Who’s Fueling Whom?
Why the biofuels movement could run out of gas
I first started to think that the biofuels movement might be slipping into la-la land when I spotted a news item early this year about a 78-foot powerboat named Earthrace. In the photographs, the boat looked like a cross between Howard Hughes' Spruce Goose and a Las Vegas showgirl. Skipper Pete Bethune, a former oil industry engineer from New Zealand, was trying to set a round-the-world speed record running his 540-horsepower engine solely on biodiesel.
Along the way, he spread the word that, as one report put it, "it's easy to be environmentally friendly, even in the ostentatious world of powerboating."
Well, it depends on what you mean by "easy." Bethune's biodiesel came mostly from soybeans. But "one of the great things about biodiesel," he declared, is that "it can be made from so many different sources." To prove it, his suppliers had concocted a dollop of the fuel for Earthrace from human fat, including some liposuctioned from the intrepid skipper's own backside.
Given the global obesity epidemic, that probably seemed like a sustainable resource. You could almost imagine NASCAR fans lining up for a chance to personally power Dale Earnhardt Jr.'s Chevy Monte Carlo into the tunnel turn at Pocono. But biofuel skeptics were seeing warning flags everywhere.
Over the past few years, biofuels have acquired an almost magical appeal for environmentalists and investors alike. This new energy source (actually as old as the first wood-fueled campfire) promises to relieve global warming and win back America's energy independence: instead of burning fossil fuels such as coal or oil, which fill the atmosphere with the carbon packed away during thousands of years of plant and animal growth, the idea is to extract energy only from recent harvests. Where we now pay larcenous prices to OPEC, we'd pay our own farmers and foresters instead.
Of course, biofuels also produce carbon dioxide, which is the major cause of global warming. But unlike fossil fuels, which don't grow back, corn, soybeans, palm oil, grasses, trees and other biofuel feedstocks can recapture, through photosynthesis, the massive quantities of carbon dioxide they release. This makes biofuels seem like a good way to start bringing the carbon ledger back into balance. Other factors have made the promise of biofuels even more tantalizing.
• Ethanol producers in this country receive a tax credit of 51 cents a gallon, on top of billions of dollars in direct corn subsidies. (In 2005, the most recent year for which figures are available, it was $9 billion.) In Europe biodiesel subsidies can approach $2 a gallon.
• Some biofuel entrepreneurs are coining energy, and profits, from stuff we now pay to get rid of: methane from municipal dumps, wood chips piling up around sawmills, manure from livestock facilities, and paper-mill sludge that now usually ends up being trucked to a landfill.
• With a little planning, proponents say, biofuels could give us not just energy but wildlife too. Switchgrass and other potential feedstocks provide good habitat for birds and other animals between harvests.
All this, and in the minds of people like Pete Bethune, we get to keep our muscle boats too.
So what's the hitch? Partly it's that bit about doing a little planning. The move to biofuels thus far looks more like a stampede than a considered program to wean ourselves from fossil fuels. Critics in the financial community have used words like "gold rush" and even the dreaded "bubble," fretting that "biofool" investors are putting too much money into new refineries, which could go bust as markets and subsidies shift or as technologies and feedstocks become obsolete.
Betting the farm on biofuels has become commonplace: this year alone American farmers planted an additional 15 million acres in corn, and they were expecting one of the largest harvests in history. The share of the corn crop going into ethanol is also increasing pell-mell, from about 5 percent ten years ago to 20 percent in 2006, with the likelihood that it could go to 40 percent in the next few years.
Not surprisingly, the price of corn doubled over the last two years. This past January, angry consumers took to the streets in Mexico City to protest the resulting surge in the price of tortillas, a staple food. In China, rising feed costs boosted pork prices 29 percent, prompting the government to back off its plan to produce more biofuels. Even titans of agribusiness worried out loud that we might be putting fuel for our cars ahead of food for our bellies.
The chief executive at Tyson Foods said the poultry producer was spending an extra $300 million on feed this year and warned of food-price shocks rippling through the market. Cargill's chief predicted that reallocation of farmland due to biofuel incentives could combine with bad weather to cause food shortages around the world. Cattle ranchers and environmentalists, unlikely bedfellows, both called for rethinking those incentives.
Not that anybody seems to have given them much thought in the first place. One problem with current subsidies is that they act as if all biofuels were created equal—while some may actually be worse for the environment than conventional gasoline. For instance, corn ethanol on average produces about 13 percent less greenhouse gas emissions than gasoline, according to Daniel Kammen, a public policy professor at the University of California at Berkeley. But when ethanol refineries burn coal to provide heat for fermentation, emissions are up to 20 percent worse for the environment than gasoline. Yet that ethanol still earns the full subsidy.
In the United States, state and federal biofuel subsidies cost about $500 for every metric ton of greenhouse gas emissions they avoid, according to a study by the Global Subsidies Initiative, an environmentally oriented nonprofit. We could pay somebody else to reduce their greenhouse gas emissions, via the European carbon emissions trading market, for about $28 a ton.
But don't biofuel subsidies buy us energy independence? President Bush, a former oil executive, declared last year that we are "addicted to oil." In this year's State of the Union speech, he set a national goal of producing 35 billion gallons of alternative fuels by 2017. The next morning, C. Ford Runge, who studies food and agriculture policy at the University of Minnesota, calculated that this would require 108 percent of the current crop if it all came from corn. Switching to corn ethanol also risks making us dependent on a crop that's vulnerable to drought and disease. When the weather turned dry in the Southeast this summer, for instance, some farmers lost up to 80 percent of their corn.
