Biofuels become a victim of own success - but not for long

For the first time in a decade, the vast biofuel industry has stalled. But with crude prices still high, charting a course towards biofuels that do more good than harm is more vital than ever

Damian blog on biofuel in USA : Harvested corn in Colorado
Surplus corn is piled outside a farmer's storage silo in Paoli, Colorado in 2010. Photograph: Robert Nickelsberg/Getty Images

Biofuels have become a victim of own success, it appears: for the first time in a decade global production has dropped. Production in 2011 dropped a touch from 1.822m barrels a day in 2010 to 1.819m in 2011, according to IEA statistics (p30) highlighted by the Financial Times.

The key reason has been the rising cost of the feedstock for most biofuels, corn, sugar and vegetable oil. And the main reason for the rising food prices is, many argue, the huge quantity consumed by biofuels. It's a big business. The global biofuels business would, if a nation, rank 16th in the world for oil production, just above the UK and Libya and a bit below Norway and Nigeria, all major oil producers. In the US, 40% of the corn crop now gets diverted into fuel tanks, giving the US 50% of global biofuel production.

On top of the peaking of production, the US has just phased out some fat subsidies and tariffs protecting the domestic biofuel industry from international competition. So is the biofuels boom over?

In a word, no. The key driving factor is the price of ordinary oil. In the medium and long term, crude prices seem very likely to remain high and vulnerable to shocks, such as the current Iranian situation. "Once oil is over $70 a barrel, conventional and new generation biofuels become cost competitive, certainly with tar sands and shale, and with oil from much of the Middle East and Brazil's new offshore fields," said Jeremy Woods, at Imperial College, when I spoke to him in March. Today, Brent crude is at $113. The IEA predicts a 20% rise in biofuel production to 2.2m b/d by 2015, although that is a slower rise than in the past.

This brings us to the environmental crux. "The less biofuel you have the more gasoline you need," Amrita Sen, oil analyst at Barclays Capital in London, told the FT. With petrol and its emissions known to be harmful to the atmosphere, and frequently the land and oceans, surely environmentalists would campaign for more biofuels?

As we know, that has not been the case and with good reason. Rising food prices, destruction of forests and other habitats and poor treatment of workers - which I have seen with my own eyes - has brought opposition from greens. Better public transport and electrified private transport are the answer, they say, and in any case many biofuels do not even lead to cuts in climate-warming carbon emissions.

However, there's one very striking line in the IEA statistics I linked to above. There is virtually no biofuel production in Africa, a continent where energy is frequently in desperate demand. The like-for-like replacement that biofuels offer means cheap, existing vehicles could be run on them. And Africa has land, lots of land. In the best of worlds, sustainable and equitable biofuels produced in African countries for domestic use would solve many problems.

The economic pressure on Brazil's biofuels industry - from poor sugar crops and underinvestment - is relevant here. Brazil will not let its biofuel industry wane: it has ambitions to be the "world's environmental first superpower". A grand phrase, you might think, but it's backed up by some hard facts too. Brazil has more patents related to biofuels than any other nation and it is working hard to export that know-how to Africa.

Producing biofuels that do more good than harm is not easy and the hard graft of standards and regulation must be ground out. But with crude prices showing no prospect of falling, biofuels certainly have a future, especially in the developing world. So we'd better make it a good one.


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  • Plutonium

    10 January 2012 4:32PM

    The reason biofuels are not being produced in Africa is that Africa can not feed itself. As world population rises to ~10 billion, biofuels will increasingly compete with starvation.
    It must be an astounding discovery that Africa has plenty of land. It is called desert. Just add water, problem is solved. A significant fraction of the 12,500 km^3/a additional water needed to feed and bathe the 10 billions. An additional 6 TWe power will do the job, either by puming water long distances or seawater desalinization. I am more for pumping the water because seawater desalinization from the Mediterrian Sea effectively increases the evaporation rate.

