Thursday, 7 April 2011

Another Moral Dilemma To Chew On

I never know if my inclination  to resist absolute answers and conclusions is because I've spent more than 30 years as a reporter professionally obligated to look at both sides, or if  I'm just morally lazy. Biofuels is another one of those difficult topics  that for me resists easy answers. It touches the economy, the environment,  and the morality of turning food into fuel.

Here's what I've learned over the years:

1. There could hardly be a worse crop to turn into ethanol than corn. As a starch (like potatoes) it requires a lot of energy to turn this starch into sugars that can be fermented to produce  alcohol (ethanol). Corn has always been at the heart of what's wrong with U.S. farm policy (it was huge surpluses of corn after the Second World War that led to the development of beef feedlots, and grading beef according to the marbling in the meat, marbling that can only be achieved by animals standing around eating a lot of carbohydrate like corn). After 9-11 the Americans desperately wanted to lessen their dependence on foreign oil, and turning corn into ethanol seemed like a good start. All farmers saw was another  big market for what they were growing, rising prices, so they embraced the move.

2. Other crops like sugar cane (in Brazil for example) and sugar beets (that was the crop proposed for a large ethanol plant in the Maritimes) are much better feed stocks. They're already sugar, so don't require big energy inputs to get them ready for fermentation, so the energy pay-off, and environmental impact is a lot better.

3. The holy grail for biofuels is starting with cellulose from wood waste,  grasses (the famous switch grass, a perennial dry grass, like hay), and other non-edible plant material. This gets away from the food or fuel dilemma. Many companies, universities and government agencies are working on this. It can be done, but the economics still aren't right. We will see it soon, particularly as oil prices move up.

4. Bio diesel presents a whole other round of issues. It's very widely used in Europe and Asia. Essentially the oil that's crushed out of crops like soybean, or canola can be mixed straight up with diesel. That's why you'll see hardcore environmentalists collecting cooking oil from restaurants and running their diesel  cars with it. It's a more elegant solution from an engineering point of view, but I have interviewed farmers from Argentina who lament the huge tracts of land devoted to soybean production that's exported to Europe. The Europeans get the "feel good" benefit of producing less carbon dioxide, but Argentinians loss the ability to produce food for themselves.

5. One more thought.  Since the beginning of the petroleum industry, gasoline has always needed what's called an octane booster. It's a chemical compound that controls how explosive gasoline is. That's why when car owners hear knocking in their engines, it means gasoline is continuing to burn after the ignition has been turned off, and  higher octane fuel is often the solution.  There's been a rather outrageous history to octane boosters. Early on, ethanol from farmers was used, but then Dupont, the big chemical company was able to convince politicians in Washington (I wonder how) to mandate something else: tetra-ethyl lead. So through a good part of my lifetime, huge amounts of lead (a serious neurotoxin) were pumped into the air from car exhausts, and Dupont made a bundle.  When regulators finally came to their senses, and lead was outlawed, other products were used that also had  negative environmental impacts, products like MTBE, and ETBE.  Now, once more in Canada and the United States, ethanol is mandated as an additive to fuel, and I would argue it's considerably safer than these other octane boosters. It does have less energy, so will end up costing more to use, but from an environmental perspective it's definitely an improvement.

So I think ethanol should be part of our energy mix, but on a limited basis (as an octane booster maybe, certainly not a solution to foreign oil imports) and the right incentives (a carbon tax would help) are needed to get to cellulose as the feedstock as quickly as possible.

Today a story in the New York Times on how wealthy countries can take advantage of poorer countries, and put their environmental agenda ahead of the needs of people who will probably never own a car, but need to feed themselves and their families.


April 6, 2011
Rush to Use Crops as Fuel Raises Food Prices and Hunger Fears

The starchy cassava root has long been an important ingredient in everything from tapioca pudding and ice cream to paper and animal feed.

But last year, 98 percent of cassava chips exported from Thailand, the world’s largest cassava exporter, went to just one place and almost all for one purpose: to China to make biofuel. Driven by new demand, Thai exports of cassava chips have increased nearly fourfold since 2008, and the price of cassava has roughly doubled.

Each year, an ever larger portion of the world’s crops — cassava and corn, sugar and palm oil — is being diverted for biofuels as developed countries pass laws mandating greater use of nonfossil fuels and as emerging powerhouses like China seek new sources of energy to keep their cars and industries running. Cassava is a relatively new entrant in the biofuel stream.

But with food prices rising sharply in recent months, many experts are calling on countries to scale back their headlong rush into green fuel development, arguing that the combination of ambitious biofuel targets and mediocre harvests of some crucial crops is contributing to high prices, hunger and political instability.

This year, the United Nations Food and Agriculture Organization reported that its index of food prices was the highest in its more than 20 years of existence. Prices rose 15 percent from October to January alone, potentially “throwing an additional 44 million people in low- and middle-income countries into poverty,” the World Bank said.

Soaring food prices have caused riots or contributed to political turmoil in a host of poor countries in recent months, including Algeria, Egypt and Bangladesh, where palm oil, a common biofuel ingredient, provides crucial nutrition to a desperately poor populace. During the second half of 2010, the price of corn rose steeply — 73 percent in the United States — an increase that the United Nations World Food Program attributed in part to the greater use of American corn for bioethanol.

