This topic has been archived, and won't accept reply postings.
If you are interested in the issues:
SPECIAL ISSUE: BIOFUELS TODAY
Erroneous claims abound. One is that it takes 1,700 gallons of water to produce a gallon of corn-based ethanol; another that ethanol has a negative energy balance; still another that ethanol does little to reduce greenhouse gas emissions, is not as environmentally friendly as commonly believed and may even have a net negative impact. Biofuel production is causing global food shortages and raising food prices, particularly for the poor. Among detractors are noted and influential opinion-molding media, including the Wall Street Journal, New York Times and Toronto Globe & Mail.
Another criticism is that even if all the corn grown in the United States were converted to ethanol it would supply only 12% of the country's motor fuel. (As of 2007, just under 5% of U.S. gasoline consumption and about 2% in Canada was being displaced by ethanol, produced almost entirely from corn.)
False and misleading information is spread, restated and repeated until the observer who is only marginally interested no longer knows what to believe. Stalwart political supporters suddenly become opponents of biofuel development. The ludicrous argument is often made that other measures (such as stricter automobile fuel-efficiency standards) were adopted, greater reductions in oil use could be made. It is not possible to reduce energy use without reducing living standards. The satisfactory answer to the consequences of shortages is to increase supply.
Actually only about three gallons of water are used to produce a gallon of ethanol today if the water used to grow the corn is not included Most of that comes as rain and is essentially free. Ethanol plants typically now recycle most of the water used in the actual distillation process. The favorable environmental impact of even low-level ethanol and biodiesel blends has been established beyond reasonable question. The biofuel boom does not cause tightening world grain and food supplies but happens to coincide with other new forces in the direction of increasing food needs worldwide.
There is no single, quick or inexpensive solution to today's energy problems, which centre around soaring prices, uncertainty and insecurity of supply, declining reserves, a steadily decreasing pace to new discoveries of oil and gas reserves and soaring ocean transportation costs.
There is a community of energy and geopolitical experts which sees a crisis immediately ahead in the supply of conventional fuels. But such people have sounded the alarm so many times that they are no longer heard. The dependence on politically unstable and hostile crude oil sources such as the middle east is the greatest threat to the economic and social stability of importing countries, including the major Asian economies. Unprecedented financial flows from importing countries to exporters are massively distorting trade balances and concentrating economic power in the hands of despotic, authoritarian regimes.
However the opponents of biofuel development by and large do not worry about the unsustainability of present global energy arrangements. The danger is that public energy policy will be distorted as a result. There is a one-issue mentality these days in which points of view are not required to be justified or legitimized in some larger context. It is considered quite enough to beat one drum at a time.
SPECIAL ISSUE: BIOFUELS TODAY
Erroneous claims abound. One is that it takes 1,700 gallons of water to produce a gallon of corn-based ethanol; another that ethanol has a negative energy balance; still another that ethanol does little to reduce greenhouse gas emissions, is not as environmentally friendly as commonly believed and may even have a net negative impact. Biofuel production is causing global food shortages and raising food prices, particularly for the poor. Among detractors are noted and influential opinion-molding media, including the Wall Street Journal, New York Times and Toronto Globe & Mail.
Another criticism is that even if all the corn grown in the United States were converted to ethanol it would supply only 12% of the country's motor fuel. (As of 2007, just under 5% of U.S. gasoline consumption and about 2% in Canada was being displaced by ethanol, produced almost entirely from corn.)
False and misleading information is spread, restated and repeated until the observer who is only marginally interested no longer knows what to believe. Stalwart political supporters suddenly become opponents of biofuel development. The ludicrous argument is often made that other measures (such as stricter automobile fuel-efficiency standards) were adopted, greater reductions in oil use could be made. It is not possible to reduce energy use without reducing living standards. The satisfactory answer to the consequences of shortages is to increase supply.
Actually only about three gallons of water are used to produce a gallon of ethanol today if the water used to grow the corn is not included Most of that comes as rain and is essentially free. Ethanol plants typically now recycle most of the water used in the actual distillation process. The favorable environmental impact of even low-level ethanol and biodiesel blends has been established beyond reasonable question. The biofuel boom does not cause tightening world grain and food supplies but happens to coincide with other new forces in the direction of increasing food needs worldwide.
There is no single, quick or inexpensive solution to today's energy problems, which centre around soaring prices, uncertainty and insecurity of supply, declining reserves, a steadily decreasing pace to new discoveries of oil and gas reserves and soaring ocean transportation costs.
There is a community of energy and geopolitical experts which sees a crisis immediately ahead in the supply of conventional fuels. But such people have sounded the alarm so many times that they are no longer heard. The dependence on politically unstable and hostile crude oil sources such as the middle east is the greatest threat to the economic and social stability of importing countries, including the major Asian economies. Unprecedented financial flows from importing countries to exporters are massively distorting trade balances and concentrating economic power in the hands of despotic, authoritarian regimes.
However the opponents of biofuel development by and large do not worry about the unsustainability of present global energy arrangements. The danger is that public energy policy will be distorted as a result. There is a one-issue mentality these days in which points of view are not required to be justified or legitimized in some larger context. It is considered quite enough to beat one drum at a time.
In reply to Removed User:
Source?
I noticed that Biofuels still only make up 5% of production in the EU, and they're still driving to up that to 10%.
Source?
I noticed that Biofuels still only make up 5% of production in the EU, and they're still driving to up that to 10%.
In reply to Removed User:
It's just possible that this is a little bit one-sided. For example:
There is nothing ludicrous in improving fuel efficiency. Today's cars are considerably more fuel efficient than they were in the 50s and 60s, and there is still a long way to go in attaining optimum fuel efficiency.
It is perfectly possible to improve living standards while reducing energy use, if one is more careful with the way the energy is used. Compare and contrast well-insulated Scandinavian homes with the usual leaky British houses, and try to make a convincing case for the fuel-inefficient ones.
It's just possible that this is a little bit one-sided. For example:
> The ludicrous argument is often made that other measures (such as stricter automobile fuel-efficiency standards) were adopted, greater reductions in oil use could be made. It is not possible to reduce energy use without reducing living standards.
There is nothing ludicrous in improving fuel efficiency. Today's cars are considerably more fuel efficient than they were in the 50s and 60s, and there is still a long way to go in attaining optimum fuel efficiency.
It is perfectly possible to improve living standards while reducing energy use, if one is more careful with the way the energy is used. Compare and contrast well-insulated Scandinavian homes with the usual leaky British houses, and try to make a convincing case for the fuel-inefficient ones.
In reply to Removed User:
Then try to stay away from ill-informed, special interest group copy-and-paste rants.
> If you are interested in the issues:
Then try to stay away from ill-informed, special interest group copy-and-paste rants.
In reply to galpinos:
Agriweek is published weekly except late December by Century Publishing Co., Division of CANVESCO Inc., P.O. Box 444, Winnipeg, Canada R3C 2H6
Author is Morris W. Dorosh
Agriweek is published weekly except late December by Century Publishing Co., Division of CANVESCO Inc., P.O. Box 444, Winnipeg, Canada R3C 2H6
Author is Morris W. Dorosh
In reply to brothersoulshine:
ETHANOL & PUBLIC POLICY
In a nearly frenzied attempt to respond to public outcries about rising food prices, some in the U.S. Congress recently began to question renewable fuels policy that they enthusiastically supported only a few months before. A division is developing, across party lines, on government support for ethanol production. In Canada the NDP and Bloc Quebecois parties have completely reversed long-held positions of vociferous support for pro-ethanol policies to categorical opposition. Very recently both had proposed that 10% of petroleum motor fuel should be displaced by renewable sources. These changes of heart arise from what is perceived to be public disenchantment with renewable fuels and their alleged side-effects.
Government support in Canada and the U.S., and also the majority of developed, high-energy-consumption countries around the world, is based on environmental and energy security concerns. In the U.S. ethanol has replaced MTBE (methyl tertiary butyl ester), an oxygenate later found to be cancer-causing and an extreme groundwater pollutant. Though it was very recent, that contribution of ethanol is now mostly forgotten.
Favorable government policy remains the key to further development. The U.S. government has a goal of 30% of the motor fuel to be ethanol, corn-based and cellulosic, by 2030. Approximately that level has already been reached in Brazil.
The first law to mandate a minimum biofuel blend in the U.S. was the Energy Policy Act of 2005, which required biofuel use to increase in annual steps between 2006 and 2012, reaching 5 billion gallons a year at the end of the period. The Energy Independence and Security Act of 2007 increased the RFS to 9 billion gallons of renewable fuel use by 2008 and 36 billion by 2022. The requirement for corn-based ethanol is currently capped at 15 billion gallons by 2015; 21 billion of the 36 billion gallons to be used in 2022 will have to be derived from cellulosic and other non-corn sources.
