Alternative Energy and Energy Independence from Biofuels, Corn Ethanol and Celluslosic Ethanol

Our In-Depth Report:
CORN ethanol
Given Politics and Pork, Will We Switch to the Right Ethanol?

Though Detroit automakers and Midwest farmers are gearing up for corn-based ethanol, it has serious limitations as a fuel, its production releases greenhouse gasses and it has potentially negative implications for American agriculture and global food production.

Can't Find Ethanol?

Big Oil Is Playing the Shell Game

Despite the $.51 paid them for every gallon of ethanol they blend with gasoline, U.S. oil companies are waging a stealth war against the gasoline substitute. Big oil will pocket an estimated $6.3 to $8.7 billion taxpayer dollars between 2006 and 2012, according to Taxpayers for Common Sense, all the while funding studies that point up ethanol’s negatives and subverting distribution at the pump.
     Even oil’s longtime allies, the auto manufacturers, are angered. They’ve pledged that half of new vehicles will be flex-fuel by 2012 and have invested heavily to put 5 million on the road already, only to see the oil companies making the fuel largely unavailable. You may have found pumps in your community offering E10, a blend that is 10% ethanol. The oil companies are content to add that soupçon to their gas and pocket the subsidy, but good luck finding E85, which is 85% ethanol. Of 179,000 gas station pumps in the U.S, only about 1,000 are for E85, and virtually none of these are at oil company-owned stations, reports Business Week. That’s because big oil has placed an array of obstacles in E85’s path. The Wall Street Journal found that companies:

Stipulate that the E85 pump be on a separate island, in the hopes it will not be noticed.
Block the use of credit cards in its purchase.
Require franchisees to buy all fuel from the company, so as to price E85 unfavorably.

Negative reports ordered up by big oil from think tanks and universities restrict themselves to corn-based ethanol, which does indeed suffer from numerous drawbacks (that we cover here, and here), but that is a bias meant to obscure public knowledge of the much greater advantages of cellulosic ethanol, hopefully just over the horizon. There are no operational cellulosic plants in the U.S. as yet -- breaking down the sugars of other vegetation is more complex -- but the Dept. of Energy has placed $385 million in startup grants with six companies, with more likely to come in the energy bills now before Congress.
     The point is that ethanol is a needed substitute for oil. Legislation calls for production of 35 billion gallons of biofuels by 2017, but Congress has forgottn the other half of the equation: infrastructure must be in place for corn ethanol now, and improved forms to come, to reach the consumer, but nothing has been enacted to prevent the oil companies from blocking the road.
What the Corn Lobby Won't Tell You:

Dispelling Some Myths About Ethanol

The U.S. government has provided significant incentives to support ethanol as a major factor in reversing climate change and a key component in its energy efficiency policies. It’s worthiness and efficiency has become increasingly challenged, lately. and much of the "received wisdom" is not correct. In this article we try to identify misconceptions.

What Is Ethanol?

Ethanol is a form of alcohol (methanol and butanol being two others) that is best known as the intoxicating ingredient in wines and spirits. It comes primarily from fermentation of various sugars. It once was called "grain neutral spirits" and is chemically the same as 200 proof vodka (100% alcohol). So, if desired, you can dilute it with water and drink it as a Martini. Also, it can be used as motor fuel, with minor engine adjustments for pure ethanol, and with no adjustments needed for up to 85% ethanol. As motor fuel it provides 15% less energy per cubic foot, so miles per gallon are correspondingly lower.

Why Is Corn an Issue?

In the USA, ethanol is made mainly from natural sugars in corn, and in Brazil it is made from sugar cane. That we use corn to make it is the source of many misconceptions about ethanol, of which the most important is that it makes no sense for ethanol to be part of our new energy strategy. Nothing could be farther from the truth.
     Many do not realize that corn did not evolve naturally. Instead, it was hybridized by Native Americans over centuries, starting probably 4500 BC, from a common grass in what is now Mexico. It was developed by them, we reason, because it produced more food per acre than natural products. That was helpful because clearing and cultivating land was difficult. But, a wasteful side effect of this caloric productivity was rapid depletion of soil nutrients, eventually leaving the soil barren.
     That may well explain why corn did not develop without human intervention. Much later, as American farmers refined and grew corn for food, its productivity per acre was a profitable feature because they were able artificially to re-nourish the depleted soils with nitrogen fertilizer, a cheap by-product of otherwise almost useless natural gas that itself often came as a byproduct of extracting crude oil from wells.
     As our energy needs grew and our domestic sources of hydrocarbons waned, mid-Western agri-businesses began to experiment with making ethanol as a fuel from corn. The economics were not good, but Iowa, as the location of early election primaries, found it fairly easy to attract Federal subsidies, and so it went forward, albeit slowly at first.