  • Dzierzega

    10 January 2012 5:04PM

    More harm than good?

    Since when is making an insignificant dent in the pace of climate change more important that preventing starvation?

    Biofuels should be banned.

  • gunnison

    10 January 2012 5:12PM

    Biofuels are insignificant, and chew up land that will be increasingly needed for food anyway. They chew up water, too, which is also going to be a resource problem of major proportions.

    This maniacal insistence on trying to deal with future energy shortfalls by focusing only on the supply side is lunacy.

  • Williamtheb

    10 January 2012 5:15PM

    Land based bio-fuels are an environmental (and hence economic and social), disaster.
    Is it because we are subconsciously aware that we have treated the seas like medieval town dwellers used to treat the street outside their windows for the last two hundred years that we allow the notion of large-scale oceanic bio-fuel production to be marginalised?

  • franksw

    10 January 2012 5:15PM

    "Rising Food Prices", such a benign statement that hides the hundreds of thousands that died in the years following legislative mandatory use of ethanol in the western world.

    Or that suggestive statement "many biofuels do not even lead to cuts in climate-warming carbon emissions." That "many" should be replaced by ALL except for that sourced from Brazillian sugar, and that partly because of the cheap "lo carbon" workforce.

    So perhaps someone should tell Amrita Sen of Barclays that there actuallyis no environmental crux at all, for most of the world, more biofuel actually means extracting even more oil than if we had just put gasoline straight in the tank.

    More eco madness, that legislation enforcing starvation, poor working conditions, destroyer of wildlife habitats should be rescinded now. There is nothing wrong with using biofuel, if it solves a local problem and you are aware that it does nothing for the environment OR anything at all to "save the planet" but to deliberately extend it's use otherwise is criminal.

  • Hewerga22

    10 January 2012 5:20PM

    This is the same Brazilian government that is content to encourage the destruction of the rainforest for cattle or biofuel production, remember? Their environmental spiel isn't worth the paper it's written on.

    And as for the land argument, this is patently nonsense. We are desperately short of land for arable farming as it is, and with world populations expected to reach 9 billion by 2050, siphoning this off for production of biofuels is simply inhumane.

  • ejam

    10 January 2012 5:23PM

    Algal biofuels will change the game once they are commercially viable.

  • Shellshocked

    10 January 2012 5:31PM

    The like-for-like replacement that biofuels offer means cheap, existing vehicles could be run on them. And Africa has land, lots of land. In the best of worlds, sustainable and equitable biofuels produced in African countries for domestic use would solve many problems.

    It's not so simple. There is lot's of land but most of it is clapped out, very low organic matter, low pH. Then there's the poor infrastructure - roads etc. Badlands should certainly be rehabilitatied, but biofuels are not the answer. The only two that show good energy returns are sugarcane and palm oil. These are not easy to grow in many places. Water is a major limiting factor in many places.

    Africa should concentrate on feeding itself and not relying on hand-outs from NGOs because one day they may no longer be able to deliver.

  • BunnyFlumplekins

    10 January 2012 5:34PM

    The majority of bio-fuels have historically been a disgrace, causing starvation and having a minimal impact on global carbon dioxide emissions.

    The majority of bio-fuel will continue to be a disgrace for a long time into the future, causing starvation and having a minimal impact on global carbon dioxide emissions.

  • SubversiveBrighton

    10 January 2012 5:37PM

    Current population levels are not sustainable if we are to stop global warming. Already too much forrest has been given over to food production. Unless we move away from models of economic growth, reduce population and ration resources society as we know it is doomed.

  • Shellshocked

    10 January 2012 5:41PM

    I believe it is possible to make biofuels than do not compete with food and do cut emissions

    How?

    You can't grow biofuels on existing agricultural land, and you shouldn't destroy more natural vegetation because so much of it has gone already (and GHG emissions for doing so nullify any advantage).

    Therefore you have to grow it on marginal, abandoned or unused land.

