The Biofuel Backlash

More on Biofuels and Agriculture & Food – World Hunger

Uprising Against the Ethanol Mandate
Gov. Rick Perry of Texas is asking the Environmental Protection Agency to temporarily waive regulations requiring the oil industry to blend ever-increasing amounts of ethanol into gasoline.
3 July
Secret report: biofuel caused food crisis
Internal World Bank study delivers blow to plant energy drive
Biofuels have forced global food prices up by 75% – far more than previously estimated – according to a confidential World Bank report obtained by the Guardian. The damning unpublished assessment is based on the most detailed analysis of the crisis so far, carried out by an internationally-respected economist at global financial body. The figure emphatically contradicts the US government’s claims that plant-derived fuels contribute less than 3% to food-price rises. It will add to pressure on governments in Washington and across Europe, which have turned to plant-derived fuels to reduce emissions of greenhouse gases and reduce their dependence on imported oil.
Some biofuels better than others
“Biofuels” is a broad term that includes lots of different ways of making energy, some arguably bad for the environment and the global food situation but others ultimately good for the world, this commentary argues. While for example biodiesel made from palm oil has had negative environmental consequences, cellulosic ethanol has the strong potential to “help our environment, economy and national security,” writes Vinod Khosla, founder of venture capital firm Khosla Ventures and a big investor in biofuels. The Washington Post (6/16)
June 5
The [World Food Summit] could have helped rationalise biofuels policy. Some non-governmental organisations want a moratorium on ethanol output, saying this would cut grain prices by 20%. Parts of the UN bureaucracy and some big food companies say they would support something milder, such as international restrictions on the production of corn-based ethanol. Still others argue that biofuels are fine as an idea but are beset by a tangle of subsidies, tariffs and production targets that needs unravelling. The summit made no headway in doing so. Just before it, America’s secretary of agriculture, Ed Schafer, claimed that ethanol accounts for only 2-3% of the increase in world food prices—a contentious view (IFPRI says 30%) but one that left the summit irreparably and paralysingly split over biofuels.
June 3
FACTBOX: World biofuels production and its impact
(Reuters) – The following are facts about biofuels production as world leaders meet in Rome this week to discuss the global food price crisis.

* The most important biofuel is ethanol, a substitute for gasoline, which is mainly produced from grains and sugar crops.

* The two largest producers of ethanol are the United States and Brazil although there is also growing production in the European Union.

* The U.S. makes ethanol from corn, a crop for which it is by far the world’s largest producer with output more than twice that of nearest rival China. More
June 2
Researchers boost yields of rice-waste biofuel
( BEIJING Chinese scientists have developed a new method that dramatically increases the yield of a clean biogas fuel from rice straw.
China is the world’s largest rice producer and the industry results in 230 million tonnes a year of surplus rice ‘straw’ — the stem and leaves left behind after harvesting. Farmers often burn the straw, increasing pollution and carbon dioxide emissions (see Stalk burning fuels China pollution woes).
Until now, using the straw to produce ethanol or biogas — a
mix of methane and carbon dioxide — by anaerobic digestion with microorganisms has been disappointing. The complex structures of the straw’s cellulose and lignin components make it hard for the microorganisms to break them down.

