US: Rise in Blending Limit Must Ensure Increase in Production of Next Generation Biofuels
America’s biofuel producers and lobbyists have urged President Obama to raise the 10 percent limit of ethanol blending in gasoline to 15 percent. Although the decision to raise the blending limit would infuse billions of dollars into the economy, create jobs and have environmental benefits, it could also lead to shortage in food supplies around the world.
The Environment Protection Agency ordered that about 9 billion gallons of ethanol be blended with fuels in 2008, a major portion of this came from corn and maize - both being edible crops. Farmers were given billions in subsidies to grow biofuel yielding crops, seeing great demand for biofuels on the back of record breaking oil prices farmers opted to sell these food crops to biofuel companies which in turn led to the food crisis witnessed last year.
President Obama has thrown his support behind biofuels as a measure to reduce carbon emissions so if the President is serious in pursuing the use of biofuels as a long-term solution to the environmental problems he must ensure that any new investment is aimed at second & third generation biofuels and research of fourth generation (genetically modified) biofuel crops.
Emphasis must be given to waste management of agricultural residue and extracting biofuels from the same. Using agricultural wastes like cotton & rice straw (second generation biofuels) instead of using corn or maize would not only increase efficiency but would also help in reducing excessive use of pesticides and fertilizers which are the main reason behind the rapidly increasing ‘dead zone’ in the Gulf of Mexico.
Algal production of biofuels using waste water has shown great promise with many US companies running pilot projects to evaluate its large scale commercial viability. However, the technology is still in its nascent stage and requires tremendous amounts of investments for research and development. This technology seems to be the most efficient and eco-friendly as it turns waste to fuel without triggering a food vs. fuel situation.
Increasing the blending limit to 15 percent would take the United States ahead of the European Union which aims to achieve a 10 percent blending target by 2020. It is estimated that the decision would inject a projected $24.4 billion in the recession hit economy also creating thousands of jobs.
Image: meganpru (Creative Commons)
The idea that corn ethanol had anything to do with any food crises is ludicrous.
USDA Source: The USDA Crop Production Annual Summary estimated that 2008 corn for grain production totaled 12.1 billion bushels, which was up 1 percent from the November forecast, but 7 percent below last year’s record high. The average U.S. yield was estimated at 153.9 bushels per acre, which was 3.2 bushels above 2007’s average yield. The 2008 yield is the second highest on record, behind 2004, and total production is second highest, behind last year.
In global estimates, the WASDE report projected global corn production for 2008-‘09 5.1 million tons higher than the previous month’s report, with increased corn production in China, the U.S., Mexico, Russia and EU-27 more than offsetting reductions for Brazil and Argentina. Corn production for China was raised 5.5 million tons on higher area and yields as indicated by available national and provincial government data. Mexico production was raised 1 million tons with favorable weather indicating higher yields. Production for Russia was raised 0.3 million tons on higher harvested area and higher yields. EU-27 production was raised 0.3 million tons reflecting official government statistics by France. Brazil corn production was lowered 2 million tons and Argentina lowered 1.5 million tons as extended dryness and heat during December reduced yield prospects. …
The United States produced 12 Billion bushels of corn .. Feed all the Livestock , all the US and exported record number of bushels of corn they still had 1.5 BILLION bushels of corn left over!
Last year the United States produced nearly 8 billion gallons of ethanol and corn rose to almost $7 a bushel..we have now produced nearly 9 Billion gallons corn is at $3.55 a bushel.
You can blame a lot of things for raising food cost but ethanol is at the bottom of the scale
Cost of Oil , Cost of production , transport costs , profit margins and speculators
ANYONE can buy 56 LBS of Corn (1 bushel) for a whopping $3.55 cents.. The problem isn’t the price of corn .
Dan McCullough
E85Prices.com
I have added a link to a news article which quotes a World Bank report saying that biofuels were responsible for 75% rise in food prices around the world. I would agree with you that there are many other factors responsible for the rise in food prices but i don’t agree that (first generation) biofuels come at the bottom of the list.
It has been proved by various studies that first generation biofuels leave a net adverse effect on the environment - excessive use of pesticides, deforestation, soil degradation etc. It would be very unfortunate if the United States and other major biofuel producers do not move from first generation biofuels to second & third generation biofuels as they are eco-friendly and efficient.