In a recent Foreign Affairs article, "How Biofuels Could Starve the Poor," Runge and co-author Benjamin Senauer noted that growing corn requires large amounts of nitrogen fertilizer, pesticides and fuel. It contributes to massive soil erosion, and it is the main source, via runoff in the Mississippi River, of a vast "dead zone" in the Gulf of Mexico. (This year the dead zone, expanding with the corn crop, was the third-largest on record.) The article made the switch to corn ethanol sound about as smart as switching from heroin to cystal meth.
Biofuel subsidies might make sense, other critics say, if they favored "cellulosic" ethanol instead—fuel that comes from breaking down the cellulose in the fibrous parts of the plant, such as the corn stalk instead of the kernel. That wouldn't put direct pressure on food prices, and might even reduce them by providing a market for agricultural waste products. Cellulosic technology is also the key to exploiting such nonfood plants as switchgrass, and it promises an improvement of more than 80 percent in greenhouse gas emissions compared with conventional gasoline. But while an experimental cellulosic ethanol plant is now operating in Canada, and several others are being built in this country, most experts say it will take years for the technology to become economically competitive. There are also political realities. "Corn and soybean interests haven't spent 30 years paying campaign bills" for national politicians, says Runge, "to give the game away to grass."
Even if cellulosic ethanol becomes practical, biofuels will provide at best only part of the solution to the problems of global warming and energy supply. That's because biofuels will never match the one thing fossil fuels do brilliantly: concentrating solar energy. A gallon of gasoline represents the power of the sun gathered up and locked away by about 196,000 pounds of plants and animals. To produce all the petroleum, coal and natural gas on earth, it took an entire planet's worth of plants and animals growing and dying over about 700 million years.
Switching to biofuels means getting our energy only from what we can grow in the present day, and that's not much. In the course of a year, an acre of corn yields only as little as 60 gallons of ethanol, after you subtract the fossil fuels used to cultivate, harvest and refine the crop.
So let's flash forward five years. Twice a month you swing by the biofuels station to fill the 25-gallon tank in your sporty flex-fuel econo-car. (Pretend you've kissed the SUV goodbye.) Even this modest level of energy consumption will require a ten-acre farm to keep you on the highway for a year.
That might not sound too bad. But there are more than 200 million cars and light trucks on American roads, meaning they would require two billion acres' worth of corn a year (if they actually used only 50 gallons a month). The country has only about 800 million acres of potential farmland.
What if we managed to break out of the corn ethanol trap and instead set aside 100 million acres for high-yielding cellulosic ethanol crops? That's an attractive option to almost everyone outside the corn industry, including such environmental groups as the Natural Resources Defense Council. But it would still produce only about an eighth of the nation's projected energy consumption in 2025, according to a University of Tennessee study.
One other problem with the rush to "greener" fuels is that, despite the biodiversity happy talk, wildlife is already prominent among biofuel victims. Last year, for instance, farmers were protecting about 36 million acres through the U.S. Department of Agriculture's Conservation Reserve Program (CRP), which works to restore degraded lands, reduce soil erosion and maintain wildlife habitat. CRP land is what biofuel proponents often have their eyes on when they talk about producing biofuels and biodiversity by growing switchgrass. But farmers look at the bottom line, sizing up the $21 per acre they net with the CRP payment (to take a representative example from southwest Minnesota) against the $174 they can now earn growing corn. And they have begun pulling land out of CRP and putting it back into production.
Other countries are also rapidly surrendering habitat to biofuel. In Indonesia and Malaysia, companies are bulldozing millions of acres of rain forest to produce biodiesel from oil palm, an imported species. The United Nations recently predicted that 98 percent of Indonesia's forests will be destroyed within the next 15 years, partly to grow palm oil. Many of the new plantations will be on the island of Borneo, a mother lode of biological diversity.
Apart from the effect on wildlife, critics say Indonesia's forests are one of the worst places to grow biofuels, because they stand on the world's richest concentration of peat, another nonrenewable fuel. When peat dries out or is burned to make way for a plantation, it releases huge quantities of carbon dioxide. Indonesia, despite its undeveloped economy, already ranks as the world's third-largest source of greenhouse gas emissions, after China and the United States. When you add the peat effect into the equation, according to the conservation group Wetlands International, Indonesian palm oil biodiesel is up to eight times worse for the environment than gasoline.
Oh, and one final irony. The Christian Science Monitor recently reported that because of the way U.S. biofuel laws are written, foreign tankers loaded with Indonesian biodiesel can stop briefly at an American port, blend in a splash of regular petroleum diesel and qualify for a U.S. subsidy on every gallon. It's called "splash and dash," because the tankers generally push on to Europe to collect additional subsidies there. All in the name of greener fuels.
None of this means we should give up on biofuels. But we need to stop being dazzled by the word and start looking closely at the realities before blind enthusiasm leads us into economic and environmental catastrophes. We also should not let biofuels distract us from other remedies. Conservation and efficiency improvements may not sound as sexy as biofuels. But they are typically cheaper, faster and better at dealing with the combined problems of global warming and uncertain energy supply. They also call on what used to be the defining American traits of thrift and ingenuity.
And what about Pete Bethune, gallivanting around the planet in his powerboat and telling us it's easy to be environmentally friendly in this newfangled world? I think he must be kidding. Our brief infatuation with biofuels has already taught us, with every high-priced tortilla, that there is no such thing as a free lunch.
Richard Conniff, a longtime contributor to the magazine, is a 2007 Guggenheim Fellow.