    Where is this land?
    Why is it not being used?
    Where is the data to support your assertion?

  • fairwinds3

    10 January 2012 5:44PM

    This comment was removed by a moderator because it didn't abide by our community standards. Replies may also be deleted. For more detail see our FAQs.

  • Laffin

    10 January 2012 6:05PM

    Praising biofuels is akin to denying the holocaust.

    The idea that some starve so that others can drive cars would not be out of place in a Nazi regime.

  • Staff
    DamianCarrington

    10 January 2012 6:10PM

    "At present some 11 percent (1.5 billion ha) of the globe's land surface (13.4 billion ha) is used in crop production (arable land and land under permanent crops). This area represents slightly over a third (36 percent) of the land estimated to be to some degree suitable for crop production. The fact that there remain some 2.7 billion ha with crop production potential suggests that there is still scope for further expansion of agricultural land."

    From the UN Food and Agriculture Organisation.

  • undercurrent

    10 January 2012 6:12PM

    I really can't understand why this article appears in a section about 'environment'
    Shouldn't it be in the business section?

  • atheistjon

    10 January 2012 6:12PM

    There is no shortage of land in Africa, even of good quality land, so it can be done. The problem with Africa is perennial and related to bad governments which only act in their own very narrow self interest. Once that is solved there will be plenty to go round and with good management create surplus. I am not holding my breath though.

  • atheistjon

    10 January 2012 6:16PM

    Also, you can certainly grow biofuels on the same land that you grow food crops. Most grain crops, for example, have been chosen for their short stalks to limit straw production at the end of the season. If longer stalked varieties are grown then, hey presto, you have additional resource for cellulosic biomass to fuels technologies.

  • Shellshocked

    10 January 2012 6:21PM

    Damian - please don't quote FAO data - it's notoriously inaccurate. It relies largely on self reporting. The report you quote gives no real data to support this assumption, which is all it is. Yes there is plenty of land around, but it's in no condition to be pressed into use. Look at the collapse of jatropha in E Africa caused by drought. Much of the apparently available land is likewise marginal in some respect.

  • Shellshocked

    10 January 2012 6:23PM

    hey presto, you have additional resource for cellulosic biomass to fuels technologies.

    Yes, like magic, which is what you need to make cellulosics work, they don't work in US let alone Africa. Cellulosic plants are closing down there.

  • euangray

    10 January 2012 6:30PM

    But then you oppose anything that might cut the emissions that cause global warming. I wonder why?

    And you oppose nuclear power, which is the only practical real world way of reducing carbon emissions and keeping the lights on. I wonder why?

  • planorg

    10 January 2012 6:36PM

    The problem with US corn ethanol is return on energy invested being equal at best and maybe even negative. The driver for This is US oil security, nothing to do with the environment. ROEI is much better with sugar which is why brazil is doing so well - also sugar isn't displacing rainforest it is grown in a different region with a different climate

  • SteB1

    10 January 2012 6:37PM

    I think biofuels are definitely not a good idea in a global, or even in national trade network. Initially they may seem like a good idea but the dynamic situation they create, and the various feedback paths which arise are very damaging. They create very damaging trends with lots of unforeseen consequences. This is not to say biofuels are bad per se. However, to avoid damaging consequences all biofuel use should be in a very local context. Where both the source and consumption of these biofuels is local. This is the best way to limit the damaging consequences.

    Before food and oil prices started to spiral in 2008 a litre of cooking oil in my local supermarket was well below the price of a litre of diesel. Now it's far more expensive. I also think the perceived benefits of biofuels as regards carbon budgets are well outweighed by the damaging trends they induce i.e. they help to facilitate increasing net carbon emissions rather than decreasing them. The theoretical way in which they work is very different to the real world reality in which they work. It's a bit like just giving heroin addicts methadone instead of heroin. It's not an answer in itself and only works as part of a coordinated strategy. The problem is in seeing biofuels as a great profit making opportunity, rather than seeing them as a solution to a serious problem.

