Showing posts with label corn. Show all posts
Showing posts with label corn. Show all posts

Tuesday, March 3, 2009

EU biofuel trade war is brewing

March 4, 2009

Europe Backs Tariffs on U.S. Biofuel Imports


BRUSSELS — Seeking to protect their beleaguered biodiesel industry, European governments on Tuesday backed a plan to impose provisional tariffs on American biodiesel producers
like Cargill and Archer Daniels Midland, European Union diplomats said.

Both the European Union and the United States subsidize their
biodiesel industries. But European producers have complained to trade
regulators that their counterparts in the United States benefit twice:
from subsidies by the United States government to produce biodiesel,
and from subsidies granted by European governments when the fuel is
sold on the Continent.

Moves by the European Union to impose tariffs come as concerns are growing
that protectionism by governments during the current downturn could
spiral out of control. But representatives of the European biodiesel
industry said the measures being undertaken by European officials were
necessary and justified under World Trade Organization rules.

“Whatever the action of the United States will be — even in front of
the W.T.O. — our complaint and our case is well grounded,” said
Raffaelo Garofalo, the secretary general of the European Biodiesel
Board, an industry group. “There is no logical explanation for why
biodiesel sold in Europe could be cheaper than its raw materials.”

European diplomats spoke on condition of anonymity because a final determination on the levels of duties remained with the European Commission, which is not expected to publish its decision until next week.

Under European rules, the commission is entitled to impose
provisional duties lasting six months. Any definitive measures, lasting
five years, would need approval by European governments before the
summer.

“We are not commenting on expected decisions and instead will wait
for official action to be taken by the commission,” said an American
trade official, who spoke on condition of anonymity because a formal
decision had not yet been made.

To counter what it calls unfair subsidies to the American industry,
the commission is poised to impose tariffs of 261 to 407 euros, or $328
to $511, on a ton of American biodiesel, the diplomats said. Dozens of
companies would be affected, the diplomats said.

The level of tariffs would be tailored to individual companies to
reflect the types and amounts of the fuel they produce, and the amount
of subsidies and other support they receive from American authorities,
the diplomats said. Commission officials have visited United States as
part of an investigation since beginning formal proceedings last year,
they said.

http://www.nytimes.com/2009/03/04/business/worldbusiness/04biodiesel.html?pagewanted=print

Saturday, July 26, 2008

Gassing up with garbage

July 24, 2008
The Energy Challenge, NYTIMES

Gassing Up With Garbage
By MATTHEW L. WALD

After years of false starts, a new industry selling motor fuel made from waste is getting a big push in the United States, with the first commercial sales possible within months.

Many companies have announced plans to build plants that would take in material like wood chips, garbage or crop waste and turn out motor fuels. About 28 small plants are in advanced planning, under construction or, in a handful of cases, already up and running in test mode.

For decades scientists have known it was possible to convert waste to fuel, but in an era of cheap oil, it made little sense. With oil now trading around $125 a barrel and gasoline above $4 a gallon, the potential economics of a waste-to-fuel industry have shifted radically, setting off a frenzy to be first to market.

“I think American innovation is going to come up with the solution,” said Prabhakar Nair, research chief for UOP, a company working on the problem.

Success is far from assured, however. Some of the latest announcements come from small companies whose dreams may be bigger than their bank accounts. They are counting on billions in taxpayer subsidies. Big technological hurdles remain, and even if they can be solved, no one is sure what unintended consequences will emerge or what it will really cost to produce this type of fuel.

“We desperately need it, and I personally think it’s not there yet,” said Steven Chu, director of the Lawrence Berkeley National Laboratory and a Nobel Prize-winning physicist. “You have to look at starts with a grain of salt, especially starts where they say, ‘It’s around the corner, and by the way, can you pay half the bill?’ ”

Still, the incentive to make fuel from something, anything, besides oil and food is greater than ever. Moreover, the federal government is offering grants to help plants get off the ground and subsidies for one type of fuel of $1.01 a gallon, twice the subsidy it historically offered to ethanol made from corn.

