emission Trading -an international market for trad ing GHG emission rights, the closing price in December 2008 was 2,713 yen/t-CO 2 or 20.87 euro/t-CO 2 (conversion rate: 130 yen/euro) [28]. Fro m the viewpoint of the cost-effectiveness of CO 2 reduction, the price of b io-ethanol impo rted fro m Brazil is more than 20 times as high as the emission trading market rate; CO 2 reduction using bio-ethanol imported fro m Brazil is expected to result in significant economic loss. The cost-effectiveness and economic efficiency of bio-ethanol-based CO 2 reduction are markedly lo wer than those of other GHG reduction measures.

Discussion
The efficacy of bio-ethanol as an environmental measure is currently assessed based on the principle of carbon neutrality, which has been adopted by the Japanese government. However, such assessment does not take into account CO 2 emissions in ethanol production. In the present study, quantitative assessment of the net amount of CO 2 reduction was conducted, taking into consideration the amount of CO 2 emitted in the process of ethanol production, and the significance of the "Bio mass Nippon Strategy", a national policy, as well as the feasibility and economic efficiency of the plans were d iscussed.
As a mid-and long-term strategy, Japan plans to substantially increase the domestic production of bio-ethanol that can compete with other fuel products in Japan and other countries in terms of the price and quality until 2030. However, its production cost is relatively high, when compared to gasoline and imported ethanol, and domestic bio-ethanol production is not profitable without government subsidies. According to data of the demonstration project published by ZEN-NOH (JA) in Niigata Prefecture, the government provides 128.9 yen per 1ℓ of b io-ethanol as subsidies, which has been incurred by the public. One of the goals for "The Bio mass Nippon Strategy", a national policy, is the "revitalization of agriculture, forestry, and fisheries, including farming, mountain, and fishing villages". Ho wever, the promotion of do mestic bio-ethanol production using idle land, as stated in the policy, causes an adverse effect: "an increase in the economic burden on the public", rather than revitalizing agriculture. It is not expected to generate substantial CO 2 -reducing effects. In fact, the bio-ethanol policy may only serve to increase the economic burden on the public, and waste funds that should be spent to revitalize the Japanese agricultural industry.
Agriculture in Japan had long been supported by rice production. However, now that the Japanese export industry has regained its strength, the country can afford to import food fro m other countries, which has been weighing on the domestic agricultural industry. In addition to a reduction in tariffs responding to the international trends of free trade, a decrease in the consumption of rice among the Japanese due to changes in their food preferences led to a decline in its price and extensive areas of id le agricultural land. As a measure to address this problem, bio-ethanol production using idle land was proposed, and the "Law concerning Biofuels in Agriculture, Forestry, and Fisheries" was established. However, to revitalize agriculture in Japan, priority should be placed on efforts designed to improve the low food self-sufficiency rate -41% on a supplied calorie basis. It would be wiser to gro w crops on idle agricultural land, and allocate part of the sales of the products, which otherwise would have been used to import fo reign agricultural produce, for pro motion of the Japanese agricultural industry.
With a bio-ethanol production goal of six million kℓ for the year 2030, Japan has been involved in the effort to promote "E10 Fuel" -a hybrid of gasoline and 10% bio-ethanol. Ho wever, as of today, the annual bio-ethanol production capacity is estimated at 36,000 kℓ based on the domestic production scale. It is very d ifficult to use food crops to produce biofuels in Japan, whose food self-sufficiency rate is very low, co mpared to other countries with h igh agricu ltural production capacities where biofuels are produced using surplus crops. Even if surplus rice and cellu lose are used as raw materials, the production capacity is estimated at 5.47 million kℓ -six million kℓ less than required in the E10 plan. Its feasibility is also low in terms of the scale o f p lants, procurement of raw materials, and production costs.
Energy production by combusting byproducts and its use in the process of ethanol production would improve the energy-profit ratio and CO 2 -reducing effects. However, even if these technologies become available, the domestic production and use of bio-ethanol are expected to have only limited CO 2 -reducing effects (a reduction of up to 0.52% when compared to CO 2 emissions in 1990).
It should be noted that all of the environmental measures that are currently being imp lemented are not necessarily eco-friendly. You should not describe the effects of bio-ethanol ambiguously, using a word suggestive of environmental conservation -carbon neutrality. Environmental issues require thorough scientific discussions. The government should understand the nature of an environmental issue, design a feasible p lan for effective and economically efficient environmental measures, and invest in it.