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Do we need to rethink the rush to biofuels?
Posted by: McQ on Friday, April 04, 2008

We've seen net cooling for the last 10 years, there are serious questions about both the models and the equations from which global warming has been predicted and still the rush to convert to biofuels continues with very grave possible consequences:
World Bank President Robert Zoellick says a global food crisis demands the immediate attention of world leaders.

"As financial markets have tumbled, food prices have soared," Zoellick said in a speech on Wednesday. He said the situation is not expected to get better any time soon — and he is pushing what he calls a "new deal for global food policy."

"Since 2005, the prices of staples have jumped 80 percent," Zoellick said on Wednesday. "Last month, the real price of rice hit a 19-year high; the real price of wheat rose to a 28-year high and almost twice the average price of the last 25 years."

While that is good news for farmers, it is blow to vulnerable groups, including children, he said.

"The World Bank Group estimates that 33 countries around the world face potential social unrest because of the acute hike in food and energy prices. For these countries, where food comprises from half to three quarters of consumption, there is no margin for survival."
Zoellick properly identifies one of the prime reasons for these huge increases in the price of staples:
In his speech on Wednesday, Zoellick mentioned biofuels as one the "realities" that will keep food prices high for years to come.

The Energy Policy Act of 2005 passed by Congress and signed by President Bush increases the amount of biofuels (usually corn-based ethanol) that must be added to gasoline sold in the United States.

But diverting corn from food to fuel use has raised food prices, the Heritage Foundation noted.

Corn cost about $2.00 a bushel when the 2005 law was signed, but it's now selling for more than $5.00 — "primarily because a quarter of the crop is now used to produce energy," wrote Ben Lieberman, a senior policy analyst at Heritage.

Moreover, the price of corn-fed meat and dairy products has jumped as well; and wheat and soybean prices are also rising, because acreage once devoted to those crops is now going to corn.
Everywhere you look, there are warnings that diverting food stock to make fuel is driving prices up and creating more scarcity:
Corn prices jumped to a record $6 a bushel Thursday, driven up by an expected supply shortfall that will only add to Americans' growing grocery bill and further squeeze struggling ethanol producers.

Corn prices have shot up nearly 30 percent this year amid dwindling stockpiles and surging demand for the grain used to feed livestock and make alternative fuels including ethanol. Prices are poised to go even higher after the U.S. government this week predicted that American farmers — the world's biggest corn producers — will plant sharply less of the crop in 2008 compared to last year.

[...]

Worldwide demand for corn to feed livestock and to make biofuel is putting enormous pressure on global supply. And with the U.S. expected to plant less corn, the supply shortage will only worsen. The U.S. Department of Agriculture projected that farmers will plant 86 million acres of corn in 2008, an 8 percent drop from last year.
The World Food Programme issued its own warnings:
The WFP boss said the prices of staple foods had risen by up to 40 per cent in the last six months and was impacting negatively on poor families.

Several cases of unrest have been reported across the globe especially in third world countries over high food and fuel costs in recent months.

[...]

According to WFP, the rising food prices are rooted in increased oil prices, competition between bio-fuels and food, rising food demand from emerging economies and climatic changes such as droughts and floods.

Of course you'd like to believe that the market would adjust and compensate for the increased demand. However, it has to be left alone to do that, and that certainly isn't the case, especially here:
The market should adjust, spurring more planting and more production in response to higher prices. Last week's annual outlook conference of the U.S. Department of Agriculture reported that U.S. farmers were cutting their plantings of cotton and sugar in order to take advantage of the higher prices for wheat, corn and soy. Wheat production is projected to soar 13 percent to 2.33 billion bushels as farmers expand planting for the grain by 6 percent.

But markets worldwide face severe constraints from government manipulation of prices. Sometimes, like the U.S. subsidies for biofuels, this is done with the best of intentions, to cut U.S. dependency on imported fossil fuels. But government action can have severe effects.
We're beginning to see some of those severe effects of government manipulation manifested in higher prices and scarcity and impacting, as they always do, the poorest among us.
For corn farmers, the mandate has exceeded their wildest dreams, but for consumers, it has been an expensive double-whammy-higher costs to drive to the supermarket and higher prices once you're there. A recent study from Purdue University puts the added food cost from the renewable mandate at $15 billion in 2007-about $130 per household.[2] And that was from ethanol usage at a fraction of what will be required in the years ahead.