Potential controls on global warming gases would heighten the appeal of these fuels, since many of them would add little new carbon dioxide to the atmosphere.

Tellingly, the type of companies placing bets on the field has started to expand. The earliest were small start-ups founded by people with more technological vision than business experience. Now some of the giants of global business, including Honeywell, Dupont, General Motors, Shell and BP, are taking stakes in the nascent industry.

The dream of making fuel from plants is almost as old as the internal combustion engine. Henry Ford himself was fascinated by the idea, and it re-emerges in periods of fuel scarcity and high prices. These days, advancing technology has made the notion more plausible.

Virtually any material containing hydrogen, carbon and oxygen could potentially be turned into motor fuel. That includes plastics, construction debris, forest and lawn trimmings, wood chips, wheat straw and many other types of agricultural waste.

The potential fuels include ethanol, which can be blended with gasoline, or other liquids that could displace gasoline or diesel entirely. Government studies suggest the country could potentially replace half its gasoline supply in this way — even more if cars became more efficient.

The government is pushing to get the industry off the ground. Legislation passed last year mandates the use of 36 billion gallons of biofuels a year by 2022, less than half of it from corn ethanol. Almost all the rest is supposed to come from nonfood sources, though the requirement could be waived if the industry faltered.

“One has to say upfront that what Congress has done is remarkable in its bravery,” said David Morris, vice president of the Institute for Local Self Reliance, a group in Minneapolis that advocates biofuels.

Much of the new money flowing into the field is coming from Silicon Valley, where the venture capitalists who gave the world the Internet revolution see an opportunity to do something similar with the fuel supply.

At Solazyme, a start-up in South San Francisco that hopes to commercialize a process for making fuel from algae, President Harrison F. Dillon said, “When we founded the company in 2003, we couldn’t find a venture capital firm that had heard of the concept of a biofuel.” Now he is backed by two such firms.

Venture capital investment in the first half of this year hit $612 million, up from $375 million in all of 2007, according to a survey by Thomson Reuters. Every few days brings another announcement. PFC Energy, a Washington consulting firm, counts projects worth perhaps $1.5 billion that will total more than 300 million gallons of capacity by 2011, if they all get built.

That is small in the scheme of American fuel demand, but it would presumably set the stage for substantial growth if those first projects prove that the economics can work.

One of the first companies to bring a plant online is KL Process Design Group, in Wyoming. With experience making corn ethanol plants, it has built a small plant meant to use pine wastes from a nearby national forest. The company is still testing its production line but hopes to begin commercial sales of ethanol late this year.

“We’re still learning and tweaking, and hoping for a little bit of capital infusion,” said Tom Slunecka, a vice president of the company.

Range Fuels, of Denver, is building a commercial-scale plant in Soperton, Ga., with help from the Energy Department. That plant will take pine chips and turn them into ethanol, with commercial sales expected by late 2009 or 2010.

Some companies want to use garbage. On Friday, a company called Fulcrum BioEnergy said it would start construction later this year on a $120 million plant at the Tahoe-Reno Industrial Center, in Storey County, Nev., to make 10.5 million gallons of ethanol a year from 90,000 tons of garbage. Operation would begin in early 2010.

In Montreal, another firm, Enerkem, plans to use arsenic-contaminated utility poles from the provincial electric company. On Wednesday, the Los Angeles County Regional Planning
Commission approved a plan by BlueFire Ethanol to build a $30 million garbage-to-ethanol plant on 10 acres next to a landfill in Lancaster, Calif.; construction will start soon, the company said.

A handful of small companies has long made a diesel replacement from waste oil, or sold kits to individuals to do the same. One company in Carthage, Mo., even turns turkey guts into fuel. The goal of the emerging waste-to-fuel industry is more elaborate, however: to take bulky, solid feedstocks and transform them into high-grade motor fuel.

