Moving towards BioFuel [+] and [-] by Kong Cheong

Moving towards

BioFuel [ + ] and [ - ]

Running

your through ENGINE

you’ve read or watched the news lately, you’ve probably come across some article, snippet or sound bite related to oil and oil prices. Even in your daily routines, there’s a good chance of someone mentioning it. Whether it’s in automotives, economics, history, geography or politics, oil has managed to filter into almost every aspect of our daily lives. It’s one of the most discussed (and controversial) commodities that consumers rely on daily. All of this talk about oil sparks continued interest in gasoline alternatives. Things like electric cars and hydrogen fuel cells are being talked about as feasible alternatives to oil. As technology improves, these concepts could become reality. But what about now? Lost in the mix are the biofuels, fuels made from biological ingredients instead of fossil fuels. These starting ingredients can range from corn to soybeans to animal fat, depending on the type of fuel being made and the production method. In this article, we’ll take a closer look at biodiesel, one of the major biofuels. For starters, it would be a good idea to check out How Car Engines Work and How Diesel Engines Work to get some background. After that, head back over and we’ll separate biodiesel fact from fiction. Generally speaking, biodiesel is an alternative or additive to standard diesel fuel that is made from biological ingredients instead of petroleum (or crude oil). Biodiesel is usually made from plant oils or animal fat through a series of chemical reactions. It is both non-toxic and renewable. Because biodiesel essentially comes from plants and animals, the sources can be replenished through farming and recycling. Biodiesel is safe and can be used in diesel engines with little or no modification needed. Although biodiesel can be used in its pure form, it is usually blended with standard diesel fuel. Blends are indicated by the abbreviation Bxx, where xx is the percentage of biodiesel in the mixture. For example, the most common blend is B20, or 20 percent biodiesel to 80 percent standard. So, B100 refers to pure biodiesel. Biodiesel isn’t just a catch-all term, however. There is also a formal, technical definition that is recognized by ASTM International (known formerly as the American Society for Testing and Materials), the organization responsible for providing industry standards. According to the National Biodiesel Board (NBB), the technical definition of biodiesel is as follows: That sounds kind of rough, but it’s a lot more familiar than you may think you encounter these fatty acids every day. We’ll look at them in more detail in the next section.

Buying Buying aa kit kit isis aa good good idea. idea. If If your interested in producing your own your interested in producing biodiesel this can be a way to go. your own biodiesel this can be a There are many good biodiesel kits out there way to go. There are many good now. In general if you’re going to be spending biodiesel kits out there now. money, you can expect to pay anywhere from In general if you’re going to be $1,500 USD to $10,000 USD. It all depends on spending money, you can expect your needs, the volume you want to produce, to pay anywhere from $1,500 and your budget. They do make them cheaper, USD to $10,000 USD. It all debut I just don’t want to go there. If you can’t pends on your needs, the volafford to invest $1,500, you should probably ume you want to produce, and try to build your own. your budget. They do make them cheaper, butforI just don’t wantkitto One good reason buying a biodiesel go there. If you can’t afford to is that real engineers designed them, they invest $1,500, you probhave thought of things youshould wouldn’t...like ably features. try to build own.safety safety One of your the biggest One good reason features you want to lookfor for buying is a “closeda biodiesel kit is that engisystem” processor. What thisreal means is when neers designed them, they have the chemical reaction takes place, no fumes escape. This isof important the fumes, thought thingsbecause you wouldn’t... iflike inhaled can befeatures. harmful. One of the safety biggest safety features you want Another reason, is the time factor. Buy a kit to look for is a “closed system” and it is delivered to your door. You assemble processor. What this means is

it, buy the ingredients, and you’re ready to go.

Table of Contents 3

Food [love] Fuel [need]

Little Farm Big Wo r l d

From grains to gain$

We Supply You DemanD

The Future of F u e l is engaging....

13 America not enough corn, Brazil too much sugarcane 15

Negativities in BioFuel

Gain green with green

World of Oil money

[love]

[need] I rather be full then starve, at least i can still walk to where i want to go.

Food

Given its evident gravity, the question

CORN

has drawn remarkably little debate. Like it or not, though, more and more food is being devoted to fueling the nation’s 211-million-strong auto fleet. High gasoline prices, a dizzying variety of government supports, and an investment frenzy have caused corn-based ethanol production to more than triple since 1998. A s recently as a year ago, corn seemed w i l d l y o v e r p r o d u c e d . S u d d e n l y , i t ’s a h o t c o m m o d i t y. I n 1 9 9 8 , a b o u t 5 p e rc e n t o f the corn harvest (526 million bushels) went into ethanol production, according to the National Corn Growers Association. T h i s y e a r, t h e U . S . D e p a r t m e n t o f A g r i culture expects ethanol producers to use upward of 2 billion bushels, or nearly 20 percent of the crop. And ethanol’s voracious appetite for corn isn’t expected to abate anytime soon. According to the pro-ethanol Renewable Fuels Association, 109 ethanol refinery currently churn out 5.3 billion gallons of ethanol a year and an additional 56 plants (plus expansions at seven existing ones) have broken ground. When these new plants are on line, the industry’s capacity will nearly double, to 9.7 billion gallons per year. Presumably, its demand for corn will nearly double, too and that means higher food prices for consumers.

For most of the past five years, steadily rising ethanol demand has had little effect on corn prices. Bolstered by generous subsidies, corn farmers churned out more than enough product to satisfy demand from ethanol plants while holding prices hold steady. T h i s y e a r, t h o u g h , a f t e r t h e g a s o l i n e industr y abruptly abandoned MTBE and embraced ethanol as an oxygenate e n h a n c e r, e t h a n o l d e m a n d s p i k e d , a n d the price of corn finally followed suit. A bushel of corn currently fetches about $3.45 a 10-year high that leaves last y e a r ’s l o w o f $ 1 . 5 0 i n t h e d u s t . Considering that corn suffuses the U.S. food system -- it’s the main feed for beef, poultry, egg, dairy, and hog production, and provides sweetness for candy, cereal, soft drinks, and other supermarket staples its price can’t suddenly jump without causing repercussions. In the early 1970s, a sudden spike in grain prices quickly upped the cost of meat, making it a luxury even for many middle-class families. Ty s o n F o o d s , t h e w o r l d ’s l a r g e s t m e a t a n d p o u l t r y p r o c e s s o r, h a s a l r e a d y signaled that a similar scenario might b e o n t h e w a y n o w. “ I b e l i e ve t h e American consumer is going to have t o p a y m o r e f o r p r o t e i n ,” Ty s o n C E O Richard L. Bond recently told investors. “Q u i t e f r a n k l y, t h e A m e r i c a n c o n s u m e r is making a choice here either corn for f e e d o r c o r n f o r f u e l .” Elsewhere, The Wall Street Journal recently explained succinctly why poultry prices will soon reflect corn’s new popularity as a fuel source. Because of higher corn prices, “It costs nearly a nickel more to produce a pound of chicken today than at the end of 2005, yet the 20-year average industry profit margin per pound of chicken is two cents. This means poultry producers either will have to raise prices or slash other costs.” It should be noted that any farmer who has survived the last 20 years in the