What Is EROE?

Measuring the performance of virtually any process is often done by developing a custom yardstick, usually in terms of desired output per unit of whatever resource is in short supply. So it is with corn ethanol. A yardstick called EROE, shorthand for "Energy Return on Energy" is now used to compare various alternate energy sources. It expresses whether a net gain in usable energy is available from a process, and if so, how much. Corn ethanol does not measure up well, largely because it takes a lot of energy to till, fertilize, harvest, transport, process, ferment and distill the plant into usable energy. The EROE for corn ethanol is about 1.3:1, meaning that only about 30% more usable energy is produced from the whole process than is consumed by it. Not much of a solution, especially since the corn can be used for animal or human food.
     The good news and reason why ethanol should remain part of the energy independence solution is that there are far more efficient sources for ethanol than corn. Sugarcane ethanol made in Brazil has an EROE of about 5:1, partly because the so-called "bagasse", or waste product after the sugar in the juice is squeezed out, can be burned for the heat needed in distillation. Brazilian ethanol could be shipped economically to the US if we did not (foolishly) apply a 54 cents per gallon import duty to it, ostensibly to "protect" our farmers from unfair competition.

Enter Cellulosic Ethanol

Almost all plants contain quantities of a woody substance called lignocellulose. Grasses, wood chips, corn stalks, sugarcane bagasse, switchgrass, buffalo grass, even waste paper, are all forms of plant lignocellulose. The cellulose molecules in these materials are complex sugars than can be used to make ethanol, if they can be separated from the lignin economically. Currently, there are dozens of companies developing genetically-engineered microorganisms and complex enzymes that are proving successful in separating these molecules from each other. In time, we should be able to manufacture a great deal of ethanol from these cellulosic sources. And we will not consume corn sugars to do so, nor use farmer's fields, nor consume nitrogen fertilizers and herbicides. The estimated EROE's from cellulosic ethanols, assuming we burn the lignin to promote distillation, are in the region of 10:1.
     So, the widely-held opinion that "ethanol is falsely counted as part of the solution" applies only to corn ethanol, and if we are patient, we will see billions of gallons of cellulosic ethanol being produced and consumed in motor vehicles in this country on terms that make economic sense for everyone. But, this approach alone cannot succeed unless we also make more efficient cars, and stop generating electricity from pulverized coal. We need to do everything we know of to do if we are to achieve energy independence and arrest human-caused climate change.
     After all, hydroelectric power, wind power and solar power have EROE's that are off the charts. But their EROI's (Energy Return on Investment) are currently low, but rising. When EROI's are high, along with EROE's, then we are making serious progress. Look for an article discussing EROI's that will be coming soon.
      - DLA

Imported Sugarcane Ethanol Promises Challenges from Corn Belt

Last year President Bush visited South America, during which he signed an agreement with Brazilian President Lula de Silva to develop sugarcane-produced ethanol as a regularly traded commodity, like oil. Because Brazil has several decades of experience using ethanol as a fuel, and 23% of its car fuel is ethanol and 8 out of 10 new cars will operate on ethanol, it is being promoted as the clean and renewable fuel of the future. Since Brazil has several decades of experience using ethanol as a fuel, and where 23% of the gasoline is ethanol and 8 out of 10 new cars will operate on ethanol, it is being promoted as the clean and renewable fuel of the future.
     While the United States and Brazil produce 3/4ths of the world's ethanol, our ethanol is based on corn, which requires more energy to produce, while sugarcane ethanol provides 8 times the amount of energy per liter of fuel. Therefore, developing sugarcane plantations for ethanol in Central America or the Caribbean could provide a new source of energy for the United States market while providing new sources of income for the producing countries. It would also reduce our dependency on oil from unstable or volatile regions as well as the cost of our military presence in those areas.