History provides plenty of warning that it will not be easy. A company called Verenium in Lafayette, La., has cut ribbons three times in one locale since 1998 on plants that would supposedly make fuel from sugar cane waste, and has yet to sell a drop because of problems converting laboratory success into smooth, commercial-scale operation.

A bigger operation, Iogen, has been running a demonstration plant in Ottawa since 2004 that can turn wheat straw into ethanol. It was expected to build a plant in Idaho but has suspended work to focus attention on a plant in Saskatchewan. “It would be our view that there are substantial challenges in scaling up a big new biochemical process,” said Brian Foody, the president.

The Energy Department early last year picked six projects as most likely to succeed, and offered each of them tens of millions of dollars. Iogen’s Idaho project was among them; so was a plant in Kansas proposed by a Florida company, Alico, that has also been abandoned. Still, increasing interest from big companies — ones with a track record of solving technical problems — suggests that a waste-to-fuel industry may not remain out of reach forever.

General Motors has invested an undisclosed sum in two companies, Coskata, of Warrenville, Ill., and Macoma, of Lebanon, N.H., that aim to turn crop wastes into ethanol.

DuPont, one of the world’s largest chemical companies, has joined forces with a company called Genencor, announcing plans to commercialize a process for making ethanol from the nonedible parts of corn and sugar cane. They plan to invest $140 million over three years.

In making their announcement, the companies estimated the worldwide market for fuels made by methods like theirs would eventually reach $75 billion, dwarfing the scale of today’s biofuels produced from food crops like corn and sugar cane.

Monday, July 21, 2008

Africa’s Women Last and Least in Food Crisis


Africa’s Women Last and Least in Food Crisis
by Kevin Sullivan

0720 04 1OUAGADOUGOU, Burkina Faso -
After she woke in the dark to sweep city streets, after she walked an
hour to buy less than $2 worth of food, after she cooked for two hours
in the searing noon heat, Fanta Lingani served her family’s only meal
of the day.

First she set out a bowl of corn mush, seasoned with tree leaves,
dried fish and wood ashes, for the 11 smallest children, who tore into
it with bare hands.

Then she set out a bowl for her husband. Then two bowls for a dozen
older children. Then finally, after everyone else had finished, a bowl
for herself. She always eats last.

A year ago, before food prices nearly doubled, Lingani would have
had three meals a day of meat, rice and vegetables. Now two mouthfuls
of bland mush would have to do her until tomorrow.

Rubbing her red-rimmed eyes, chewing lightly on a twig she picked
off the ground, Lingani gave the last of her food to the children.

“I’m not hungry,” she said.

Mealtime conspires against women
In poor West African nations such as Burkina Faso, mealtime conspires
against women. They grow the food, fetch the water, shop at the market
and cook the meals. But when it comes time to eat, men and children eat
first, and women eat last and least.

Soaring prices for food and fuel have pushed more than 130 million
poor people across vast swaths of Africa, Asia and Latin America deeper
into poverty in the past year, according to the U.N. World Food
Program. But while millions of men and children are also hungrier,
women are the hungriest and skinniest. Aid workers call malnutrition
among women one of the most notable hidden consequences of the food
crisis.

“It’s a cultural thing,” said HervĂ© Kone, director of a group that
promotes development, social justice and human rights in Burkina Faso.
“When the kids are hungry, they go to their mother, not their father.
And when there is less food, women are the first to eat less.”

A recent study by the aid group Catholic Relief Services found that
many people in Burkina Faso are now spending 75 percent or more of
their income on food, leaving little for other basic needs.

Pregnant women and young mothers are forgoing medical care. More
women are turning to prostitution to pay for food. And more families
are pulling children — especially girls — out of school, unable to
afford fees and clothes.

But perhaps the most pervasive effect of the growing global crisis
is the ache in the stomachs of millions of poor women such as Fanta
Lingani.

