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Monday, July 23, 2012

'U.S. Ethanol Policies Set to Reach Their Illogical Conclusion'

Why is the US selling Brazil two million gallons of ethanol at the same time it is importing more ethanol than that from Brazil?:

Running on Empty: U.S. ethanol policies set to reach their illogical conclusion, by Timothy Wise: I’m as cynical as the next policy wonk, but sometimes even I am surprised at the perverse outcomes of some of those policies. Take the bizarre scenario outlined in the new agricultural outlook report from the FAO and the OECD regarding the projected rise in ethanol trade – ethanol traded for ethanol – between the United States and Brazil. That’s right, 6.3 billion gallons a year sloshing between the world’s pre-eminent ethanol producers by 2021. And all in the name of the environment, without a single drop helping people or the planet.
Why would the United States, which now devotes 40% of its corn crop to the production of ethanol, import more than 4 billion gallons of ethanol from Brazil? And why would Brazil at the same time import a projected 2 billion gallons from the U.S.? Couldn’t we just save all those transactions costs and shipping-related greenhouse gas emissions by keeping our ethanol and cutting our projected ethanol imports from Brazil in half?
Not if your goal is to game the U.S. biofuel mandate.
The U.S. Renewable Fuel Standard, passed in 2007 and known as RFS2, includes a mandate for 36 billion gallons of renewable fuel use by 2022, with a nested set of mandates for different types of biofuels. Conventional or first-generation biofuels, such as ethanol from corn, have limited environmental benefits, with supposed reductions in greenhouse gas (GHG) emissions of about 20%. Congress wisely set the mandate such that the majority of the 36 billion-gallon mandate should be met by “advanced biofuels” with a GHG score of 50% or better in terms of reductions.
Well, advanced biofuel production in the United States isn’t going so well. ... At this point, all we produce is a whole lot of corn ethanol, and we are already nearing the technical limit of 15 billion gallons for non-advanced biofuels.
Fortunately for Brazilian ethanol producers..., the renewable fuel mandate can be met to a significant extent by the use of “other” advanced biofuels. Even though Congress was sold the RFS on the promise of energy independence, those “other biofuels” do not have to be produced in the United States. (In fact, mandating U.S. sourcing could have been subject to a WTO challenge.) Brazil’s sugarcane-based ethanol is considered advanced, with a GHG-reduction score of 50% despite widespread concerns about a range of other social and environmental impacts. ...
Under the FAO-OECD’s baseline scenario, Brazil would import 2 billion gallons of corn ethanol from the United States. Why, if it’s a major ethanol exporter and it produces more environmentally sustainable ethanol? To make up for the domestic shortfall created by its exports to the U.S., and to meet its own rising demand from its expanding fleet of flex-fuel cars. They’ll take our low-grade corn ethanol if they can get a higher price for their sugar-based equivalent.
Talk about perverse. It’s bad enough that we meet our environmental goals not through good old American know-how but by buying it from someone else. Then we turn around and sell them an environmentally inferior equivalent at a cheaper price.
In the process, another round in the food-fuel fight will be won by the fuels, with ethanol demand continuing to put upward pressure on corn prices globally. The FAO-OECD report contains strong warnings on biofuels’ impacts on food prices, and it went to press even before drought parched the U.S. corn belt. They projected stable or slightly declining prices in 2012 and forward. Instead, corn and soybean prices are hitting historic highs and the world is staring down the loaded barrels of the third major spike in commodities prices in the last five years.
Unfortunately, the powers that be seem to have learned nothing from the first two. They certainly haven’t learned that it’s still a bad idea to put food in our cars.
For more, see Wise’s coauthored report, “Resolving the Food Crisis,” and his report for ActionAid, “Biofueling Hunger.”

And beyond the "perverse" influence of the powers behind biofuels, Paul Krugman notes the corrupting influence of Big Oil and Big Coal:

VSPs of Energy: David Roberts has an interesting post about how the “experts” massively underestimated the potential for growth in renewable energy: wind and solar have grown enormously faster than the Very Serious People, energy sector, predicted circa 2000. He links this to the somewhat related tendency of the alleged experts to predict huge costs from efforts at energy conservation, huge costs that keep on not materializing.
Roberts suggests that it’s because conventionally-minded experts aren’t in touch with the potential of technologies that are (a) new and (b) distributed, representing choices by millions of players as opposed to a few big corporations.
Maybe. But I’d place more emphasis on a more cynical view: capture, both crude and subtle, by existing fossil-fuel interests (with nuclear power, another big business venture, somewhat similar).
It should be obvious that Big Oil and Big Coal have a stake in having the public believe that there is no alternative to ever more drilling, digging, and burning. And who employs, funds, and generally shapes the careers of mainstream energy “experts”? Who actually has a seat at the table when international organizations are putting together their scenarios?
It doesn’t have to be raw corruption, although there’s that too. It can instead be a matter of creating a mindset. And a lot of that mindset involves the sense that serious, hard-headed men think in terms of big extractive projects, that solar, wind, and conservation are hippie stuff — a sense that persists even in the teeth of contrary evidence.
The VSPs strike again.

    Posted by on Monday, July 23, 2012 at 09:45 AM in Economics, Environment | Permalink  Comments (23)

          


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