Blatant Reality

As you could probably tell from reading this blog, I am pretty vehemently against any kind of biofuel that comes from crops that take up agricultural land, requires freshwater, and receives obnoxiously large subsidies. This means that the only biofuel that I really support at the moment is algae based biofuels and that I’m a strong opponent of ethanol. So it saddened me to see that the EPA ruled against Texas Governor Rick Perry’s request to lower the ethanol mandate.

The Environmental Protection Agency today denied Texas Gov. Rick Perry’s request to reduce federal ethanol requirements this year.

 

The decision dealt a blow to Perry and a broad consortium of industry groups that claim rising U.S. ethanol output is inflating corn prices, hurting livestock and food producers and boosting grocery bills.

 

But in a noon conference call, EPA Administrator Stephen Johnson said the the federal Renewable Fuel Standard that sets the ethanol requirement isn’t causing “severe economic harm,” which would be required to justify a waiver, and is improving national security and benefiting farmers.

 

In a statement, Perry said he was “greatly disappointed with the EPA’s inability to look past the good intentions of this policy to see the significant harm it is doing to farmers, ranchers and American households.”

 

“For the EPA to assert that this federal mandate is not affecting food prices not only goes against common sense, but every American’s grocery bill,” he said.

Crop based ethanol is just a bad idea both environmentally and economically. I wouldn’t be against ethanol nearly as much as I am if the government wasn’t propping up the industry through subsidies and artificially creating a market for it through a mandate. There are other options out there, such as algae biofuels, that could potentially stand on their own in the free market and wouldn’t have the negative environmental effects associated with crop biofuels (clear cutting forests for new land, increased freshwater usage, etc.).

Bjorn Lomborg has added his name to the list of those who have attacked the world’s infatuation with crop-based ethanol. Mind you, Lomborg isn’t a ’skeptic’ in the sense that he believes CO2 is affecting the climate. However, he does believe that things have been drastically overstated. Take a look what he says here about some of the major problems with ethanol:

Bio-fuels essentially take food from mouths and puts it into cars. The grain required to fill the tank of an SUV with ethanol is enough to feed one African for a year. Thirty percent of this year’s corn production in the United States will be burned up on America’s highways. This has been possible only through subsidies that globally will total $15 billion this year alone.

 

Because increased demand for bio-fuels leads to cutting down carbon-rich forests, a 2008 Science study showed that the net effect of using them is not to cut CO2 emissions, but to double them. The rush towards bio-fuels has also strongly contributed to rising food prices, which have tipped another roughly 30 million people into starvation.

 

Because of climate panic, our attempts to mitigate climate change have provoked an unmitigated disaster. We will waste hundreds of billions of dollars, worsen global warming, and dramatically increase starvation.

Once again people, ethanol from crops (or anything that takes up agricultural land) is a bad idea that has led to millions suffering from starvation. Take a look at some more of the downside in some of my previous articles posted here, here, and here.

Since I have been talking about ethanol for a while, I figured it might be a good idea to see what you think about it. If you want some background on some of the discussion here about the subject, you can view any of these posts found here, here, and here.

Judging from the comments posted on two of my posts about ethanol (seen here and here), I need to go a little more in depth about why I do not like the idea of growing our next source of fuel on farmland.

There are many reasons why I don’t like the idea of growing ethanol crops on farmland no matter if you are growing corn, sugar cane, beets, switch grass or any plant that requires space and water. One thing that none of the major proponents of any of these ethanol sources are confronting is the reality that in our capitalistic economy, using these crops as fuel would give farmers more incentive to plant them.

You can already see this with farmers planting the most acres of corn in 2007 since 1944. This year (2008), farmers were expected to plant less corn but thank goodness they didn’t because floods have affected a lot of the farmland devoted to this crop.

Bad for Aquifers

Underground aquifers are found all over the world and they are basically natural reservoirs. These aquifers have been tapped and are used for irrigation and the like. More farmland means more water use and this can be bad news for these aquifers. For example, one of our largest aquifers, the Ogallala, has gone down roughly 100 ft due to our use of it for irrigation. Normally, the aquifer would refill itself with rain but our withdrawal rate far outstrips the replenish rate so as of now, every year the aquifer gets lower and lower.