Sweeping for pennies
Lingani, who sleeps on a concrete floor, began one recent day at 4 a.m.
and dressed quietly in the dark. All around her, children slept on the
cracked floor under a tin roof, common conditions in a country that
ranks 176th out of 177 on the U.N. Human Development Index.

A year ago, Lingani might have started a small fire to boil herself a cup of weak coffee. But even that is now too expensive.

Such sacrifices led to food riots in February in Ouagadougou, the
capital, and towns across the country. Hundreds of people were arrested
after they set fires and smashed government buildings to protest rising
prices. But for Lingani, the struggle is quieter, and harder by the
day, and it starts before the sun comes up.

Lingani, who said she is about 50, walked across the dirt courtyard
past the two-room hut where her husband was sleeping in his own double
bed, with a thick mattress. The dirt street outside was muddy and
steamy from an overnight rain shower.

After a half-hour walk on the black-dark streets, she reported for
work and pulled on the long green smock of the Green Brigade, a city
program that pays poor women the equivalent of about $1.20 a day to
sweep streets two mornings a week.

Lingani picked up a pair of small straw brooms and pushed a
wheelbarrow onto a wide, deserted avenue. In the orange haze of
streetlights, she bent over at the waist, so far that her bottom was
higher than her head, and started pushing red dust into little piles.

The “shssssh shssssh” of her sweeping was the only sound, except for
the crowing of a few roosters and occasional laughter from men at an
all-night bar down the road.

She worked a section of road about 150 yards long, while a dozen
others in the all-female brigade swept along. A tanker truck sped down
the street, kicking up a cloud of dust into her face and blowing away
her little piles. She coughed, pulled her pink head scarf across her
face and swept the same dust all over again.

Lingani swept until the sun came up, pushing her piles onto a small
metal dish, then dumping them into a wheelbarrow and finally into a
pothole on an unpaved side street.

By 7 a.m., she’d finished her section. But she had to wait an hour
for a male supervisor to show up and check her work. In two weeks, she
would get her monthly pay of less than $10.

‘The job of women’
Lingani walked a half hour back to her house, where her huge family was
starting to stir. She took off her smock and picked up a green plastic
basket about the size of a shoebox.

Market time. She and one of her two “co-wives,” Asseta Zagre, do the
shopping on alternate days. Their husband’s other wife, the senior of
the three, is nearly blind and can’t do chores anymore.

Polygamy is common in much of Africa. In this household, the
patriarch is Hamado Zorome, 68, a retired police officer whose pension
is the family’s main income — but he doesn’t tell his wives how much he
gets.

The pension of a mid-level civil servant is probably modest in
Burkina Faso, where the United Nations says nearly 72 percent of the
country’s 15 million people live on less than $2 a day.

Zorome also collects a “tip” of 60 cents from each of his two
working wives when they get their monthly pay, which he uses to buy the
kola nuts he likes to chew.

Lingani and Zagre, who also sweeps streets, said Zorome doles out
small amounts of money for them to buy staples such as cornmeal. But
the bulk of the family’s meals are paid for out of the wives’ sweeping
wages.

As she prepared to leave for the market, Lingani kept bending over
and rubbing her ankles and feet. She said they hurt from sweeping for
so long. She has never weighed herself, but she said she can feel a
significant loss in her weight and strength in the past year.

Last month’s sweeping money was already gone. So she went to her
husband, who handed her about $2.50 for groceries. He told her to spend
no more than about 75 cents and save the rest for another day.

“Women are born with this job” of feeding the family, Lingani said,
as she walked around puddles and past goats tied to trees. “The man has
to have his share. And we have to make sure the kids have their share.
So we eat less.”

Lingani said none of the older boys in the family has a steady job,
since work is hard to come by in this poor city. So, she said, the boys
mostly spend their days doing odd jobs or playing soccer. What little
money they earn they tend to spend on food and beer for themselves.

“A man can never sit at home. They are always out somewhere,” Lingani said. “They don’t do anything. They don’t help.”