Many states, especially in the midwest where ethanol production is concentrated, also require minimum amounts to be used. Most are in the 5% to 10% range but Minnesota is considering a 20% minimum, near the limit of what can be used in vehicles not specially equipped to use ethanol.
Ethanol is subsidized at the federal level in the U.S. through an excise tax credit (VEETC), created in 2004 as part of a job-creation measure. It provides oil companies with a credit of 51 cents per gallon on pure ethanol, blended in their gasoline supply. It is to be reduced to 45 cents by the 2007 farm bill. Under current legislation the credit expires at the end of 2010 but would be extended to 2012 under the farm bill. American ethanol producers who ship less than 60 million gallons a year qualify for a further tax credit of 10 cents per gallon on the first 15 million gallons produced each year. This incentive has not been notably influential; very few new ethanol plants are being built with 60 million gallons of annual capacity because economics of scale create larger cost savings than 10 cents. A blender's credit of $1 per US gallon also applies to all U.S. biodiesel production.
In addition there are numerous federal, state and local capital grants, loans and other financial incentives to promote increasing ethanol capacity and also to support distribution infrastructure.
Canadian ethanol support policy is intended to provide comparable incentives. It includes a direct subsidy based on ethanol prices. At present ethanol and biodiesel are exempt from federal excise tax and most provincial taxes on motor fuel. Legislation now before parliament (Bill C-33) will implement a 5% average renewable fuel content requirement in Canadian gasoline and diesel fuel by 2010. This is a modest and achievable goal. The government's position is that, despite the fact that Canada is a net exporter of oil, this policy will result in reduced emissions of greenhouse gases, assist farmers in participating in a new economic opportunity and reduce the exposure of Canadians to rising petroleum prices. It is expected that when the policy is fully implemented in two years new demand for 200 million bushels (about 5 million tonnes) of wheat, corn, and canola will be created. A high priority is to encourage farmers to participate in the emerging industry in an equity owner capacity. It is anticipated that 14,000 jobs will be created and private investment of $1.5 billion will be attracted to build the required infrastructure. Spin-off benefits of an estimated $600 million are projected to the Canadian economy.
All Canadian provinces west of Quebec have created their own standards and assistance plans for renewable fuels produced within their borders.
To encourage development of ethanol capacity using non-grain sources as feedstock, U.S. tax law provides a 50% depreciation allowance for new cellulosic plants in the year they are put in service. The present law is effective until the end of 2012. The accelerated depreciation applies only to cellulosic ethanol plants that break down cellulose through enzymatic processes (as opposed to gasification).
Tariffs apply to U.S. ethanol imports to encourage domestic production and avoid payment of subsidies on imports. A general ad valorem tariff of 2.5% applies. U.S. ethanol imports from other than certain Caribbean countries are subject to a 54-cent-a-gallon secondary tariff, which under current law expires at Dec. 31 2008. There is lobby pressure to not renew this provision. Imports of up to 7% of U.S. consumption under the Caribbean Basin Initiative are duty free. The limit is 452 million gallons for 2008 and will increase as U.S. production rises. The provision was originally intended to support ethanol production from sugar cane in the region, but that has not developed. Current imports are of Brazilian ethanol lightly processed in the Caribbean to remove water content.
ETHANOL & PUBLIC POLICY
In a nearly frenzied attempt to respond to public outcries about rising food prices, some in the U.S. Congress recently began to question renewable fuels policy that they enthusiastically supported only a few months before. A division is developing, across party lines, on government support for ethanol production. In Canada the NDP and Bloc Quebecois parties have completely reversed long-held positions of vociferous support for pro-ethanol policies to categorical opposition. Very recently both had proposed that 10% of petroleum motor fuel should be displaced by renewable sources. These changes of heart arise from what is perceived to be public disenchantment with renewable fuels and their alleged side-effects.
Government support in Canada and the U.S., and also the majority of developed, high-energy-consumption countries around the world, is based on environmental and energy security concerns. In the U.S. ethanol has replaced MTBE (methyl tertiary butyl ester), an oxygenate later found to be cancer-causing and an extreme groundwater pollutant. Though it was very recent, that contribution of ethanol is now mostly forgotten.
Favorable government policy remains the key to further development. The U.S. government has a goal of 30% of the motor fuel to be ethanol, corn-based and cellulosic, by 2030. Approximately that level has already been reached in Brazil.
The first law to mandate a minimum biofuel blend in the U.S. was the Energy Policy Act of 2005, which required biofuel use to increase in annual steps between 2006 and 2012, reaching 5 billion gallons a year at the end of the period. The Energy Independence and Security Act of 2007 increased the RFS to 9 billion gallons of renewable fuel use by 2008 and 36 billion by 2022. The requirement for corn-based ethanol is currently capped at 15 billion gallons by 2015; 21 billion of the 36 billion gallons to be used in 2022 will have to be derived from cellulosic and other non-corn sources.
Many states, especially in the midwest where ethanol production is concentrated, also require minimum amounts to be used. Most are in the 5% to 10% range but Minnesota is considering a 20% minimum, near the limit of what can be used in vehicles not specially equipped to use ethanol.
Ethanol is subsidized at the federal level in the U.S. through an excise tax credit (VEETC), created in 2004 as part of a job-creation measure. It provides oil companies with a credit of 51 cents per gallon on pure ethanol, blended in their gasoline supply. It is to be reduced to 45 cents by the 2007 farm bill. Under current legislation the credit expires at the end of 2010 but would be extended to 2012 under the farm bill. American ethanol producers who ship less than 60 million gallons a year qualify for a further tax credit of 10 cents per gallon on the first 15 million gallons produced each year. This incentive has not been notably influential; very few new ethanol plants are being built with 60 million gallons of annual capacity because economics of scale create larger cost savings than 10 cents. A blender's credit of $1 per US gallon also applies to all U.S. biodiesel production.
In addition there are numerous federal, state and local capital grants, loans and other financial incentives to promote increasing ethanol capacity and also to support distribution infrastructure.
Canadian ethanol support policy is intended to provide comparable incentives. It includes a direct subsidy based on ethanol prices. At present ethanol and biodiesel are exempt from federal excise tax and most provincial taxes on motor fuel. Legislation now before parliament (Bill C-33) will implement a 5% average renewable fuel content requirement in Canadian gasoline and diesel fuel by 2010. This is a modest and achievable goal. The government's position is that, despite the fact that Canada is a net exporter of oil, this policy will result in reduced emissions of greenhouse gases, assist farmers in participating in a new economic opportunity and reduce the exposure of Canadians to rising petroleum prices. It is expected that when the policy is fully implemented in two years new demand for 200 million bushels (about 5 million tonnes) of wheat, corn, and canola will be created. A high priority is to encourage farmers to participate in the emerging industry in an equity owner capacity. It is anticipated that 14,000 jobs will be created and private investment of $1.5 billion will be attracted to build the required infrastructure. Spin-off benefits of an estimated $600 million are projected to the Canadian economy.
All Canadian provinces west of Quebec have created their own standards and assistance plans for renewable fuels produced within their borders.
To encourage development of ethanol capacity using non-grain sources as feedstock, U.S. tax law provides a 50% depreciation allowance for new cellulosic plants in the year they are put in service. The present law is effective until the end of 2012. The accelerated depreciation applies only to cellulosic ethanol plants that break down cellulose through enzymatic processes (as opposed to gasification).
Tariffs apply to U.S. ethanol imports to encourage domestic production and avoid payment of subsidies on imports. A general ad valorem tariff of 2.5% applies. U.S. ethanol imports from other than certain Caribbean countries are subject to a 54-cent-a-gallon secondary tariff, which under current law expires at Dec. 31 2008. There is lobby pressure to not renew this provision. Imports of up to 7% of U.S. consumption under the Caribbean Basin Initiative are duty free. The limit is 452 million gallons for 2008 and will increase as U.S. production rises. The provision was originally intended to support ethanol production from sugar cane in the region, but that has not developed. Current imports are of Brazilian ethanol lightly processed in the Caribbean to remove water content.
In reply to Removed User:
So not particularly unbiased then, assuming that Agriweek is probably read by people who grow the corn etc?
So not particularly unbiased then, assuming that Agriweek is probably read by people who grow the corn etc?
In reply to Monk:
I don't think I ever claimed that this was unbiased but it certainly isn't ill-informed.
I don't think I ever claimed that this was unbiased but it certainly isn't ill-informed.
In reply to brothersoulshine:
THE ETHANOL ENERGY BALANCE
It should be a straightforward matter to determine whether or not there is or is not a net gain in energy from biofuel production. Feedstock and production costs and the value of biofuel and co-products are easily determined. However huge disagreements have arisen even in the economist-scientist communities.