Now, I am not arguing that we stop using this aquifer (though I would argue that we should use it more efficiently by eliminating water subsidies for farmers) but I don’t like the idea that we could potentially increase the withdrawal rate due to increased crops being used for fuel. Freshwater is an important resource in general so I don’t like the idea of using it for creating fuel in the heavily subsidized ethanol industry.

Massive Subsidies

And thats another thing about ethanol, it is a very heavily subsidized industry. Sure the oil industry is subsidized as well, but the ethanol industry receives a subsidy almost twice as big as the oil industry. For example, Minnosota’s Department of Agriculture tries to make the argument that the oil industry gets larger subsidies. Take a look:

It is important to compare “apples to apples” when discussing fuel subsidies. According to the Government Accountability Office (GAO), the U.S. has spent more than $130 billion over the last three decades in subsidies to the oil industry. Add to this the amount of money that the U.S. spends to maintain a major presence in the Middle East, and you begin to see the “embedded” cost in our gasoline coming from the oil imported from this region.

 

Ethanol has received government subsidies as well. However, with the rise in today’s market price of corn, agricultural subsidies in their current form will be reduced from more than $10 billion/year to approximately $2 billion/year. Even by factoring in the current cost of the U.S. excise tax credit to gasoline blenders, which amounts to $3 billion/year, the subsidy level is greatly reduced from previous norms.

These two paragraphs try to make the argument that the subsidies to ethanol are “modest” in comparison to oil. Well if the subsidies are truly modest, I would really like to see a dictionary on how Minnesotans define modest. If one uses my definition of modest, the two paragraphs above show that the subsidies are anything but modest in comparison.

First off, they try to confuse you by saying that “the US has spent more than $130 billion over the last three decades.” Not per year people. Talk about not comparing “apples to apples.” $130 billion per three decades comes out to about $4.33 billion/year.

Now lets look at the second paragraph, keeping the $4.33 billion/year in mind. First of all, they use the phrase “will be reduced” which means the ethanol subsidy is still at $10 billion/year. I, for one, have great faith in our lobbying industry and their ability to keep subsidies coming no matter if they are needed or not so I doubt the subsidies will be disappearing anytime soon. Therefore, instead of Ethanol subsidies being “modest” in comparison, they are over two times more than oil per year!

Even if you take their approximate $5 billion/year subsidy ($2 billion + $3 billion stated about), you still get a subsidy amount that is above the oil industry’s average $4.33 billion/year. Another estimate puts the ethanol industry subsidy at $7 billion for the year 2006 so any way you look at it, subsidies for ethanol are definitely not modest.

Bad for Biodiversity

Anyways, back to the environmental aspect of ethanol production. As I have stated in the past articles linked to above, with the increase in demand for ethanol producing crops, people are going to either switch from food crops to crops that produce and/or clear more land for farmland. The latter part means that farmers might actually see that it is economically worth clearing acre upon acre of forests or prairie which, as we have heard the Greens say multiple times, is bad for the environment. By clearing these lands, farmers are hurting the biodiversity of that particular region.

One example of this can be seen in Indonesia where there is a large palm oil industry. This oil is a big component in some biofuels and Europe is helping drive Indonesia’s palm oil industry by mandating that 10% of their fuel comes from biofuels by 2020. Thanks to the central planning of Indonesia’s government, 75,000 square miles of land are set to be converted to palm oil production by 2020 (“The Really Inconvenient Truths“). The land being converted consists of forests that are being cut with the fauna (tigers, orangutans, elephants, etc.) being killed (see the book link above for more).

Now the United States wouldn’t mandate a certain number of acreage to be put under for ethanol crop production, would they? No, but with legislation that has already been passed, they really don’t have to. Instead of mandating a specific number of acreage devoted to ethanol production, the government has mandated the use of 7.5 billion gallons of ethanol by 2012 with goals of renewable fuels in general reaching 36 billion gallons by 2022. With tariffs on cheap foreign sources of ethanol (like sugarcane from Brazil) impeding importation, it looks like we will be growing our own, hence the need to cultivate more land.