Lingani walked past small stands where women were selling fruit or
water, assisted by small girls. A few men sold bags or charcoal, but
most were sitting in the shade and talking.

“Men and women should fight together for the children,” Lingani
said. “But if the men won’t do that, the women have to fight alone.”

Zorome, Lingani’s husband, said that men don’t help with shopping
and cooking because “that is the job of women.” Like many men
interviewed here, he said African culture clearly defines roles for
men, who work outside the house, and women, who manage children and
meals.

He said that men are willing to work but that jobs are scarce. He
would prefer it if his wives didn’t have to sweep streets, but “life is
much more expensive now.”

“Last year, we could eat well, but now, forget it,” he said. “My
sons don’t work, so it’s up to me to feed 25 people. That’s why the
women sweep. We don’t have anything, so they have to work. That’s life.”

Ugly math
On her way to the market, Lingani explained the ugly math: A year ago,
she could feed her entire family a nutritious meal of meat and
vegetables and peanut sauce for about 75 cents. But now the family gets
much lower-quality food for twice the price.

She said the cost of six pounds of cornmeal has risen from 75 cents
to $1.50. A kilogram — 2.2 pounds — of rice cost 60 cents last year and
costs a little more than $1 now. Other basics such as salt and cooking
oil have also doubled in price.

Fuel costs have more than doubled for trucks that haul food to landlocked Burkina Faso, helping keep food prices high.

Beef or goat meat is now so expensive — about $1.20 for a tiny
portion — that the family has given up meat completely, eating cheap
dried fish instead. Rather than seasoning their sauces with vegetables
and peanuts, they now use the tough leaves of baobab trees, the gnarly
giants that flourish here in the dry lands south of the Sahara.

To soften the sour taste of the leaves, Lingani mixes in potash, a
paste made by boiling down water strained through ashes from wood fires.

“In the past, our money would last the whole month. We might even
have some left over,” Lingani said. “But now as soon as it arrives, we
spend it.”

Dinner happens only if there is a bit of food left over from lunch. Even then, she said, there is rarely enough left for women.

“When the children ask for food, we have to give it to them,” she said. “We’re mothers.”

Never enough
“Are you sure you don’t want more?” the vegetable vendor asked Lingani. “Is that enough for your family?”

Lingani, standing in a crowded neighborhood market, had just asked the woman for 30 cents worth of baobab leaves.

“No, it’s fine,” Lingani said, handing over a few coins.

The vendor shrugged and stashed the coins under a burlap sack of
tomatoes covered with a beard of small flies. She handed Lingani back
some change, which she counted carefully.

At the next stall, Lingani bought four small onions. As she turned
to leave, the seller tossed in a fifth with an understanding smile.
Lingani caught her eye and thanked her.

Moving through the churning mass of people, Lingani bought a bag of
dried fish, a small plastic bag of salt, two small cubes of beef
bouillon and a bag of potash, the paste made from ashes.

In 10 minutes, her shopping was done. She had spent double her budget of 75 cents.

After the half-hour walk home, with the temperature already above
90, Lingani and Zagre started plucking the baobab she bought at the
market, saving the leaves and throwing away the thick stems.

For an hour, the two women methodically pounded the rough leaves in
a wooden bowl, then dumped them into a pot boiling over a wood fire.
Then Lingani added the dried fish and some of the ash flavoring.

“Of course we would prefer something else,” she said. “But it’s the
cheapest thing we can buy, and we can afford enough to feed everybody.”

Two hours after she started cooking, Lingani scooped out six bowls
of flavorless food. The first was for Zorome, delivered to his hut. He
ate it alone, then said he felt as though he needed a nap.

Others were set aside to be shared by the children.

The last bowl, slightly larger than Zorome’s, was to be shared by 10
people: Lingani, Zagre and eight small grandchildren. Lingani took two
bites before letting five hungry toddlers finish her food.

