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Biofuels:
What Place in Our Energy Future?

(Released April 2009)

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  by Ethan Goffman  

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The Bigger Picture: Where Might Biofuel Fit in Our Energy Future?

Contents

The economic viability of biofuels depends on the price of gasoline and other fossil fuels versus the price of a given biofuel. The latter has become steadily less expensive, although the recent food shortage pushed the price of corn ethanol temporarily up. Meanwhile, as every driver knows, the price of oil has oscillated wildly based on speculation and political events. When oil prices raced to nearly $150 a barrel it seemed like a potential goldmine for alternative energy, but their equally breathtaking drop to under $35 a barrel has thrown the ethanol industry into crisis. The industry today faces a triple whammy: overly rapid expansion, falling gasoline prices, and a deep recession. The future of the U.S. industry looks grim, at least in the near term; "Overcapacity and falling ethanol prices have driven a flight from biofuel investment and spurred industry consolidation," so much so that "several major ethanol producers have announced plans to cancel or have already delayed projects in the fourth quarter" of 2008 (Coons).

cars in front of ethanol plant
General Motors flexfuel vehicles, US Bio Woodbury Ethanol Plant, Lake Odessa, Michigan

With oil prices low, demand for ethanol is naturally dropping. "This has been our pattern," explained Barack Obama, "We go from shock to trance. . . oil prices go up, everybody goes in a flurry of activity. And then prices go back down and suddenly we act like it's not important" (Revkin). It is possible, however, that oil's extraordinary volatility has shaken faith in it enough to spur a deeper commitment to alternative fuels. With rising demand in China and India it is inevitable that we will reach peak oil, although how soon is not clear. According to the United Nations, "at a time when oil production is already in decline in many nations, greater biofuel use could help bring the oil market into balance and greatly reduce oil prices" (UN 39). And of course concern about climate change is also spurring interest in ethanol, leading to increased government support.

global biofuel production
Global Biofuel Production

Like all renewable energy, biofuels are dependent on government subsidies and mandates to be economically viable. "This is an industry that was grown by regulation and will continue to be grown by regulation for awhile," explains an energy analyst (Coons). However, as renewable energy advocates like to point out, fossil fuels have also been heavily subsidized throughout their development. According to the United Nations, "Decades of direct and indirect subsides to the energy sector as a whole . . . have contributed to the current energy system" (UN 39). In any case, "Brazil, the European Union, and the United States have already demonstrated that government regulations and tax incentives are essential to the development of modern bioenergy" (UN 5). U.S. ethanol subsidies in 2006 were $5 billion, more than 40% of the market price (UN 37). According to the OECD, "Government biofuels support in the US, EU and Canada is estimated to be around US$25 billion per year by 2015, up from US$11 billion in 2006" (Europe Info).

While the environmental and energy advantages of biofuels are contested, the job benefits for the agricultural sector are irrefutable. According to the United Nations, biofuel production is often "labour intensive, particularly compared with producing energy from fossil fuels and other renewable resources" (UN 12). Biofuels bring jobs where they are needed, for instance in economically impoverished farm towns in the United States. In addition, the United Nations recently projected that, "As biofuels absorb crop surpluses in industrialised countries, commodity prices will rise, increasing income for farmers in poor countries" (33).

power plant
Steam turbines convert wood residues to electricity, Shasta, California.

When jobs and money are at stake, lobbying is certain to be intense. With the government deeply involved, political interests may trump economic and environmental ones as to how much of what biofuel is produced. "We are up against formidable opposition from competing interests" an executive of an algal ethanol company regarding proponents of other kinds of biofuels (Blumenthal). The delicate question of what biofuels to research and produce, where, and in what quantities is hard to separate from politics.

Yet, in a world with serious, and seriously complicated, energy problems, the allure of biofuels remains great. Greene describes them as "unlike any other renewable energy technology. Biofuel production is unique, and can be very good for the environment or very bad depending entirely on how we do it." Much of the environmental movement has abandoned ethanol, pushing for a combination of wind and solar energy along with a greatly enhanced electrical grid and battery powered cars. Greene, however, worries that the economic viability of solar and of a smart, extensive energy grid still hasn't been proved. He also argues that "you can't easily electrify planes, long distance trains, and boats." Most of all, he believes that only ethanol, correctly produced, can solve the problems of a world in which "the car population is just exploding. If we can't find low-carbon technology, it's a real challenge." He questions whether rapidly developing countries are ready for a complete wind and solar makeover, and argues that "we can't simply write off ethanol. If we wrote off every alternative as complicated we'd be left with almost nothing." Clearly, though, we need to think about biofuels in a more systematic way than we have been so far, and so far "policies to promote broadly sustainable biofuels are not in place," (Greene Blog).

Certainly the challenges are many: full cycle accounting, water shortages, soil depletion, indirect land use, among others. And the need is great: energy independence, jobs, greenhouse gas reduction, local air quality. Biofuels are a uniquely complex answer to our energy needs with a unique set of problems. With a new administration in the White House, a major global warming conference impending, and problems foreseen and, undoubtedly, unforeseen looming, it remains to be seen what mix of biofuels will be part of our future.

© 2009, ProQuest LLC. All rights reserved.

List of Visuals

References

  1. Answers.com. Biofuel. http://www.answers.com/topic/biofuel Accessed March 24, 2009.

  2. Blumenthal, Les. Go Green: Industries See Algae's Promise as Biofuel. McClatchy - Tribune News Service. December 7, 2008.