Globally, with nearly a billion people at risk for hunger and malnutrition, the costs are far higher. Several anti-hunger organizations have weighed in heavily against current policies. An August 2007 United Nations report warns of "serious risks of creating a battle between food and fuel that will leave the poor and hungry in developing countries at the mercy of rapidly rising prices for food, land, and water."[3] There is evidence that this may already be happening, including food-related rioting in Mexico, Indonesia, Egypt, and the Philippines.
Somewhere along the line, someone will claim all of this to be a "market failure". Just watch.

And, of course, then there's the environmental impact that biofuels supposedly help alleviate:
Not only is ethanol less productive than gasoline as a fuel source, its production is hurting the environment it was intended to preserve, particularly in the Third World. The amount of land needed to grow corn and other biofuel sources means that their production is leading to deforestation, the destruction of wetlands and grasslands, species extinction, displacement of indigenous peoples and small farmers, and loss of habitats that store carbon.

Scientists predict that the Gulf of Mexico, already polluted by agricultural runoff from the United States, will only get worse as demand for ethanol, and therefore corn, increases. Meanwhile, rain forests throughout Central and South America are being razed to make way for land to grow biofuel components. Tortilla shortages in Mexico, rising flour prices in Pakistan, Indonesian and Malaysian forests being cut down and burned to make palm oil, and encroachments upon the Amazon rainforest due to Brazilian sugar cane production - all these developments indicate that biofuels are turning out to be more destructive than helpful.

The latest issue of Time magazine addresses the subject in frightening detail. Michael Grunwald, author of the cover story, "The Clean Energy Scam," posits a worldwide epidemic that could end up being a greater disaster than all the alleged evils of fossil fuels combined. As he puts it:

"Deforestation accounts for 20 percent of all current carbon emissions. So unless the world can eliminate emissions from all other sources - cars, power plants, factories, even flatulent cows - it needs to reduce deforestation or risk an environmental catastrophe. That means limiting the expansion of agriculture, a daunting task as the world's population keeps expanding. And saving forests is probably an impossibility so long as vast expanses of cropland are used to grow modest amounts of fuel. The biofuels boom, in short, is one that could haunt the planet for generations - and it's only getting started."
More:
Corn-based ethanol is inefficient as a fuel for automobiles, reducing vehicle gas mileage by 20-30 percent in vehicles using E85, the highest ethanol content fuel. Fewer miles-per-gallon of gas essentially eliminates any savings achieved, even by mixing ethanol with gasoline in the lower 9 percent ethanol blends required in all U.S. gasoline today. And of course, it also takes energy to produce ethanol — for farming and distilling the corn and transporting the final product to the pump — and much of that energy will come from carbon-based fuels.
Accordingly, the United Nations has expressed skepticism about ethanol and other biofuels.

One of the few things on which the UN and I are in sync.
The biofuel madness is gathering steam, and it's not good news for the world's poor and hungry. Putting one man's dinner into another man's car hardly seems like a sensible or ethical way of solving any of the world's problems. —Graham Young, 2 August 2006
Agreed. Ben Lieberman of Heritage is hopeful that this will all be short lived:
It is only a matter of time before the public realizes that the mandate is contributing to their pain at the pump. The media are belatedly picking up on this point. Eventually, Members of Congress—at least those outside of the 10 or so Midwestern states where much of the corn and ethanol production is concentrated—will realize that the mandate is a lousy deal for their constituents, and they may want to do something about it.
If only I could buy into that optimism. We've known any number of government programs which were lousy deals, have had endless politicians promise to fix them or even do away with them and yet still exist today. What you see, as with the global warming hype, is a rush to judgment which has spawned the usual less than optimal government solutions. And unfortunately, when the government gets involved and gets a full head of steam, it is virtually impossible to stop and it's programs, no matter how awful, seem to somehow always survive.