Near the front gate, half a dozen of the children sat in a circle,
playing a game. They had built a play fire out of pieces of bark. On
top of it they had placed a little plastic cup, overflowing with street
garbage: onion skins and bits of rotting leaves.

They were pretending to cook.

“We’re cooking rice with meat!” said a beaming Ousmane, 6, the head chef.

His father, Zorome, watched the game and laughed. He was asked if he
would eat again today. Yes, he said, Lingani would make him a little
rice or porridge for dinner that night.

Nearby, his daughters and granddaughters heard him and exploded.
“What are you talking about?” they said. “Why are you saying that? We
have no food.”

Zorome smiled sadly and admitted his lie.

“When we have food one day, we have to tighten our belt the next,”
he said. “But it is very hard for a man to admit when things are not
good.”

Lingani was still sitting next to her empty food bowl. She had
stopped the children from finishing one last lump of corn mush, about
the size of her fist.

“The small children will be crying in a couple of hours, so we have
to save it,” she said. Her voice was small and soft, and she didn’t
look up from the red dirt. She said she felt “very sad.”

“I’m thinking too much,” she said.

Wednesday, July 16, 2008

Ending the ethanol gold rush and beginning the biofuels deathwatch

The market says corn ethanol is no good, so it must be so.

Graphic: Estimated breakeven corn price for Iowa ethanol plants.


There was a very good story on NPR about ethanol and the significant drops in investment due too venture capital drying up, and how the credit crunch is making the construction of these plants hard to finance. Turns out that even corn ethanol is linked up with the banking crisis.
http://www.npr.org/templates/story/story.php?storyId=92559699

Also, check out Biofuels deathwatch... a fantastic resource from earth2tech.com
http://earth2tech.com/2008/01/09/earth2tech-maps-biofuels-deathwatch/

The costs of constructing those plants should be counted in the balance sheet against biofuels!

Tuesday, July 1, 2008

Ethanol, corn, and the weather

The NYT today had an article about the perfect storm brewing with ethanol and energy prices. They are arguing that the reliance on ethanol really makes energy prices vulnerable to weather disturbances, as they already are with all the refining and drilling capacity in the gulf of mexico.

Just think of how bad its going to get when the corn committed to ethanol almost quintuples over the next 12 years. We are really going to need some new way of producing ethanol, and if has to be corn, it has to be the whole plant, not just the cobs. That probably means genetic engineering, either engineering the corn plant to digest itself (like the Michigan State one with the enzyme in the vaccuole), or new enzymes to digest the whole plant in some kind of fermentation reactor... and with this the assocaited food safety and ecological risks... unless switchgrass, elephant grass, or some other exotic perrenial weed takes off... But that won't happen unless they work it into the farm bill....


July 1, 2008

Weather Risks Cloud Promise of Biofuel

The record storms and floods that swept through the Midwest last month struck at the heart of America’s corn region, drowning fields and dashing hopes of a bumper crop.

They also brought into sharp relief a new economic hazard. As America grows more reliant on corn for its fuel supply, it is becoming vulnerable to the many hazards that can damage crops, ranging from droughts to plagues to storms.

The floods have helped send the price of ethanol up 19 percent in a month. They appear to have had little effect on the price of gasoline at the pump, as ethanol represents only about 6 percent of the nation’s transport fuel today.

But that share is expected to rise to at least 20 percent in coming decades. Experts fear that a future crop failure could take so much fuel out of the market that it would send prices soaring at the pump. Eventually, the cost of filling Americans’ gas tanks could be influenced as much by hail in Iowa as by the bombing of an oil pipeline in Nigeria.

“We are holding ourselves hostage to the weather,” said John M. Reilly, a senior lecturer at the Massachusetts Institute of Technology and an ethanol expert. “Agricultural markets are subject to wide variability and big price spikes, just like oil markets.”