Conclusion

Now, do I believe that oil is the best form of energy in the world? Of course not. Do I believe that it is something that we are going to be primarily using for a while? Yes I do. Do I believe we should relax restrictions on drilling in ANWAR and offshore? Absolutely. However, I also like the idea of alternative energy, as long as it is economically feasible and can basically stand on its own.

My problem with crop based ethanol is that it is going to give farmers the incentive to grow crops specifically for fuel instead of for food and as prices rise due to increasing demand(be it for ethanol or increasing demand for food worldwide), more and more farmers are going to get on the action. This means more land under cultivation which will end up hurting the environment more than any alternative fuel might help it. I’m no environmentalist but I do appreciate nature (conservationist) and hate to see forests get chopped down for unnecessary reasons.

So why add any extra demand on farmland for things other than growing food when there are viable fuel alternatives out there?

The Algae Alternative

At this point you are all probably wondering that since I absolutely abhor crop-based ethanol, what other feasible alternatives are there? Well there is at least one that looks pretty promising (or at least more friendly to the environment and our food supply).

Farming algae for either ethanol or biodiesel could potentially be the answer for growing renewable fuels.

Now hold on a minute, I bet your about to comment something to the affect that “Algae basically lives in water! How will using algae lesson our water usage?” Well that is a great question and I’m glad you asked it.

The great thing about algae is that it can be grown in wastewater or even saltwater. Obviously there is little demand for those two sources of water and since we are not going to be eating it, it really doesn’t matter what the water source is. This flexibility would allow us to save freshwater for our food crops and drinking water.

Another great this about algae is that these algae farms could be located next to power plants and the CO2 they produce can be used as nutrients for the algae. Therefore, instead of investing in carbon sequestration methods which basically just cost money to the power plants, they could potentially make money by selling the CO2 to the farms.

Some of you might also be thinking that algae is just as bad as farms because land will have to be used to produce this algae harvest. Well this is where I would tell you that you’re not entirely correct. The first benefit of algae is that you don’t have to use land that has agricultural value (basically it can grow anywhere as long as the temperature and nutrients are right). Another benefit is that with algae, you don’t have to grow it horizontally. What I mean by this is that you could theoretically have a skyscraper that house algae producing vats.

And do you know what the best part about algae is? It’s a whole lot more efficient at producing oil than crops. Take a look:

Companies in California, Texas and Florida are leading the effort to produce and market fuel from algae. PetroSun of Rio Hondo, Texas, began producing fuel in April 2008. The company says it can produce 4.4 million gallons of oil every year from its 1,100 acres of algae ponds – roughly 4,000 gallons per acre. In contrast, one acre of corn produces about 330 gallons of ethanol, according to industry reports.

So there you have it, more reasons why crop-based ethanol is a bad idea and an alternative that is better in every single aspect that we could focus on producing instead.

Corn ethanol is once again being linked to as a contributor of rising food prices and it seems that things will only get worse. This year, because of flooding and other factors, the corn harvest expected to be drastically smaller than last year. When you add this to the fact that the government has mandated a 9 billion gallon corn-based Renewable Fuel Standard (RFS), the demand for corn is going to far outstrip the supply. This will end up contributing to the increase of prices of all corn-based products, including food.

“A lot depends on how badly this weather has devastated the corn crop,” said Thomas Elam, an agricultural economist at Indiana University who was commissioned by the Balanced Food and Fuel Coalition to release a study on the matter. “A smaller crop will be devastating to meat, dairy, and poultry producers if the Renewable Fuels Standard is maintained, and consumers will suffer as food and fuel costs rise.”

 

About 5% of the world’s corn supply goes to producing bio fuels – representing a whopping three years of growth in typical crop production, according to Elam.

 

“Corn will have to go to at least $8 a bushel to squeeze out enough food use to keep up with corn for ethanol,” he said. “Food prices will be significantly impacted by corn if RFS goes to 10.5 billion gallons for 2009.”