  • raggedbandman

    10 January 2012 6:39PM

    Sorry Damian but you're way off on this one.

    <Hewerga22> and <Bunny> are right, biofuels, whether they are produced agriculturally or come from by-products of industry are a disaster, no way around it.

    Brazil is planning on doubling it's production of biofuels using sugar as a feedstock, millions more hectares, huge amounts of water, fertilizer and agricultural soil depletion and run-off.

    The energy to process this disaster comes from burning the biomass waste of the sugar with 50% higher GHG emissions than if they used coal as an energy source, peer-reveiwed studies have proven their 'carbon-neutral' claim to be utter bullshit.

    Their 'no deforestation' claim also fails as the indirect impact of buying and developing farm and ranch property, most of which was originally forested, simply drives the those industries to de-forest more land somewhere else.

    Shell Oil, Cargill and the Brazilian biofuels industry are now working to produce synthetic gasoline and diesel fuel from biomass (any organic matter actually) with an insanely destructive process similar to 'gasification' and the Fischer-Tropsch Process. The combined emissions will be off the charts.

    Just imagine, no more worries about the cost or availability of fossil fuels. These guys can make synthetic fuel from ANY organic material. Starving masses, no problem, crops and forests made into syn-gas and diesel, no problem, massive increases in emissions, no problem. Uninhabitable future-earth... No problem so long as I can fuel my car...

  • euangray

    10 January 2012 6:41PM

    The problem with US corn ethanol is return on energy invested being equal at best and maybe even negative

    People mention EROEI quite often in energy discussions, but fail to realise it misses the point.

    It is not so much the amount of energy that is important as the form of that energy. Wind has lots of energy, for instance, but is extremely diffuse, oil has lots of energy and is extremely concentrated. It is that concentration in a conveniently and easily handled form that is more important, and which makes oil derived energy a lot cheaper than wind derived.

    EROEI is largely a bogus argument.

  • euangray

    10 January 2012 6:43PM

    Just imagine, no more worries about the cost or availability of fossil fuels. These guys can make synthetic fuel from ANY organic material.

    Of course. All you need, after all, is a convenient source of carbon and hydrogen.

    You can get this from biomass, but it's pretty dumb given that the process is not efficient and you also need the land for feeding people.

  • Shellshocked

    10 January 2012 6:51PM

    EROEI is largely a bogus argument.

    No it's not, it's crucial. Corn ethanol has an EROI of about 1:1 so it's a futile endeavour, you only get out what you put in. Brazilian sugar cane is 8:1 so it's a much better investment - even though there are serious environmental effects. Tar sands are about 2:1 which is also a bad investment of scarce energy. So you need to invest where you get a good return.

  • raggedbandman

    10 January 2012 6:59PM

    My point was how scary this whole process is. There is a plentiful supply of Hydrogen and Methane in all organic matter, what the proponents of this technology don't tell you is that the GHG's, CO, CO2 and Nitrous Oxide (300 times as powerful a GHG as CO2) are emitted in the process.

    Every step of biofuel and biomass production is worse than any fossil fuel use we could come up with.

  • SteB1

    10 January 2012 7:20PM

    I've not gone into this in as much detail as yourself because my focus tends to be more on ecology, big picture views and trends, rather than the fine detail of the technology. However, my impression is biofuels as car and transport fuel is generally a bad idea. I specifically had Brazil in mind when I said all biofuel use should be limited to a very local level, and not even traded on a national level. That's because I think the only way to keep a handle on the negative consequences is where you can see all the parts of the process. Once a trade network becomes widespread it's difficult to follow all the consequences, or to have any control over it if it starts behaving in a way different than envisaged. It should certainly not be something traded by large international corporations or even governments. Once that happens these powerful organizations have a vested interest in maintaining it even when the damaging consequences become clear. Thanks for the input as it's very useful. What's more by biofuels I'm not really talking about growing huge areas of edible crops. In a world of growing demand for food, and possible limitations on supply, it clearly isn't joined up thinking.