Three years ago, Americans discovered that the vicissitudes of the weather could have a powerful effect on energy prices when two hurricanes struck the Gulf Coast. Hurricanes Katrina and Rita interrupted a quarter of the nation’s oil production and closed dozens of refineries for weeks. Lines formed for the first time since the 1970s as gasoline spiked above $3 a gallon, a record at the time. The nation’s increasing dependence on crops for motor fuel adds another level of vulnerability from the weather.

It is still too early to estimate damage to corn crops from the recent floods, or their impact on ethanol output. Iowa, the biggest corn state, may have lost as much as 10 percent of its harvest, according to preliminary estimates.

But concerns that the floods could tighten corn supplies this year have pushed up both corn and ethanol prices. Ethanol, which was already rising before the floods, has nearly doubled from its low of $1.50 a gallon in September.

Unexpected interruptions in oil supplies have been a factor driving oil prices above $140 a barrel lately. Given the tight oil market, there is little untapped capacity that can be brought online to make up for sudden supply interruptions, whether of oil itself or of the biofuels that are increasingly substituting for oil.

In the 1980s, the oil capacity cushion peaked at around 20 percent of global consumption. Today, it represents only about 2 percent — less than Iran’s petroleum exports. Analysts have warned that such record-low levels of spare capacity pose unprecedented risks to the stability of oil markets and introduce a significant premium in the price of oil.

“There is now a vulnerability to perfect storms, not just in a metaphorical sense, but increasingly in a literal sense,” said Daniel Yergin, the chairman of Cambridge Energy Research Associates, a consulting firm. “In addition to geopolitical risks, you must now add weather risks.”

While storms, torrential rains and hurricanes have always been a part of energy production, the areas where most of the nation’s new oil and ethanol supplies are coming from — the corn belt and the Gulf of Mexico — are especially vulnerable to hazardous weather.

“Our energy policy is like playing Russian roulette with every chamber loaded,” said Lawrence J. Goldstein, an energy analyst at the Energy Policy Research Foundation, a group backed by the oil industry. “We’ve doubled up on the weather risk.”

Both the government and the ethanol industry recognize the risks of tying fuels to crops. The secretaries of energy and agriculture, in a joint letter to the Senate, recently said: “If we assumed a supply disruption of ethanol, we would expect a fairly large increase in the price of gasoline until ethanol supply were re-established or new market equilibriums were achieved.”

Backers of biofuels contend that growing ethanol supply is keeping gasoline prices from rising even higher than they have, by anywhere from 35 cents to 50 cents a gallon, in their estimation. They also point out that the government’s ethanol mandate, which requires oil companies to blend ethanol into motor fuel, can be suspended in an emergency. Finally, they say that future ethanol supplies will be derived from materials like switchgrass or wood chips that are resistant to bad weather.

Bob Dinneen, the president of the Renewable Fuels Association, the industry’s main trade group, said only two out of 160 ethanol refineries nationwide shut down because of the storms. Both will reopen soon, he said.

“There is a lot of overblown concern that is not really justified by the facts on the ground,” Mr. Dinneen said. “Certainly the weather is going to have an impact on all sorts of industries. It had an impact when Katrina wreaked havoc on the refining industry. It has an impact on ethanol production, but it has been minimal.”

In recent years, corn ethanol has been one of the few sources of supply growth in transport fuels. Indeed, biofuels have become the single biggest source of new fuels produced outside of countries belonging to the Organization of the Petroleum Exporting Countries.

Production worldwide is expected to grow by 330,000 barrels a day this year, to 1.4 million barrels a day, according to the International Energy Agency.

In the United States, bipartisan public policies have driven the rise of the ethanol industry. Congress has set rising requirements for oil companies to blend ethanol with gasoline, backed with generous subsidies that should total $12 billion this year, according to estimates by Barclays Capital.

The ethanol mandate is set at nine billion gallons for 2008 and is scheduled to rise to 36 billion gallons a year by 2022. By various estimates, that would represent 20 to 25 percent of the nation’s gasoline consumption by then.