Mr. Mridul
I am not sure were you are choosing to get your information but I am afraid in your rush to keep up with the pace of today’s information demand you have forgotten to check the source of your facts. As one that writes “FOR THE PEOPLE” I can not understand we you would side with the richest industry in the world over a few well organized farmers? What is wrong with the little guy getting a head? Is that not what you push your trade organizations to do for you? I agree with the comments of Mr. Mcullough and would only add that your choice of adding GMO crops and the DEAD ZONE in your story only further demonstrates my point the checking facts. While I wish it were true, there is no reputable research that links the use of cellulose to the Dead Zone. Further more there is one GMO corn that is nearing commercialization. When it is given all of it EPA approvals its maximum market potential is less than .005% of the total corn market. Hardly a world ender.
Tom,
If you noticed I have also mentioned about second generation biofuels i.e. biofuels produced from agricultural waste and I believe the farmers would be the ones benefiting from that. Next I mentioned producing biofuels from waste water using algae, I don’t see anything wrong in that as it is the most efficient and eco-friendly way.
Kindly click the link I have posted about dead zones.
“A planned increase in US ethanol production from corn would spell environmental “disaster” for marine species in the Gulf of Mexico” - scientific study done by University of British Columbia and University of Wisconsin.
Genetically modified (biofuel) crops is sensitive areas of scientific research and there are several problems in this but fourth generation biofuels would require decades of R & D before being commercially viable. Genetically modified biofuels crops are being talked about so that they could be used even on wastelands, lands which cannot support food crops. But I want to add that this technology can backfire as the first generation biofuels did. In my view algal production of biofuel is the best technology.
I must also add that I see biofuels as merely a short to medium term solution to the problem of rising carbon emissions. They still are not zero emission products and thus, in my view, do not provide a long term solution to our environmental problems.
A little knowledge is dangerous: The author of the above article is distorting corn ethanol. He makes it sound like when you grow an acre of corn, it’s going entirely to fuel instead of food. It’s not. Only the starch is used to make ethanol. What’s left is the protein and the oil. The protein produces distillers grains, which supplements a massive livestock, dairy, poultry, and fish farming industry. Distillers grains supplementing the diet of dairy cows produces an additional 10 pounds of milk per cow per week, and fed to cattle produces 10-14% more meat. Last time I checked that was FOOD. The corn oil is also being extracted for human consumption of for biodiesel. And now the corn cobs and stover are being exploited.
Nobody starved last year because the starch from about a third of the U.S. corn crop was extracted for ethanol. Also U.S. exports of distillers grains doubled. We have a surplus of corn. You can buy it anywhere in the world, if you can afford the shipping costs. The main cause of high food prices last year was crude oil over $100 a barrel, which caused high priced transportation fuels and high shipping costs. Try shipping a ton of corn from Iowa to China and see what happens to the price.
If you’re so concerned about starving people, then buy surplus corn and ship it to them, instead of criticizing the farmers who feed you. Or did you expect them to quit making ethanol and just give their corn away to poor people? Get Real. There is no land shortage in the U.S.. We only use about a third of the arable land, and the productivity is going up every year. We are not diverting food crops to fuel crops. That’s a myth.
Get over the subsidies too. Big oil companies collect 6 times more subsidies than the entire biofuels industry. Coal is subsidized. Natural gas is subsidized. Anything that relates to National Security. You are misinformed about subsidies to farmers: In a recent article called “Ethanol Innovator Driven to Replace Oil”, Thom Gabrukiewicz quoted Jeff Broin, head of Poet, the largest ethanol producer in the world: “In 2007, the (ethanol) tax incentive, that tax break, was $3.3 billion, but the ethanol industry returned $4.6 billion in tax revenue to the Treasury,” Broin says. “We saved $8 billion in farm payments because we eliminated farm payments for the first time in almost 40 years. We saved the consumer $40 to $60 billion in gas prices with extra supplies that kept prices down. We added $47 billion to the Gross Domestic Product.” (Jeff Broin – Poet Ethanol)
The ethanol subsidy you are talking about is a 45 cent per gallon blending subsidy, that’s mainly going to oil companies who splash blend ethanol and gasoline. Blender pumps are chipping away at that. Local ethanol is starting to go directly to the blender pump, and the retailer passes along all or part of the blending subsidy to the consumer. The ethanol subsidy pays for itself over and over in cheaper fuel. Corn ethanol has created over 320,000 jobs and generated billions in tax revenue and GNP. It is the economic backbone of numerous Corn Belt states. Besides, you would still be breathing unburned gasoline residues, if it wasn’t for ethanol’s fast flame speed which we exploit as an oxygenator.