  • IGiveUp

    10 January 2012 7:25PM

    I don't understand how the burning of bio-fuels reduces emissions. Is this because they burn cleaner than fossil fuels? or is it from associated industries (mining/drilling, transport etc)?

  • UnderminingOrthodoxy

    10 January 2012 7:52PM

    IGiveUp

    10 January 2012 7:25PM

    I don't understand how the burning of bio-fuels reduces emissions. Is this because they burn cleaner than fossil fuels? or is it from associated industries (mining/drilling, transport etc)?


    The theory is as follows.
    The living matter used as a source for the biofuel draws carbon from the environment to grow.
    Burning the biofuel then releases that carbon back to the environment.
    Net emissions are zero.

    Unfortunately in practice, it does not seem to actually work that way.
    For instance, US farmers growing corn for ethanol production use fossil powered farming machinery, and fossil derived fertilizers, consequently releasing large amounts of geologically stored carbon in the process.

  • SteB1

    10 January 2012 7:54PM

    I don't understand how the burning of bio-fuels reduces emissions. Is this because they burn cleaner than fossil fuels? or is it from associated industries (mining/drilling, transport etc)?


    The essential idea is that although burning biofuels releases CO2 like burning fossil fuels, when the crop the biofuels is created from are growing, they absorb CO2 from the atmosphere, as plants need to absorb atmospheric CO2 to grow. So in theory there should be more balance, and less net carbon emissions. Fossil fuels are fossilized plant remains and the carbon locked up in them would not normally be in the atmosphere. Therefore when fossil fuels are burnt it results in a net increase in the release of CO2/carbon into the atmosphere. Carbon is constantly cycled, both being absorbed into the ground, and released into the atmosphere. So any release of carbon above what would be naturally released, results in a net increase into the atmosphere of CO2/carbon. However, that's all theory as biofuels have other impacts that muddy these waters, and which make them not so good in practise as the theory suggests.
    http://en.wikipedia.org/wiki/Carbon_cycle

  • nofo

    10 January 2012 8:15PM

    Demand needs to be cut!
    The ridiculously wasteful lifestyle of the developed world is utterly destroying the ecosystem on which we depend.
    Let us shrink the economy: less production, less consumption, less mobility, less convenience, less trade might just work.
    We can organize that or nature will do it for us, the first alternative is brutal but the second will be the end of us.
    There is just no way to innovate our way out of this mess.

  • raggedbandman

    10 January 2012 8:40PM

    Hi again-

    According to the 'carbon neutral' argument we could cut down and burn ALL the flora, trees, grasslands agricultural crops and anything we have to date manufactured from these sources, all over the planet, and still be 'carbon neutral'. Some stretch of the imagination!

    It's all based on time. The carbon 'recovery rate' of agriculture is fairly short, forests much longer. What biofuel and biomass proponents don't factor in is the 'gone time' of the carbon absorbers. Leaving forests and grasslands intact provides a continuous absorption of carbon WITHOUT adding any more emissions to the atmosphere. This alone completely nullifies their argument.

    What is created by harvesting any source of biomass is 'carbon debt'. It is estimated that the expansion of sugar farming in Brazil for biofuels and biomass will immediately create a 250 year 'carbon debt' for that country. We don't have 250 more years to keep trashing the atmosphere. Then whatever is left, nitrogen fertilizers either become toxic run-off or off-gas as nitrous oxide, unstable soil becomes silted run-off and until another heavily watered and fertilized crop reaches maturity, there will be be NO equivalent carbon absorption. It's a no-win/big lose situation.

  • Gelion

    10 January 2012 8:46PM

    @Dzierzega
    "10 January 2012 5:04PM
    More harm than good?

