Sunday, October 28, 2012

Food or Fuel? The Biofuel Dilemma

The first-generation biofuels, primarily ethanol made from maize or sugar cane, or biodiesel made from vegetable oil were motivated by the novel goal of weaning the world off fossil fuels and reducing or mitigating greenhouse gas emissions.

In the United States, Congress adopted extensive mandates and subsidies for corn-based ethanol in the late 1970s to get a biofuels industry off the ground. The Renewable Energy Directive (RED) adopted by the EU in 2009 set an objective, which demands 10% biofuels in road transport by 2020.

The arguments that created the economic, environmental and energy independence appeal of first-generation biofuels are diminishing rapidly and furiously.

US federal government's corn subsidies, which have encouraged farmers to produce maize for ethanol, began in the 1970s. In 2010, 40% of maize produced in the US was used for making ethanol. Moreover, even if America's entire corn crop were to be devoted to ethanol production, it would still only supply 4% of the country's oil consumption. There are numerous causes to the recent spikes in food prices in the US, but biofuels remain a significant piece of the puzzle.

A 2008 study published in the Proceedings of the National Academy of Sciences journal showed that increasing maize production to meet renewable fuels target would add to nitrogen pollution in the Gulf of Mexico by 10 to 34%. The study also revealed that a modern biofuel plant uses about 3 gallons of water to produce 1 gallon of ethanol.

A study by Food First Information and Action Network International (FIAN International) estimates that over 60% of all large-scale land grabbing in more than 20 African countries, mainly by British and EU companies is intended for producing biofuels. Various instruments, including in the areas of trade, development cooperation and diplomacy, support the biofuel policy of the EU.

EU’s renewable energy policy encourages farmers in Indonesia to clear forests in order to grow crops for use as fuel in Europe. According to the Institute for European Environmental Policy (IEEP), carbon released from deforestation linked to biofuels could exceed carbon savings by 60% in 2018.  A report published in the Guardian in 2011 estimated that half of the 3.2 million hectares of biofuel land in Africa is linked to 11 UK companies. 
Biofuels came under sharp scrutiny when the IEEP showed that EU’s biofuels policy alone could push up oilseed prices up to 33%, maize up to 22%, sugar up t 21% and wheat by up to 10% by 2020. Claims that commercial production of Jatropha curcas – non-edible oil whose oil-rich seeds­ – avoids competition with food because it grows on marginal and arid land have been challenged. Profitable production of Jatropha needs water, fertilizer and pesticides, hence competing for the same resources needed to produce food.

The argument that ambitious biofuel targets are fueling high food prices and hunger is gaining credence. Biofuel production is now viewed as taking food from the plates of the poor and putting it into the fuel tanks of the wealthy. Consequently, many experts are now calling for countries, especially the EU, Britain and the US to scale back incentives and investments in green fuel development.

In June 2011, members of the United States Senate voted to abolish a 45-cents-a-gallon subsidy for ethanol from maize that is used for blending with petrol. There are compelling reasons why. A gallon of pure ethanol contains about two-thirds the energy of a litre of petrol.

Two weeks ago, the European Commission released a proposal to limit the use of food-based feedstock and stimulate the development of alternative biofuels from non-food feedstock. The proposal provides incentives for feedstocks that do not create additional demand for land, including algae, straw and waste.  What is more consequential is that the EU proposal sets a limit of 5% on the use of crop-based biofuels.

However, representatives of the European biofuel industry are speaking out against the proposal, arguing that it will hurt the region’s biofuel industry in the midst of the European economic crisis. This is especially callous, in my view, if you consider that that global food prices have jumped 6% poor people in developing countries spend 50-80% of their income on food.
The failure of the first-generation biofuels has stimulated interest in developing alternative or second-generation biofuels from non-food feedstocks. The success of the second-generation biofuels must evaluated on fundamental environmental sustainability and economic policy goals:
1.     Second-generation biofuels must not compete for land and water used for food and fibre production;
2.    Second-generation biofuels must achieve technology and market competiveness without government subsidies to compete with petroleum;
3.     Second-generation biofuels must deliver greenhouse gas emission reductions or mitigations  once direct and indirect land use change is accounted for. 

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