Demand for biofuels is almost doubling the challenge of producing more food. Since
2004, for every additional ton of grain needed to feed a growing world population,
rising government requirements for ethanol from grain have demanded a matching ton.
CORVALLIS, Ore. – A new study by economists at Oregon State University questions
the cost-effectiveness of biofuels and says they would barely reduce fossil fuel
use and would likely increase greenhouse gas emissions.
The idea of turning farms into fuel plants seemed, for a time, like one of the answers
to high global oil prices and supply worries. That strategy seemed to reach a high
point last year when Congress mandated a fivefold increase in the use of biofuels.
But now a reaction is building against policies in the United States and Europe to
promote ethanol and similar fuels, with political leaders from poor countries contending
that these fuels are driving up food prices and starving poor people. Biofuels are
fast becoming a new flash point in global diplomacy, putting pressure on Western
politicians to reconsider their policies, even as they argue that biofuels are only
one factor in the seemingly inexorable rise in food prices.
In some countries, the higher prices are leading to riots, political instability
and growing worries about feeding the poorest people. Food riots contributed to the
dismissal of Haiti’s prime minister last week, and leaders in some other countries
are nervously trying to calm anxious consumers.
Food & Agriculture Organization of the United Nations:
In less than one decade, world biofuel production has increased five times, from
less than 20 billion litres/year in 2001 to over 100 billion litres/year in 2011.
The steepest rise in biofuel production occurred in 2007/2008, concomitantly with
a sharp rise in food commodity prices (HLPE, 2011a), quickly accompanied by food
riots in the cities of many developing countries. In comparison with average food
prices between 2002 and 2004, globally traded prices of cereals, oils and fats have
been on average from 2 to 2.5 times higher in 2008 and 201112, and sugar prices have
had annual averages of from 80 percent to 340 percent above their 2000-04 prices.
These price increases were accompanied by price volatility and price spikes to an
extent unprecedented since the 1970s.
Recent dramatic increases in food prices are having severe consequences for poor
countries and poor people. The Food and Agriculture Organization of the United Nations
(FAO) reports that food prices rose by nearly 40 percent in 2007 and made further
large jumps in early 2008. Nearly all agricultural commodities—including rice, maize,
wheat, meat, dairy products, soybeans, palm oil, and cassava—are affected. In response
to the price hikes, food riots have occurred in many developing countries, including
Burkina Faso, Cameroon, Côte d’Ivoire, Egypt, Haiti, Indonesia, Senegal, and Somalia.
According to the FAO, 37 countries are now facing food crises.
Triggers and Underlying Factors
High food-price triggers have included biofuel policies, which have led to large
volumes of food crops being shifted into bioethanol and biodiesel production;
(Author is with the World Bank - Development Economics Group (DEC))
The rapid rise in food prices has been a burden on the poor in developing countries,
who spend roughly half of their household incomes on food. This paper examines the
factors behind the rapid increase in internationally traded food prices since 2002
and estimates the contribution of various factors such as the increased production
of biofuels from food grains and oilseeds, the weak dollar, and the increase in food
production costs due to higher energy prices. It concludes that the most important
factor was the large increase in biofuels production in the U.S. and the EU. Without
these increases, global wheat and maize stocks would not have declined appreciably,
oilseed prices would not have tripled, and price increases due to other factors,
such as droughts, would have been more moderate. Recent export bans and speculative
activities would probably not have occurred because they were largely responses to
rising prices. While it is difficult to compare the results of this study with those
of other studies due to differences in methodologies, time periods and prices considered,
many other studies have also recognized biofuels production as a major driver of
food prices. The contribution of biofuels to the rise in food prices raises an important
policy issue, since much of the increase was due to EU and U.S. government policies
that provided incentives to biofuels production, and biofuels policies which subsidize
production need to be reconsidered in light of their impact on food prices.
The New England Complex Systems Institute has become the latest organization to charge
that by turning almost 50 percent of our corn crop into auto fuel, America is causing
food shortages in the poorer nations of the world. The UN Food and Agriculture Association
has been saying the same thing for ten years, calling biofuels "a crime against humanity."
But this time the authors are not simply making the accusation. They are providing
correlations to back it up.
Ultimately, plant growth can offset greenhouse gas emissions only to the extent that
bioenergy leads to more plant growth than would occur anyway, directly or indirectly.
That happens only to a limited extent (see “additional biomass” below) and cannot
happen at a meaningful scale because the world’s productive land and potential to
boost crop, pasture, and timber yields is already needed to meet rising demands for
food and timber.
Why Revenue Neutral Isn’t, and Other Costs of the BC Tax
Willis Eschenbach / July 15, 2013
I hope against hope that this is my last post on this lunacy. I started by foolishly
saying I would write about the benefits, costs, and outcomes of the BC carbon-based
energy tax, so I was stuck with doing it. I discussed the possible benefits of the
tax in “British Columbia, British Utopia“. To recap the bidding from that post, I
showed that if we assume 1) that the BC folks could hold their CO2 emissions steady,
with absolutely no increase for 50 years, and 2) that CO2 is the secret control knob
that regulates planetary temperature, and 3) climate sensitivity of the secret CO2
control knob is not less than 3°C per doubling of CO2 … assuming all of those things,
they’d achieve a 0.003°C reduction in temperature in half a century. Anything less
than 100% on any of those, of course, means less than three thousandths of a degree
I followed that with an analysis of the pre-tax and post-tax changes in the motor
fuel sales in BC called “Fuel On The Highway In British Pre-Columbia“. Curiously,
both total and per-capita road fuel (diesel plus gasoline) have increased since the
tax was passed. Read the rest at: Why Revenue Neutral Isn’t, and Other Costs of
the BC Tax