    Since when is making an insignificant dent in the pace of climate change more important that preventing starvation?

    Biofuels should be banned."

    I could not say that better my self. 22,000 people died today through hunger and poverty related issues.

    Not only should biofuels be banned, but speculating on food should be too.

  • kvms

    10 January 2012 8:48PM

    Producing biofuels that do more good than harm is not easy and the hard graft of standards and regulation must be ground out. But with crude prices showing no prospect of falling, biofuels certainly have a future, especially in the developing world. So we'd better make it a good one.

    APPLAUSE, Damian, APPLAUSE!!

    Yes we must have standards for biofuels which we can enforce at the petrol pumps. That must include carbon management plans to ensure the producers dont asset strip soil humus.

    Fair Traded biofuels are coming, and that must include MORE food security for the producers.

    Those who speculate in food futures should be stopped, but we must learn from them; they know food prices follow the price of oil. That link must be broken by enabling food producers to produce their own fuel, as they did in the past with rapseed and horsepower.

  • Gelion

    10 January 2012 8:53PM

    @nofo

    "The ridiculously wasteful lifestyle of the developed world is utterly destroying the ecosystem on which we depend. Let us shrink the economy: less production, less consumption, less mobility, less convenience, less trade might just work."

    This is utterly unworkable. "Shrinking the economy" will not stop C02 emissions in any meaningful way, but will make 30% of the population unemployed and the others desperate not to fall into poverty.

    We don't need to stop trade and consume less, we need to move away from Oil and Gas and use solar and fusio instead.

    The idea that "there are limits to growth" are ridiculous. This was a consideration before the Agricultural revolution - then the AR happened, then the IR happened, then computers, etc - technology whether you like it or not will provide new forms of production to cope with demand for goods. 3D printing and Graphene will be two new forms of processes that will revolutionise manufacturing over the next 10 - 50 years. As will particle physics.

  • damnfool

    10 January 2012 9:00PM

    This comment was removed by a moderator because it didn't abide by our community standards. Replies may also be deleted. For more detail see our FAQs.

  • Rasputin9000

    10 January 2012 9:33PM

    Producing biofuels that do more good than harm is not easy and the hard graft of standards and regulation must be ground out.

    There are some things that are relatively straightforward to regulate, like (just for example) providing basic chemical effluent regulation for clothes factories and so on. Yet globalisation has completely trumped all of the efforts to regulate. Western consumers now wear blue denim made the same way as ever, and the Ganges flows with blue dye chemicals, nice for the poor of India to drink and wash in. Why do you believe that with something you acknowledge to be more complicated, there is any hope whatsoever. It's cloud cuckoo land, no?

  • Rasputin9000

    10 January 2012 9:44PM

    I could not say that better my self. 22,000 people died today through hunger and poverty related issues.

    Not only should biofuels be banned, but speculating on food should be too.

    And next time someone invents something like biofuels, there will be no advance warning of its horrendous consequences; until the grain is actually running out, there will be no conserving of it, no price rises. Not to mention, with the price of food held lower than the speculative market would have it, more land will be allocated to the alternatives.

    The problem of starvation remains primarily one of distribution rather than hoarding. The real crux of it is whether we're willing to use the grain consumed to feed poor humans rather than mistreated meat animals in factory farms. Until that changes (and it doesn't look like changing, Chinese meat consumption as proportion of calories is on the up), hand-wringing about famine is fairly irrelevant.

  • Error403

    10 January 2012 9:59PM

    Hi Gellon

    The idea that "there are limits to growth" are ridiculous. This was a consideration before the Agricultural revolution - then the AR happened, then the IR happened, then computers, etc - technology whether you like it or not will provide new forms of production to cope with demand for goods. 3D printing and Graphene will be two new forms of processes that will revolutionise manufacturing over the next 10 - 50 years. As will particle physics

    This limitless growth thing... Where exactly are we going to be getting the apparently "limitless" resources and raw materials from?

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