 

How significantly? Collins said food costs could rise 23% to 35% above the normal annual inflation rate of 2.5% over the next two to three years if the RFS mandates are not reduced. Elam said food price inflation rate could go as high as 7% without a mandate reduction.

“Collins” is the US Department of Agriculture chief economist just to let you know. How should we fix this? Well the article states that just a simple 50% reduction in the RFS would bring the bushel price of corn to $2. Sadly, this probably won’t happen.

I sure hope everyone is beginning to see that using a food crop for fuel is never a good idea, no matter how well intentioned or fool-proof it looks on paper.

For more of my thoughts on Corn Ethanol, check out this article I wrote on the subject a couple weeks back.

Obama seems to be in a little conundrum about whether or not to support ethanol subsidies. Better yet, he still hasn’t decided who these subsidies help: the nation which he wants to represent or corn-growing Illinois (my emphasis).

Today, in a New York Times article on Obama’s support for ethanol, Jason Furman, the Obama campaign’s new economic policy director, is quoted saying that Obama’s stance on the issue was based on the merits, a determination that ethanol subsidies are in the national interest. “That is what has always motivated him on this issue, and will continue to determine his policy going forward,” Furman said. The article continues: “Asked if Mr. Obama brought any predisposition or bias to the ethanol debate because he represents a corn-growing state that stands to benefit from a boom, Mr. Furman said, ‘He wants to represent the United States of America, and his policies are based on what’s best for the country.’”

 

It was the expected answer during a presidential campaign — except that it flies in the face of what Obama himself said on the issue a few months ago. Asked about his support for ethanol during a press conference at a gas station in Indianapolis in April, Obama was remarkably candid in explaining why he backed the subsidies: “Look, I’ve been a strong ethanol supporter because Illinois … is a major corn producer,” he said. He went on to say that he was concerned about reports that ethanol was helping drive up food prices, and that he saw ethanol as merely a transitional option that would eventually give way to biofuels that were more efficient and has less of an impact on food prices, such as ones made out of switchgrass.

Agenol and the Mexican company BioFields have teamed up to grow algae that produces ethanol. However, there is a difference between this method and other methods of creating biofuels from algae. This method allows the algae to continually produce ethanol without having to kill the algae in the extraction pocess.

Several algae companies are trying to enter the biofuels business by drying and pressing the organisms to make vegetable oil that can be processed into biodiesel.

 

Woods said Algenol will use a process he invented in the 1980s to coax individual algal cells to secrete ethanol. That way, the fuel can be taken directly from the vats where the algae is grown while the organism lives on, using far less energy than drying and pressing the organisms for their oil.

 

Algenol plans to make 100 million gallons of ethanol, about the average annual capacity of one traditional U.S. distillery, in Mexico’s Sonoran Desert by the end of the 2009. By the end of 2012, it plans to increase that to 1 billion gallons — more than 10 percent of current ethanol capacity in the United States, the world’s top ethanol producer.

If they can reach their estimated production level by 2012, I think many people will start to see algae as having major potential for a sustainable energy source. However, I wouldn’t get your hopes up too much about this yet. The article has this little disclaimer later on:

How well the system would work, what kinds and volumes of nutrients would be needed and how much water would be required are unknowns, Steelman said. And gaining market share from politically-established players in the U.S. Midwest and Big Oil could be difficult, he said.

Yea that first line says it all and basically negates all the numbers and dates they have in the previous paragraphs. The process may work in a lab but getting everything up and running always is another thing entirely.

Remember a couple years ago when everyone was all excited about the prospects of ethanol production as the newest and greatest biofuel? Well I hope everyone has wised up to the reality that ethanol fuel is probably one of the worst things we could do from both an environmental and an economic standpoint.

First, lets give you some background about ethanol. The most common version is made from corn, one of the most important grains produced in the United States. To understand how it is made, you can visit this website that explains its production and includessome graphics. Now, having to process corn to create ethanol isn’t the problem because, as you well know, we have to refine crude oil to create gasoline and such. The problem comes when you look to see just how much energy it takes to create ethanol.