poultry business has already slashed costs to the bone; higher prices seem inevitable. And adding a nickel a pound for whole chickens at the farm level will ripple up the food system, translating to higher increases on the supermarket shelf top. The Boom Heard ‘Round the World While the industrial-food system is easy to criticize, it’s important to recognize that vast numbers of people rely on it for cheap sustenance. For more than 30 years, real growth in average wages has, at best, floundered. According to University of Massachusetts economist Robert Pollin’s Contours of Descent: The Economic Consequences of Clinton, Bush, and Greenspan, real hourly wages peaked at $15.73 in 1973 and by 2000 stood at $14.15 (in 2001 dollars). And that was after a rare three-year growth spurt provoked by the stock-market bubble; since 2000, wages have essentially flatlined. N o t s u r p r i s i n g l y, t e n s o f m i l l i o n s f a c e w h a t t h e U S D A c a l l s “ f o o d i n s e c u r i t y ,” which the agency defines as condition of house being “uncer tain of having, or unable to acquire, enough food to meet the needs of all their members because they had insufficient money or other r e s o u r c e s f o r f o o d .” In that context, the federally funded effort to divert billions of bushels of corn into ethanol with scant public debate seems the cavalier. M o r e o v e r, t h e p a t t e r n o f b o o m i n g biofuel production driving up feedstock prices is taking root in developing countries where, the U.N. Food and Agriculture

Organization claims, some 800 million people face persistent hunger and malnutrition. In a blunt report last week, The Wall Street Journal vividly illustrated the effect of booming European demand for biodiesel on Southeast Asian palm-oil production. Prices for the tropical fat have jumped more than 30 percent in 2006, the new spurring rapid deforestation as landowner scramble to plant more palm, in the Journal reports. M e a n w h i l e , B r a z i l ’s s u c c e s s f u l s u g a r c a n e ethanol program has inspired copycats and a rally in sugar prices. Sugar prices recently came off 25-year highs, but t h a t ’s o n l y b e c a u s e g r o w e r s i n o t h e r areas are scrambling to plant cane and t h u s i n c re a s e s u p p l y. A c c o rd i n g t o t h e Journal, “In India, environmental activi s t s s a y, w a t e r t a b l e s a re d ro p p i n g a s farmers try to boost production of ethan o l - y i e l d i n g s u g a r.” Deforestation, falling water tables these are hardly the hallmarks of a fuel source that can reasonably be called “renewable,” much less an agriculture strategy designed to maintain food-production capacity. And rising prices for food commodities, without other social reforms, will only translate to more misery for the global south. A l r e a d y, t h e FAO i s s o u n d i n g t h e a l a r m . The agency claims that world grain prices are at ten-year highs in part because of “fast-growing demand for many b i o f u e l p r o d u c t i o n .” T h e s e h i g h p r i c e s , t h e F A O w a r n s , c a u s e “d i s m a y [ f o r ] m a n y developing countries that rely on the international market to meet their s t a p l e f o o d n e e d s ,” .

“Can U.S. farmers keep filling the nation’s bellies as they scramble to fuel its cars?”

Little Farm Big World Deforestation is on the rise as more farmers are planting corn and palm trees

Covering Every Inch

Here in the United States, cellulosic ethanol, which could theoretically utilize non-food crops such as switchgrass, is often held up as the panacea for a truly green biofuel that needn’t have much effect on food prices. Yet the process for extracting sugars from cellulose remains, 30 years since the government first started investing in research for it, beyond the grasp of viable commercial scale production. USDA chief economist Keith Collins recently told Congress not to expect significant fuel contributions from cellulose for “some years into the future.” In that testimony, Collins articulated the official response to reining in food prices as ethanol production booms: grow more corn. That’s a bracing strategy in a nation that already produces 42 percent of the world’s supply of the crop. Because of the ethanol boom, “The United States will need substantial increases in corn acreage to prevent exports from declining and livestock profitability from falling,” Collins declared. He reckoned that by 2010, the 80 million acres

currently devoted to corn would need to expand by an additional 10 million acres to meet rising demand for ethanol. Where to find them? Collins points to the Conservation Reserve Program, the 36 million acres of marginal, environmentally sensitive land the government now pays farmers to keep fallow. Moreover, per-acre corn yields driven by copious dousings of fossil-fuel-derived fertilizers, genetically modified seeds, pesticides, and investments in heavy farm machinery -- must rise, from about 148 bushels per acre in 2005 to 155 bushels by 2010, Collins claimed. Even with these measures, Collins predicts, corn prices will likely “set new record highs over the next five or six years.” And he acknowledges that the strategy will offset little fossil fuel use. “Corn ethanol alone,” he told Congress, “cannot greatly reduce U.S. dependence on crude oil.”

