Reynard Loki is a Justmeans staff writer for Sustainable Finance and Corporate Social Responsibility. A co-founder of MomenTech, a New York-based experimental production studio, he writes the blog 13.7 Billion Years and is a contributing author to "Biomes and Ecosystems," a comprehensive reference encyclopedia of the Earth's key biological and geographic classifications, published in 201...
Leave the Corn, Take the Algae: Time to Say Buona Notte to Food-Based Biofuels
You have a bushel of corn. You can either produce 2.7 gallons of ethanol or feed 50 people. Which would you choose?
On December 31, 2011, America's three-decade-old federal tax credit for ethanol expired, ending a government subsidy that poured more than USD 20 billion into an industry that the New York Times called one of Congress's "most resilient boondogles." Oil companies received a 45-cent-per-gallon tax credit to blend ethanol into gasoline, costing American taxpayers between USD 5-6 billion a year.
THE PROS AND CONS OF BIOFUELS
Of course, there are many environmental benefits of biofuels, including reductions in particulate pollution and greenhouse gas emissions (they are inherently carbon-neutral because burning them simply releases back into the atmosphere the same amount of carbon that was initially absorbed by the plant matter) and a move toward local production, which is not only less transport-heavy than importing fuel, but also reduces dependency on unreliable foreign resources. Overall, advocates stress the energy security to be found in biofuel production.
But while biofuels are inherently carbon-neutral, growing biofuel crops like corn, oil palms and sugar cane means the creation of vast plantations -- and that means massive deforestation, which is responsible for up to 30 percent of the world's greenhouse gas emissions, about 1.6 billion tonnes, according to the Food and Agriculture Organization (FAO).
"[Ethanol's] environmental virtues were less than advertised," according to the New York Times. "Billed as a lower-carbon replacement for fossil fuels, corn ethanol generated more carbon dioxide than gasoline after taking into account the emissions caused when new land was cleared to replace the food lost to fuel production."
LOWER BIODIVERSITY, HIGHER FOOD PRICES
And all that clearcutting of forests means the destruction of natural habitat and loss of biodiversity. The endangered orangutan, for example, is rapidly losing its habitat in Indonesia due to the conversion of tropical forests to palm oil plantations.
Also, biofuels have been criticized for pushing up the price of corn and food in general as farmers replaced other crops with corn. In the United States, government-mandated ethanol production has represented around 27 percent of the corn crop (net of the by-product credit; i.e., the leftover plant materials that is then processed to produce livestock feed), according to a 2011 study by economists at Purdue University. Considering that amount, the report, requested by Farm Foundation NFP, a not-for-profit non-partisan agribusiness policy think tank based in Oak Brook, Illinois, concludes that "there is little doubt that biofuels play a role in the corn price level and variability, and this has spilled over into other commodity markets."
EUROPE'S BIOFUEL GAMBLE
In April 2009, the European Parliament and the Council of the European Union passed a directive requiring all EU member nations to derive 20 percent of their total energy and 10 percent of transport fuels from renewable sources by 2020. Now, three years since it passed and eight years left until the deadline, pressure is rising, and so are concerns, as "[m]ember states are placing large bets on biofuels to meet that target," according to a recent press release issued by the Geneva-based International Institute for Sustainable Development (IISD).
Two recent reports -- one by the FiFo Institute for Public Economics at the University of Cologne and another by the Global Subsidies Initiative (GSI) of the IISD -- look at the economic costs of using biofuels to achieve the EU's renewable transport fuel targets. The researchers found that by the target year of 2020, consumers in the United Kingdom will be expected to pay between GBP 1-2 billion (USD 1.6-3.2 billion) every year in higher transport fuel prices, while German consumers will face EUR 1.4-2.2 billion (USD 1.8-2.9 billion) more annually.
The Renewables Energy Directive (RED) asserts that a "framework that includes mandatory targets should provide the business community with the long-term stability it needs to make rational, sustainable investments in the renewable energy sector which are capable of reducing dependence on imported fossil fuels and boosting the use of new energy technologies." But considering all the cons, how rational are biofuels, especially those derived from food sources? Can EU states rely on the future of biofuels to achieve their green energy portfolio goals?
FIDEL CASTRO WAS RIGHT
That biofuels -- and in particular, ethanol -- have become such a hotly debated issue was on marked display in 2007 when The Economist -- the pro-globalism bastion of classic liberalism and free market capitalism -- actually sided against a U.S. president and with a Marxist revolutionary who spent decades at the top of America's most wanted list:
"It is not often that this newspaper finds itself in agreement with Fidel Castro, Cuba's tottering Communist dictator. But when he roused himself from his sickbed last week to write an article criticising George Bush's unhealthy enthusiasm for ethanol, he had a point. Along with other critics of America's ethanol drive, Mr Castro warned against the 'sinister idea of converting food into fuel.' America's use of corn (maize) to make ethanol biofuel, which can then be blended with petrol to reduce the country's dependence on foreign oil, has already driven up the price of corn. As more land is used to grow corn rather than other food crops, such as soy, their prices also rise. And since corn is used as animal feed, the price of meat goes up, too. The food supply, in other words, is being diverted to feed America's hungry cars."
For EU states looking to meet the 2020 renewable energy mandate and a United States that has finally let go of pricey ethanol subsidies, algae fuel should be on the top of the biofuel list. Algae fuel doesn't compete with farmland or food crops. Plus, it's biodegradable and virtually harmless to the environment if spilled. The Energy Department estimates that if algae fuel replaced America's total petroleum fuel requirement, it would require only 15,000 square miles -- less than one half of one percent of the entire area of the United States.
To paraphrase Clemenza from "The Godfather": Leave the corn. Take the algae.
 New York Times Editorial Board. "One Bad Energy Subsidy Expires." January 6, 2012. Accessed February 7, 2012.
 Food and Agriculture Organization. "Deforestation causes global warming." September 4, 2006. Accessed February 7, 2012.
 Ibid., 1.
 Smith, David. "Five years to save the orangutan." The Guardian. March 24, 2007. Accessed February 7, 2012.
 Abbott, Philip C., Christopher Hurt and Wallace E. Tyner. What's Driving Food Prices in 2011?. Farm Foundation NFP. April 2011. Accessed February 7, 2012.
 International Institute for Sustainable Development. "Biofuels a high-cost means to reach renewable transport fuel targets in Germany and the UK." February 2, 2012. Accessed February 7, 2012.
 Global Subsidies Initiative. "Biofuels - At What Cost? Mandating ethanol and biodiesel consumption in the United Kingdom." International Institute for Sustainable Development. January 2012. Accessed February 7, 2012.
 FiFo Institute. "Biofuels - At What Cost? Mandating Ethanol and Biodiesel Consumption in Germany." International Institute for Sustainable Development. January 2012. Accessed February 7, 2012.
 2009/28/EC Directive of the European Parliament and the Council of European Union. April 23, 2009. Accessed February 7, 2012.
 The Economist. "Castro was right: As a green fuel, ethanol is a good idea, but the sort that America produces is bad." April 4, 2007. Accessed February 7, 2012.
 Hartman, Eviana. "A Promising Oil Alternative: Algae Fuel." The Washington Post. January 6, 2008. Accessed February 7, 2012.
image: Loyna, Flickr Creative Commons