May 31
Global Biofuel Output To Soar In Next Decade-Report
PARIS – Global production of biofuels will rise rapidly over the next decade, helped by high government blending targets and subsidies, the OECD and the UN’s FAO food agency said in a report published on Thursday.
These rises will boost already soaring world agricultural commodities prices and reduce their availability for food and feed, the Organisation for Economic Co-operation and Development and the Food and Agriculture Organisation said in co-drafted report.
May 29
Canada House Gives Green Light To Biofuel Bill
(Planet Ark) OTTAWA – Government legislation that will require all gasoline sold in Canada to contain 5 percent ethanol by 2010 passed the House of Commons on Wednesday.
The bill, which also calls for diesel to contain 2 percent renewable fuels by 2012, won the support of the main opposition Liberal Party but was opposed by two smaller parties that had voiced concern about food-crop production being diverted to fuel. However, the governing Conservatives and the Liberals have both backed the idea, arguing that only a small portion of food crops such as corn will be used to make the biofuel.
May 23
Biofuels and food prices: Running the numbers
Clean-energy research firm New Energy Finance has waded into the “food versus fuel” debate and finds that oil is a bigger factor in rising food prices than biofuels.
New Energy Finance, which will release its report Tuesday, also finds that changing food patterns around the world, growing population, and rising input costs, such as fertilizers, are contributing to upward pressure on food prices.
It’s clear that there are a number of factors affecting food prices. New Energy Finance, which tracks investments in clean tech, sought to quantify the relative impact of the various factors. From the report:
“In grains, during the period from 2004 to April 2008, global dollar prices increased by an average of 168 percent. The rising price of oil accounts for an increase of 32.5 percent and other inputs–such as land and labor costs–contributed 7.4 percent. Dollar depreciation accounts for a further 17.9 percent. Supply and demand imbalances account for the remaining 57.7 percent, with biofuels responsible for up to an 8.1 percent increase in global average grain prices (the impact on U.S. corn was clearly above average). The biggest issues were the failure to improve yields to compensate for global population growth, along with the failure of the Australian harvest.”
In food oils, such as palm and soy, the higher price of oil contributed to 18 percent of the run-up in soy prices.
May 21
New Trend in Biofuels Has New Risks
ROME — In the past year, as the diversion of food crops like corn and palm to make biofuels has helped to drive up food prices, investors and politicians have begun promoting newer, so-called second-generation biofuels as the next wave of green energy. These, made from non-food crops like reeds and wild grasses, would offer fuel without the risk of taking food off the table, they said.
But now, biologists and botanists are warning that they, too, may bring serious unintended consequences. Most of these newer crops are what scientists label invasive species — that is, weeds — that have an extraordinarily high potential to escape biofuel plantations, overrun adjacent farms and natural land, and create economic and ecological havoc in the process, they now say.
At a United Nations meeting -[Convention on Biological Diversity COP9] in Bonn, Germany, on Tuesday, scientists from the Global Invasive Species Program, the Nature Conservancy and the International Union for Conservation of Nature, as well as other groups, presented a paper with a warning about invasive species.
[ENB reports from the CBD meeting: “Biofuels made a splash in Bonn on Tuesday. The “new and emerging issue,” emanating from SBSTTA 12 [12th meting of the Subsidiary Body on Scientific, Technical and Technological Advice], is rapidly morphing into the most controversial aspect of the agricultural biodiversity work programme. Only months ago, at SBSTTA 13, the issue looked much like a “bilateral face off” between biofuel exporters and importers – now all parties are taking a stance. Noting broad concerns raised by parties, indigenous peoples and NGOs that biofuel production may lead to ecosystem degradation, land grabbing and community displacement, one participant dreaded that “the specter of biofuels might rise again when COP addresses perverse incentives,” prophesying yet another transformation of the issue. Looking at the debate on biofuels and in the context of the current global food crisis, one delegate quipped: “Some countries called forth spirits they cannot control, and are now trying to summon the global community to bail them out.”]
May 3 2008
Biofuel salvation or perdition?
As debate heats up on the wisdom of turning plants into energy, Ottawa embraces the idea
A growing global food crisis has not curbed the appetite of Canada’s newest biofuel plant, which is busy stockpiling a mountain of wheat near this town west of Regina.
Billed as the largest wheat-fed ethanol plant in North America, Terra Grain Fuels aims to put huge swaths of Canada’s fabled bread basket to work growing fuel. It is the latest addition to a boom that has seen biofuel production in this country more than quadruple since 2003.
May 2 2008
Ethanol faces growing U.S. backlash
Lawmakers rethink corn-based biofuel as an energy solution after cropland diversions blamed for rising food prices
(Globe & Mail) The U.S. Congress is rethinking its enthusiastic embrace of corn-based ethanol as food and fuel inflation pushes to the top of the political agenda.New York Senator Charles Schumer, chairman of the joint economic committee of Congress, complained yesterday that Washington’s promotion of ethanol is one of the reasons Americans are now paying substantially more for bread, eggs, milk and a range of other groceries.
13 September 2007
The Biofuel Backlash
By Bart Mongoven
Published in Stratfor e-letter 13 September 2007
The Organization for Economic Cooperation and Development (OECD) released a scathing report Sept. 11 calling for a dramatic drawdown in the subsidies and preferential trade laws granted to biofuel producers in OECD countries. In Europe, Friends of the Earth hailed the report, saying it has focused attention on the negative issues surrounding biofuels, while libertarian groups on both sides of the Atlantic applauded its call for a reduction in subsidies.
The report is one of a number of efforts designed to deflate support for biofuels in the United States and Europe. Increasing numbers of groups, especially in Europe, are beginning to question the wisdom of the current move toward biofuels as a replacement, at least in part, for gasoline and diesel in vehicles. They argue that these fuels offer little benefit and have serious drawbacks. Specifically, they question the wisdom of burning food crops for fuel. They point to a “tortilla crisis” in Mexico caused by rising corn prices and a “bread crisis” in France caused by rising wheat prices. Inflation in China is now running above 6 percent, largely due to increases in the price of foodstuffs.
In other words, the backlash against biofuels is in full swing. The critics, however, are running head on into the powerful agricultural lobbies in the United States and Europe that so successfully championed the issue in the first place. These advocates say that ethanol, biodiesel and other nonpetroleum-based transportation fuels reduce pollution, help fight climate change and improve national security by reducing dependence on foreign oil. Though many policymakers find these arguments compelling, the biofuels issue would not have achieved the political momentum it has without the intense lobbying by the agricultural sector.
In fact, the fate of the current wave of biofuel mandates and the pace at which industrialized countries offer biofuels at the pumps will largely be determined by agriculture interests. The implications are as strong and lasting for developing countries as for the industrialized countries involved. Moreover, advancements in biofuel technology over the next decade or so could convert some of the current critics to supporters.
Plant-based Fuels
The term “biofuels” refers to any number of combustible liquids derived from plants that can be used to create energy. Most biofuel development is directed at use in transportation, where biofuels are envisioned as a replacement for gasoline or diesel fuel. The most prevalent sources of biofuel now are corn ethanol (predominantly in the United States), sugar ethanol (mostly from Brazil) and rapeseed oil for biodiesel in Europe. Among the other current sources are palm and soy oil and various waste products (such as cooking waste) for diesel. In the future, researchers hope to make ethanol from unused portions of agriculture produce — cellulosic ethanol from corn stalks and waste from wood processing.
The creation of biofuels produces dramatically different levels of pollution, depending on the plant used. Ethanol is the same and burns similarly regardless of its source, but the pollution and emissions associated with the specific plant’s production cycle vary widely. Corn ethanol, for instance, produces 0 percent to 3 percent less greenhouse gas emissions than gasoline when the factors of planting, fertilizing and harvesting the corn are taken into consideration along with the processing and transportation of the fuel, which in the best case requires dedicated pipelines and currently requires overland transportation. Sugar ethanol from Brazil, over its lifecycle, produces 50 percent to 70 percent less greenhouse gas emissions than gasoline. Early indications are that the next generation of cellulosic ethanol will produce more than 90 percent less emissions than gasoline over its lifecycle, though there are significant infrastructural and technical obstacles to the realization of such breakthrough technology.
According to the U.N. Food and Agriculture Organization, the countries of Southeast Asia, Central Africa and South America, especially Brazil, have the highest potential for producing the fast-growing woody crops that will be used in the next generation of biofuels. Over the long term, biofuels could emerge as a way for the economies of many poor countries to gain a solid footing by increasing the agriculture sector generally and diversifying national economies. That is, of course, if major consumers will import their biofuels.
In the United States and Europe, corn currently provides the bulk of ethanol. Europe has recently adopted a stringent biofuel mandate that calls for an escalating percentage of biofuel in its transportation fuel mix. With this, it is looking beyond corn to other sources, such as Brazil’s sugar-based ethanol — though a solution that benefits Brazilian farmers but offers little to EU farmers is highly controversial. Meanwhile, in the United States, where imported ethanol is saddled with a 53-cent-per-gallon tax, biofuel produced outside of the United States is uncompetitive.