You see, to actually admit a mistake and power down a program like the ethanol subsidy program and mandates would mean having to admit to a mistake. And doing so is not advantageous to a politician's political health. So instead, as food prices continue to grow, my prediction is that we'll hear about the greed of the food purveyors, just as the oil companies have been made the villains of high oil prices, and instead of backing off and letting the free market work, the solution, backed by the economically ignorant public, will be to see even more government regulation and intervention.
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Comments
Whether or not you are correct about climate change, I agree with you 100% on the problems of the biofuels. If the world had a food surplus, it might be a good idea for the surplus, but to grow food for this purpose eschewing the more effective purpose of these crops (people fuel), was a terrible idea.

Until we can power cars with slag and leftovers of agriculture at a much lower cost than primary crops, it will continue to be a bad idea.

Biodiesel makes more sense, but again, on a large scale basis, it would be subject to the same flaws.

In the short term (50 years?), nuclear electricity and electric cars probabaly makes the most sense, and in the long term, hydrogen power.

As long as we burn stuff for power, coal, oil, wood, corn, we are going to have problems.

Cap

 
Written By: Captin Sarcastic
URL: http://
The corn used for ethanol is the same stock of corn used for spirits.

I guess we shouldn’t be wasting corn on spirits either. That bottle of Jack is causing someone in India to miss a meal.
 
Written By: jpm100
URL: http://
jpm, that’s like saying that the fuel used for cars is the same stuff that goes into lighter fluid, so we better stop using barbecues. it’s just an entirely different order of magnitude.
 
Written By: morganovich
URL: http://
Isn’t this all about the money.

I caught a line on the bottom of Bloomberg TV this morning saying that Germany has put a hold on bio-fuels.
 
Written By: Neo
URL: http://
Some related stuff.
 
Written By: Neo
URL: http://
Forget about admitting mistakes. As long as subsidies result in gummint jobs, those programs will never die. Think it’s a coincidence that the Rural Electrification Administration is still going strong? How much of the US is both rural and without electricity anymore?
 
Written By: Greg
URL: http://
jpm, that’s like saying that the fuel used for cars is the same stuff that goes into lighter fluid, so we better stop using barbecues. it’s just an entirely different order of magnitude.
The corn used for ethanol fuel is far more removed form the corn used for food than spirits. So your argument seems to say that Ethanol shouldn’t be impacting the price of food related corn either.

 
Written By: jpm100
URL: http://
If it’s such a good idea, why does it need a taxpayer subsidy?
 
Written By: Paul
URL: http://
Compare:
Worldwide demand for corn to feed livestock and to make biofuel is putting enormous pressure on global supply. And with the U.S. expected to plant less corn, the supply shortage will only worsen. The U.S. Department of Agriculture projected that farmers will plant 86 million acres of corn in 2008, an 8 percent drop from last year.
With:
The market should adjust, spurring more planting and more production in response to higher prices. Last week’s annual outlook conference of the U.S. Department of Agriculture reported that U.S. farmers were cutting their plantings of cotton and sugar in order to take advantage of the higher prices for wheat, corn and soy. Wheat production is projected to soar 13 percent to 2.33 billion bushels as farmers expand planting for the grain by 6 percent.
So which is it, USDA? Will farmers plant more or less corn? And if the answer is "less" then why? If the price for corn is rising, and it’s predicted to continue rising, why wouldn’t farmers plant more corn? And not just here, but around the world? Is there something about corn that makes it difficult to grow outside of Iowa (and up and down the East Coast judging from my own observations)?

And then, what about this?
MSM Rot Watch: Another tomato farmer gives up due to the failure to legalize illegal immigrants! ... Oh wait, it’s the same guy, Keith Eckel of Clark’s Summit, PA., who got publicity for the same reason last week. ... Is Eckel the only one the MSM could find? He’s the Greg Packer of farmers! ... He’s so famous he’s already been contacted by Obama’s people. ... P.S.: The NYT, unlike the Philadelphia Inquirer (which had last week’s Eckel story) somehow doesn’t have room to mention that Eckel is giving up tomatoes but planting corn. Instead reporter Paul Vitello deceptively says that Eckel has been put "out of business." ... And of course neither story mentions that corn prices are at record highs due to "surging demand for the grain used to feed livestock and make alternative fuels including ethanol." ...