There are two sources of these disagreements: the lack of a consensus on a common starting point for calculations and the accuracy of data and estimates for the quantity, energy content and cost of inputs.
The notion that ethanol requires more energy to produce than it contains has been promoted since the 1980s by Cornell University entomologist Dr. David Pimentel, whose conclusions, though long since discredited, continue to accepted and quoted as the definitive research on the subject. Pimental has contended that ethanol production consumes up to 29% more energy than it yields and that most of it is from fossil fuel sources. He considers all energy requirements for any purpose in any way associated with corn production, including energy used to make and transport farm equipment. He assumes that all corn is irrigated at 1.29 inches per acre per year; that 8.6 gallons of diesel fuel, 3.1 gallons of gasoline and 6.4 gallons of LPG are used to grown each acre of corn. Large amounts of propane, natural gas and LPG were once used to dry grain after harvest but now very little is used due to the development of earlier-maturing corn varieties. Pimmental puts the cost of labor and custom work for corn at $366 per acre; it is actually $15.
Pimental's estimates of fossil inputs for corn production are more than twice as high as those of researchers more knowledgeable in actual farm practices, including the U.S. agriculture department, and his processing input estimate is 40% higher.
Pimental's studies are the only ones to suggest a net loss in energy. Others have shown only small gains, but the latest, most thorough research by the U.S. agriculture department and the Argonne National Laboratory found that ethanol nets up to 67% more energy than it takes to produce. No known energy source nets 100%.
Corn ethanol production is almost 400 US gallons per acre based on current average crop yields of about 150 bushels per acre. A bushel of corn contains about 2.65 gallons of ethanol and the yield is increasing as technology improves.
Actual everyday ethanol economics are based on the cost of the corn, the cost of processing and the value of the resulting products. Corn has remained a leading U.S crop through times of great variations in production costs and corn prices. Though some increase in corn production is clearly attributable to rising ethanol demand, it is both intellectually faulty and logically incoherent to include all crop production expenses in the input load for biofuels. It would only be otherwise if all corn were used for ethanol production.
THE ETHANOL ENERGY BALANCE
It should be a straightforward matter to determine whether or not there is or is not a net gain in energy from biofuel production. Feedstock and production costs and the value of biofuel and co-products are easily determined. However huge disagreements have arisen even in the economist-scientist communities.
There are two sources of these disagreements: the lack of a consensus on a common starting point for calculations and the accuracy of data and estimates for the quantity, energy content and cost of inputs.
The notion that ethanol requires more energy to produce than it contains has been promoted since the 1980s by Cornell University entomologist Dr. David Pimentel, whose conclusions, though long since discredited, continue to accepted and quoted as the definitive research on the subject. Pimental has contended that ethanol production consumes up to 29% more energy than it yields and that most of it is from fossil fuel sources. He considers all energy requirements for any purpose in any way associated with corn production, including energy used to make and transport farm equipment. He assumes that all corn is irrigated at 1.29 inches per acre per year; that 8.6 gallons of diesel fuel, 3.1 gallons of gasoline and 6.4 gallons of LPG are used to grown each acre of corn. Large amounts of propane, natural gas and LPG were once used to dry grain after harvest but now very little is used due to the development of earlier-maturing corn varieties. Pimmental puts the cost of labor and custom work for corn at $366 per acre; it is actually $15.
Pimental's estimates of fossil inputs for corn production are more than twice as high as those of researchers more knowledgeable in actual farm practices, including the U.S. agriculture department, and his processing input estimate is 40% higher.
Pimental's studies are the only ones to suggest a net loss in energy. Others have shown only small gains, but the latest, most thorough research by the U.S. agriculture department and the Argonne National Laboratory found that ethanol nets up to 67% more energy than it takes to produce. No known energy source nets 100%.
Corn ethanol production is almost 400 US gallons per acre based on current average crop yields of about 150 bushels per acre. A bushel of corn contains about 2.65 gallons of ethanol and the yield is increasing as technology improves.
Actual everyday ethanol economics are based on the cost of the corn, the cost of processing and the value of the resulting products. Corn has remained a leading U.S crop through times of great variations in production costs and corn prices. Though some increase in corn production is clearly attributable to rising ethanol demand, it is both intellectually faulty and logically incoherent to include all crop production expenses in the input load for biofuels. It would only be otherwise if all corn were used for ethanol production.
In reply to brothersoulshine:
CELLULOSE ETHANOL
Cellulosic ethanol, made from crop residues, fast-growing grasses, forestry waste and other biomass materials, represents the technological frontier of renewable fuels production. Cellulosic biomass is plentiful and cheap. Taken together, corn-based and cellulosic ethanol could eventually replace half of the 140 billion gallons of gasoline used annually in the U.S.
A study by the U.S. energy and agriculture departments estimated that 1.3 billion tons of biomass could be produced in the U.S. annually for biofuel production including crop residues which are now incorporated into the soil. The potential could be even larger if technology is developed to take advantage of additional forms of biomass such as algae. However the technology to convert the sugars locked up in these materials is still being developed to a commercial level. Research in this area has been intensive and a sudden, dramatic breakthrough is very unlikely.
There are also questions about how biomass crops and prairie grasses will be grown for ethanol production. With removal of crop residues, there could be impacts on soil fertility and erosion resistance and wildlife habitat could be impacted.
The cost of collecting and transporting crop residue, given its very low sugar content per unit of weight or volume, presents as-yet untested logistical challenges. The true key to non-grain ethanol sources is the ability to grow crops specially for ethanol or biodiesel on land that is not suited to conventional crop production. If land now being cropped is simply diverted to cellulose production, the end result may be little different than using
CELLULOSE ETHANOL
Cellulosic ethanol, made from crop residues, fast-growing grasses, forestry waste and other biomass materials, represents the technological frontier of renewable fuels production. Cellulosic biomass is plentiful and cheap. Taken together, corn-based and cellulosic ethanol could eventually replace half of the 140 billion gallons of gasoline used annually in the U.S.
A study by the U.S. energy and agriculture departments estimated that 1.3 billion tons of biomass could be produced in the U.S. annually for biofuel production including crop residues which are now incorporated into the soil. The potential could be even larger if technology is developed to take advantage of additional forms of biomass such as algae. However the technology to convert the sugars locked up in these materials is still being developed to a commercial level. Research in this area has been intensive and a sudden, dramatic breakthrough is very unlikely.
There are also questions about how biomass crops and prairie grasses will be grown for ethanol production. With removal of crop residues, there could be impacts on soil fertility and erosion resistance and wildlife habitat could be impacted.
The cost of collecting and transporting crop residue, given its very low sugar content per unit of weight or volume, presents as-yet untested logistical challenges. The true key to non-grain ethanol sources is the ability to grow crops specially for ethanol or biodiesel on land that is not suited to conventional crop production. If land now being cropped is simply diverted to cellulose production, the end result may be little different than using
In reply to brothersoulshine:
ETHANOL & ENVIRONMENT
Polls have established that the perception that renewable fuels offer environmental benefits is the main reason for public support. Yet there is nearly as much controversy over the value of ethanol as a green fuel as over ethanol economics.
It is well established by credible research that ethanol use even in low blends reduces carbon monoxide and ground-level ozone emissions. There are also reductions in compounds that react with moisture and particulate matter to create smog, including carbon monoxide, unburned hydrocarbons, benzene, and nitrogen oxides (nitrous oxide and nitric oxide). Ethanol decreases ozone formation. Though burning ethanol also produces emissions, these are less harmful and les reactive with sunlight than those produced by burning fossil fuels.
The so-called greenhouse effect refers to the trapping the sun's radiation in an atmosphere high in carbon dioxide, methane and nitrogen oxide. The use of 85% ethanol-blend fuels (E85) reduces emissions of greenhouse gases by up to 37%. A 10% blend reduces these emissions by 4%. Use of 10% ethanol also results in a 25 to 30% reduction in carbon monoxide emissions by promoting a more complete combustion of the fuel, and a 6 to 10% reduction in carbon dioxide emissions because the carbon dioxide released from ethanol production and use is less than that absorbed by crop plants used to produce ethanol.
Because ethanol is an oxygenate, a 7% overall decrease in volatile organic compounds in exhaust emissions using low-level ethanol-blended fuels. With E85 blends, exhaust VOC reductions are 30% or more.
ETHANOL & ENVIRONMENT
Polls have established that the perception that renewable fuels offer environmental benefits is the main reason for public support. Yet there is nearly as much controversy over the value of ethanol as a green fuel as over ethanol economics.
