Biofuels: When Subsidies and Special Interests Collide
by Jeremy Elton Jacquot, Los Angeles 
on 11. 3.07
Few debates have proved as highly contentious as the one pitting those who believe biofuels have a role to play in fighting global warming and securing our energy independence and those who view it as little more than a subsidy-laden boondoggle for farmers and politicians. Noted economist and Financial Times commentator Martin Wolf recently waded into the fray with a firmly anti-biofuel column. Citing a report released by the Global Subsidies Initiative of the International Institute for Sustainable Development, Wolf writes:
"Energy security and climate change are two of the most significant challenges confronting humanity. What we see, in response, is the familiar capture of policymaking by well-organised special interests. A superb example is the flood of subsidies for biofuels. These are farm programmes masquerading as answers to energy insecurity and climate change. Not surprisingly, they have the depressing characteristics of such programmes: high protection, open-ended support to producers, and indifference to economic rationality."
He describes most of the policies and legislation in place as being highly irrational; for example, he explains how Brazil, one of the few efficient producers of bioethanol, faces huge markups in the U.S. and European Union - a consequence of prohibitive tariffs - while much less efficient corn ethanol-based technologies receive large government subsidies. As he points out, the subsidy to ethanol is often greater than the cost of petrol equivalent - often leading to much higher production costs.
Far from having a substantial impact on reducing net emissions of GHG, Wolf says, European rapeseed oil-based diesel and U.S. corn-based ethanol have in fact only made small contributions - 13% less than conventional diesel and 18% less than petrol, respectively. As we've argued at length in several past posts, most biofuel schemes would have a devastating impact on developing, food-importing countries:
"The rising price of food is good for producers. It is dreadful, however, for consumers, particularly for those in poor food-importing countries. Increased production of biofuels also adds stress on existing land and water supplies."
Listing several of the well-worn rationalizations policymakers have used to justify the continued production of biofuels, Wolf goes on to call the schemes a "costly system of transfers looking for a rationale" - equating them to the typical farm program. His proposed solutions: create a single global price of carbon, define more clearly the overall goals of reductions in GHG and let the markets determine which biofuels will work.
Though we remain dubious of many biofuel production schemes, we agree with Wolf that they can have a role to play - if the policies are designed rationally and efficiently with poor countries' interests kept in mind. One need not look at the current regime primarily through an economic lens, as Wolf does, to see it has many fallacies.
What's clear is that we need to move away from policies that favor hare-brained, special interest-abetted boondoggles that do little, if anything, to address our immediate concerns. It would be a shame for poor implementation to sink otherwise promising technologies.
Via ::Financial Times: Biofuels: a tale of special interests and subsidies (newspaper)
See also: ::Quote of the Day: David Suzuki on Biofuels, ::Biofuels Not Enough to Offset Damage Caused by Deforestation, ::The Dangers of Biofuel
Images courtesy of FT and the Global Subsidies Initiative
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What about algae and cellulosic ethanol? They're the most sensible!
You know what they ought to do? Legalize Marijuana and make ethanol from that - it's nearly as efficient as sugarcane, and it'd free us from foreign oil.
Less driving and more efficient vehicles will do far more for the environment than biofuels ever can. And without any of the negative effects.
Besides the cost of subsidies and that the benefits wind up in the pockets of ADM and Cargil, this also helps out Monsanto and Dow, increases irrigation of declining water supplies, erosion, and stresses the environment further.
Besides my ecoparents.blogspot... I happen to be the President of Blue Sky Optimum Energy, Inc...a biodiesel technology development company based in upstate NY. We are in the process of building out a production plant.
I am pro-biofuels and pro-support of renewable energy in general. I got in this industry because I wanted to produce a company that someday others would point to and say...
That is the Role Model Company. They can balance profits, environment and social consciousness. This is the triangle of philosophies for my company.
Subsidies can help as long as they are balanced, some $$ go to production, some to distributors, some to customers and a lot, I mean a lot more to Research and Development.
If subsidies are dumped into one area, a subsidies hog, then no one benefits. Subsidies should be used as a spark or training wheels. Once a company reaches a certain revenue trigger point they should be able to run on their own or get acquired.
R& D is always a good thing for governments to invest in. Often the best thing.
T
There is also the fertilizer N2O emissions that makes biofuels unsustainable and worse than regular fuels, with only sugar cane being produced in Brazil being sustainable.
80% of Europe’s biodiesel comes from rapeseed, which’s nitrous oxide (N2O) emissions required in fertilizers for growing does global warming damage 1 to 1.7 times the CO2 saved from using fossil fuels; corn bioethanol’s factor is 0.9 to 1.5; but sugar cane bioethanol is sustainable at 0.5 to 0.9. (Nobel Prize winner Paul Crutzen research, Google it cause links I put in seems to ban my posts).
Costs also aren't favourable, and there is enough of a market now to start seeing that since economy of scale is being almost hit, it not already.
Really, any way you look at it, biofuels is not feasible (refer to Treehugger story just after this one on government subsidies to "Meat" that was really corn and soy, claimed for cattle feed, in a good piece of distortion when anyone planting the stuff these days smart enough to do so would know the biofuels market offer them better value.
I like the less driving recommendation.
I cannot see the long term benefits of biofuels. To make enough for even a small dent in either our dependency or our co2 emissions we need to use land already being used for food crops or create new land, both of which leave us in the same predicament. Biofuels need arable land.
So while the rich will keep driving, the poor will literally go hungry.
We cannot keep consuming at the rate we are. Period.
Biofuels make a lot of sense in principle, but the details matter tremendously if they are really going to help the environment. Ethanol from corn is simply horrible- it pollutes fresh water with fertilizer, uses up water, isn't economical (requiring Federal and State subsidies), and more.
I have problems with any biofuels that compete with food for arable land. As stated by others, this simply drives up food prices while having no effect on oil prices (see recent article in The Economist).
I think that biomass to ethanol conversion may work well some day, and that approach makes sense to me as long as the biomass is waste biomass, not "purpose-grown" for fuel. Saw dust, corn stalks, etc. are examples of feedstocks for this purpose. But, please, no grasslands harvested for cellulosic biomass. We need the grasslands left alone, and the rain forests.
However, please note that the air quality in Brazil has been reported to suffer (from formaldehyde) because of ethanol fuel. This issue needs to be dealt with. I have references to the relevant primary (and secondary) articles if you want to search for "Chemistry for a sustainable world". Also search for articles at "HIGHLIGHT health" on this subject.
There are circumstances where biodiesel can also work as a fuel, in my opinion. However, we should not confuse a viable alternative to petroleum with an environmentally-friendly fuel. Some of the biofuels are good alternatives to petroleum but are neutral, a bit better, or even worse than petroleum when it comes to the environment. The details matter a lot.
Problems with emissions from biofuels, whether ethanol or some biodiesel, could possibly be dealt with by better catalytic converters or engine design. That is just speculation on my part. We should do the research to find out. That is the kind of thing that governments should support, as stated above by jon: tax dollars for research and development, but not for production or capital investment into boondoggles.
Something just doesn't add up.
We currently grow our food above the ground, and get our fuel from under the ground.
Now we think we can suddenly grow our food AND get the same amount of fuel from above the ground?
Maybe if we're all rationed to 100 miles a year......but basically, it's greedy.
Arguements agains bio-fuels reminds me of outrageous divorce settlements. "$50,000 per month doesn't even meet my expenses! It'll never do!" Try spending less. Bio-fuels can't replace fossil fuels and supply food for the entire world with our current technology. To many people using too much. To say bio-fuels are not part of the solution is to not understand the problem.