A more flexible policy could ease the impact of ethanol mandates on worldwide markets.
Federal ethanol mandates, which have led to a steady increase in the production of ethanol made from corn, are a major reason why food prices worldwide have reached record levels in the past several months, according to some economists.
Earlier this month, the United Nation’s Food and Agriculture Organization reported that global food prices had risen for eight consecutive months, reaching the highest levels since the agency started tracking prices in 1990. The prices are high in large part because of steadily growing worldwide demand for food, and because of natural disasters that have hurt harvests, but they’re also affected by government policies.
Federal ethanol mandates in the United States have played an important role in the increase in corn prices, which are approaching $7 a bushel, up from historical norms of $2 to $3. The mandates—called the renewable fuel standard—require fuel distributors to use a certain amount of ethanol each year, with the amount increasing each year. In 2005, when the mandates were first introduced (legislation signed by President Bush in 2007 subsequently expanded the federal mandates), ethanol production accounted for only 5 to 10 percent of the demand for corn in the United States, says C. Ford Runge, professor of applied economics and law at the University of Minnesota. Now it’s up to roughly 40 percent, he says. (The standard calls for 13.95 billion gallons of renewable fuel, almost all of which will come from corn-based ethanol.)
The increased production of ethanol has a large impact on corn prices, not only because it’s a major source of demand, but also because the demand is fixed. In a free market, if the price of corn goes up, demand will go down, moderating corn prices. But the federal mandate requires the same amount of ethanol no matter how expensive corn is. (Technology Review)
By Stephen Foley in New York
Soaring food inflation is the result of “immoral” policies in the US which divert crops for use in the production of biofuels instead of food, according to the chairman of one of the world’s largest food companies.
Peter Brabeck-Letmathe, the chairman of Nestlé, lashed out at the Obama administration for promoting the use of ethanol made from corn, at the expense of hundreds of millions of people struggling to afford everyday basics made from the crop.
Mr Brabeck-Letmathe weighed in to the increasingly acrimonious debate over food price inflation to condemn politicians around the world who seem determined to blame financial speculators instead of tackling underlying imbalances in supply and demand. And he reserved especially pointed remarks for US agriculture secretary Tom Vilsack, who he said was making “absolutely flabbergasting” claims for the country’s ability to cope with rising domestic and global demand for corn.
“Today, 35 per cent of US corn goes into biofuel,” the Nestlé chairman told an audience at the Council on Foreign Relations (CFR) in New York yesterday. “From an environmental point of view this is a nonsense, but more so when we are running out of food in the rest of the world.
“It is absolutely immoral to push hundreds of millions of people into hunger and into extreme poverty because of such a policy, so I think – I insist – no food for fuel.” (The Independent)
Plantation of a shrub once hailed as the great new hope for biofuels will result in up to six times the greenhouse gas emissions of fossil fuels, according to a new report.
By Ian MacKinnon in Bangkok 5:56PM GMT 22 Mar 2011
Jatropha has been planted across Asia in countries under pressure from the West to reduce emissions from the destruction of rainforests, car exhausts and energy production from coal-burning power plants.
But the study for the anti-poverty agency ActionAid and the RSPB of a proposed 50,000 hectare jatropha plantation development in the Dakatcha woodlands of Kenya, near Malindi, found that emissions in producing the biofuel would be 2.5 to six times higher than the fossil fuel equivalents. The woodland hosts globally endangered bird life.
The research examined the whole “life-cycle” of the jatropha production, primarily the clearance of woodland and scrubland, planting, harvesting, refining and transportation of the bio-diesel destined for heating and electricity production in Europe.
“Biofuels are far from the miracle climate cure they were thought to be,” said Tim Rice, ActionAid’s biofuel expert. “Like most other biofuels, jatropha could actually end up increasing carbon emissions.” (Daily Telegraph)
By Geoffrey Styles
Ed. note: This piece first appeared on Energy Outlook, Geoffrey Styles’ blog.
I see that Google’s venture capital fund is investing in a startup company that would produce hydrocarbon fuels from cellulosic plant matter, with the added twist of sequestering carbon in soil. This is another signpost of the growing interest in non-alcohol biofuels, often referred to as “drop-in” fuels, for both oil replacement and climate mitigation. With cellulosic ethanol developers having mainly disappointed for the last several years, and with so much current policy focus on electric vehicles and their infrastructure, I find it reassuring that there are smart people out there working on alternative fuels that fit today’s cars, with today’s infrastructure. That’s important not just for the obvious reasons, but because the end result of energy policy must create successful business models, not just neat technology.
I haven’t delved deeply enough into the technology of CoolPlanetBioFuels to form an opinion about its potential, though I do have some questions about how their front-end “thermal/mechanical processor”, which will apparently be produced in 1-million gallon-per-year modules, would mesh with the catalytic fuel production processes needed to turn its output into consumer-ready fuels. Those processes normally operate at scales 100 times larger than CoolPlanet’s processor, and when it comes to the efficiency of industrial chemistry, smaller is rarely better. However, if their technology works as advertised, the company’s pursuit of the mainstream fuel market looks like a smart business decision. (Energy Tribune)