So let’s see: Corn prices soar. Farmer decides to plant corn. It’s the yahoos fault!
Something’s not adding up.
 
Written By: MichaelW
URL: http://asecondhandconjecture.com
MichaelW, did you not see in your own block quote that wheat planting is up 13%? There is less corn planting because it is more profitable to plant wheat, apparently. Otherwise, the market participants would surely plant more corn.
 
Written By: skh.pcola
URL: http://
MichaelW, did you not see in your own block quote that wheat planting is up 13%? There is less corn planting because it is more profitable to plant wheat, apparently. Otherwise, the market participants would surely plant more corn.
Yes, I did, but that doesn’t explain how the increased demand for corn (because of ethanol demands) leads farmers to plant 8% less corn than last year.

Did you not notice that the USDA says that farmers will plant less corn in one breath, while claiming that farmers are moving away from cotton and sugar to plant, inter alia, corn in the next breath?

So which is it? More or less corn will be planted, and if "less" then why?
 
Written By: MichaelW
URL: http://asecondhandconjecture.com
Crop rotation may have something to do with it. The farmers who normally plant corn have to rotate the crops, usually to soybeans here in IL; otherwise the land will become less productive unless you use massive amounts of relatively expensive fertilizer. It sounds like the cotton and sugar farmers are changing to corn but are not making up the shortfall since the corn farmers have been sticking with corn as long as they could but now have to rotate the crops in their fields.
 
Written By: H man
URL: http://
Uhm, just let me add that ethanol fires are extremely difficult to handle.

So, at least we’ve got that going for us.
 
Written By: Billy Beck
URL: http://www.two—four.net/weblog.php
Does anyone else feel like they’ve been watching a chapter of Atlas Shrugged play out in slow motion with last year’s energy bill, the backslapping applause for it on both sides of the aisle, and its disastrous consequences (you know, like starving the world’s poor)?
 
Written By: Mark
URL: http://publiusendures.blogspot.com
Obviously these issues can be addressed through better agricultural production. AGW mentions the risks to agriculture and by gosh, we need to address better growing conditions... so let’s get started - everyone should just buy a couple of these and fire’em up:

http://homeharvest.com/carbondioxideenrichment.htm

I think this link will be my all time favorite AGW site when explaining why I’m a skeptic :-)
 
Written By: BillS
URL: http://bills-opinions.blogspot.com/
I have been following ethanol use since 1989 and have done what I could to get government to emulate Brazil’s shift to ethanol which started in the 1970s. But hey, I’m just a small voice without a damn bully pulpit.

Part of the present problem is that the protein rich corn residue is apparently not being used as feedstock as it could be had we started an early sane production of alcohol for ethanol and the needed realignment of our animal feed process/system (http://www.npr.org/templates/story/story.php?storyId=87782087). This from NPR no less. But as usual with a rush of government interference, the corn field to feed yard loop has been broken. The corn residue could also be used for human food, but I doubt that that will be done.

The shifting of crops to corn is a separate problem, but as usual every one is in it for the money. Anyway, wheat prices are reported up 300% because of this shift of crops. My pizza price last night was much higher. And beware, oh dear, beer prices should go up for the same reason – hops are less plentiful. Obviously Western culture is doomed!!!

The future of ethanol is switchgrass and/or waste use with the new ethanol process that GM is now involved in (http://www.trollhattansaab.net/archives/2008/01/gm-invests-in-experimental-waste-to-ethanol-process.html).

That our country is fueling world terrorism with our purchase of oil from the ME while ignoring our own oil resources because of environmental scare tactics is also worrisome. Yet we ignore TDP and other similar processes that recover oil from organic waste, so why not ignore this process too to rid ourselves of organic waste and produce fuel.

There is no shortage of corn feed stocks nor sources of fuel to power our economy and the family car, just a shortage of imagination and due diligence.

 
Written By: AMR
URL: http://

 
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