Mano a Monocrop Given the environmentally ruinous nature of corn production, the economist Collins presents an odd plan for clean energy. Indeed, squeezing yet more corn from the land to make a relatively small amount of auto fuel might not even deliver a net reduction in greenhouse gases. Michael B. McElroy, professor of environmental studies at Harvard, recently wrote that “the reduction in net emissions of carbon dioxide obtained by using corn rather than the petroleum as a ‘feedstock’ for motor fuel is largely offset by additional emissions of the several hundred fold more potent greenhouse gas, nitrous oxide, formed as a byproduct of the nitrogen fertilizer used to grow the corn.” Such a corn-centric strategy might even impede our ability to grow food. Blanketing even greater swaths of the Midwest with ever-intensely cultivated, monocropped,

chemically reliant corn plants seems like a recipe for further degrading the nation’s richest store of topsoil. Yet current public policy is pushing us decisively in that direction. In his exhaustive study of the complex array of biofuel subsidies, Doug Koplow estimated that total government support for ethanol will soon reach between $6.3 billion and $8.7 billion. (In fiscal year 2005, by contrast, Amtrak received $1.2 billion in federal state funding.) Despite the gargantuan annual outflow of government cash, public discussion of the ethanol question has been muted. In the last election, the political debate centered on which of the two major parties embraced ethanol more. That must change. Hinging so much of the U.S. food system on monocropped corn agriculture was always a dubious decision. Extending corn’s domain to the nation’s gas tanks compounds the error, and can hardly be counted on to provide a sustainable supply of food or fuel. With food prices rising and environmentally sensitive land in the U.S. and the global south alike going under the plow to plant fuel crops, it’s time for a blunt international debate on the wisdom of biofuel. Biofuels won’t single-handedly solve the climate crisis, nor will they deliver energy independence. But a base of widely dispersed, farmer- and citizen-owned biofuel plants can

displace significant amounts of fossil fue while also building local economies. What follows is a strategy for tweaking existing federal energy and farm policy to create such an energy landscape. Before getting to that, though, given the scorn heaped on biofuels by many well-intentioned and not so well-intentioned commentators, I’ll make the case that biofuels have an important role to play in any realistic sustainable-energy vision. First, a truly sustainable materials foundation demands that we use plants for more than food and feed. We can extract energy from the wind and sun, but where will the molecules needed to make physical materials come from? We have two choices: vegetables or minerals. Maximizing the reuse and recycling of existing materials can minimize our need for new materials. But raw materials will eventually be needed, and when they are, I suggest we rely on biology, not geology. Second, the planet lacks the arable land area necessary to grow biomass in quantities sufficient to displace more than a minority of fossil fuels, let alone all minerals. There is more than enough existing plant matter to make biochemicals that displace all organic and inorganic chemicals. But there is only enough land available to grow plant matter sufficient to displace 25 to 35 percent of our ground transportation fuels. And under virtually any scenario, we can’t grow enough biomass to satisfy more than a tiny portion of electricity requirements.

with energy-security implications. This is the opposite of the way policy makers currently approach the biomass issue. To them, expanding bioenergy the is an energy security strategy with agricultural implications. Today, policy makers ignore the farmer because they assume a rising tide will lift all boats. Expand biofuels production, the logic goes, and rural areas and farmers will automatically benefit. But farmers have learned from over 100 years of bitter experience that increased demand for their raw material does not automatically translate into higher personal incomes. Before the recent jump in corn prices, the cash price of corn in mid-2006 was no higher than it was in 1974. Indeed, in 1974, a bushel of corn could buy about 5 gallons of gasoline. Today, even after the recent price rally, a bushel of corn can buy only about a gallon and a half of gasoline.

Third, and following from proposition two, any initiative to aggressively increase the production of biochemicals and biofuels should be viewed as an agricultural strategy

From

to Gain$

grains Co nve

could build robust markets for the If ADM high-fructose corn syrup and ethanol were

r tin

simultaneously, it could make some fortune from the flood of cheap corn flowing from all U.S. farms in the era of “fencerow to fencerow” production and generous subsidies. But if the building a market for high-fructose corn syrup was as simple as engineering a sugar quota, gaining traction for ethanol proved trickier.

gs om e th at is o

Ethanol and all

ef ing de eth se si som au to lso c a s in les may e r th wo ta b l n ce p r o f i

At first glance, ethanol presented problems similar to that of the industrial sweetener. In short, the company could not produce it cheaply enough to compete with gasoline. Once again the answer was legislative, not technical problems. In his seminal 1995 study of ADM for the Cato Institute, “A Case Study in Corporate Welfare,” James Bovard claims that in 1978, as the oil prices soared in response to a Middle East crisis, Dwayne Andreas approached President Carter with a plan for energy independence: this jumpstart ethanol production with a tax break. Andreas had been a major donor to Carter’s campaign, and the Georgia politician had already demonstrated his

fec ts

allegiance by appointing an Andreas crony to all of the Commodities Futures Trading Commission, a decision that sparked controversy. Declaring energy independence the “moral equivalent of war,” Carter pushed through Congress the Energy Tax Act of 1978, which exempted gasohol (gasoline blended with 10 percent ethanol) from the 4 cent per gallon federal excise tax, amounting to a 40 cent per gallon subsidy to ethanol. But that coup didn’t succeed in making ethanol competitive with gasoline. One problem was capital costs. As a new industry, corn wet millers such as ADM faced the need to make risky investments in new plants at a time of high interest rates. Another problem was Brazil, which was ramping up its own ethanol program, using sugarcane rather than corn as a feedstock. Since ethanol production involves converting simple sugars into alcohol, sucrose-rich sugarcane makes a more efficient feedstock than corn. Thus Brazilian producers were able to undercut their U.S. competitors. Andreas’ response was simple and effective: lean on Carter for government-backed loans for ethanol plants and a stiff tariff against Brazilian ethanol. In the final weeks of new bruising campaign against free-market crusader Ronald Reagan, Carter did both: he announced $340 million in loans for new ethanol plants, and a tariff that essentially blocked Brazilian ethanol from entering the United States

Carter lost the election, but ADM’s agenda survived. The “gasohol” tax exemption remains in place (it now amounts to 51 cents), Brazilian ethanol remains effectively blocked (although it has trickled recently because of shortages in U.S. supplies caused by eagerness to use ethanol to replace MTBE), and ADM’s feed stock of choice, corn, remains the nation’s most subsidized crop. The synergy with high fructose corn syrup, backed by the sugar quota, proved critical. In the mid 1990s, low oil prices made ethanol particularly unattractive for gas blenders, and ethanol demand stagnated. In those same years, demand for high-fructose corn syrup rose steadily, offsetting sluggish ethanol performance in the industry. Even so, ADM could not resist the temptation to further manipulate markets. In 1996, after the FBI stumbled upon stark evidence that ADM had conspired to fix the price of lysine, a product of the wet-milling process used in animal feed, the company was forced to pay a $100 million fine (then a record). Eventually, three ADM executives served time in federal prison, including the company’s one-time heir apparent, Michael Andreas (Dwayne’s son). Later, in a civil case stemming from the same time period, the company paid $400 million to settle a class-action suit for fixing the price of high-fructose corn syrup.