It is well established by credible research that ethanol use even in low blends reduces carbon monoxide and ground-level ozone emissions. There are also reductions in compounds that react with moisture and particulate matter to create smog, including carbon monoxide, unburned hydrocarbons, benzene, and nitrogen oxides (nitrous oxide and nitric oxide). Ethanol decreases ozone formation. Though burning ethanol also produces emissions, these are less harmful and les reactive with sunlight than those produced by burning fossil fuels.
The so-called greenhouse effect refers to the trapping the sun's radiation in an atmosphere high in carbon dioxide, methane and nitrogen oxide. The use of 85% ethanol-blend fuels (E85) reduces emissions of greenhouse gases by up to 37%. A 10% blend reduces these emissions by 4%. Use of 10% ethanol also results in a 25 to 30% reduction in carbon monoxide emissions by promoting a more complete combustion of the fuel, and a 6 to 10% reduction in carbon dioxide emissions because the carbon dioxide released from ethanol production and use is less than that absorbed by crop plants used to produce ethanol.
Because ethanol is an oxygenate, a 7% overall decrease in volatile organic compounds in exhaust emissions using low-level ethanol-blended fuels. With E85 blends, exhaust VOC reductions are 30% or more.
In reply to brothersoulshine:
ETHANOL & FOOD PRICES
Retail food prices in the U.S. are posting the fastest gain in almost two decades. The rate in Canada is lower, mitigated to some extent by the rising exchange value of the Canadian dollar. Steady food demand from higher consumer incomes and less price sensitivity on the part of consumers as well as higher production and distribution costs contributed to this increase. On an annual basis, 2007 retail food prices were 4% above 2006 levels, compared to the 2.3% rate in core consumer price inflation, a measure that excludes food and energy.
The food industry is trying to deflect possible blame for food price inflation fears by contending that these increases are traceable to higher prices for corn, wheat and soybeans which in turn are being raised by biofuel use. Actually only a very small part of the retail food price is attributable to the cost of raw commodities. The per-dollar share of grocery industry revenues going to farmers has been steadily declining. Between 1984 and 2000, the share of the domestic food dollar that reached the primary producer fell from 35 cents to 19 cents. Marketing costs (the difference between the farm value and consumer spending for food at grocery stores and restaurants) jumped from 67% in the 1970s to 80% today. Labor costs have increased faster than labor rates as production of highly-processed and prepared foods increases. Labor costs have increased to about 39% of total food spending from 28% in the 1970s.
In 1980, the farm-gate price for corn was $2.70 a bushel and the median price of new cars was about $6,000. Two years ago the car price had risen to $19,000 and corn was $3.70 a bushel. Today the median car price is $20,300 and corn is at $6 a bushel, meaning that corn prices have only now restored historic relationships with prices of capital consumer goods.
Recent credible economic research showed that ethanol accounts for no more than 2 to 3% of the increase in food prices over the past year (equal to about 0.1% in the consumer price index). Explosively-growing demand for food, feed and oilseed crops from emerging markets makes up about 55%.
Higher energy costs, arising from steep increases in the world price of crude oil, account for more of the recent increase in food prices than grains and oilseeds. Historically, retail food prices have always increased by about 0.5% in the short-term for every 1% rise in energy prices, which suggests that not all of the dramatic increase in crude oil prices over the past year has yet found its way to the supermarket check-out.
As a practical matter ethanol production in Canada and the use of Canadian grains for this purpose has absolutely no impact on food prices here or abroad. Grain prices globally are determined on American commodity exchanges essentially on the basis of American supply and demand, including export demand. Neither any increase nor decrease in Canadian ethanol production or use would have any measurable impact on U.S. or global supply-demand conditions for major crops.
ETHANOL & FOOD PRICES
Retail food prices in the U.S. are posting the fastest gain in almost two decades. The rate in Canada is lower, mitigated to some extent by the rising exchange value of the Canadian dollar. Steady food demand from higher consumer incomes and less price sensitivity on the part of consumers as well as higher production and distribution costs contributed to this increase. On an annual basis, 2007 retail food prices were 4% above 2006 levels, compared to the 2.3% rate in core consumer price inflation, a measure that excludes food and energy.
The food industry is trying to deflect possible blame for food price inflation fears by contending that these increases are traceable to higher prices for corn, wheat and soybeans which in turn are being raised by biofuel use. Actually only a very small part of the retail food price is attributable to the cost of raw commodities. The per-dollar share of grocery industry revenues going to farmers has been steadily declining. Between 1984 and 2000, the share of the domestic food dollar that reached the primary producer fell from 35 cents to 19 cents. Marketing costs (the difference between the farm value and consumer spending for food at grocery stores and restaurants) jumped from 67% in the 1970s to 80% today. Labor costs have increased faster than labor rates as production of highly-processed and prepared foods increases. Labor costs have increased to about 39% of total food spending from 28% in the 1970s.
In 1980, the farm-gate price for corn was $2.70 a bushel and the median price of new cars was about $6,000. Two years ago the car price had risen to $19,000 and corn was $3.70 a bushel. Today the median car price is $20,300 and corn is at $6 a bushel, meaning that corn prices have only now restored historic relationships with prices of capital consumer goods.
Recent credible economic research showed that ethanol accounts for no more than 2 to 3% of the increase in food prices over the past year (equal to about 0.1% in the consumer price index). Explosively-growing demand for food, feed and oilseed crops from emerging markets makes up about 55%.
Higher energy costs, arising from steep increases in the world price of crude oil, account for more of the recent increase in food prices than grains and oilseeds. Historically, retail food prices have always increased by about 0.5% in the short-term for every 1% rise in energy prices, which suggests that not all of the dramatic increase in crude oil prices over the past year has yet found its way to the supermarket check-out.
As a practical matter ethanol production in Canada and the use of Canadian grains for this purpose has absolutely no impact on food prices here or abroad. Grain prices globally are determined on American commodity exchanges essentially on the basis of American supply and demand, including export demand. Neither any increase nor decrease in Canadian ethanol production or use would have any measurable impact on U.S. or global supply-demand conditions for major crops.
In reply to brothersoulshine:
BIOFUELS & GASOLINE PRICES
The steady and rapid increase in retail petroleum product prices is a matter of general public concern. However there is evidence that these prices would be even higher, and would increase more rapidly in the future, were it not for the displacement of some of the world petroleum supply by biofuels.
Though U.S. ethanol production accounts for only 5% of motor fuel consumption, economic research suggests retail gasoline prices are between 6 and 15 cents a gallon lower than would be the case if no ethanol were used. Some of this benefit also accrues to Canadian motorists because gasoline is priced on a continental basis.
Gasoline prices in both the U.S. and Canada are at records at over $3.80 a gallon in the U.S. and over $1.25 a litre ($4.73 per US gallon) in Canada. U.S. ethanol prices peaked at about $3.20 a gallon in 2005 but declined to just over $2.00 in late 2007 because of large increases in supply and the completion of the elimination of MTBE. Currently ethanol prices are at about $2.65 to $2.80 per gallon, meaning that ethanol blending is advantageous as a volume extender and octane enhancer alone. Blending would probably occur at the highest rates made possible by available supply even if it were not for mandatory use requirements.
The price of gasoline has not increased as quickly as of diesel fuel, which is not being blended to the same degree because of the limited supply of biodiesel. In the U.S. retail diesel fuel prices are above $4 a gallon or $1.06 Canadian per litre.
Ethanol prices are being held down by transportation costs and logistics. Ethanol cannot be transported by conventional pipelines because of its corrosive and water-absorbing properties. Special ethanol pipelines are only in planning stages. Meanwhile ethanol is distributed by tanker truck and rail. Production is concentrated in midwest farm states which are located long distances from high-population regions on the east and west coasts. As a result ethanol blending is at relatively low levels in the major population areas while far exceeding minimum mandated levels in the midwest states.
BIOFUELS & GASOLINE PRICES
The steady and rapid increase in retail petroleum product prices is a matter of general public concern. However there is evidence that these prices would be even higher, and would increase more rapidly in the future, were it not for the displacement of some of the world petroleum supply by biofuels.
Though U.S. ethanol production accounts for only 5% of motor fuel consumption, economic research suggests retail gasoline prices are between 6 and 15 cents a gallon lower than would be the case if no ethanol were used. Some of this benefit also accrues to Canadian motorists because gasoline is priced on a continental basis.
Gasoline prices in both the U.S. and Canada are at records at over $3.80 a gallon in the U.S. and over $1.25 a litre ($4.73 per US gallon) in Canada. U.S. ethanol prices peaked at about $3.20 a gallon in 2005 but declined to just over $2.00 in late 2007 because of large increases in supply and the completion of the elimination of MTBE. Currently ethanol prices are at about $2.65 to $2.80 per gallon, meaning that ethanol blending is advantageous as a volume extender and octane enhancer alone. Blending would probably occur at the highest rates made possible by available supply even if it were not for mandatory use requirements.