Stiff Tariff Blocks More Efficient Cane Ethanol

Though the United States promotes free trade and Latin Americans have asked for access to the U.S. market for their agricultural exports, there is a $.54 tariff on every gallon of ethanol imported from Brazil. That amounts to a subsidy of United States ethanol production, the reduction of which will be fiercely opposed by industry lobbyists and corn-producing states.
     Reflecting fallout from past experiences or the war in Iraq, critics in Brazil point out that the United States has intervened in other countries to protect oil reserves and now wants to control Brazilian ethanol production. Venezuela's Hugo Chávez also accused Bush of seeking cheap fuel at the expense of Latin American food production.

Rising Corn Prices Triggered Unrest in Mexico

Because of an increased demand for corn to produce ethanol in the United States, the price of corn doubled last year, leading to an increase of 50% for corn and tortillas, Mexico's basic food staple. Since NAFTA had eliminated subsidies for corn farmers in Mexico, they could not compete with cheaper corn from the United States and corn production declined. The price increase sparked social unrest and the government intervened to stabilize food prices. As more acreage has been converted to corn, the prices for wheat and other grains have also risen.
     As the price of corn rises, ethanol production costs also rise. With oil at over $100 a barrel, there is still a comfortable profit margin while cheap oil would make ethanol less attractive to investors. As more land is put into fuel production, agricultural exports might decline and global food production suffer. In order to save production costs, several new ethanol plans are also coal-fired, creating another emissions problem.
     Meanwhile, Brazil is not only expanding its ethanol refining capacity, but is also developing new technology and sharing it with other countries in Asia and Africa. During the next five or six years Brazil hopes to increase its own exports of ethanol six fold and become a supplier of ethanol refining equipment, personnel and technology to other countries. In fact Brazil has already built ethanol plants in Jamaica and Nigeria.

Ethanol One Answer But Many Needed

While Brazil has reduced its oil dependency by developing sugarcane ethanol and it clearly has potential benefits for other tropical countries, it is not a standalone panacea for energy independence or the threat of global warming. In fact, recent analyses demonstrate rather convincingly that converting tropical forests to sugarcane, soybeans or other fuel crops will release more carbon dioxide than will be saved by using ethanol, or that it will take hundreds of years before the reduction in emissions will approach the carbon already stored in these forests.
     Our own energy independence, as well as helping to reduce greenhouse gas emissions, requires that we look at other renewable sources of energy, including crops like switch grass, corn husks or crop waste, solar and wind power, and wave generation. Plug-in hybrid cars, using green electricity and a biofuel as backup, also offer the promise of greater energy independence, cheaper transportation, fewer greenhouse gas emissions and a reduced defense budget.      - DAW

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Biofuels Come a Cropper

New "Science” Studies Say All Lead to Higher CO2 Emissions

  Click to return to beginning
carbon cost of land conversion to raise those crops, and come up with the disturbing conclusion that vastly more CO2 will be released into the atmosphere than were we to continue to use gasoline.
     The problem is this: the accelerating demand for raising crops for both food and fuel worldwide will lead to millions of acres to be cleared, ranging from grasses to mature forests. Whether suddenly from burning or gradually from decomposition, the biomass on that land will release the stored CO2 that funded its growth. Then comes the lost opportunity of how much CO2 that biomass would have absorbed thereafter by its continued existence, especially woodlands that are still growing.
     The combined release of CO2 at the outset and the sacrificed “carbon uptake” thereafter creates what the studies call a “carbon debt”. For a biofuel crop to make sense, it must repay that debt in the course of its repeated plantings by the CO2 emissions it saves compared to oil. Until that payback, a biofuel will have led to the emission of more CO2 than the fossil fuel it replaced.
Long-Term Loans      The question: how long do different feedstocks on different types of converted land take to cancel their debt?
      The answer: the carbon debts incurred are enormous. The studies say that scores of years and even centuries are needed to break even, depending on the crop and the type of land put to the plow. When land use change is added on the debit side of the ledger, most crops result in much higher emissions than oil, especially across the next 30 years, the span during which the studies assume we will be using biofuels before moving on to a non-agricultural-based fuel.
     One study found, for example, that even if it only displaced central U.S. grassland, corn grown for ethanol would take 93 years before it overcame the carbon debt of land use change with its lower carbon emissions compared to gasoline.
     The other study, which used globe-spanning agricultural models to assign crops to land to meet projected demands, calculated that were corn to replace forest, the sequestered carbon loss is about 330 to 630 times the amount the field will pay back each year, the variance depending on the type of forest and whether it is still growing.
     Most findings are much worse when natural land cover is replaced by the much reduced CO2 take-up of field crops. An insurmountable 319 year debt is left behind when Brazil’s rain forests are leveled to produce soybeans for biodiesel. The rain forests slashed in Indonesia in the race to produce palm oil as fuel leave behind an astonishing 423 year debt.
     There are few bright spots. One is ethanol from Brazilian sugarcane. Its extraordinary productivity could pay back its land use debt in only four years, if tropical grazing land is used. Elsewhere, as in the United States, the studies strongly advise that (1) only abandoned agricultural lands, or land retired under U.S. programs, be planted, and with perennials, and (2) otherwise, biofuels must be produced only from waste that would yield its CO2 anyway, and to no purpose, such as municipal waste, wood chips, and agricultural discard.
      - SCW