  3. Bourne, Joel K. Green Dreams: Making fuel from crops could be good for the planet-after a breakthrough or two. National Geographic October 2007.

  4. Boyd, Robynne. Fueling the Future? Earth Island Journal July 1, 2008.

  5. Bryner, Michelle. Alternative Fuels: Filling the Gap. Chemical Week December 19, 2007.

  6. Castaldo, Joe. The New Alchemists: Is The Quest For Better Ethanol Leading Us Down The Garden Path? Canadian Business. October 27, 2008.

  7. Clanton, Brett. From Laboratory to the Fuel Tank / Advocates Say Algae Has Big Assets. Houston Chronicle October 25, 2008.

  8. Coons, Rebecca. Alternative Fuels: Will Recession Slow Progress? Chemical Week December 22, 2008

  9. Davidson, Paul. Start-ups Put Farm Debris to Use as Fuel. USA Today January 9, 2009. http://www.usatoday.com/money/industries/energy/2009-01-08-cellulosic-waste-ethanol_N.htm Accessed April 7, 2009.

  10. Preto, Ribeirão. Biofuels in Brazil: Lean, Green and Not Mean. The Economist Jun 26, 2008 |

  11. Energy Information Administration. Energy Kids Page. http://www.eia.doe.gov/kids/history/timelines/ethanol.html Accessed March 24, 2009.

  12. The Engineer. Biofuels: Field of dreams? July 30, 2007

  13. The Engineer. Fuel Technology: Late bloomer. July 14, 2008.

  14. Europe Information. Energy: OECD Report Blasts Biofuels as "Costly and Ineffective." July 17, 2008

  15. Galbraith, Kate. A Slugfest Over Higher Ethanol Blends. New York Times Blogs. March 6, 2009. http://greeninc.blogs.nytimes.com/2009/03/06/slugfest-brewing-over-higher-ethanol-blends/ Accessed March 24, 2009.

  16. Greene, Nathanael. Blog. 23 Scientists Call for Careful Policy for Cellulosic Biofuels. Natural Resources Defense Council Blogs. http://switchboard.nrdc.org/blogs/ngreene/23_scientists_call_for_careful.html Accessed March 24, 2009.

  17. Greene, Nathanael. Personal Interview. February 17, 2009.

  18. Greer, Diane. Spinning Straw into Fuel. BioCycle April 1, 2005

  19. Hiserodt, Ed. Algae May Be an Energy Answer. The New American August 18, 2008.

  20. Leahy, Stephen. Environment: Fuel Industry Explores Cellulosic Ethanol. Global Information Network July 2, 2007.

  21. Liska, Adam, Haishun Yang, Virgil Bremer, Terry Klopfenstein, Daniel Walters, Galen Erickson, and Kenneth G. Cassman. Improvements in Life Cycle Energy Efficiency and Greenhouse Gas Emissions of Corn-Ethanol. Journal of Industrial Ecology. 21 Jan 2009.

  22. Max, Arthur. Biofuel Turns to Sources that Don't Bite into Food Chain. Virginian Pilot (Norfolk) November 24, 2008.

  23. Mitchell, Donald. A Note on Rising Food Prices. The World Bank Development Prospects Group. July, 2008.

  24. Morrow, John K. Can Biotech Companies Enable Ethanol Biofuels to Achieve Sustainability? Sustainability: Science, Practice, & Policy 4(1):45-49. http://ejournal.nbii.org/archives/vol4iss1/communityessay.morrow.html Accessed March 24, 2009.

  25. Nowak, Rachel. Bring on the Second Generation of Biofuels. New Scientist February 2, 2008.

  26. Pearce, Fred. Time to Bring in Plan B for Biofuel. New Scientist June 21, 2008

  27. Pimentel, David, Alison Marklein, Megan Toth, Marissa Karpoff, Gillian Paul, Robert McCormack, Joanna Kyriazis & Tim Krueger. Human Ecology (2009) 37:1-12

  28. Reel, Monte. Brazil's Road to Energy Independence: Alternative-Fuel Strategy, Rooted in Ethanol From Sugar Cane, Seen as Model. Washington Post Sunday, August 20, 2006. http://www.washingtonpost.com/wp-dyn/content/article/2006/08/19/AR2006081900842.html Accessed March 24, 2009.

  29. Revkin, Andrew. Obama on the 'Shock to Trance' Energy Pattern. New York Times Blogs November 17, 2008 http://dotearth.blogs.nytimes.com/2008/11/17/obama-on-shock-to-trance-energy-pattern/ Accessed March 24, 2009.

  30. Rotman, David. The Price of Biofuels. Technology Review January 1, 2008.

  31. Scott, Alex and Michelle Bryner. Alternative Fuels: Rolling Out Next-Generation Technologies. Chemical Week December 20, 2006.

  32. Shreeve, Jamie. Redesigning Life to Make Ethanol. Technology Review July 1, 2006.

  33. Stipp, David. The Search for the Perfect Fuel. Fortune April 28, 2008.

  34. Tyner, E. The US Ethanol and Biofuels Boom: Its Origins, Current Status, and Future Prospects. Bioscience July 1, 2008.

  35. United Nations. Sustainable Bioenergy: A Framework for Decision Makers. 2007.