The price of gasoline has not increased as quickly as of diesel fuel, which is not being blended to the same degree because of the limited supply of biodiesel. In the U.S. retail diesel fuel prices are above $4 a gallon or $1.06 Canadian per litre.
Ethanol prices are being held down by transportation costs and logistics. Ethanol cannot be transported by conventional pipelines because of its corrosive and water-absorbing properties. Special ethanol pipelines are only in planning stages. Meanwhile ethanol is distributed by tanker truck and rail. Production is concentrated in midwest farm states which are located long distances from high-population regions on the east and west coasts. As a result ethanol blending is at relatively low levels in the major population areas while far exceeding minimum mandated levels in the midwest states.
In reply to brothersoulshine:
BIOFUELS & COMMODITY PRICES
For the first time in recent memory, farm prices for the major crops are consistently above the cost of production. The increased demand for ethanol has undisputedly tightened up the market for corn and contributed to the rise in commodity markets.
However, these increases appear more sudden because the real (inflation adjusted) price of corn has been dropping steadily for over 30 years. In 2007 dollars, corn prices averaged $4.88 per bushel during the 1980s, $3.30 during the 1990s and $2.31 between 2000 and 2006. This decline coincided with changes in American farm policy towards greater subsidization, which resulted in overproduction of commodities and severe pressure on prices.
U.S. farm policy has promoted excess production of basic farm commodities without regard for efficient demand for over 25 years. In some ways subsidies paid to farmers eventually became indirect consumer subsidies. The biggest single change to U.S. subsidy programs was made with the passage of the 1996 farm bill, when the basis for some subsidy payments was changed and rates increased. After the bill went into effect, corn production soared, prices collapsed and billions of dollars in emergency payments were required to stabilize farm incomes, leading to even bigger subsidy payments than had been intended.
There have been large short-term variations in crop prices before. American corn prices more than doubled from $1.99 in November 1994 to $4.43 in July 1996. In the following five months they fell by 66% to $1.52. During the year ended in May 1997 prices fell by 35% from $4.14 per bushel to $2.69. American subsidy payments peaked in 2004 and 2005 when they added about up to a dollar a bushel to farmers' returns from corn.
These provisions were retained in the 2002 five-year farm bill and are also being carried forward in the 2007 version about to take effect. Most subsidy provisions have now become moot due to the increase in market prices.
Expanding production and demand for biofuels, especially in the U.S, paralleled other forces which combined to push crop prices to records, beginning in late 2006. These prices levels would not have been reached in reaction to higher crop demand from biofuels alone. Higher market corn prices and increasing demand from ethanol refineries so far have been met by rising corn acreage and production. In 2007 U.S. corn area was 92.9 million acres, a one-year gain of 19% and the highest since 1944. When this result was reported by the U.S. agriculture department in mid-2007, corn futures dropped in a matter of days to eight-month lows.
For 2008 corn acreage is expected to be reduced to 86 million acres, however normal or better yields would provide enough corn for all needs, including exports. To be sure, high corn acreage in 2007 and 2008 limited land available, and therefore production, of other crops. Soybean area was affected more than wheat, falling 15% in 2007 to 64.1 million acres, but rebounding to 74.8 million for 2008-09. Drought-reduced harvests in other countries (notably Australia) reduced world grain supplies and lowered reserve stocks to all-time lows relative to annual use.
The factors propelling grain and oilseed prices are numerous and complex and biofuel production is only one of many contributors. Traditional sources of grain demand are also expanding as the economies of developing countries grow at double-digit rates. Rising consumer incomes in developing countries are straining global food supplies more than any other factor.
Growth of the global population has slowed compared to the 1970s but has not flat-lined. It now stands at 6.7 billion compared to 5.8 billion a decade ago. Per-capita caloric intake in advanced countries is 24% higher than in developing countries. Because of their large populations, even a small movement towards first-world standards means very large absolute increases in food demand. With about a fifth of the world's population, China is leading changes in food consumption patterns. Since the mid-1990s, per-capita world oilseed consumption has jumped 35%, most of it accounted for by China and, to a lesser extent, India.
Historically, technological advances have always enabled the world's farmers to boost agricultural productivity to meet rising needs. From 1900 to 2000, U.S. corn area fell almost 25% but corn yields jumped 380%. In the 1970s, a Green Revolution propelled a global surge in crop productivity. More recently, genetically modified crops have brought the promise of another revolution in agricultural productivity.
BIOFUELS & COMMODITY PRICES
For the first time in recent memory, farm prices for the major crops are consistently above the cost of production. The increased demand for ethanol has undisputedly tightened up the market for corn and contributed to the rise in commodity markets.
However, these increases appear more sudden because the real (inflation adjusted) price of corn has been dropping steadily for over 30 years. In 2007 dollars, corn prices averaged $4.88 per bushel during the 1980s, $3.30 during the 1990s and $2.31 between 2000 and 2006. This decline coincided with changes in American farm policy towards greater subsidization, which resulted in overproduction of commodities and severe pressure on prices.
U.S. farm policy has promoted excess production of basic farm commodities without regard for efficient demand for over 25 years. In some ways subsidies paid to farmers eventually became indirect consumer subsidies. The biggest single change to U.S. subsidy programs was made with the passage of the 1996 farm bill, when the basis for some subsidy payments was changed and rates increased. After the bill went into effect, corn production soared, prices collapsed and billions of dollars in emergency payments were required to stabilize farm incomes, leading to even bigger subsidy payments than had been intended.
There have been large short-term variations in crop prices before. American corn prices more than doubled from $1.99 in November 1994 to $4.43 in July 1996. In the following five months they fell by 66% to $1.52. During the year ended in May 1997 prices fell by 35% from $4.14 per bushel to $2.69. American subsidy payments peaked in 2004 and 2005 when they added about up to a dollar a bushel to farmers' returns from corn.
These provisions were retained in the 2002 five-year farm bill and are also being carried forward in the 2007 version about to take effect. Most subsidy provisions have now become moot due to the increase in market prices.
Expanding production and demand for biofuels, especially in the U.S, paralleled other forces which combined to push crop prices to records, beginning in late 2006. These prices levels would not have been reached in reaction to higher crop demand from biofuels alone. Higher market corn prices and increasing demand from ethanol refineries so far have been met by rising corn acreage and production. In 2007 U.S. corn area was 92.9 million acres, a one-year gain of 19% and the highest since 1944. When this result was reported by the U.S. agriculture department in mid-2007, corn futures dropped in a matter of days to eight-month lows.
For 2008 corn acreage is expected to be reduced to 86 million acres, however normal or better yields would provide enough corn for all needs, including exports. To be sure, high corn acreage in 2007 and 2008 limited land available, and therefore production, of other crops. Soybean area was affected more than wheat, falling 15% in 2007 to 64.1 million acres, but rebounding to 74.8 million for 2008-09. Drought-reduced harvests in other countries (notably Australia) reduced world grain supplies and lowered reserve stocks to all-time lows relative to annual use.
The factors propelling grain and oilseed prices are numerous and complex and biofuel production is only one of many contributors. Traditional sources of grain demand are also expanding as the economies of developing countries grow at double-digit rates. Rising consumer incomes in developing countries are straining global food supplies more than any other factor.
Growth of the global population has slowed compared to the 1970s but has not flat-lined. It now stands at 6.7 billion compared to 5.8 billion a decade ago. Per-capita caloric intake in advanced countries is 24% higher than in developing countries. Because of their large populations, even a small movement towards first-world standards means very large absolute increases in food demand. With about a fifth of the world's population, China is leading changes in food consumption patterns. Since the mid-1990s, per-capita world oilseed consumption has jumped 35%, most of it accounted for by China and, to a lesser extent, India.
Historically, technological advances have always enabled the world's farmers to boost agricultural productivity to meet rising needs. From 1900 to 2000, U.S. corn area fell almost 25% but corn yields jumped 380%. In the 1970s, a Green Revolution propelled a global surge in crop productivity. More recently, genetically modified crops have brought the promise of another revolution in agricultural productivity.
In reply to brothersoulshine:
BIOFUELS & LIVESTOCK
Historically the cost of feed has accounted for about 60% of the total production cost of chicken, 47% of hog production costs and 17% in the case of beef. The escalation in corn prices without a commensurate increase in chicken and livestock prices has created severe financial stress in the North American livestock sector. Livestock organizations are now among those demanding a reduction in mandated ethanol use and reduced government supports for biofuels so as to increase the feed grain supply.