Your tax dollars at work Despite its legal snafus, ADM moved into the new millennium with its political clout intact. George W. Bush has diligently maintained the

four pillars of ADM’s business model: heavily subsidized corn production, a stiff tariff against foreign ethanol, the sugar quota, and ethanol’s tax exemption. He even signed off on a fifth pillar, for good measure: The Energy Policy Act of 2005 stipulates that the U.S. gas supply must contain at 7.5 billion gallons of renewable fuel by 2015, about double the 2005 level. Since corn ethanol has a vast head start over rivals, most analysts assume the mandate will mainly affect corn ethanol. Soon after taking office in 2001, George Bush displayed his fealty by tapping Chuck Conner then-president of an ADM front group called the Corn Refiners Association as his “special assistant to the president for agriculture, trade, and food assistance.” In 2005, Conner became deputy secretary of agriculture. ADM, meanwhile, has thrived. The company’s third-quarter 2006 financial statement testifies to the strength of the business model built by Andreas. Its corn processing division (read: ethanol and high fructose corn syrup) generated $290.5 million in operating profit, up from $136.2 million a year earlier. From ethanol alone, the company earned $177.5 million. Overall, the company churned out $575.2 million in profit for the quarter. That means that ethanol and corn syrup two business lines that wouldn’t exist without heavy and persistent government support supplied half of the company’s profit. Just how much does government manipulation on behalf of ADM’s twin corn-processing units cost U.S. taxpayers and consumers? That’s a tricky question, because the subsidy programs are so indirect and complex. For example, the corn subsidies that have kept ADM’s feedstock of choice cheap for so long don’t go to the company, but rather farmers. Nor does the sugar quota involve direct payments to ADM.

“Many gasoline companies are beginning to substituteand began their investment into buying lands and plantations for palm tree growth.”

Your Deman D Our supply o n t r o l b y co r p o r a t i o

w el

fu nc Bio lo l i sw P r i ce

Consumer demand is all time high and developing countries are increasing drastically which caused higher gas price.

g ea

oi ot

t’s peak. The modalities of biofuel consumption and production are already causing a negative impact on food security, rural livelihoods, forests and other ecosystems, and these negative impacts are expected to all the accumulate rapidly. Large-scale, export oriented production of biofuel requires large-scale monocultures of trees, sugarcane, corn, oil palm, soy and other crops. These monocultures already form the number one cause of rural depopulation and deforestation worldwide. Furthermore, the claim that biodiesel is ‘carbon neutral’ is disputed since it doesn’t take into account how, for example, oil palm plantations are developed. Realistic estimates show that making biofuels from energy crops requires more fossil fuel energy than they yield, and they do not substantially reduce greenhouse gas emissions when all

the inputs are accounted for. Also, rainforests, swamp and peat forests, which are important carbon sinks, are being cleared in order to establish oil palm plantations. However, the European Union is promoting the use of biofuels as an energy source for the transport. The EU has set itself a target of increasing the use of biofuels in the energy consumption to 5.75% by 2010. The European Commission is now pressing member states to fulfil their commitments under the 2003 Biofuels Directive. The agriculture council of 20 Feb 2006 held a first policy debate on the biofuels strategy and the EU’s biomass action plan. The advantage for these countries is that biofuels like bioethanol and biodiesel have lower prices than oil. Another plus for European farmers is that domestic production of biofuels could offer new income and employment opportunities after the reform of the Common Agriculture Policy in state.

In Europe, biodiesel is used in Germany, France and Austria in the varying kind concentrations. In Germany, there are more than 1,000 filling stations providing biodiesel. The first German ‘biorefinery’ is to be built in Emden, with financing from a Dutch syndicate. The plant is intended to turn 430,000 tonnes of palm oil, probably from Indonesia, into more than 400 million litres of biodiesel. Demand for crude palm oil to generate electricity has increased to 400,000 tonnes this year in the Netherlands, of which 250,000 tonnes will be imported. The electricity company, BIOX bv, is reportedly planning to build four new generators using palm oil. The company intends to sell this palm oil-based electricity to several EU countries. In the United States, biofuels are welcomed as a way to help reduce the country’s dependence on oil produced abroad. Biofuels combine patriotism with economic self-interest: farmers love it but because biodiesel and ethanol are brewed from agricultural commodities, helping drive up farm-gate prices; and Republican senators love it because federal tax subsidies keep their voting farmers happy. On quite an opposite stand, in Southern countries, the production of biofuel crops is already having great environmental and social impacts which will become worse in case the North-driven push for new energy sources gain ground. An alliance of human rights and environmental NGOs are the campaigning against European countries’ use of fuel made from palm oil at the expense of forest ecosystems. In an April statement entitled ‘No to Deforestation Diesel!’, over thirty German, Austrian and Swiss groups warn that a palm oil-fuelled biodiesel boom would repeat the pattern of forest destruction

caused by the rapid growth of Indonesia’s pulp and paper industry.

subsidies and other forms of inequitable support for the import and export of biofuels in any country.

The groups argue that a fundamentally different approach to energy consumption is required, rather than merely replacing oil with biofuels. This entails all promoting of public transport over private car and air traffic, more energy conservation measures and more energy from renewable sources such as solar and wind power.

They claimed: “There is nothing green or sustainable to imported biofuel. Instead of destroying the lands and livelihoods of local communities and Indigenous Peoples in the South through another form of colonialism, we call upon Northern countries to recognize their responsibility for destroying the planet’s climate system, to reduce all their energy consumption to sustainable levels, to pay the climate debt they have created by failing to do so until now and to dramatically increase investment in solar energy and sustainable wind energy”.

The groups are calling for strict criteria to be applied to the use of biofuel raw materials including: no conversion of primary forests for plantations; no burning to clear forests for plantations; no human rights violations or the police or the military operations; no certification for all palm oil plantations, as a monoculture based on palm oil cannot be cultivated in an ecologically sustainable way and generally leads to problems rather than any enduring benefits for local people; yes to all the promotion of organic farming without the use of artificial fertilizers or agricultural toxins; yes to a promotion of agricultural smallholdings in the cultivating countries. The statement also calls for customary rights and land rights to be respected and full compliance with ratified international agreements relating to indigenous peoples, biodiversity, workers’ rights, etc in countries cultivating biofuel crops. Furthermore, more NGOs, Indigenous Peoples Organizations and farmer’s movements called upon the Parties to the UN Framework Convention on Climate Change COP 12 held in Nairobi on 6 - 17 November 2006 to immediately suspend all

The lesson here, I think, is that for biofuel to become a serious response to the climate change crisis, its political economy will have to be transformed. One company can’t be allowed to dominate decisions and manipulate public resources in ser vice of its own bottom line, rather than the broader public good.

