Twenty-four Republican senators, including Sen. John McCain got together on May 5 to demand that the EPA to waive or roll back requirements that mandate 36 billion gallons of biofuel production by 2022 in order to ease pressure on food and livestock feed prices.
"People are now starving to death because of this transfer from food to fuel," said Sen. James Inhofe, R-Oklahoma, the ranking Republican on the Senate Environment and Public Works Committee.
This type of overblown rhetoric seems to be on the rise. A number of recent stories in the media have been represented as evidence of the growing food vs. fuel crisis. Biofuels are often cited as a cause, typically singling out ethanol. In many cases, such as the so-called "tortilla riots," these articles simply get the facts wrong. Last year, food riots erupted in Mexico over the rising price of white corn, which is produced primarily by Mexican growers for the domestic market. In fact, the Ethanol Promotion and Information Council (EPIC) noted that US corn exports in 2007-08 market year were 2.25 billion bushels, 6 percent more than in 2006-07 and the highest since 1990, and that the largest increase in sales went to Mexico, "one of the very nations that we are supposedly starving to death."
One reason behind the recent media blitz on ethanol might be the fact that interested groups like the American Petroleum Institute (API) which are opposed to ethanol, have launched a PR campaign against it. Vinod Khosla, the Silicon Valley venture capitalist and advocate for ethanol, at the Wall Street Journal's ECO:nomics conference, noted that "the API started issuing press releases about food. Suddenly they got interested in the welfare of poor Africans."
According to Roll Call, a Capitol Hill insider newspaper, the Grocery Manufacturers Association (GMA), has launched a multi-million dollar, 6-month campaign against ethanol on behalf of its members, which include the Altria Group Inc., the Coca-Cola Company, ConAgra Foods, General Mills, Nestle, PepsiCo, Inc., Procter & Gamble, and Unilever, designed to turn public opinion against ethanol fuel.
The senator's claims of a food vs. fuel crisis have put them at odds with the Bush administration as well. Agriculture Secretary Ed Schafer disputed whether ethanol is to blame for rising world food prices. He said his department calculates that competition between food and biofuels accounts only for up to 3 percent of food price increases. "Only a very small portion of this problem is ethanol driven," Mr. Schafer said in an interview.
Studies seem to support Mr. Schafer's estimates. In a report authored by a group of agricultural economists at Texas A&M University's Agricultural & Food Policy Center, researchers concluded that "The underlying force driving changes in the agricultural industry, along with the economy as a whole, is overall higher energy costs," not biofuels. In addition, reducing the amount of ethanol the government requires each year "does not result in significantly lower corn prices." That's because the ethanol industry is now being driven largely by market forces rather than by the government's renewable-fuel mandate.
With the farm value of the corn in a box of corn flakes about 8.6 cents at the current price of $6.00 per bushel (USDA), it is difficult to buy the argument that ethanol is significantly driving food prices. The argument that higher corn prices will cause meat prices to increase is a stronger argument because feed is a major cost of meat production. But even then ethanol is only one of the factors causing higher food prices, and about a third of the corn used to produce ethanol is recovered as distiller's grains, a high fat and protein product suitable for animal feed.
John Podesta, CEO of the Center for American Progress, said that fossil fuels account for two-thirds of the cost of producing and transporting grains, and blamed the 129 percent increase in fuel costs for the increase in food prices. In addition, the cost of fertilizer has doubled as have many other agricultural costs that are petroleum based, from pesticides to packaging. Drought and poor conditions for world production of wheat during recent growing seasons are largely responsible for higher wheat prices.
But none of this has seemed to phase the GOP Senators. "American families are feeling the strain of these food-to-fuel mandates in the grocery aisle and are growing concerned about the emerging environmental concerns of growing corn-based ethanol," they released in a written statement.
Even Democratic frontrunner Sen. Barack Obama Obama recently suggested he was open to changing ethanol policy, although his statements were a bit more nuanced, stressing the need to convert from corn-based ethanol to "ethanol that is made from non-food stock."
The issue really seems to have more to do with posturing over the upcoming battle over the Farm Bill, which President Bush has threatened to veto, than any rational debate over ethanol policy. What is lost in the argument is that corn ethanol has always been seen as a transitional fuel. Even the most optimistic in the industry have never claimed ethanol alone would meet all of our energy needs, rather one piece of the sustainable fuels puzzle.
Ethanol as an energy source is far from perfect. Wind and solar can be used to efficiently produce electricity, and a lot of urban transportation needs can run on electric. But liquid hydrocarbon fuels – in a form that can be used to fill up a gas tank - will remain the only practical alternative for most rural and interstate transportation and agricultural purposes for quite some time. Even hybrids require liquid fuel. Non-food plants that can be grown on marginal lands with minimal input of fertilizers and pesticides are the future of biofuel technology. Crops like switchgrass, prairie grasses, and even alternatives like algae may offer the best prospects for supplying biofuels.
