Recently, reports have emerged that American biofuel subsidies have, in the characterization of the Wall Street Journal’s Environmental Capital, been “boomeranging” across the Atlantic (see story here). Meanwhile, the Los Angeles Times reported a California biofuels manufacturer was “short on cash and suffering from higher corn and plant construction costs” which threaten the company. The paper also noted a number of other plants that have been put on hold across the country, citing narrowing margins between the cost of production and the selling price of ethanol (see story at newspaper's Web site here).
Then, late last week, reports began emerging that corn had hit a record $6 a bushel, prompting the food industry to pin the blame rising prices squarely on government encouragement of ethanol production. The Grocery Manufacturers Association said the "ripple effects" are being "felt throughout the economy" (see statement here).
The Time article contained the most scathing critique of a fuel that had been touted as a major factor in the effort to slow climate change:
"But several new studies show the biofuel boom is doing exactly the opposite of what its proponents intended: it's dramatically accelerating global warming, imperiling the planet in the name of saving it. Corn ethanol, always environmentally suspect, turns out to be environmentally disastrous. Even cellulosic ethanol made from switchgrass, which has been promoted by eco-activists and eco-investors as well as by President Bush as the fuel of the future, looks less green than oil-derived gasoline."
The biofuel industry does receive encouragement from the federal government, including last year’s Energy Independence and Security Act that required a five-fold increase in renewable fuels by 2022 (see White House fact sheet and text of legislation). The magazine reported that last year the country produced about 7 billion gallons of ethanol, costing taxpayers $8 billion in subsidies.
Time described a complex domino effect that starts with the demand for the fuels in the United States and elsewhere and ends up promoting the destruction of forests that, ironically, could help soak up the excess carbon dioxide in the atmosphere that contributes to global warming:
"In Brazil, for instance, only a tiny portion of the Amazon is being torn down to grow the sugarcane that fuels most Brazilian cars. More deforestation results from a chain reaction so vast it's subtle: U.S. farmers are selling one-fifth of their corn to ethanol production, so U.S. soybean farmers are switching to corn, so Brazilian soybean farmers are expanding into cattle pastures, so Brazilian cattlemen are displaced to the Amazon. It's the remorseless economics of commodities markets. 'The price of soybeans goes up,' laments Sandro Menezes, a biologist with Conservation International in Brazil, 'and the forest comes down.'"
The article appeared before last week’s report from the U.S. Department of Agriculture that suggested some shifts in the American farming pattern. That document (see text) said that corn planting is actually expected to decline by about 8 percent this year, with other crops, including soybeans, increasing significantly. Among others, a New York Times (see story) account of the report suggested that the changes could hike corn prices and cause difficulties for the “struggling” companies that make ethanol.
Nevertheless, suggestions that the ethanol industry is part of the climate change problem, rather than the solution, drew a sharp response from Matt Hartwig, a spokesman for the Renewable Fuels Association, an industry trade association. Hartwig said biofuels offer society the opportunity to begin moving toward a more sustainable future.
“How did we get in the situation we find ourselves in today?” Hartwig said in an interview with Climate Law Update. “It wasn’t because of biofuels; it was because of a reckless use of our fossil fuel resources.”
The organization also issued its own written defenses of the industry and responses to the USDA report. The industry association noted that farmers themselves have had to react to rising fossil fuel prices and it attacked the scientific evidence cited by biofuel critics (see public statements here, here and here).
Hartwig, who blamed much of the recent push-back against biofuels on criticisms coming from the oil, food and livestock industries, said ethanol production has helped strengthen corn prices. But he said that is by no means the only factor at work. He cited such pressures as the global demand for corn for food for people and livestock; the weak dollar that encourages exports and market speculation. And he bristled at the notion of a causal relationship between biofuel production in the United States and deforestation elsewhere.
“An acre of corn used for ethanol production here does not directly result in an acre of rainforest in Brazil being cut down,” Hartwig said. “They’ve been cutting down the rainforest for decades, long before the ethanol industry came into being.”
For instance, the association refuted the asserted connection between ethanol production and foreign impacts, including rainforest destruction. It noted that American corn exports generally have held steady and shipments of distiller's grains, a byproduct used for animal feed, have actually increased. At the same time, without renewable sources such as biofuels, fossil fuel use is destined to increase, the industry statements said.
The association's Web site demonstrates that the latest brew-up isn't the first. "Oil and Food Industry Attacks on Ethanol Misleading and Diversionary," proclaims one press release; "Wheat Prices Are High, But Not Because Farmers Planted Less," says another. And talk about subsidies: The association cites a study showing the U.S. government spends as much as $140 billion a year -- on military might to protect the oil shipping channels out of the Middle East.
A report appearing in a USDA publication earlier this year appeared to lend some support to the biofuels industry position that ethanol production and higher food prices do not necessarily go hand-in-hand, at least for long. It cited a spike in corn prices in the 1990s that led to a "short-lived" impact on some foods. But the article concluded (see full text here): "For the most part, food markets adjusted to the higher corn prices and corn producers increased supply, bringing down price."
Not all alternative energy sources took a punch from the media. A CNN report glowingly referred to algae as “the ultimate in renewable energy,” and cited several benefits, including its ability to help sequester carbon from power plants (see story).
And stationary power sources continued to gain lots of attention. Schwarzenegger last week, for instance, joined with Southern California Edison in announcing the nation’s largest rooftop solar installation project by a utility company (see Edison press release and Schwarzenegger press release).
In Ohio, Gov. Ted Strickland and legislative leaders unveiled a new $1.57 billion economic stimulus package that includes $150 million to help make the state "a powerhouse of renewable and advanced energy production such as wind, solar and clean coal (see press release here)." The announcement did not include many details of the program in a state that is both a big producer and consumer of coal (see Ohio Coal Association background information).
And in Northern California, Pacific Gas & Electric Company announced it had signed a deal for up to 900 megawatts of solar thermal power. The utility signed contracts with BrightSource Energy Inc. for 500 megawatts of electricity from three projects and it took out options for another 400 megawatts (see PG&E statement).
Meanwhile, the American Wind Energy Association released its latest list of who's on top in the industry. It found Texas to be the leading wind energy state, leading in both total installed capacity and in the amount of new projects added in 2007. Other leaders were California, Minnesota, Iowa, Washington, Colorado, Illinois and Oregon. Iowa generated 5.5 percent of its electricity from wind, the highest of any state, according to the findings. The study also found that FPL Energy operated the biggest farms and Vestas had installed the largest turbines in the United States (see press release and complete text of study).
(Photo of organic corn crop, courtesy USDA Agricultural Research Service)
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A compromise farm bill that reportedly includes some sharp reductions in subsidies for some forms of ethanol underwent heavy criticism Tuesday from President Bush. At a news conference, he called the overall multi-billion-dollar measure a “massive, bloated” bill that would do little to solve the problem of rising food prices (see White House transcript here).
By any measure, it’s been a tough few weeks in the spotlight for biofuels such as corn-based ethanol and other alternative sources for transportation energy, including hydrogen.