Have you heard of Jatropha Curcas?

An Ugly Green Poisonous Shrub Could Come to Our Rescue

Biodiesel and ethanol have been touted as the answer to the U.S. oil import problem. However, ethanol from corn has been getting a lot of bad press lately as questions are being asked as to how much does corn-based ethanol actually reduce the need for imported oil and reduce greenhouse gases? Meanwhile the price of corn has soared.
     A “new” source of biodiesel is rearing its head and it may be what the world needs in the short run to keep the price of corn down. It is called jatropha curcas. It is a nut from a tree and the nuts (its fruit) contain 30% inedible oil that can but used as biodiesel. This tree grows best in tropical, humid climates, but has the capability, once established with irrigation, to grow and produce the nuts in hot, dry, arid and sandy soil. As it is a tree it does not need the yearly tilling, seeding etc that uses a lot of fuel needed for the production of soy beans and corn. Jatropha curcas also has a higher content of oil per acre than either soybeans or corn.
      It is being introduced in South America, Asia and Africa in the hot humid areas where it produces the best. However, now is the time to try to introduce it in the United States in quantities where it can be useful and reduce the quantity of corn and soybeans being produced for fuel instead of food. To that end researchers at the University of Florida are working on jatropha — how to grow the trees and where — while another group in the Florida Panhandle is working to develop the process to obtain and refine the oil.      HVW

Another Biofuel Entrant: Rice Straw

And Some Observations About Biofuels in General

Japan plans to spin rice straw into biofuel. Unlike corn, sugarcane and other biofuel sources that remove the eatable portion from the food supply, rice straw isn't consumed as food and is often thrown away. (It should be noted that the ethanol in E85 biofuel so far comes from corn; most of the kernel is still available for use in traditional products such as animal feed.)
     To make the rice straw technology commercially viable, the Japanese government seeks total vertical integration of the process, from rounding up the straw to producing and using the resultant fuel. Maybe the Japanese will also take steps to ensure that all its automaker’s engines can burn the fuel, since not all cars, whether Japanese, American, German, Korean, English, etc., can now use ethanol (E85) or any other biofuel. GM and other US automakers each sell a few so-called flex-fuel models that can run on either straight gasoline or E85.
     Any flex-fuel vehicle can use a biofuel. Roughly 5 million such models

have been sold over the past decade. For instance, the Jeep Grand Cherokee became E85 compatible in the 2007 model year. If you were unaware, don’t be dismayed. A recent GM study found that roughly 70% of its flex-fuel vehicle owners didn't know they could use E85, and fewer than 10 percent did so. This contributed to GM's decision to launch its "LiveGreenGoYellow" media blitz. A flex-fuel model can burn any combination of E85 and straight gasoline, so owners can fill up with either fuel at any time. Technically, a non-flex fuel model can be modified to run on E85, but it is far from being cost-effective, according to the website, cars.com.

Will a Biofuel Save You Money?

E85 saves you money only when gasoline prices are high because it produces 72% of the energy as gasoline. Cars.com reports, for
Rarely found: The logo for E85
in the United States. example, that a flex-fuel Chevrolet Impala equipped with a 3.5-liter V-6 engine gets an EPA-estimated 23/31 mpg (city/highway) on gasoline and 16/21 mpg when burning E85. The acceleration is pretty much the same, but you'll be filling the tank more often when using E85. Do the math and you'll discover that E85 must be priced roughly 28% less than gas just to break even. For example, if gasoline were $3.25 per gallon, E85 would have to be priced below $2.34 per gallon.

How Available Is Biofuel?