The U.S. hog/corn ratio is currently 11.1 to one, compared to 19.4 a year ago. The U.S. steer-corn ratio is 15.4 vs. 27.5. The Alberta steer/barley ratio is 16.5 compared to 25.8 and the Alberta hog/barley is 7.3 compared to 12.0. The livestock-feed ratio is the number of bushels of corn or barley equal in value to 100 lbs. of live animal. The lower the ratio the higher the cost of feed relative to livestock prices and the less profitable livestock production becomes. These ratios are not economically sustainable and livestock production for practical purposes is not currently viable. However little if any of this can be blamed on renewable fuels.
Feed grains, as noted above, have been artificially low-priced for many years, leading to artificially low livestock and meat prices. U.S. corn subsidies also acted as subsidies to the American livestock industry by keeping post-subsidy grain prices low. The same effect was felt in Canada to the extent that Canadian and U.S. feed grain prices are related. American chicken operators are estimated to have saved over $11.3 billion between 1997 and 2005 compared to what they would have paid for corn and soybean meal had feed prices been only at the cost of production.
Ethanol production uses only the starch in corn, leaving as a co-product distillers' grain, a high-protein animal feed suitable for beef and dairy cattle, hogs, poultry and fish feed. Each bushel of corn (54 lbs) produces 17 lbs (31.5%) of DDGS (distillers' dried grains with solubles). The reduction in feed grain supply on account of ethanol use is therefore much less than it seems. The rapidly-rising supply of DDGS has undoubtedly moderated the drastic increase in soybean meal costs over the last two years. Soybean meal prices are currently in the area of $333 a short ton, compared to $192 a year ago. None of this increase is attributable to biodiesel production.
On the contrary, increased biodiesel output would moderate oilseed meal prices because it would increase meal supply. Another driver behind the run-up in protein meal prices has been export demand. Part of the rising requirement for meat in developing countries is being met by higher livestock production, in regions where the potential for internal feed grain and oilseed production has already reached its limits, hence their need to import these products in ever-increasing amounts.
BIOFUELS & LIVESTOCK
Historically the cost of feed has accounted for about 60% of the total production cost of chicken, 47% of hog production costs and 17% in the case of beef. The escalation in corn prices without a commensurate increase in chicken and livestock prices has created severe financial stress in the North American livestock sector. Livestock organizations are now among those demanding a reduction in mandated ethanol use and reduced government supports for biofuels so as to increase the feed grain supply.
The U.S. hog/corn ratio is currently 11.1 to one, compared to 19.4 a year ago. The U.S. steer-corn ratio is 15.4 vs. 27.5. The Alberta steer/barley ratio is 16.5 compared to 25.8 and the Alberta hog/barley is 7.3 compared to 12.0. The livestock-feed ratio is the number of bushels of corn or barley equal in value to 100 lbs. of live animal. The lower the ratio the higher the cost of feed relative to livestock prices and the less profitable livestock production becomes. These ratios are not economically sustainable and livestock production for practical purposes is not currently viable. However little if any of this can be blamed on renewable fuels.
Feed grains, as noted above, have been artificially low-priced for many years, leading to artificially low livestock and meat prices. U.S. corn subsidies also acted as subsidies to the American livestock industry by keeping post-subsidy grain prices low. The same effect was felt in Canada to the extent that Canadian and U.S. feed grain prices are related. American chicken operators are estimated to have saved over $11.3 billion between 1997 and 2005 compared to what they would have paid for corn and soybean meal had feed prices been only at the cost of production.
Ethanol production uses only the starch in corn, leaving as a co-product distillers' grain, a high-protein animal feed suitable for beef and dairy cattle, hogs, poultry and fish feed. Each bushel of corn (54 lbs) produces 17 lbs (31.5%) of DDGS (distillers' dried grains with solubles). The reduction in feed grain supply on account of ethanol use is therefore much less than it seems. The rapidly-rising supply of DDGS has undoubtedly moderated the drastic increase in soybean meal costs over the last two years. Soybean meal prices are currently in the area of $333 a short ton, compared to $192 a year ago. None of this increase is attributable to biodiesel production.
On the contrary, increased biodiesel output would moderate oilseed meal prices because it would increase meal supply. Another driver behind the run-up in protein meal prices has been export demand. Part of the rising requirement for meat in developing countries is being met by higher livestock production, in regions where the potential for internal feed grain and oilseed production has already reached its limits, hence their need to import these products in ever-increasing amounts.
In reply to brothersoulshine:
BACKGROUNDER / Morris W. Dorosh, Publisher
How can the planet's energy future not look bleak when crude oil sells at $3 a gallon? When $3-a-gallon crude is converted to $5 gasoline and $4 diesel fuel and still consumption keeps rising? When crude oil production does not increase, as it always has before, in response to sky-high prices? When not one new oil refinery has been built in the U.S. since 1972 because of prohibitive environmental restrictions? When future development of the northern Canadian oil sands, the biggest known petroleum reserve in the world, is made uncertain by threatened regulations, unpredictable royalties, endless native land claims and fanatic ecomaniac opposition? When all countries with significant exportable petroleum resources are controlled by ruthless, despotic, secretive dictatorships which are themselves threatened by religious fanatics who despise western civilization?
The world would rather continue to pump oil and natural gas than look for alternatives. Petroleum was itself once the new, novel, alternative fuel. It took about 80 years for oil exploration, production, processing and distribution to become commercially feasible, sufficiently to bring oil product costs down to the capacity of the mainstream consumer to buy them. A gallon of oil still costs less than a gallon of milk. Oil and oil product prices have tripled in three years, but demand has not skipped a beat. The market has shown that it can modulate neither the supply nor demand side of the petroleum equation. Unless such a capacity is soon and decisively demonstrated we are in for a bigger convulsion than even the pessimists among us can yet imagine.
Price is one thing, supply another in this strange environment. Practically no one seems to appreciate how vulnerable the western world is to a supply disruption, or how instantly any such disruption would be telegraphed everywhere, even to energy-independent Canada. One of the few who do is president Bush: he has ordered his administration to keep filling the strategic oil reserve maintained by the U.S. government even as prices set one record after another. The reserve is at 97% of its capacity of 727 million barrels. It could replace offshore imports for 58 days, but military needs would take such priority that non-essential users would get practically none. No one knows what would happen if an Islamist-terrorist-created oil embargo lasted for 60 or 75 days.
Renewable biofuels are of special interest to this newsletter and most of its subscribers because this sector creates a new and theoretically unlimited market for farm crops, which have been in surplus most of the time for two centuries. Nothing could be more logical than diverting chronic agricultural overproduction towards the alarming energy crisis. However nothing can be proposed or done today without attracting opposition and obstruction, either from special interests which feel threatened or from misinformed and wrongly motivated planet-defenders.
It is very hard to see how any kind of alternative energy development could possibly be opposed by people who appreciate and understand the whole energy situation. The most benign alternative source of electricity is wind, yet intense and organized opposition is developing to wind farms. Construction should be started somewhere in North America on a large nuclear energy plant every two months if there is to be any practical hope of developing an electric-vehicle sector in the next 25 years. Half the electricity in enviro-fanatic France comes from atomic power plants. A few nuclear projects have been proposed in the U.S. and Canada but permitting will take years while construction costs escalate. It takes about four years to build an electricity-generating nuclear reactor. An atomic bomb can be made in 30 days. Even hydro-electric power stations can't be developed without complicated entanglements with wildlife-preservation and native-rights pressure groups. If a station can be built, opposition is certain over the transmission line to move the power to users. Solar panel farms are resisted because they might disorient birds.
No one in the know contends that any alternative energy source can replace all oil. It will take all of them, aggressively pursued on an emergency basis. If biofuels can only replace 10% of petroleum needs the rational reaction is to be grateful that biofuel technology has come this far. A more common reaction is that if biofuels can only replace 10% it's not worth the bother.
But to come back to the sheer precariousness of conventional energy supply. The economic and social consequences of even brief interruptions are many times more important than any issue posed by biofuels. An incident on the scale of the World Trade Center attack could paralyze half the world's oil shipping for weeks. Coordinated terrorist assaults on as few as four or five oil pipelines and tanker terminals would do it. The western world has already gone as far as it can go in appeasing the owners of the oil with money and protection. A day will come when that is not enough. The sheiks and kings will be deposed and anarchy will come. This isn't paranoia. It is the twenty-first century, full bore.