Algae production is being integrated with corn ethanol refinery waste products, and that will increase the efficiency several times. After refinery Algae is made into biodiesel or ethanol, the byproducts, like corn ethanol byproducts, will go to high protein livestock feed and supplements for human consumption. More food. Cellulosic ethanol is also being integrated into the corn ethanol infrastructure. It is the foundation of an industry chipping away at foreign oil, which we buy with Trade Deficit debt instruments and pay floating interest on. You pay no floating interest on domestic biofuels, most of which is corn ethanol.
You’re claim is false, that excessive use of pesticides is the main cause of the dead zone in the Gulf of Mexico. Nitrogen and phosphorus from fertilizer is a much bigger cause than pesticides. Furthermore N&P come from numerous other sources besides corn crops. Fertilizer is put on many other crops in the Mississippi watershed. And that may not even be the main cause. You’ve got thousands of sources of manure and sewage getting into run-off water, such livestock feed lots, dairy farms, hog farms, poultry farms, industrial waste, sewage disposal plants and septic systems. These are all contributing factors. Corn alone is not the main cause. There is additional proof of that. Algae blooms are occurring in numerous places all along the West Coast and the East Coast, where corn is not even grown. Chesapeake Bay is one of many examples. Take a look on Google Earth sometime.
President Obama knows a lot more about biofuels and energy than you do. Plus he is surrounded by a group of very intelligent focused people. They know where to invest to get the best bang for the buck. That will include taking the established corn ethanol industry, which is still evolving, to the next level. Corn ethanol is a viable industry that is here now, replacing a growing percentage of foreign oil as we speak.
I have to agree with Dan McCullough. My guess as to what caused the increase in corn prices is: energy costs and speculation in that order.
PLEASE I REQUEST EVERYONE TO KINDLY CLICK ON THE RELEVANT LINKS I HAVE PROVIDED IN THE ARTICLE.
It’s not me who is saying that excessive biofuel production was responsible for food crisis - the World Bank says that. It’s not me who says that an increase in biofuel production would increase the size of dead zone in Gulf of Mexico - University of British Columbia and University of Wisconsin says that. I request you to look at these reports.
I’m not criticizing farmers for producing biofuel crops. Numerous scientific studies have proved that first generation biofuels emit more carbon emissions than they help reduce. Again I’m not saying this, the scientists are saying this.
I don’t see any reason not to move a notch up in the production of biofuels. By moving to second generation biofuels we are still engaging with the farmers only. Algal production is yet another option as we have seen, around the world, farmers opting to grow biofuel crops instead of traditional food crops.
The World Bank is not an authority on Biofuels. It is controlled by International Bankers who control central banks, from which we are forced to borrow money to buy imported oil. They make huge profits on these foreign oil debt instruments, and likewise, they are against domestic biofuels that replace imported oil. The World Bank allowed this unscientific so-called study to leak-out, as a slash and burn tactic against biofuels, without having it first published in a scientific journal, which it did not qualify for. Because the study was not conducted using scientific principles. The World Bank biofuels study you quote has been proven wrong, not only wrong, but way way inaccurate. During the spike in crude oil prices we experienced last year, that study came to the false conclusion that biofuels were the cause of 75% of the price increase in food. Again, this is totally false. The overall consensus by professors and scientists in the U.S., confirmed what the USDA stated: That corn ethanol had only a modest impact on food price increases. And that was offset by the fact that ethanol lowered fuel prices, created jobs and economic stimulus, and created tax revenue in the multi-billions.
The real cause of higher food prices was crude oil prices going over $100 a barrel, which sent transportation fuels and shipping costs sky high. The second cause was commodities speculation. One Swiss company cornered 11 % of the entire crude oil market, held it off the market to drive-up the price, and then sold it for a huge profit. They made over a billion dollars a year just flipping oil futures, and they kept doing this over and over, along with thousands of other speculators doing the same thing. Except speculation wasn’t just being done with crude oil. Speculators were flipping corn futures, soybean futures, wheat futures, rice futures – whatever they could profit from. The result of commodities speculation is that corn doubled, Rice tripled, wheat doubled, and soy doubled. Now corn is back down to under $4 a bushel, half of what it was. And by the way, food prices did not come back down. That proves that the food industry and the World Bank were making false claims about corn ethanol being the main cause of food price increases, when it was not.