Corn ethanol is capped at 15 billion gallons from 2015 onward. The rest is supposed to come from advanced biofuels. They would not require food crops, but bringing them to market depends on perfecting techniques that are still experimental.

Farmers who support the government’s ethanol policy argue that truly disastrous weather in the corn belt does not happen often.

“The last time we had real weather problems in the corn belt was 1988,” said Tom Buis, the president of the National Farmers Union. “That’s pretty rare.”

Emerson D. Nafziger, a professor of agronomy at the University of Illinois, said farmers still had time to recover this year, to some degree. But he said this year’s storms were the first real test for the nascent ethanol industry.

“We may end up feeling we dodged a bullet this year,” he said. “We’ve had a run of fairly favorable weather in recent years. But there is no guarantee it will stay that way.”

Thursday, June 26, 2008

Another Inconvenient Truth: How biofuel policies are deepening poverty and accelerating climate change

posted by Dustin

A report by Oxfam today argues that biofuel policies contribute to as much as 30% of the food price spike, an assertion that supports the number suggested by the International Monetary Fund.

Another Inconvenient Truth: How biofuel policies are deepening poverty and accelerating climate change

Biofuels are presented in rich countries as a solution to two crises: the climate crisis and the oil crisis. But they may not be a solution to either, and instead are contributing to a third: the current food crisis. Meanwhile the danger is that they allow rich-country governments to avoid difficult but urgent decisions about how to reduce consumption of oil, while offering new avenues to continue expensive support to agriculture at the cost of taxpayers. In the meantime, the most serious costs of these policies – deepening poverty and hunger, environmental degradation, and accelerating climate change – are being 'dumped' on developing countries.

Also...

Biofuel farming accused of driving up food prices
Updated Wed Jun 25, 2008 1:26pm AEST
Oxfam says the competition between fuel and food is dragging more than 30 million people into poverty.

Oxfam says the competition between fuel and food is dragging more than 30 million people into poverty. (user submitted: Greg O'Brien)

Biofuels were supposed to make up a big part of the answer to two of the great challenges of our age: climate change and energy security.

To many governments grappling with soaring oil prices and growing fears about climate change, tailoring incentives to engineer a switch from oil-based fuels to those made from food seemed like a good idea.

But increasingly, there are fears that biofuels may be creating as many problems as they solve.

Oxfam says the renewable fuels are not as climate-friendly as first thought.

The international aid agency blames the biofuel policies of developed countries for a 30 per cent spike in food prices which are dragging more than 30 million extra people into poverty.

"As more science has come to light and as people have looked at this issue more carefully, I think our conclusion is that changing to biofuels in transport in countries like Australia, Europe, America is not good for the planet," says Oxfam Australia's Jeff Atkinson.

In its global report, Another Inconvenient Truth, Oxfam argues the benefits to the climate of using biofuels have been overstated.

It says many farmers have cleared further into forests and wetlands to accommodate the crops, and others have moved out of food production to make room for biofuel feedstock.

"Of course changing from petrol to biofuels in one's car is going to reduce greenhouse gas emissions but to look at the whole picture you have to look at how these biofuels are produced and where they are produced and many of them are produced in developing countries of course," Mr Atkinson said.

"But what's happening is that there is competition between fuel and food."

"Take the corn crop in the US for example, which would normally be grown for food, a lot of that is now being grown for fuel instead and factors like this of course are driving up food prices."

That rise is as much as 30 per cent, Oxfam says.

But Bob Gordon from Renewable Fuels Australia rejects the notion that biofuels are entirely responsible for the global food shortage.

"It is oil that is the primary driver and you'll find that the United States, you'll find that the European governments and everybody accepts that," Mr Gordon says.

"The issue with biofuels is that we have to play it carefully if we're going to use biofuels as a fuel alternative, and only one fuel alternative."

He says the current crop of biofuels is just the first step in the transition from an oil-based economy.

"Biofuels do require land use. We need to be careful about that," Mr Gordon says.

-Adapted from a report by Ashley Hall for AM