Why Biofuels Are a Bad Idea
Recent news reports (e.g., this article from CBC News ) have suggested that consumers’ grocery bills are on the rise because of rising costs for corn which is used to produce ethanol.
This shouldn’t be much of a surprise since it’s a simple implication of the law of supply and demand. As the demand for corn increases for ethanol production, there is less supply available for human and animal consumption. As a result, the price of any food product with corn goes up.
This is similar to a conclusion that I came to while studying the potential of biodiesel and why any biofuel isn’t a good investment or a solution to rising gas prices. Quite simply, using crops to provide energy rather than using those crops as food sources ignores the larger trends affecting the agriculture industry.
From the mid 90s to 2006, vegetable oil consumption in China has increased from 8kg/person to 16kg/person,1 while vegetable oil consumption in India was 10kg/person in 2005.2 While neither of these countries matches the per capita vegetable oil consumption of 34kg/person in North America,3 their consumption levels are only likely to increase as they continue to industrialize.
More significantly, China and India add approximately 25 million people to the planet each year. (That’s slightly less than one Canada per year!) Since both countries already import a lot of food, the growing populations combined with their current consumption level suggests that these countries will need to import even more food in the future. Based on these demographics and figures, agricultural production would need to increase by one Canada almost every five years just to meet current demand for food.
Although the above analysis is overly simplistic since I’m only looking at one crop, the implications should be clear: food prices are going to keep increasing because of rising demand/decreasing supply. Similarly, the price of biofuels will continue to increase simply because they are in competition with food. Since its unlikely that a government will allow its people to starve, biofuels don’t really have a future.
NOTE: THIS POST WAS ORIGINALLY PUBLISHED MAY 23, 2007 AND REPUBLISHED TO REFLECT CHANGES TO THE ARTICLE AND THE DIRECTION OF THE BLOG.
- Lawrence, L., Duck, A., & Fletcher, S. Grains Outlook to 2010-11 (Electronic version). Australian Commodities 13(1), 35-60. ↩
- Agriculture and Agri-Foods Canada. “India.” Bi-Weekly Bulletin 17(12). 2004. 23 Sep. 2006. 22 May 2007. ↩
- Agriculture and Agri-Foods Canada. “Vegetable Oils: Competition in a Changing Market.” Bi-Weekly Bulletin 18(11). 2006. 22 May. 2007. ↩
Tags: biofuel, China, demographis, India
Nice to see an informed blog complete with footnotes to legitimate source material.
I leave this entry with three thoughts.
1. I’d like to hear more conversation about energy diversity. My father always said there’s the right tool for every job. If our main focus is toward combustion engine fuel, we may erroneously concentrate on one solution to that current problem (oil dependence) and ignore the fact that cooperative and complementary energy delivery systems may better serve us in the future.
2. I’m interested to know if there is a metric that describes energy output/cost of material/cost of energy conversion/CO2 emission?
3. India and China should consider family planning investment.
Certainly any biofuel that depends on the same supply chain that feeds a critical existing need inelastically is a problem.
But who’s fault is that? Government control and subsidies that keep prices up through capacity restriction or companies like ADM that purposely make the supply chain inelastic to assure high profits? I have no sympathy for either, but it’s the consumer that would be hurt first. The lack of elasticity is the first order evil here.
One trick would be to use a supply chain that involves the following:
1. Plant is a weed that doesn’t require energy intensive supply chains (fertilizer, pesticides, maintenance).
2. Plant is not part of an existing, inelastic supply chains or that is part of an existing, elastic supply chain
3. Plant extract does not require enormous energy for refining
If you hit these you don’t impact other economic supply chains badly and you just have transportation/distribution like existing organic fuels. That becomes a growth opportunity. In general, this would have a multiplicative effect by 1) increasing supply chain diversity, 2) reducing energy intensive agriculture (as a total percentage), and 3) helping the foreign oil dependency (even a small amount is cumulatively good both economically and politically).
For Jamie:
For CO2, biofuels are carbon neutral if, and only if, you do not use energy intensive farming techniques. Simply, fertilizer, pesticides and tractors are all energy sinks. Further if you can grow biofuels in places that edible crops can’t grow you won’t displace food crops. This describes what most people call “weeds”.
India and China already have much better family planning that the USA! In fact, average family size in both India and China is the same as USA. You are operating with 40 year old demographic biases – don’t worry most 1st worlder’s do also. See reference:
http://www.ted.com/index.php/talks/view/id/92
Bio-Fuels are a bad idea because internal combustion engines are a bad idea. If you’re truly worried about carbon emissions then using an engine that is 80% efficient vice one that is 20% efficient (on a good day) will have roughly 4x the impact of anything you decide to do with an internal combustion engine (catalytic converters, car pooling, etc.)
What the world needs *NOW* is a good electron extracting gasoline fed fuel cell.
Considering the plethora of corn-derived food ingredients like high-fructose corn syrup and cornstarch, looking at corn isn’t as restrictive an idea as you might initially think!
Since high fructose corn syrup is so bad for our health, why not burn the stuff in our diesels instead of drinking it? Two problems solved at the same time.
It is a complicated scenario and a very intricately balanced eco-system. Converting from the old industrial revolution system to the new clean energy system is going to take some heavy lifting and political will – hopefully we are seeing that beginning to happen now.
It will definitely take political changes as well as continued R&D. A number of clean energy sources are almost as price competitive as oil already, and if these technologies received the same level of subsidies as oil, they may even be as cost effective.
Thanks for the tips! Your post actually helped me.
Great post, I bet a lot of work and research went into this article.