According to some studies, it can takes roughly 1.29 gallons of fossil fuel to produce just 1.0 gallon of corn-based ethanol fuel. Now, when one of the main reasons to use biofuels is to decrease CO2 emissions, this figure just makes the whole process seems outrageous. Those people who think they are saving the environment by buying “Flex-Fuel” are potentially harming it more than those with regular fossil fuel cars. Ironic, isn’t it?

The sad thing is that this same study found that corn was the most efficient biofuel. For example, switch grass was found to need 1.45 gallons of fossil fuel to produce 1.0 gallon of biofuel (one study has it as better than corn) and wood biomass needed 1.57!

Nevertheless, one must also take into account another environmental impact caused by promoting biofuel production. According to basic economics, the more of some product that is demanded, the higher price that product fetches in the marketplace. With higher potential to make money, more suppliers will then enter into the market in order to supply that product.

Now, what does that mean in our case? Well what we are seeing now is that since corn prices have risen, more people are starting to produce corn. Just last year we had the largest corn harvest here in the United States. Of course some of that was due to good crop conditions but a lot had to do with an overall increase in corn production.

Now, what this means from an environmental standpoint is that farmers are going to have more incentive to plow under land to produce corn. This might be tracks of forest on their properties or just land that, at previous corn prices, wasn’t economically feasible to plow under. For you environmentalist out there, let me break down what this means for you: Less forested land and natural habitats = less biodiversity and less CO2 sequestration = very bad.

For folks like me who tend to care more about the economic side of the issue, corn ethanol still looks like a total waste of money.

One of the major things to keep in mind is that this whole corn ethanol business is very heavily subsidized. For example, in 2006, the ethanol business got $7.0 billion to produce just 4.9 billion gallons of ethanol. That comes out to being about $1.45 per gallon of ethanol. In my opinion, that is a completely outrageous amount of money for such an impractical solution to our energy needs.

More importantly, because of these subsidy, corn prices are kept at an artificially high level. A high price of any other commodity might not be too bad but since it is corn, the results can be an increase in almost all food prices. The reason for this is that the price of corn basically controls the price of every single staple we eat in America. Don’t believe me? Well let me break it down for you.

Cereal? Made from corn.
Beef? Chicken? Pork? Fed corn.
Milk? Produced by cows that have been fed corn.
Cheese? Yogurt? Made from milk that was produced by cows that have been fed corn.
Those little fruit cups you put in your kid’s lunches? I guarantee that they are made with high fructose CORN syrup.

Funny how our lives can be so dependent on the price of just one product.

Here are some statistics you can throw around:

• Global food prices have risen 83% in the past three years and ethanol productions are predicted to increase prices by another 10 – 15%.
• Last year, 27% of the corn crop went to ethanol production.
• Ethanol production was up 37% in the first quarter and could reach a record 7.7 billion gallons by the end of this year.

So why am I writing all about this? Well it is just to help you understand one of the reasons why ethanol is a bad choice that is contributing to the raising food prices worldwide. So whenever you hear a politician talk about ethanol, remember to be wary if they seem to fawning over its production. Not only is corn ethanol production wasting your tax dollars through government subsidies, it isn’t helping the environment at all.

There may be more problems than solutions offered by ethanol.

Ethanol is not the way to energy independence. The ability of corn-based ethanol to reduce U.S. dependence on foreign oil is limited. Dedicating the entire U.S. corn crop to ethanol would displace only a small share of gasoline demand.

 

Ethanol is not the solution to global warming. Ethanol tailpipe emissions can reduce some greenhouse gases, but can also increase levels of others. Also, large-scale corn production requires farm equipment that runs on fossil fuels, which, in turn, emit more greenhouse gases. Moreover, when fossil fuels are used to power ethanol refineries, it can lead to higher greenhouse gas emissions than the fossil fuel ethanol replaces. Ethanol is not the solution to revitalizing rural America.

Read the rest of the article here.

Read the summary from the Food & Water Watch here and the full report here.