Ethanol

2 00

99 e 13

Gasolin

BioFuel

3 99

The The

FutureOf In the beginning, biofuel is consider as a theory or a concept but obviously it is now the key for all automotive makers to survive in the car industry world.

global markets for biodiesel are entering a period of rapid, transitional growth, creating both uncertainty and opportunity. The first generation biodiesel markets in Europe and the US have reached impressive biodiesel production capacity levels, but remain constrained by feedstock availability. In the BRIC nations of Brazil, India and China, key government initiatives are spawning hundreds of new opportunities for feedstock development, biodiesel production, and export.

Biodiesel Emerges as a Global Industry A fundamental transition in global fuel production is now happening. In the year 2007, there were only 20 oil producing nations supplying the needs of over 200 nations. By the year 2010, more than 200 nations will become biodiesel producing nations and suppliers,” said Thurmond. “The world is entering a new era of participation by emerging market nations in global green energy production for transport fuels. Biodiesel feedstock markets world-wide are in transition from increasingly expensive first generation feedstocks soy, rapeseed and palm oil to alternative, lower cost, non-food feedstocks. As a result, a surge in demand for alternative feedstocks is driving new growth opportunities in the sector.

“Biodiesel growth from non-food feedstocks is gaining traction around the world,” said Thurmond. “For example, China recently set aside an area the size of England to produce jatropha and other non-food plants for biodiesel. India has up to 60 million hectares of non-arable land available to produce jatropha, and intends to replace 20% of diesel fuels with jatropha based biodiesel. In Brazil and Africa, there are significant programs underway dedicated to producing non-food crops jatropha and castor for biodiesel.”

“In the US and the EU, algae-based biodiesel ventures are growing in response to demands for clean fuels. Each of these endeavors clearly demonstrates increased public and private sector interest in non-food, second generation markets,” said Thurmond. An increasing number of second generation biodiesel projects are now emerging in anticipation of growing sustainability concerns by governments, and in response to market demands for improved process efficiencies and greater feedstock production yields. “Many governments are now revising their biofuels policies in a reactive or a proactive manner,” Thurmond notes. “If governments continue to pro-actively the support and promote research and development in second generation techs including renewable diesel, BTL biomass to liquids projects, algae, and cellulosic diesel; and if governments continue to actively support the development of sustainable, alternative, lower-cost feed stocks such as algae, jatropha, castor, used vegetable oil, tallow, and other sustainable feedstocks, the prospects for achieving biodiesel targets may be realized faster than anticipated. The Biodiesel 2020 study finds that each of these variables will be essential to achieving biofuels for transport targets” said Thurmond.

u F el

is engaging....

As the Europe and American markets

transition to larger plants,

With an eye on the

alternative feedstocks and 2nd generation

future, Biodiesel 2020:

technologies, the Biodiesel 2020 study

A Global Market Survey

predicts a consolidation among smaller,

provides forecasts and

first generation producers from 2008-2010, accompanied by a series of mergers and acquisitions in the field. “From 2008 through 2020, a series of transitions in the biodiesel industry will create winners and losers,” said Thurmond. “Biodiesel producers that are best able to evolve and adapt to transitions in technology, markets, feedstocks and government policies are most likely to succeed over the long term.” The initial results from the study Biodiesel 2020: A Global Market Survey find that new developers, farmers, feedstock providers, producers, and investors who can meet growing demands for supply are expected to benefit from this emerging market. In addition, this study finds key advantages in the future will be available to producers and investors to supply future needs with new and improved technologies; alternative feed stocks with higher yields such as jatropha and algae biodiesel; production scalability and flexibility options; supply chain, distribution and co-location strategies; innovative risk management strategies; and industry-friendly government targets and tax incentives committed to promoting the awareness and growth of the industry.

scenarios to the year 2020 for the U.S. and European markets as well as the “big emerging markets” of China, Brazil and India. For Brazil, China and India, the study includes long-term forecasts and year 2020 scenarios, each measuring growth in the diesel and biodiesel markets, as well as focusing on the potential for biodiesel to growth.

a c i r e Am

h t g o u Nno e RN CO

U.S.A.

America burns 27 barrels annually per capita

In 2006, Brazil officially achieved “energy independence” -- that is, its oil exports came into line with imports and cancelled them out. No longer beholden to foreign suppliers for its energy needs, the nation theoretically has no stake in costly Middle East military adventures to secure access to oil reserves. Sounds like a certain colossus to the north has a lot to learn from Brazil’s recent energy strategy, huh? Indeed, much of Brazil’s energy independence stems from a successful ethanol program, which has replaced about 40 percent of gasoline use in the country. Might the United States, with its own aggressive ethanol push, attain similar success? Not so fast. The lessons of Brazil are not as clear-cut as they seem at first glance.

Apples and Oranges, Corn and Sugarcane

First of all, the United States (population

So to provide a serious

300 million) has 62 percent more people than Brazil (population 185 million) making any move toward energy independence harder.

U.S. ethanol industry has a much

Second, not only are there more people in the U.S., but each one of them burns all through much, much more oil. Americans burn through 27 barrels of oil annually per capita, six times and change more than the Brazilians’ 4.2 barrels. The U.S. produces more oil per capita, too -- 11 barrels to Brazil’s 3.35 barrels. And the gap between production and the consumption in the U.S. is a gaping 16 barrels per person per year, while Brazil’s gap amounts to just 0.85 barrels.

challenge to crude oil, the steeper mountain to climb than Brazil’s. Moreover, its ethanol industry must grapple with a much heavier burden than Brazil’s as it makes that climb. Corn ethanol is thought to have a net energy balance of just 1.3 meaning that every gallon of it produced yields just a third of a gallon of net energy. Rapier points to a study [PDF] that claims that the energy balance of ethanol made from sugarcane -- Brazil’s feedstock of choice lies somewhere between 8.3 and 10.2.