The next generation of cellulostic ethanol will improve efficiencies in production and land use, but it will first be necessary to loosen the oil and gas industry's death-grip on the gas pump handle. It would be a shame if politicians and corporate media ensure its early demise in the court of public opinion by using it as a scapegoat for the world's food supply troubles.
References:
"McCain, GOP senators call for easing of ethanol rules" - CNN 5/5/2008
"Khosla, Cavaney In Ethanol Food Fight" - Wall Street Journal 5/14/2008
"Ethanol as cause of food crisis 'flat-out wrong' - Washington Times 5/10/2008
"Is Ethanol Getting a Bum Rap?" - BusinessWeek 5/1/2008
"The Ethanol Industrial Complex" - Forbes 5/7/2008
Demand for ethanol and other biofuels is a "significant contributor" to soaring food prices around the world, World Bank President Robert Zoellick says. Droughts, financial market speculators and increased demand for food have also helped create "a perfect storm" that has boosted those prices, he says.
Source: World Bank Chief: Biofuels Boosting Food Prices
DuPont and Genencor have just announced a $140M venture to produce cellulosic ethanol, which made from crop remnants rather than actual corn.
Using remnants from corn is a great idea....they can use remnants from any crop really. Better yet there have been advances in using algae, as Infohack mentioned, for ethanol.
What do you believe is the main cost that is driving up the price of manufactured finished food goods, like cornflakes?
Clearly, if you read the 10-K report of any food manufacturer, it is commodity prices not fuel prices that has been driving up their COGS.
Now, of course, the question is what is the main factor that has driven up the cost of food commodities?
Now from 1974 until 1985, fuel prices spiked in a similar fashioned to the last few years. However, the commodity spike that followed was driven by fuel and metals, not by agriculture. We also do not have the agriculture prices lagging the fuel prices, so I doubt that it is fuel costs that are the main cost behind the food commodities increase.
I can find as many sources that blame ethanol as you can find that blame fuel or oil, so that is a wash in my opinion. Using logic and economics, what do you think is the main factor that has driven up the cost of food commodities?
No, it was not a trick question at all. I think if we were able to accurately gauge the percentage of individual factors this would be less of an issue.
I think you are missing a few factors:
F) Weaker dollar
G) Lower interest rates
Also, I would rephrase speculation
rather as Increased investors
who have being flooding the commodities market trying to hedge against inflation since about 2001. It is so bad it is has started to effect the fluidity of some markets.
However, I am not really hinting at anything. I have not been able to narrow down a single factor that I could point to as the main reason for the increase. I believe it is probably between the increased demand (driven both by biofuels and developing countries) and the increase in capital investment in the markets.
It depends on whether or not corn is replacing rice in the fields. If that was occurring, and I am sure it is not, then it is possible that market demands would drive the price of rice higher than that of corn.
I do not believe that ethanol is the main factor in the increase in food prices, it may be the main factor in the increase in corn though. Regardless, to answer your question; yes I do believe there is a PR campaign against ethanol, just as there is a PR campaign for it to.
I think the main reason many people like Zoellick are quick to lay the blame on biofuels is because when you look at all the factors which are working to increase the cost of food commodities, the demand for biofuels is the easiest to manipulate.
In terms of energy density (or Watt hours per liter), ethanol isn't that great a choice. Diesel is far better, and just as capable of being produced by renewable sources. It's amazing to me that the gas companies want to charge premium prices for ethanol or gas/ethanol mixtures that deliver lower mpg than regular old gasoline, and far lower than diesel fuel.
Add to that the fact that under current development are methods for producing bio-diesel from algae that pretty much just eats carbon and water and produces diesel, thereby sidestepping the whole food/fuel question entirely. And when the algae is processed for the diesel, the remains can be processed for cellulosic ethanol, if so desired.
We could switch to largely diesel-powered fleet of vehicles in a short amount of time, decrease the total gallons of fuel which we consume through improved mpg over gasoline or ethanol, and still produce ethanol/gas mixtures for those without the means to switch over to diesel-powered vehicles quickly, with minimal changes to our infrastructure, but apparently the thought seems too scary for politicians to consider.
As a result, we have initiatives to push the worst of the alternative fuel choices, and will wind up paying top dollar for it. Sad, really.
I don't think there has to be any waiting for bio-diesel, or at the very least, if there is waiting to be done, it doesn't need to be any longer than the waiting we'd be doing for ethanol to become the widespread fuel of choice. That's my point. There's really nothing that ethanol has going for it that couldn't also be said to be true of bio-diesel at this moment in time.