Furthermore, there’s about 6 cents worth of corn in a box of corn flakes that retails for $3.50, and even if corn doubles to 12 cents a pound, it is almost insignificant. Most of the shelf price of a grain based food is overhead, mark-up, and transportation cost. Right now, the entire cost of the corn itself in a box of corn flakes is 1.7%. So corn ethanol, which only strips the starch from of 1 out of 3 bushels of cow corn, could never have caused retail food prices to jump 10 to 15%. You can throw the World Bank study you’re quoting in the trash. The U.S. Department of Agriculture has much more accurate information.
Regarding the dead zones: After I blogged his article, the author changed his wording (to read) “pesticides and fertilizer” (instead of just pesticides). His original claim was false, that pesticides are the main cause. Dead zones are caused by algae blooms, and algae blooms are mainly caused by excess Nitrogen and Phosphorus from chemical fertilizers and numerous other causes, not pesticides.
I have already shown that there are many other causes for Nitrogen and Phosphorus algae blooms: “You’ve got thousands of sources of manure and sewage getting into run-off water, such as livestock feed lots, dairy farms, hog farms, poultry farms, industrial waste, sewage disposal plants and septic systems. These are all contributing factors to algae blooms and dead zones.” In the original article, the author was falsely claiming that dead zones were caused by pesticides put on corn. Now he’s edited his article to claim that dead zones are caused by pesticides “and fertilizers”, which is partly true. But he implies that they’re caused mainly by corn crops, which is false. Corn alone is not the main cause. There are many other types of agricultural crops grown in the Mississippi water shed using Nitrogen Phosphorus fertilizers, plus look at all the other causes that I have listed above. There is additional proof of this: “Algae blooms are also occurring in numerous places all along the West Coast and the East Coast, where corn is not even grown. Chesapeake Bay is one of many examples. Take a look on Google Earth sometime.” You can see algae blooms on satellite photos.
The above article falsely claims that: “Farmers were given billions in subsidies to grow biofuel yielding crops”. The truth is farmers are not given any subsidies to grow biofuel crops: Number one corn ethanol producer Jeff Broin said. “We saved $8 billion in farm payments (2007) because we eliminated farm payments for the first time in almost 40 years.” There is a 45 cent per gallon ethanol-gasoline splash blending credit that mainly goes to oil companies. That was 3.8 billion in 2007 and paid for itself numerous times over in lower fuel prices, economic stimulus, and tax revenue.
The above article also makes this false claim: “…seeing great demand for biofuels on the back of record breaking oil prices farmers opted to sell these food crops to biofuel companies which in turn led to the food crisis witnessed last year.” The above author tries to create the false impression that greedy corn farmers took food out of the mouths of the hungry, in order to profit from crops on the coattails of the high price of oil. The truth is, farmers did not opt-out to sell their corn to biofuel companies. They deliberately grew their corn crops, in advance, for ethanol and livestock feed (or their soybean crops for oil and feed). This was Before oil prices skyrocketed. We also have government mandates to produce so many gallons of ethanol per year. Farmers planned their crops long before they knew what the future price of oil would be.
It has already been proven, by people who know what they’re talking about, that extracting only the starch from 1 out of 3 bushels of corn did not cause anyone to go hungry and did not have any major impact on food prices. Especially since we have a surplus of corn. No food crops were diverted to fuel crops in the U.S.. What drove food prices to unaffordable levels for the poor, was commodities speculation and the spike in the cost of crude oil and transportation fuels. This caused a dramatic increase in the cost to ship commodities and food.
The above article falsely claims that food was diverted to fuel. The writer says: “…a major portion of this came from corn and maize - both being edible crops.” Folks – corn ethanol feedstock is genetically modified FEED corn. It’s specifically produced to feed Animals and is not suitable for human consumption. Furthermore, distillers grains, the feed portion that is processed out of this corn, goes to producing FOOD. Again, we have a large surplus of corn at 6 cents a pound. And you can buy it anywhere in the world, if you can afford the transportation cost.
With all due respect, the above author is someone who has some good views on cellulosic ethanol and algae, but doesn’t know beans about corn ethanol.