On a national level, E85 is hardly widespread. There are currently 1,441 E85 stations providing this biofuel across the United States. (For a complete listing, go to www.E85Refueling.com.) The highest concentration of filling stations is in corn-growing states such as Illinois, Iowa, Wisconsin, Nebraska and Kansas. Minnesota has the most, with more than 300. Availability is poorest in the South and the Northeast. The number of filling stations offering E85 in the U.S. is expected to double within a year's time.
     The Energy bill recently passed by Congress and signed by President Bush provides new impetus for the development and use of biofuels. A substantially increased level of biofuel use is mandated as a requirement on the fuel producing industry. Under current law, they are required to produce 5.4 billion gallons in 2008, increasing to 7.5 by 2012. Under the new law, the 2008 target is raised to 9.0 billion gallons in 2008, and then scales upward to 36 billion gallons by 2022. No one is sure how or whether the industry can meet this immediate surge, but there is a provision for EPA to grant a time waiver if it proves impossible. In each year after 2016, all of the increase must come from what are called “advanced biofuels” derived from feedstock other than cornstarch. Specific emphasis is placed on increasing quantities of cellulosic-based product and on biodiesel.
     In the earlier versions of the energy bill, Congress had agreed to cut back tax breaks for the petroleum industry and replace them with greener tax breaks, and that may happen in a later tax bill or in the eventual farm bill. What was included was a strong emphasis on biofuel R & D, including specific provisions for algae-based formulations, as well as support for demonstrations and market research to improve understanding of the production, transportation and use of these products. In a classic example of Congressional earmarking, a special provision was included for a University R & D effort with priority to “…universities in low-income and rural communities with proximity to trees dying of disease or insect infestation.
     Seemingly contrary to this effort is the fact that the new CAFÉ standards will phase out the current bonus given for flex-fuel vehicles. However, this is likely a response to the fact that automakers have gotten a significant boost out of the exemption without it creating any major incentive to actually use the flex-fuel capacity. If biofuel mixes become more available, as called for, it will create a marketing imperative for the automakers to provide this relatively low cost modification to their vehicles.

Biofuel Benefit?

The best reasons to buy an E85 vehicle are to decrease U.S. dependence on petroleum — which is non-renewable and comes mainly from foreign countries — and to keep more of your money in this country. E85 also has environmental benefits, although the degree is in question, Cars.com states. A flex-fuel car burning E85 has different levels of tailpipe pollutants, but it's not dramatically better overall than gasoline exhaust. Separate from true pollution emissions, E85's output of carbon dioxide — a greenhouse gas — is again comparable to that of gasoline, at the car's tailpipe. The theoretical benefit is that the carbon in ethanol comes from corn plants, which, in a sense, recycle the carbon.
     In comparison, petroleum is carbon that was trapped underground for millions of years before being released into the ecosystem. The National Ethanol Vehicle Coalition says E85 reduces CO2 by about 36 to 42 percent versus gas. Still, scientists point out that petroleum is used to plant, fertilize, harvest, process and transport E85.
     When it comes to biofuels, the advantages are these:

  • Renewable fuel
  • Uses up to 85 percent less imported petroleum
  • Less money goes overseas
  • You don't have to pay a premium for a flex-fuel model

There are disadvantages to biofuels, however:

  • - Get fewer miles per gallon than regular gas
  • - Environmental benefits unclear

Right now, ethanol alcohol, in the form of E85 (85% ethanol, 15% gasoline) is the biofuel most often seen in the U.S. The gasoline ensures that the engine starts in cold weather, because straight alcohol won't.

What About Prices for Biofuels?

Ethanol prices are already subsidized in some states. Buyers in Illinois pay no sales tax, which brings down the posted price per gallon (tax is included in per-gallon prices for straight gasoline, not added on top of the total). Price hinges on supply and demand and economies of scale. Demand recently jumped when the additive MTBE was found to be polluting groundwater. States that used MTBE are switching to ethanol as an octane booster and oxygenate, which reduces summertime air pollution from gasoline evaporation. Ethanol proponents say an oft-cited study that claimed ethanol takes more energy to produce than it gives back is no longer accurate. According to NEVC, the overall energy advantage over gasoline is 3 to 1. This ratio is expected to reach 9 to 1 when the industry moves away from food crops and toward waste vegetation (e.g., rice straw, switchgrass, and others) and/or plants that are simpler and cheaper to grow, harvest and process. As alternative fuels go, biofuels like ethanol and biodiesel have great advantages in the real world. They can be distributed and dispensed like conventional liquid fuel, and used in vehicles that cost automakers very little in terms of additional cost. The same cannot be said of hybrids, which force consumers to pay a higher sticker price.
     KCM, with contributions from MLD