Marketability and consumer acceptance? At $4/gallon or more, I would think getting double the mileage of ethanol would be a strong incentive to prefer bio-diesel powered vehicles over ethanol-powered vehicles.
In terms of infrastructure changes that would need to be put in place, there's little (if any) difference. In terms of fuel consumption, one would halve our consumption compared to the other. No technological breakthroughs are required for this, either. The technology is ready to go, today, off the shelf.
How is pushing bio-diesel NOT a pragmatic approach?
Yes, I can tell you as someone on the front lines, there is a huge anti-ethanol campaign under way. But did you know:
1. Almost every country can become energy-independent. Anywhere that has sunlight and land can produce alcohol from plants. Brazil, the fifth largest country in the world imports no oil, since half its cars run on alcohol fuel made from sugarcane, grown on 1% of its land.
2. We can reverse global warming. Since alcohol is made from plants, its production takes carbon dioxide out of the air, sequestering it, with the result that it reverses the greenhouse effect (while potentially vastly improving the soil). Recent studies show that in a permaculturally designed mixed-crop alcohol fuel production system, the amount of greenhouse gases removed from the atmosphere by plants—and then exuded by plant roots into the soil as sugar—can be 13 times what is emitted by processing the crops and burning the alcohol in our cars.
3. We can revitalize the economy instead of suffering through Peak Oil. Oil is running out, and what we replace it with will make a big difference in our environment and economy. Alcohol fuel production and use is clean and environmentally sustainable, and will revitalize families, farms, towns, cities, industries, as well as the environment. A national switch to alcohol fuel would provide many millions of new permanent jobs.
4. No new technological breakthroughs are needed. We can make alcohol fuel out of what we have, where we are. Alcohol fuel can efficiently be made out of many things, from waste products like stale donuts, grass clippings, food processing waste-even ocean kelp. Many crops produce many times more alcohol per acre than corn, using arid, marshy, or even marginal land in addition to farmland. Just our lawn clippings could replace a third of the autofuel we get from the Mideast.
5. Unlike hydrogen fuel cells, we can easily use alcohol fuel in the vehicles we already own. Unmodified cars can run on 50% alcohol, and converting to 100% alcohol or flexible fueling (both alcohol and gas) costs only a few hundred dollars. Most auto companies already sell new dual-fuel vehicles.
6. Alcohol is a superior fuel to gasoline! It's 105 octane, burns much cooler with less vibration, is less flammable in case of accident, is 98% pollution-free, has lower evaporative emissions, and deposits no carbon in the engine or oil, resulting in a tripling of engine life. Specialized alcohol engines can get at least 22% better mileage than gasoline or diesel.
7. It's not just for gasoline cars. We can also easily use alcohol fuel to power diesel engines, trains, aircraft, small utility engines, generators to make electricity, heaters for our homes—and it can even be used to cook our food.
8. Alcohol has a proud history. Gasoline is a refinery's toxic waste; alcohol fuel is liquid sunshine. Henry Ford's early cars were all flex-fuel. It wasn't until gasoline magnate John D. Rockefeller funded Prohibition that alcohol fuel companies were driven out of business.
9. The byproducts of alcohol production are clean, instead of being oil refinery waste, and are worth more than the alcohol itself. In fact, they can make petrochemical fertilizers and herbicides obsolete. The alcohol production process concentrates and makes more digestible all protein and non-starch nutrients in the crop. It's so nutritious that when used as animal feed, it produces more meat or milk than the corn it comes from. That's right, fermentation of corn increases the food supply and lowers the cost of food.
10. Locally produced ethanol supercharges regional economies. Instead of fuel expenditures draining capital away to foreign bank accounts, each gallon of alcohol produces local income that gets recirculated many times. Every dollar of tax credit for alcohol generates up to $6 in new tax revenues from the increased local business.
11. Alcohol production brings many new small-scale business opportunities. There is huge potential for profitable local, integrated, small-scale businesses that produce alcohol and related byproducts, whereas when gas was cheap, alcohol plants had to be huge to make a profit.
12. Scale matters—most of the widely publicized potential problems with ethanol are a function of scale. Once production plants get beyond a certain size and are too far away from the crops that supply them, closing the ecological loop becomes problematic. Smaller-scale operations can more efficiently use a wide variety of crops than huge specialized one-crop plants, and diversification of crops would largely eliminate the problems of monoculture.
13. The byproducts of small-scale alcohol plants can be used in profitable, energy-efficient, and environmentally positive ways. For instance, spent mash (the liquid left over after distillation) contains all the nutrients the next fuel crop needs and can return it back to the soil if the fields are close to the operation. Big-scale plants, because they bring in crops from up to 45 miles away, can't do this, so they have to evaporate all the water and sell the resulting byproduct as low-price animal feed,which accounts for half the energy used in the plant.