Politics of Ethanol
The energy bill that passed the U.S. House of Representatives in August includes a call for more than 7.5 billion gallons of biofuels to be sold in the United States by 2009 and for the amount to escalate to 36 billion gallons by 2022. The catch is that most of the ethanol in 2022 will have to be from “advanced” sources, which is to say from next-generation cellulosic processes. (Europe’s emerging policy has a similar clause.) The U.S. numbers will likely be scaled back in the conference committee, but some requirement to increase the use of biofuels will go forward. Once passed and signed, biofuels will be cemented in the national energy mix.
Among the most intriguing aspects of the political wrangling over the biofuel mandate in the United States has been the disappearance of the environmental lobby. When pressed, it says it generally supports a mandate and emphasizes the importance of next-generation sources. This is an important turn because for the past 20 years environmentalists have battled appeals by farm states to mandate the use of corn ethanol. Major environmental groups are among those that have commissioned and brought attention to studies showing negligible or negative environmental benefits from ethanol.
Environmentalists’ support for biofuels is tied directly to their support for action on climate change. For environmentalists, imposing a cap on greenhouse gas emissions on the United States is their primary objective. They see a carbon cap as the prize, and they figure that anything done in the process of achieving that goal can be fixed later.
To achieve a carbon cap, supporters recognized that they needed not just the political backing of lawmakers from the West Coast and Northeast, but that they also needed a certain amount of political support from the middle of the country. Policymakers in Michigan, West Virginia and Colorado seemed unlikely to come on board because of the stake their states have in the automobile and coal industries. States such as Iowa, Nebraska and South Dakota, however, have no clear stake in the climate issue so those battling for a carbon cap offered billions of dollars in subsidies and a guaranteed market for corn ethanol. That was something a farm-state senator could support.
The issues were similar in the European Union, though the politics were slightly different. While the EU environmental lobby is much stronger than its U.S. counterpart, it pales in Brussels compared to the farm lobby. In Europe, the important energy issues are energy security and climate change. Environmentalists were helpless when the farm lobby flexed its muscles in the most recent energy policy discussion and won a dramatic increase in biofuel use, having used both energy security and climate change as justification. Though environmentalists were livid, for EU politicians it was an easy decision: the policy supports farmers while dovetailing with the urgent call for a diversification of energy sources. As in the United States, support for biofuels addressed a problem rhetorically and allowed politicians and interest groups to score important political points.
The political support for biofuels already is paying dividends in both Europe and the United States. Corn prices are now more than 40 percent higher than they were a year ago, despite a 15 percent increase in planting. The rising price of corn meant reduced acreage of wheat planting, and this has coincided with a terrible drought in Australia and a falling dollar. As a result, wheat prices have doubled in the past year, to $9 per bushel for the first time ever (more than $10 in France). These are good times for farmers, and ethanol is playing a role in it.
In Europe, environmentalists are more outspoken in their frustration — as Friends of the Earth’s clear support for the OECD report suggests — though many rest with the knowledge that they have at least reduced oil’s share of the transportation fuels’ market, which for many is better than a Pyrrhic victory.