With Ethanol, It’s All Politics

In U.S. and Europe, a Bonanza for Farmers; Foreign Countries Need Not Apply

The Organization for Economic Cooperation and Development (OECD) released a scathing report Sept. 11 calling for a dramatic drawdown in the subsidies and preferential trade laws granted to biofuel producers in OECD countries. In Europe, Friends of the Earth hailed the report, saying it has focused attention on the negative issues surrounding biofuels, while libertarian groups on both sides of the Atlantic applauded its call for a reduction in subsidies.
     The report is one of a number of efforts designed to deflate support for biofuels in the United States and Europe. Increasing numbers of groups, especially in Europe, are beginning to question the wisdom of the current move toward biofuels as a replacement, at least in part, for gasoline and diesel in vehicles. They argue that these fuels offer little benefit and have serious drawbacks. Specifically, they question the wisdom of burning food crops for fuel. They point to a "tortilla crisis" in Mexico caused by rising corn prices and a "bread crisis" in France caused by rising wheat prices. Inflation in China is now running above 6 percent, largely due to increases in the price of foodstuffs.
     In other words, the backlash against biofuels is in full swing. The critics, however, are running head on into the powerful agricultural lobbies in the United States and Europe that so successfully championed the issue in the first place. These advocates say that ethanol, biodiesel and other nonpetroleum-based transportation fuels reduce pollution, help fight climate change and improve national security by reducing dependence on foreign oil. Though many policymakers find these arguments compelling, the biofuels issue would not have achieved the political momentum it has without the intense lobbying by the agricultural sector.
     In fact, the fate of the current wave of biofuel mandates and the pace at which industrialized countries offer biofuels at the pumps will largely be determined by agriculture interests. The implications are as strong and lasting for developing countries as for the industrialized countries involved. Moreover, advancements in biofuel technology over the next decade or so could convert some of the current critics to supporters.
Plant-based Fuels The term "biofuels" refers to any number of combustible liquids derived from plants that can be used to create energy. Most biofuel development is directed at use in transportation, where biofuels are envisioned as a replacement for gasoline or diesel fuel. The most prevalent sources of biofuel now are corn ethanol (predominantly in the United States), sugar ethanol (mostly from Brazil) and rapeseed oil for biodiesel in Europe. Among the other current sources are palm and soy oil and various waste products (such as cooking waste) for diesel. In the future, researchers hope to make ethanol from unused portions of agriculture produce -- cellulosic ethanol from corn stalks and waste from wood processing.
     The creation of biofuels produces dramatically different levels of pollution, depending on the plant used. Ethanol is the same and burns similarly regardless of its source, but the pollution and emissions associated with the specific plant's production cycle vary widely. Corn ethanol, for instance, produces 0 percent to 3 percent less greenhouse gas emissions than gasoline when the factors of planting, fertilizing and harvesting the corn are taken into consideration along with the processing and transportation of the fuel, which in the best case requires dedicated pipelines and currently requires overland transportation. Sugar ethanol from Brazil, over its lifecycle, produces 50 percent to 70 percent less greenhouse gas emissions than gasoline. Early indications are that the next generation of cellulosic ethanol will produce more than 90 percent less emissions than gasoline over its lifecycle, though there are significant infrastructural and technical obstacles to the realization of such breakthrough technology.
     According to the U.N. Food and Agriculture Organization, the countries of Southeast Asia, Central Africa and South America, especially Brazil, have the highest potential for producing the fast-growing woody crops that will be used in the next generation of biofuels. Over the long term, biofuels could emerge as a way for the economies of many poor countries to gain a solid footing by increasing the agriculture sector generally and diversifying national economies. That is, of course, if major consumers will import their biofuels.
     In the United States and Europe, corn currently provides the bulk of ethanol. Europe has recently adopted a stringent biofuel mandate that calls for an escalating percentage of biofuel in its transportation fuel mix. With this, it is looking beyond corn to other sources, such as Brazil's sugar-based ethanol -- though a solution that benefits Brazilian farmers but offers little to EU farmers is highly controversial. Meanwhile, in the United States, where imported ethanol is saddled with a 53-cent-per-gallon tax, biofuel produced outside of the United States is uncompetitive.