BACKGROUNDER / Morris W. Dorosh, Publisher
How can the planet's energy future not look bleak when crude oil sells at $3 a gallon? When $3-a-gallon crude is converted to $5 gasoline and $4 diesel fuel and still consumption keeps rising? When crude oil production does not increase, as it always has before, in response to sky-high prices? When not one new oil refinery has been built in the U.S. since 1972 because of prohibitive environmental restrictions? When future development of the northern Canadian oil sands, the biggest known petroleum reserve in the world, is made uncertain by threatened regulations, unpredictable royalties, endless native land claims and fanatic ecomaniac opposition? When all countries with significant exportable petroleum resources are controlled by ruthless, despotic, secretive dictatorships which are themselves threatened by religious fanatics who despise western civilization?
The world would rather continue to pump oil and natural gas than look for alternatives. Petroleum was itself once the new, novel, alternative fuel. It took about 80 years for oil exploration, production, processing and distribution to become commercially feasible, sufficiently to bring oil product costs down to the capacity of the mainstream consumer to buy them. A gallon of oil still costs less than a gallon of milk. Oil and oil product prices have tripled in three years, but demand has not skipped a beat. The market has shown that it can modulate neither the supply nor demand side of the petroleum equation. Unless such a capacity is soon and decisively demonstrated we are in for a bigger convulsion than even the pessimists among us can yet imagine.
Price is one thing, supply another in this strange environment. Practically no one seems to appreciate how vulnerable the western world is to a supply disruption, or how instantly any such disruption would be telegraphed everywhere, even to energy-independent Canada. One of the few who do is president Bush: he has ordered his administration to keep filling the strategic oil reserve maintained by the U.S. government even as prices set one record after another. The reserve is at 97% of its capacity of 727 million barrels. It could replace offshore imports for 58 days, but military needs would take such priority that non-essential users would get practically none. No one knows what would happen if an Islamist-terrorist-created oil embargo lasted for 60 or 75 days.
Renewable biofuels are of special interest to this newsletter and most of its subscribers because this sector creates a new and theoretically unlimited market for farm crops, which have been in surplus most of the time for two centuries. Nothing could be more logical than diverting chronic agricultural overproduction towards the alarming energy crisis. However nothing can be proposed or done today without attracting opposition and obstruction, either from special interests which feel threatened or from misinformed and wrongly motivated planet-defenders.
It is very hard to see how any kind of alternative energy development could possibly be opposed by people who appreciate and understand the whole energy situation. The most benign alternative source of electricity is wind, yet intense and organized opposition is developing to wind farms. Construction should be started somewhere in North America on a large nuclear energy plant every two months if there is to be any practical hope of developing an electric-vehicle sector in the next 25 years. Half the electricity in enviro-fanatic France comes from atomic power plants. A few nuclear projects have been proposed in the U.S. and Canada but permitting will take years while construction costs escalate. It takes about four years to build an electricity-generating nuclear reactor. An atomic bomb can be made in 30 days. Even hydro-electric power stations can't be developed without complicated entanglements with wildlife-preservation and native-rights pressure groups. If a station can be built, opposition is certain over the transmission line to move the power to users. Solar panel farms are resisted because they might disorient birds.
No one in the know contends that any alternative energy source can replace all oil. It will take all of them, aggressively pursued on an emergency basis. If biofuels can only replace 10% of petroleum needs the rational reaction is to be grateful that biofuel technology has come this far. A more common reaction is that if biofuels can only replace 10% it's not worth the bother.
But to come back to the sheer precariousness of conventional energy supply. The economic and social consequences of even brief interruptions are many times more important than any issue posed by biofuels. An incident on the scale of the World Trade Center attack could paralyze half the world's oil shipping for weeks. Coordinated terrorist assaults on as few as four or five oil pipelines and tanker terminals would do it. The western world has already gone as far as it can go in appeasing the owners of the oil with money and protection. A day will come when that is not enough. The sheiks and kings will be deposed and anarchy will come. This isn't paranoia. It is the twenty-first century, full bore.
In reply to brothersoulshine:
That's it. Sorry I had to split it up but it was too big to send as a whole and sorry if it offends you that it is a cut and paste rant. I think there are some interesting arguments here worth sharing.
That's it. Sorry I had to split it up but it was too big to send as a whole and sorry if it offends you that it is a cut and paste rant. I think there are some interesting arguments here worth sharing.
In reply to Removed User:
Which are the interesting ones and which are the blatant propaganda?
> I think there are some interesting arguments here worth sharing.
Which are the interesting ones and which are the blatant propaganda?
In reply to Removed User:
Could you summarise them into bullet points please?
Keep it less than, say, 200 words max.
Ta.
Could you summarise them into bullet points please?
Keep it less than, say, 200 words max.
Ta.
In reply to Removed User: I'm struggling with this, primarily because it's long and disjointed, but I'm also trying to put a lot of this into a UK context, which has been more about biomass and biodiesel, rather than bio-ethanol. It's hard enough to grow maize in the UK for cattle feed without kilometres of plastic sheet to raise the soil temp, so I don't think corn ethanol is going to be a UK issue in the near future.
Difficulty with a US trade mag is that it's written for the US business. Is there a similar Arable Farmer & Grower (or whatever) article you could post?
Difficulty with a US trade mag is that it's written for the US business. Is there a similar Arable Farmer & Grower (or whatever) article you could post?
In reply to Removed User:
Sorry but this utter unsubstantiated drivel. The Saudi monachy might fall. It might not. If it does it's highly likely to replaced with some other form of government. And if the US don't actually cause the fall you can be sure they'll have a strong hand in seeing who takes over.
And even if they don't oil is Saudi's main asset. To suggest they're simply going to sit there, not sell it, and starve is absurd.
> The sheiks and kings will be deposed and anarchy will come
Sorry but this utter unsubstantiated drivel. The Saudi monachy might fall. It might not. If it does it's highly likely to replaced with some other form of government. And if the US don't actually cause the fall you can be sure they'll have a strong hand in seeing who takes over.
And even if they don't oil is Saudi's main asset. To suggest they're simply going to sit there, not sell it, and starve is absurd.
In reply to toadwork:
The relevance to the UK is really restricted to the perceived effect that biofuel production has on food prices. The UK biofuel industry is still fairly minor.
The relevance to the UK is really restricted to the perceived effect that biofuel production has on food prices. The UK biofuel industry is still fairly minor.
In reply to Removed User: I still think biofuels from non-food-crop sources is the only way to go.
There are some great technologies in the pipeline, such as biodiesel from CO2 emmissions. (both vehicle and power plant sourced CO2)
There are some great technologies in the pipeline, such as biodiesel from CO2 emmissions. (both vehicle and power plant sourced CO2)
In reply to Alasdair Fulton:
> (In reply to Bobt) I still think biofuels from non-food-crop sources is the only way to go.
>
The only way to go where? >
In reply to Removed User:
Could you get back to me with a one line calculation on how much land it would take to be cultivated to replace, say, 30% of the world's transport fuel.
Ta
Could you get back to me with a one line calculation on how much land it would take to be cultivated to replace, say, 30% of the world's transport fuel.
Ta
In reply to Alasdair Fulton: it may be the only way to go, but with feed grain prices rising due to world shortages and bio-fuel prices being on a fixed rate for 3-5 yrs. This fixed rate currently stands at approx half feed rate prices. You need to ask the question 'who will grow the fuel?'
In reply to bilbo 1:
What?
> (In reply to Alasdair Fulton) it may be the only way to go, but with feed grain prices rising due to world shortages and bio-fuel prices being on a fixed rate for 3-5 yrs. This fixed rate currently stands at approx half feed rate prices. You need to ask the question 'who will grow the fuel?'
What?
In reply to Removed User:
An alternative way of saying the same thing is to ask why farmers would grow crops for fuel when they can make more money growing crops for food. Do all your useful cut-and-pastes tell you that?
An alternative way of saying the same thing is to ask why farmers would grow crops for fuel when they can make more money growing crops for food. Do all your useful cut-and-pastes tell you that?
In reply to Removed User:
- A modern small car uses about a third of the fuel that one did when I first started driving... this is an interesting saving.
- Using food to transport overweight people in rich countries seems a little immoral when many very thin ones in poor countries have none.
- If we wih to retain the level of mobility we enjoy today (albeit in rich countries) - which I most certainly do - we have to develop fuel systems which are not oil or hydrocarbon based. This is possible but require a bit more investment.
None of these simple arguments are countered by your enormous blocks of text put out by US farming lobbies (apparently) who may, sorry to say, be influenced by less than altruistic motives
- A modern small car uses about a third of the fuel that one did when I first started driving... this is an interesting saving.
- Using food to transport overweight people in rich countries seems a little immoral when many very thin ones in poor countries have none.
- If we wih to retain the level of mobility we enjoy today (albeit in rich countries) - which I most certainly do - we have to develop fuel systems which are not oil or hydrocarbon based. This is possible but require a bit more investment.