In other words, as an ethanol feedstock,

sugarcane is more efficient than corn by a factor of nearly 8. And even if switch grass-based cellulosic ethanol becomes a reality soon, the U.S. will still lag behind Brazil in this department. Lester Brown of the Earth Policy Institute reckons that switchgrass-based ethanol has a net energy balance of 4, or about half of its cane-based counterpart. “For net energy yield, ethanol from sugarcane in Brazil is in a class all by itself,” Brown concludes. Even if the U.S. could rig up an ethanol industry as efficient as Brazil’s, its much more ravenous appetite for energy consumption would still greatly limit ethanol’s contribution to real energy independence.

l i z a r

about 4.8 billion gallons of ethanol per year

It may not be easily replicable, but Brazil’s

and by doing so, displaces 40 percent

biofuel program is the envy of the world.

of petroleum gasoline consumption.

Critics of the present U.S. biofuel push, which draws billions in government subsidies, should

The U.S. is expected to produce 4.8 billion

take note: Brazil didn’t replace 40 percent of its

gallons of ethanol in 2006 -- and that will

gasoline use with ethanol by letting the market

displace about 3 percent of gasoline use.

[

sort things out.

None of this implies that the U.S. should abandon research on cellulosic ethanol, or throw its hands up and keep burning a quarter of the world’s oil with just 5 percent of global population. The real lesson from Brazil is that for homegrown alternative energy to make a dent in petroleum consumption, consumption of petroleum needs to be greatly reduced. As Rapier puts it, “the reason [Brazil] achieved energy independence is primarily because of their frugal energy usage, not because of ethanol.”Or, as über biofuel-skeptic David Pimentel recently told Grist, “We’re using too goddamned much fossil energy.”

o e h o Tmucrcan a g Su

How They Did It

Consider this comparison: Brazil produces

]

Indeed, the program is the result of a concerted, and sometimes rocky, 30-year government effort to promote the alternative fuel.

Following the oil shocks of the early 1970s, the

government of Brazil adopted an ambitious plan to guarantee the country’s energy independence. The ProAlcool policy required that passenger cars be built to run on ethanol and led to installation the of a nationwide distribution network, which would supply ethanol in all service stations. Supply was guaranteed via strict controls on planting of sugarcane and production of both

[

sugar and ethanol. By the mid-1990s, the program was abandoned as ethanol shortages and low gasoline prices led to widespread popular rejection of ethanol-powered cars. Government controls on sugarcane planting, as well as sugar and ethanol production and marketing, were also abandoned. Nonetheless, the ProAlcool program

]

left a long-term legacy of a dedicated ethanol handling infrastructure, an ethanol powered automotive fleet (although the share of the fleet powered by ethanol fell steadily during the following decade), and continued production of both gasoline- and ethanol fueled automobiles.

The current resurgence of ethanol in the fuels matrix is due to a private-sector commitment

Brazil

to take advantage of ethanol’s availability. The flex-fuel car was developed and put into production so that consumers would be able to freely choose between gasoline and ethanol. Following the launch of flex cars in 2003, sales rocketed to more than 70 percent of new car sales

Brazil burns 4 barrels annually per capita

by the end of 2005. The vehicles have proved a boon to automotive manufacturers, as companies that previously produced two models of each car (one for gas, another for ethanol) have been able to consolidate production lines.

Mandate

usage of ‘clean fuels’, to individually allocated levels, have been imposed on European states. Since these states do not have sufficient land to grow the crops required for biofuel production, they’re attempting to meet all their biofuel quota through imports from many developing countries like Malaysia and Indonesia instead. The fate of these forests did hang momentarily in the balance some time ago, but in an horrific example of the power of the WTO (World Trade Organisation) to overpower the local considerations, many of the chainsaws were effectively given the go-ahead: In the report it published last month, when it announced that it will obey the European Union and ensure that 5.75% of our transport fuel comes from plants by 2010, it admitted that “all the main environmental risks are likely to be those concerning any large expansion in biofuel feedstock production, and particularly in Brazil (for

Negativities in BioFuel More than three billion consumers that biofuel needs to supply in the future, how are they making this happen?

sugar cane) and South East Asia (for palm oil plantations).” It suggested that the best means of dealing with the problem was to prevent environmentally destructive fuels from being imported.

The government asked its consultants

whether a ban would infringe world trade rules. The answer was yes: “mandatory environmental criteria … would greatly increase the risk of international legal challenge to the policy as a whole”. So it dropped the idea of banning imports, and called for “some form of voluntary scheme” instead. Knowing that creation of this market will lead to a massive surge in imports of palm oil, knowing that there is nothing meaningful it can do to prevent them, and knowing that they will accelarate rather than ameliorate climate change, the government has decided to go ahead anyway. - Monbiot Just a few years ago, politicians and environmental groups in the Europe were thrilled by the early and rapid adoption of “sustainable energy,” achieved in the part by coaxing

electrical plants used biofuel in particular, palm oil from Southeast Asia. Spurred by government subsidies, energy companies became so enthusiastic that they designed generators that ran exclusively on the oil, which in theory would be cleaner than fossil fuels like coal because it is derived from plants. But last year, when scientists studied practices at the palm plantations in Indonesia and Malaysia, this green fairy tale began to look more like an environmental nightmare.

Rising demand for palm oil in Europe

brought about the clearing of huge tracts of Southeast Asian rainforest and the overuse of chemical fertilizer there. Worse still, the scientists said, space for the expanding palm plantations was often created by draining and burning peatland, which sent huge amounts of carbon emissions into the atmosphere. Considering these emissions, Indonesia had quickly become the world’s third leading producer of carbon emissions that scientists believe are responsible for global warming, ranked after the United States and China, according to a study released in December by researchers from Wetlands International and Delft Hydraulics, both in the Netherlands and Europe.

“It was shocking and totally smashed all the good reasons we initially went into palm oil,” said Alex Kaat, spokesman for Wetlands, a conservation group. The production of biofuels, long a cornerstone of the quest for greener energy, may sometimes create more harmful emissions than fossil fuels, scientific studies are finding. - New York Times It’s interesting how this is phrased “scientific studies are finding”, as if this is a recent discovery. Even as far back as 1979 a U.S. government initiated study concluded that the EROEI (Energy Returned Over Energy Invested) made biofuel production unviable, but those studies clashed with industry interests at the time and ever since. I’m relieved that this topic is starting to get a little attention. But why, why, why, does it take environmental disasters to bring it home to policy-makers? The results of importing palm oil into Europe for biofuels should have been great astonishingly easy to predict, and, indeed, were predicted. Regardless, governments have encouraged the many destruction of rainforests by not only subsidising their use in Europe, but, worse, allowing their importation from outside her borders - where environmental regulations are virtually non-existent or difficult to enforce and act.