By combining permaculture, smart agriculture and market forces, we can turn Peak Oil on its ugly head and not have to have a collapse.
Regards,
Randy White
Marketing Director
Alcohol Can Be A Gas
randy@alcoholcanbeagas.com
it's 105 octane, burns much cooler with less vibration
Higher octane is good. But higher octane is good because it means that the engine can run with higher compression, which means that it can run hotter, not cooler, improving efficiency per Carnot's theorem. You've essentially claimed that it can run simultaneously both hotter and cooler, which makes me skeptical.
Specialized alcohol engines can get at least 22% better mileage than gasoline or diesel.
Which? Because it can't be both. Diesel already gets 40% more mileage than gasoline.
I'm not saying ethanol can't be viable (obviously the example of Brazil proves that it can be), but you paint a pretty rosy picture, and the two items above leave me dubious as to whether that picture is entirely accurate.
Uh, natural gas anyone?
We can use it to get begin the transition away from oil, and this time, use what we have learned about limited and natural resources to actually plan for the depletion of natural gas.
There seems to be some sort of outside force making it difficult for companies like Honda to sell their CNG vehicles outside a select couple states. However, where available the CNG Civic comes with an at-home refueling station that plugs into your gas line in your garage. The unit is about $2,000 and the car run $9-10k more than the base model.
With that said, the price would come down if there were competition. Here is Arizona the State gave huge rebates to folks that converted their vehicles to CNG. The issue was and still is this; with CNG your vehicle will still run on gasoline. At the time the state adopted their rebate policy was still cheap and no one bothered to run CNG and the State lost billions (arguably though, I don't think they were trying to make money, they were trying to be pioneers).
Ethanol as a fuel is energy neutral. This is another case of "do something, anything" in response the the environment. Studies have been done that differentiate between the fuel costs and diversion of corn to ethanol. The lowest grade of corn that used to be fed to the animals is now being converted to fuel. The result is that the farmers have to buy a higher grade of corn (more expensive BEFORE shipping costs) to feed the animals.
I agree that there are many reasons to reduce dependence on foreign oil. I prefer better research being done.
Your statistics on the energy fail to mention that the ethanol is less efficiently converted to energy in most automobile engines. This is the end point that makes it a negative result.
The car makers have agreed to make a product to use another product for which there is no availability. How much penetration into the market is necessary before they will produce the cars that will be out 4-5 years later?
Gasohol has been around for many years. I bought it over 3o years ago in some parts of the Midwest. One would think that such a worthy product would have made a better penetration into the market by now if it were going to.
I agree that there are many reasons to reduce dependence on foreign oil. I prefer better research being done.
Your statistics on the energy fail to mention that the ethanol is less efficiently converted to energy in most automobile engines. This is the end point that makes it a negative result.
"People are now starving to death because of this transfer from food to fuel," said Sen. James Inhofe, R-Oklahoma,
First rule when weighing the value of a statement, especially emanating from the Capitol region, consider the source and the source of financial advantage. Inhofe has been solidly behind petrochemical and industrial interests with regard to lower standards and higher revenues.
He is so extreme that he blocked an act to reduce the toxicity of chemicals stored around the nation as a Homeland Security measure. The rare bit of good logic is that the less dangerous the facility the less disastrous the worst would be. Anyway Inhofe is no friend of the environment.
Dang it, I've got a call and won't wait and will not have it in me to do justice, until tomorrow...thank you it's a fabulous discussion piece, so glad you linked me in!! I'll be baak, tee hee. :~)
This is not the first time oil companies are faced with a threat of biological additives. Last time 'round it was alcohol. In Europe this was quite popular, though people were not talking about the environment but overproduction of wines and a smooth running engine. The answer to this threat was something given the innocent name "ethel" which was what the oil companies called it to avoid the ominous sounding "lead".
What we are now witnessing is a bad guy doing what the good guys are telling him - but doing it in such a way as to create a crisis. The environmentalists are like the kid who says: "I'd like some chewing gum" and the bad guy unwraps a pound of the stuff and forces it down the kid's throat, saying "You asked for it". Note that this corn production is being subsidized and production of agricultural produce is shifting to take advantage of the artifically high prices. Also, the alternative - sugar cane ethanol from Brazil (or even Cuba) is being blocked.
We've got two goals mixed together:1) an environmentally friendly fuel, and 2) self sufficiency. Actually there two goals have nothing to do with each other, they just happen to co-incide.
You're in Easy Mode. If you prefer, you can use XHTML Mode instead. |