Brazil’s Challenge
For Brazil, the existing or proposed barriers to the importation of its biofuels present a severe challenge. It invested heavily in research and development of biofuels and has perfected a system that provides a replacement for gasoline at a competitive price and with a significant reduction in greenhouse gas emissions (corn-based ethanol offers little to no greenhouse gas benefits). Brazil is moving its vehicle fleet to ethanol, which will take most of the country’s output, but it has developed capacity to export ethanol as well.
Seeing its ethanol exports blocked by the United States and Europe, Brazil is learning that energy security and climate change were only a part of the reason countries looked to biofuels. Certainly, these arguments were important, but biofuel mandates would not have happened if not for the power of agriculture in both the United States and Europe.
Brazil’s problem, then, is that it merely solved the problem politicians talked about — it has developed a fuel that reduces greenhouse gas emissions and comes from a place that is politically stable and friendly to both the European Union and United States. In solving the rhetorical problem without offering a political fix, it has placed U.S. environmental activists and EU politicians in a difficult position, and has not necessarily won markets. The larger problem, a problem that the OECD suggests but does not explicitly state, is that there is little interest in either the United States or Europe in staring down the agricultural interests.

3 Comments on "The Biofuel Backlash"

  1. Steve Savage May 4, 2008 at 10:22 pm · Reply

    This blog has a great deal of good information – just a couple of comments. While I’m not a big proponent of corn-based ethanol, it is difficult to generalize about its carbon footprint advantage. If the corn is grown optimally (e.g. no-till with cover crops, nitrification inhibitors…) the foot print is respectable. Still, sugar cane is the clear winner today and it is ridiculous to have tarrifs against it. We should be encouraging well done (from an environmental and social point of view) sugar cane everywhere it makes sense (e.g. Cuba, Brazil, some parts of Africa…) Steven Savage, Ph.D.

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