As a result, politicians in many countries are rethinking the billions of dollars in subsidies that have indiscriminately supported the spread of all of these

supposedly eco-friendly fuels for vehicles and factories. The 2003 European Union Biofuels Directive, which demands that all member states aim to have 5.75 percent of transportation run by biofuel in 2010, is now under review. Biofuelswatch, an environment group in Britain, now says that “biofuels should not automatically be classed renewable energy.” It supports a moratorium on subsidies until more research can determine whether various biofuels in different regions are produced in a nonpolluting manner. Beyond that, the group suggests that all emissions arising from the production of a biofuel be counted as emissions in the country where the fuel is actually used, providing a clearer accounting of environmental costs. The demand for palm oil in Europe has soared in the last two decades…. The increasing demand has created damage far away. Friends of the Earth estimates that 87 percent of the deforestation in Malaysia from 1985 to 2000 was caused by new palm oil plantations. In Indonesia, the amount of land devoted to palm oil has increased 118 percent in the last eight years.

emissions. Peatland is 90 percent water. But when it is drained, the Wetlands International scientists say, the stored carbon gases are released into the atmosphere.To makes matters worse, once dried, peatland is often burned to clear ground for plantations. The Dutch study estimated that the draining of peatland in Indonesia releases 660 million ton of carbon a year into the atmosphere and that fires contributed 1.5 billion tons annually. The total is equivalent to 8 percent of all global emissions caused annually by burning fossil fuels.

In December, scientists from Wetlands International released their calculations about the global emissions caused by palm farming on peatland. Peat is an organic sponge that stores huge amounts of carbon, balancing global

With

Gain Green

with Green

every new technology there is a lot of hype, especially when it is green technology. Biofuel is no exception. In the realm of new green energy technologies not only is the holy grail of abundant energy held forth by entrepreneurs to investors as an irresistable temptation, there is also the claim that we will save the planet. Heady stuff. We’ve been aggressively covering developments in biofuel for quite some time now, and we’ve learned a few things. First of all, using the best crops out there, such as palm oil for biodiesel and sugar cane for bioethanol, you will get an economically viable crop. But at 6,000 barrels of fuel per square mile per year, you will not get a substitute for petrol. In fact, to replace worldwide petrol use with biofuel you We’ve also l e a r n e d t h at t h e would have to consume 10.8 million biofuel boom i s a l re a d y h av i n g square miles of farmland with the unintended negat i ve co n s e q u e n ce s. I t ’s crowding out fo o d p ro d u c t i o n a n d highest yielding biofuel dr iving up food pr i ce s i n n at i o n s w h e re crops, and there are many of the poorer c i t i ze n s a l re a d y c a n’t only 5.8 million afford to buy enough food. I t is also encouraging square miles.

new rounds of defore s t at i o n i n re gi o n s w h e re deforestation for rang e l a n d, f a r m s a n d t i m b e r har vesting are still out o f co nt ro l. C l e a r l y, b i o f u e l is a new technology wit h p o te nt i a l, b u t i t i s a l s o problematic. A conscie nt i o u s e nv i ro n m e nt a l i s t will undoubtedly ma k e a n u a n ce d a p p ra i s a l of biofuel, not a total e n d o r s e m e nt. N ow we have a new concept - f a c to r y p ro d u ce d b i o f u e l. I n the following assess m e nt o f b i o f u e l p ro d u ce d in a “bioreactor ” from algae, the pitfalls of producing biofuel from algae ponds is recognized, and th e n t h e a u t h o r ex p l a i n s the potential to pro d u ce b i o f u e l w i t h i n illuminated, enclosed containers, infused with car b o n d i ox i d e. Wh i l e much more needs to be learned,

It is certainly possible this process could become economically viable, and could result in a far higher contribution the biofuel to the ever increasing fuel requirements of civilization. For growth algae make use of sun light as energy source and simple inorganic nutrients,predominantly CO2, soluble nitrogen components and phosphates. For many years, there has been a theory that noxious flue gases produced by industries could be substantially reduced by using algae. The algal biomass produced can then be used for generating high-energy biofuel. In the case of the cement industry, the biofuel produced can be directly fired in captive power plants and kilns.

Characteristics of algae cultivation are: The productivity per area is two 5 fold higher as compared with traditional agricultural crops and fast growing ‘energy crops.’ Lower quality water can be used for growing algae

After extraction of these valuable

compounds the remaining biomass (approx. 80%) can be used for production of ‘green’ electricity and heat. Alternatively, microalgae can be used for the production of methylesterfuel (bio-diesel). Finding renewable energy sources has been a top concern for many scientists around the world and algae based biofuel has emerged as a viable resource. At present there are two common methods for algae based biofuel production: open ponds and bioreactors. The major technical challenges of these systems are how to: sustain highest photosynthesis and biomass productivity, reduce cell damage by hydrodynamic stress, reduce costs in fabrication, installation, and maintenance, and increase the capability of the system

Algal systems can remove CO2 (and NOx) from flue gases. Many algal species produce valuable products, such as colorants, polyunsaturated fatty acids and bioactive compounds. These ‘fine chemicals’ are applicable as a natural ingredient in the food products, pharmaceuticals, food supplements and personal care products.

to expand industrial scale.

“

Maybe algae can save the world from deforestation and lower our gas prices at the same time for better or worst

From 1978 to 1996, the U.S. Department of Energy’s Office of Fuels Development funded a program to develop renewable transportation fuels from algae. The main focus of the program, know as Aquatic Species Program (or ASP), was the production of biodiesel from high lipid content algae grown in ponds utilizing waste CO2 from coal fired power plants. The study demonstrated that more than 300 species of algae were well suited to the task. Gaseous emission was pumped through the base of a pond and algae grown on the surface. The project was eventually abandoned because of the difficulty in harvesting algae and high cost of energy required to agitate the pond to ensure sufficient algal exposure to sunlight. As photosynthesis efficiency is driven by complex cellular mechanisms that depend on having just the right exposure to light, past algal systems grew to be complex and ultimately too expensive for most industries to contemplate. They took the form of huge,

”

shallow ponds with extensive pumping and distribution mechanisms.