“The fact that cassava is being used for biofuel in China, rapeseed is being used in Europe, and sugar cane elsewhere is definitely creating a shift in demand curves,” said Timothy D. Searchinger, a research scholar at Princeton University who studies the topic. “Biofuels are contributing to higher prices and tighter markets.”

In the United States, Congress has mandated that biofuel use must reach 36 billion gallons annually by 2022. The European Union stipulates that 10 percent of transportation fuel must come from renewable sources like biofuel or wind power by 2020. Countries like China, India, Indonesia and Thailand have adopted biofuel targets as well.

To be sure, many factors help drive up the price of food, including bad weather that ruins crop yields and high oil prices that make transportation costly. Last year, for example, unusually severe weather destroyed wheat harvests in Russia, Australia and China, and an infestation of the mealy bug reduced Thailand’s cassava output.

Olivier Dubois, a bioenergy expert at the Food and Agriculture Organization in Rome, said it was hard to quantify the extent to which the diversions for biofuels had driven up food prices.

“The problem is complex, so it is hard to come up with sweeping statements like biofuels are good or bad,” he said. “But what is certain is that biofuels are playing a role. Is it 20 or 30 or 40 percent? That depends on your modeling.”

While no one is suggesting that countries abandon biofuels, Mr. Dubois and other food experts suggest that they should revise their policies so that rigid fuel mandates can be suspended when food stocks get low or prices become too high.

“The policy really has to be food first,” said Hans Timmer, director of the Development Prospects Group of the World Bank. “The problems occur when you set targets for biofuels irrespective of the prices of other commodities.”

Mr. Timmer said that the recent rise in oil prices was likely to increase the demand for biofuels.

It can be tricky predicting how new demand from the biofuel sector will affect the supply and price of food. Sometimes, as with corn or cassava, direct competition between purchasers drives up the prices of biofuel ingredients. In other instances, shortages and price inflation occur because farmers who formerly grew crops like vegetables for consumption plant different crops that can be used for fuel.

China learned this the hard way nearly a decade ago when it set out to make bioethanol from corn, only to discover that the plan caused alarming shortages and a rise in food prices. In 2007 the government banned the use of grains to make biofuel.

Chinese scientists then perfected the process of making fuel from cassava, a root that yielded good energy returns, leading to the opening of the first commercial cassava ethanol plant several years ago.

“They’re moving very aggressively in this new direction; cassava seems to be the go-to crop,” said Greg Harris, an analyst with Commodore Research and Consultancy in New York who has studied the trade.

In addition to expanding cassava cultivation at home, China is buying from Cambodia and Laos as well as Thailand.

Although a mainstay of diets in much of Africa, cassava is not central to Asian diets, even though the Chinese once called it “the underground food store” because it provided crucial backup nutrition in lean harvest years. So the Chinese reasoned that making fuel with cassava would not directly affect food prices or create food shortages, at least at home. The proportion of Chinese cassava going to ethanol leapt to 52 percent last year from 10 percent in 2008.

More distant or indirect impacts are considered to be likely, however. Because cassava chips have been commonly used as animal feed, new demand from the biofuels industry might affect the availability and cost of meat. In Southeast Asian countries where China is paying generously for stockpiles of cassava, farmers may be tempted to grow the crop instead of, for example, other vegetables or rice.

And if China turned to Africa as a source, one of that continent’s staple food crops could be in jeopardy, although experts note that exporting cassava could also become a business opportunity.

“This is becoming a more valuable cash crop,” Mr. Harris said. “The farmland is limited, so the more that is devoted to fuel, the less is devoted to food.”

The Chinese demand for cassava could also dent planned biofuel production in poorer Asian nations: in the Philippines and Cambodia, developers were recently forced to suspend the construction of cassava bioethanol plants because the tuber had become too expensive.

Thailand’s own nascent biofuel industry may have trouble getting the homegrown cassava it needs because it may not be able to match the prices offered by Chinese buyers, according to the Food and Agriculture Organization.

Biofuels development in wealthier nations has already proved to have a powerful effect on the prices and the cultivation of crops. Encouraged by national biofuel subsidies, nearly 40 percent of the corn grown in the United States now goes to make fuel, with prices of corn on the Chicago Mercantile Exchange rising 73 percent from June to December 2010.

Such price rises also have distant ripple effects, food security experts say. “How much does the price of corn in Chicago influence the price of corn in Rwanda? It turns out there is a correlation,” said Marie Brill, senior policy analyst at ActionAid, an international development group. The price of corn in Rwanda rose 19 percent last year.

“For Americans it may mean a few extra cents for a box of cereal,” she said. “But that kind of increase puts corn out of the range of impoverished people.”

Higher prices also mean that groups like the World Food Program can buy less food to feed the world’s hungry.

European biofuels developers are buying large tracts of what they call “marginal land” in Africa with the aim of cultivating biofuel crops, particularly the woody bush known as jatropha. Advocates say that promoting jatropha for biofuels production has little impact on food supplies. But some of that land is used by poor people for subsistence farming or for gathering food like wild nuts.

“We have to move away from the thinking that producing an energy crop doesn’t compete with food,” said Mr. Dubois of the Food and Agriculture Organization. “It almost inevitably does.”

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