Politics of Ethanol The energy bill that passed the U.S. House of Representatives in August includes a call for more than 7.5 billion gallons of biofuels to be sold in the United States by 2009 and for the amount to escalate to 36 billion gallons by 2022. The catch is that most of the ethanol in 2022 will have to be from "advanced" sources, which is to say from next-generation cellulosic processes. (Europe's emerging policy has a similar clause.) The U.S. numbers will likely be scaled back in the conference committee, but some requirement to increase the use of biofuels will go forward. Once passed and signed, biofuels will be cemented in the national energy mix.
     Among the most intriguing aspects of the political wrangling over the biofuel mandate in the United States has been the disappearance of the environmental lobby. When pressed, it says it generally supports a mandate and emphasizes the importance of next-generation sources. This is an important turn because for the past 20 years environmentalists have battled appeals by farm states to mandate the use of corn ethanol. Major environmental groups are among those that have commissioned and brought attention to studies showing negligible or negative environmental benefits from ethanol.
     Environmentalists' support for biofuels is tied directly to their support for action on climate change. For environmentalists, imposing a cap on greenhouse gas emissions on the United States is their primary objective. They see a carbon cap as the prize, and they figure that anything done in the process of achieving that goal can be fixed later.
     To achieve a carbon cap, supporters recognized that they needed not just the political backing of lawmakers from the West Coast and Northeast, but that they also needed a certain amount of political support from the middle of the country. Policymakers in Michigan, West Virginia and Colorado seemed unlikely to come on board because of the stake their states have in the automobile and coal industries. States such as Iowa, Nebraska and South Dakota, however, have no clear stake in the climate issue so those battling for a carbon cap offered billions of dollars in subsidies and a guaranteed market for corn ethanol. That was something a farm-state senator could support.
In Europe, the Stranglehold of the Farm Lobby The issues were similar in the European Union, though the politics were slightly different. While the EU environmental lobby is much stronger than its U.S. counterpart, it pales in Brussels compared to the farm lobby. In Europe, the important energy issues are energy security and climate change. Environmentalists were helpless when the farm lobby flexed its muscles in the most recent energy policy discussion and won a dramatic increase in biofuel use, having used both energy security and climate change as justification. Though environmentalists were livid, for EU politicians it was an easy decision: the policy supports farmers while dovetailing with the urgent call for a diversification of energy sources. As in the United States, support for biofuels addressed a problem rhetorically and allowed politicians and interest groups to score important political points.
     The political support for biofuels already is paying dividends in both Europe and the United States. Corn prices are now more than 40 percent higher than they were a year ago, despite a 15 percent increase in planting. The rising price of corn meant reduced acreage of wheat planting, and this has coincided with a terrible drought in Australia and a falling dollar. As a result, wheat prices have doubled in the past year, to $9 per bushel for the first time ever (more than $10 in France). These are good times for farmers, and ethanol is playing a role in it.
     In Europe, environmentalists are more outspoken in their frustration -- as Friends of the Earth's clear support for the OECD report suggests -- though many rest with the knowledge that they have at least reduced oil's share of the transportation fuels' market, which for many is better than a Pyrrhic victory.
Brazil's Challenge For Brazil, the existing or proposed barriers to the importation of its biofuels present a severe challenge. It invested heavily in research and development of biofuels and has perfected a system that provides a replacement for gasoline at a competitive price and with a significant reduction in greenhouse gas emissions (corn-based ethanol offers little to no greenhouse gas benefits). Brazil is moving its vehicle fleet to ethanol, which will take most of the country's output, but it has developed capacity to export ethanol as well.
     Seeing its ethanol exports blocked by the United States and Europe, Brazil is learning that energy security and climate change were only a part of the reason countries looked to biofuels. Certainly, these arguments were important, but biofuel mandates would not have happened if not for the power of agriculture in both the United States and Europe.
     Brazil's problem, then, is that it merely solved the problem politicians talked about -- it has developed a fuel that reduces greenhouse gas emissions and comes from a place that is politically stable and friendly to both the European Union and United States. In solving the rhetorical problem without offering a political fix, it has placed U.S. environmental activists and EU politicians in a difficult position, and has not necessarily won markets. The larger problem, a problem that the OECD suggests but does not explicitly state, is that there is little interest in either the United States or Europe in staring down the agricultural interests.
      By Bart Mongoven for Stratfor, reprinted by permission, www.stratfor.com