None of these simple arguments are countered by your enormous blocks of text put out by US farming lobbies (apparently) who may, sorry to say, be influenced by less than altruistic motives
In reply to Bruce Hooker:
Electric/nuclear (next gen) is most likely the future. Really the only energy supply that is long term, green and potentially greener, and can provide the exponential growth in requirement as 3rd becomes 1st world. IMHO.
Electric/nuclear (next gen) is most likely the future. Really the only energy supply that is long term, green and potentially greener, and can provide the exponential growth in requirement as 3rd becomes 1st world. IMHO.
In reply to Bruce Hooker:
There is no doubt that this block of text is written by a right of centre CANADIAN farm journalist with an axe to grind. But it is still worth asking why Biofuel technology was, until last year, considered to be a reasonable part of the global fuel solution and is now considered to be unacceptable and the cause of rising food prices.
Why does no one ask how such a complete and total U turn has happened in such a short space of time? Global food prices are rising for a number of reasons, largely to do with increasing demand and whilst there is no doubt that taking land out of food production for fuel production has some impact, it isn't as big an impact as is being promoted by some single interest groups that include oil companies and food retailers.
It might also be worth noting that cheap food prices will not feed the world. This is basic economics and it will be interesting to see what effect the higher prices have on global food output (there is some difficulty with this where drought etc. plays its part). It has already been recognised that higher food prices have had a positive effect on some of the world's poorer farmers and whilst this in no way alieviates the suffering caused in the short term, it could help the long term solution.
There is no doubt that this block of text is written by a right of centre CANADIAN farm journalist with an axe to grind. But it is still worth asking why Biofuel technology was, until last year, considered to be a reasonable part of the global fuel solution and is now considered to be unacceptable and the cause of rising food prices.
Why does no one ask how such a complete and total U turn has happened in such a short space of time? Global food prices are rising for a number of reasons, largely to do with increasing demand and whilst there is no doubt that taking land out of food production for fuel production has some impact, it isn't as big an impact as is being promoted by some single interest groups that include oil companies and food retailers.
It might also be worth noting that cheap food prices will not feed the world. This is basic economics and it will be interesting to see what effect the higher prices have on global food output (there is some difficulty with this where drought etc. plays its part). It has already been recognised that higher food prices have had a positive effect on some of the world's poorer farmers and whilst this in no way alieviates the suffering caused in the short term, it could help the long term solution.
In reply to pmagowan:
And you are happy with the £73billion (current) cost of decommissioning Britain's existing Nuclear Reactors that was recently announced?
http://news.bbc.co.uk/1/hi/sci/tech/7421879.stm
> Electric/nuclear (next gen) is most likely the future. Really the only energy supply that is long term, green and potentially greener, and can provide the exponential growth in requirement as 3rd becomes 1st world. IMHO.
And you are happy with the £73billion (current) cost of decommissioning Britain's existing Nuclear Reactors that was recently announced?
http://news.bbc.co.uk/1/hi/sci/tech/7421879.stm
In reply to Dominion:
Oh, and the main drift of the article seems to be about using corn for ethanol. I posted these two links back in January, about switch grass:
http://news.bbc.co.uk/1/hi/sci/tech/7175397.stm
http://en.wikipedia.org/wiki/Switchgrass
This is sort of mentioned above, in the 15.36 Cellulose Ethanol section, which is unfortunately truncated...
Oh, and the main drift of the article seems to be about using corn for ethanol. I posted these two links back in January, about switch grass:
http://news.bbc.co.uk/1/hi/sci/tech/7175397.stm
http://en.wikipedia.org/wiki/Switchgrass
This is sort of mentioned above, in the 15.36 Cellulose Ethanol section, which is unfortunately truncated...
In reply to pmagowan:
Hydrogen fuel cell cars seem the way forward eventually, as well as more hydroelectric.
Hydrogen fuel cell cars seem the way forward eventually, as well as more hydroelectric.
In reply to Removed User:
Concerning the rapid u-turn on this subject I agree with you... from being the "only solution" it has become an "immoral danger" at lightning speed but I think this is typical of the was many questions are treated. Some spin merchant with a following and an axe to grind gets a theme going, it's picked up by a few journalists and an "expert" or two, before some minister or pressure group grabs it. The idea is then spread and imposed with little in the way of justification or critical analysis and Bob's your Uncle (!) a "truth" is born.
Like all instant truths it is fragile and an inverse movement, when someone looks into the details, or notices a slight flaw (in this case using food to produce fuel for the well fed may push up food prices and some people are already finding eating too expensive) and the whole pack of cards collapses... often to a greater extent than is reasonable.
Internet allows people to spread their ideas without the need for much in the way of verification... which although a good thing overall does have a few "side effects".
Concerning the rapid u-turn on this subject I agree with you... from being the "only solution" it has become an "immoral danger" at lightning speed but I think this is typical of the was many questions are treated. Some spin merchant with a following and an axe to grind gets a theme going, it's picked up by a few journalists and an "expert" or two, before some minister or pressure group grabs it. The idea is then spread and imposed with little in the way of justification or critical analysis and Bob's your Uncle (!) a "truth" is born.
Like all instant truths it is fragile and an inverse movement, when someone looks into the details, or notices a slight flaw (in this case using food to produce fuel for the well fed may push up food prices and some people are already finding eating too expensive) and the whole pack of cards collapses... often to a greater extent than is reasonable.
Internet allows people to spread their ideas without the need for much in the way of verification... which although a good thing overall does have a few "side effects".
In reply to Dominion:
Neither happy or sad (money is an illusion). Decomissioning creates jobs, which you pay 73billion for, which you tax, and use anon. Also I am talking about building more.
Ingieuk. Hydro in short term is good where you can do it. Fuel cells are a reasonable idea and are essentially a battery. They need electric to charge them which you get from nuclear.
Neither happy or sad (money is an illusion). Decomissioning creates jobs, which you pay 73billion for, which you tax, and use anon. Also I am talking about building more.
Ingieuk. Hydro in short term is good where you can do it. Fuel cells are a reasonable idea and are essentially a battery. They need electric to charge them which you get from nuclear.
In reply to Bruce Hooker:
This testimony is worth a read, if only to highlight the fact that there are other reasons for fuel and food price increases that don't simply match the 'blame China, blame biofuels' standard approach.
http://hsgac.senate.gov/public/_files/052008Masters.pdf
This testimony is worth a read, if only to highlight the fact that there are other reasons for fuel and food price increases that don't simply match the 'blame China, blame biofuels' standard approach.
http://hsgac.senate.gov/public/_files/052008Masters.pdf
In reply to pmagowan:
Currently we brits burn huge amounts of gas, coal, and oil every night to generate electricity and sell it cheap on Economy 7.
We should be using that "cheap" - slack-time - electricity to generate hydrogen for hydrogen fuel cells, and also for hydrogen combustion engines - BMW used to have some dual-fuel concept cars that ran on both petrol, and hydrogen combustion engines, a 7 series, and also a "new" Mini.
It would be better to use solar, and wind power to produce that hydrogen, directly from hydrolysis from water, but not so good for sunshine in the UK as it is in California, where Honda's USA R&D plant at Torrance has a fuel station that just gets fed water, and uses sunlight for the electrolysis. A fuel station that doesn't need to be fed by tankers, just a water pipe.
Obviously, in the UK, the fuel station would just catch rain water from the local area - instead of rain just going into the drains - and need to have some windmills for the electricity generation as well as solar.
We could get rid of all those fuel tankers from the roads, and a strike by tanker drivers would not happen, as there wouldn't be any...
> Ingieuk. Hydro in short term is good where you can do it. Fuel cells are a reasonable idea and are essentially a battery. They need electric to charge them which you get from nuclear.
Currently we brits burn huge amounts of gas, coal, and oil every night to generate electricity and sell it cheap on Economy 7.
We should be using that "cheap" - slack-time - electricity to generate hydrogen for hydrogen fuel cells, and also for hydrogen combustion engines - BMW used to have some dual-fuel concept cars that ran on both petrol, and hydrogen combustion engines, a 7 series, and also a "new" Mini.
It would be better to use solar, and wind power to produce that hydrogen, directly from hydrolysis from water, but not so good for sunshine in the UK as it is in California, where Honda's USA R&D plant at Torrance has a fuel station that just gets fed water, and uses sunlight for the electrolysis. A fuel station that doesn't need to be fed by tankers, just a water pipe.
Obviously, in the UK, the fuel station would just catch rain water from the local area - instead of rain just going into the drains - and need to have some windmills for the electricity generation as well as solar.
We could get rid of all those fuel tankers from the roads, and a strike by tanker drivers would not happen, as there wouldn't be any...
This topic has been archived, and won't accept reply postings.
Loading Notifications...