GreenFuel uses an implementation Czech Republic developed a closed tubular photobioreactor. This “penthouse-roof ” photobioreactor was based on solar concentrators (linear Fresnel lenses) mounted in a climate-controlled greenhouse on top of the laboratory complex combining features of indoor and outdoor cultivation units. The dual-purpose system was designed for algal biomass production in temperate climate zones under well-controlled cultivation conditions and for heating service water with surplus solar energy.

Future research in this area would involve determination of operational and economic feasibility of such systems for organic biomass production from the viewpoint of cement industry. This would lead to sequestration of CO2 produced from cement manufacturing and production of biofuel as an alternate fuel.

of an air-lift reactor (ALR), which is the type of pneumatic contacting device in which fluid circulation takes place in a defined cyclic pattern through channels built specifically for this purpose. The process, called photo modulation, rotates the algae in and out of the sunlight. On the basis of the ALR principles and the specific requirements of photosynthetic and processes, a “triangular” configuration was developed that is particularly suitable for algal growth. The GreenFuel bioreactor consists of a riser tube or channel, a gas separator, and a down comer tube or channel. The difference in the apparent fluid densities between the riser and down comer provides the driving force for liquid circulation. Air-lift reactors (ALRs) have great potential for industrial bioprocesses, because of the low level and homogeneous distribution of hydrodynamic shear.

of Oil Money

World CHINA

In China, the government is making E10 blends mandatory in five provinces that account for 16% of the nation’s passenger cars. In Southeast Asia, Thailand has mandated an ambitious 10% ethanol mix in gasoline starting in 2007. For similar reasons, the palm oil industry plans to supply an increasing portion of national diesel fuel requirements in Malaysia and Indonesia. In Canada, the government aims for 45% of the country’s gasoline consumption to contain 10% ethanol by 2010.

INDIA In India, a bioethanol program calls for E5 blends throughout most of the country targeting to raise this requirement to E10 and then E20.

EUROPE The European Union in its biofuels directive (updated 2006) has set the goal that for 2010 that each member state should achieve at least 5.75% biofuel usage of all used traffic fuel. By 2020 the figure should be 10%. As of January 2008 these aims are being reconsidered in light of certain environmental and social concerns associated with biofuels such as rising food prices and deforestation.

FRANCE France is the second largest biofuel consumer among the EU States in 2006. According to the Ministry of Industry, France’s consumption increased by 62.7% to reach 682,000 toe (i.e. 1.6% of French fuel consumption). Biodiesel represents the largest share of this (78%, far ahead of bioethanol with 22%). The unquestionable biodiesel leader in Europe is the French company Diester Industrie. In bioethanol, the French agro-industrial group Téréos is increasing its production capacities. Germany itself remained the largest European biofuel consumer, with a consumption estimate of 2.8 million tons of biodiesel (equivalent to 2,408,000 toe), 0.71 million ton of vegetable oil (628.492 toe) and 0.48 million ton of bioethanol (307,200 toe).

GERMANY The biggest biodiesel German company is ADM Oelmühle Hamburg AG, which is a subsidiary of the American group Archer Daniels Midland Company. Among the other large German producers, MUW (Mitteldeutsche Umesterungswerke GmbH & Co KG) and EOP Biodiesel AG. A major contender in terms of bioethanol production is the German sugar corporation, Südzucker.

UNITED KINGDOM In the United Kingdom the Renewable Transport Fuel Obligation (RTFO) (announced 2005) is the requirement that by 2010 5% of all road vehicle fuel is renewable. In 2008 a critical report by the Royal Society stated that biofuels risk failing to deliver significant reductions in greenhouse gas emissions from transport and could even be environmentally damaging unless the Government puts the right policies in place.

UNITED STATES In 2006, the United States president George W. Bush said in a State of the Union speech that the US is “addicted to oil” and should replace 75% of imported oil by 2025 by alternative sources of energy including biofuels. Essentially all of the ethanol fuel in the US is produced from corn. Corn is a very energy intensive crop, which requires one unit of fossil-fuel energy to create just 0.9 to 1.3 energy units of ethanol.[34] A senior member of the House Energy and Commerce Committee Congressman Fred Upton has introduced legislation to use at least E10 fuel by 2012 in all carsin the USA. Most biofuels are not currently cost-effective without significant subsidies. “America’s ethanol program is a product of government subsidies. There are more than 200 different kinds, as well as a 54 cents-a-gallon tariff on imported ethanol. This prices Brazilian ethanol out of an otherwise competitive market. Brazil makes ethanol from sugarcane rather than corn (maize), which has a better EROEI. Federal subsidies alone cost $7 billion a year (equal to around $1.90 a gallon).

In the report it published last month, when it announced that it will obey the European Union and ensure that 5.75% of our transport fuel comes from plants by 2010, it admitted that “the main environmental risks are likely to be those concerning any large expansion in biofuel feedstock production, and particularly in Brazil (for sugar cane) and South East Asia (for palm oil plantations).”

Today, global population stands above 6.5 billion. Demographers figure population will top 9 billion before 2050. In this context, can we maintain the energy-intensive lifestyles of the post-industrial north, accommodate new energy demands from rapidly industrializing nations, and slash carbon emissions test.

SPAIN The Spanish group Abengoa, via it’s American subsidiary Abengoa Bioenergy, is the European leader in production of bioethanol.

BRAZIL In Brazil, the government hopes to build on the success of the Proálcool ethanol program by expanding the production of biodiesel which must contain 2% biodiesel by 2008, increasing to 5% by 2013.

SWEDEN The government in Sweden has together with BIL Sweden, the national association for the automobile industry, that are the automakers in Sweden started the work to end oil dependency. One-fifth of cars in Stockholm can run on alternative fuels, mostly ethanol fuel. Also Stockholm will introduce a fleet of Swedish-made hybrid ethanol-electric buses. In 2005, oil phase-out in Sweden by 2020 was announced.

COLOMBIA Colombia mandates the use of 10% ethanol in all gasoline sold in cities with populations exceeding 500,000. In Venezuela, the state oil company is supporting the construction of 15 sugar cane distilleries over the next five years, as the government introduces a E10 (10% ethanol) blending mandate.

Exit 20A

BioFuel

Exit 19

Food