Saturday, April 05, 2008

The Biofuel Scam

When Time Magazine starts discussing the current incarnation of the Biofuel Revolution as a scam you know it is all over for another Greenie Fantasy. What is the essence of the fantasy? That by getting Congress to pass laws the laws of supply and demand can be repealed.

From his Cessna a mile above the southern Amazon, John Carter looks down on the destruction of the world's greatest ecological jewel. He watches men converting rain forest into cattle pastures and soybean fields with bulldozers and chains. He sees fires wiping out such gigantic swaths of jungle that scientists now debate the "savannization" of the Amazon. Brazil just announced that deforestation is on track to double this year; Carter, a Texas cowboy with all the subtlety of a chainsaw, says it's going to get worse fast. "It gives me goose bumps," says Carter, who founded a nonprofit to promote sustainable ranching on the Amazon frontier. "It's like witnessing a rape."
And what is driving this bungle in the jungle? It looks like the heros of the left are out to reap windfall profits in cahoots with corporations just trying to make a buck from Government mandates.
This land rush is being accelerated by an unlikely source: biofuels. An explosion in demand for farm-grown fuels has raised global crop prices to record highs, which is spurring a dramatic expansion of Brazilian agriculture, which is invading the Amazon at an increasingly alarming rate.

Propelled by mounting anxieties over soaring oil costs and climate change, biofuels have become the vanguard of the green-tech revolution, the trendy way for politicians and corporations to show they're serious about finding alternative sources of energy and in the process slowing global warming. The U.S. quintupled its production of ethanol--ethyl alcohol, a fuel distilled from plant matter--in the past decade, and Washington has just mandated another fivefold increase in renewable fuels over the next decade. Europe has similarly aggressive biofuel mandates and subsidies, and Brazil's filling stations no longer even offer plain gasoline. Worldwide investment in biofuels rose from $5 billion in 1995 to $38 billion in 2005 and is expected to top $100 billion by 2010, thanks to investors like Richard Branson and George Soros, GE and BP, Ford and Shell, Cargill and the Carlyle Group.
So a lefty mega hero is in the thick of this? Why am I not surprised? He promotes socialism by stealing food out of the mouths of hungry children. But you know. He only has their best interests at heart.
But several new studies show the biofuel boom is doing exactly the opposite of what its proponents intended: it's dramatically accelerating global warming, imperiling the planet in the name of saving it. Corn ethanol, always environmentally suspect, turns out to be environmentally disastrous. Even cellulosic ethanol made from switchgrass, which has been promoted by eco-activists and eco-investors as well as by President Bush as the fuel of the future, looks less green than oil-derived gasoline.

Meanwhile, by diverting grain and oilseed crops from dinner plates to fuel tanks, biofuels are jacking up world food prices and endangering the hungry. The grain it takes to fill an SUV tank with ethanol could feed a person for a year. Harvests are being plucked to fuel our cars instead of ourselves.
What a brilliant idea.

And did I hear that right? The oil companies are going to save the planet? From Time Magazine? Say it isn't so. Please. Next thing you know they will be touting the benefits of nuclear power. What is the world coming to? The Green religion is turning out to be a false god? Who could have predicted it? Believers are going to be devastated.
Biofuels do slightly reduce dependence on imported oil, and the ethanol boom has created rural jobs while enriching some farmers and agribusinesses. But the basic problem with most biofuels is amazingly simple, given that researchers have ignored it until now: using land to grow fuel leads to the destruction of forests, wetlands and grasslands that store enormous amounts of carbon.
The Law of Unintended Consequences strikes again. Because in the real world (where is that?) you can't just do one thing. It is all connected. Slow changes based on real economics and not government subsidies and mandates we can adapt to. Changes forced at the point of a (government) gun don't work nearly as well.
In Brazil, for instance, only a tiny portion of the Amazon is being torn down to grow the sugarcane that fuels most Brazilian cars. More deforestation results from a chain reaction so vast it's subtle: U.S. farmers are selling one-fifth of their corn to ethanol production, so U.S. soybean farmers are switching to corn, so Brazilian soybean farmers are expanding into cattle pastures, so Brazilian cattlemen are displaced to the Amazon. It's the remorseless economics of commodities markets. "The price of soybeans goes up," laments Sandro Menezes, a biologist with Conservation International in Brazil, "and the forest comes down."
Now who could have predicted that? Certainly not the socialists/communist who think a command and control economy can work better than individuals responding to real price signals. Hayek in his book The Road to Serfdom predicted this over 60 years ago. Not this exact crisis but, the general outlines of why command and control doesn't work.
The growing backlash against biofuels is a product of the law of unintended consequences. It may seem obvious now that when biofuels increase demand for crops, prices will rise and farms will expand into nature. But biofuel technology began on a small scale, and grain surpluses were common. Any ripples were inconsequential. When the scale becomes global, the outcome is entirely different, which is causing cheerleaders for biofuels to recalibrate. "We're all looking at the numbers in an entirely new way," says the Natural Resources Defense Council's Nathanael Greene, whose optimistic "Growing Energy" report in 2004 helped galvanize support for biofuels among green groups.

Several of the most widely cited experts on the environmental benefits of biofuels are warning about the environmental costs now that they've recognized the deforestation effect. "The situation is a lot more challenging than a lot of us thought," says University of California, Berkeley, professor Alexander Farrell, whose 2006 Science article calculating the emissions reductions of various ethanols used to be considered the definitive analysis.
My guess is that because he was a believer he cooked the books and ignored side effects. But that is the problem with command and control. No government or "smarter than the market" fool can predict all the ramifications of a policy. Despite what policy makers tell you.

Well Time goes on for pages more but let me leave you with the next stupid idea they are promoting.
The experts haven't given up on biofuels; they're calling for better biofuels that won't trigger massive carbon releases by displacing wildland. Robert Watson, the top scientist at the U.K.'s Department for the Environment, recently warned that mandating more biofuel usage--as the European Union is proposing--would be "insane" if it increases greenhouse gases. But the forces that biofuels have unleashed--political, economic, social--may now be too powerful to constrain.
Yeah. That is the ticket. Mandate something different. Which we have not got.

Why not just end the mandates and let the natural evolution of technology and the market handle the change? Not going to happen. Why? The elitists do not trust the market or the people to make the "right" decisions. It would be a joke if people weren't going hungry because of socialist stupidity.

The fall of the Soviet Union has taught these idiots nothing. You can just hear the voices in their head. "We are smarter than the stupid Soviets. We have Degrees from Harvard."

Which of the Presidential candidates had their fingers in this pie? See The Politics of Biofuels.

Thanks to Just One Minute for the link.

Cross Posted at Classical Values


Headless Blogger said...

Great piece. Thanks for posting it. This line was the real eye opener for me:

"The grain it takes to fill an SUV tank with ethanol could feed a person for a year."

I'm thinking 'Aw shucks, that can't be true.' So I did the math and determine that it takes about one ton of corn to fill an SUV one time. That is obscene.

M. Simon said...

I have read that in Seattle that gas stations are advertising "no ethanol".

BTW Seattle is a hard core Green enclave.

Headless Blogger said...

M. - Closer to home than you may know, the same thing is happening in Madison. I try to only buy Shell Gas when there.

LarryD said...

"they're calling for better biofuels that won't trigger massive carbon releases by displacing wildland."

That criteria pretty much reduces it down to algae. "Bio-waste" isn't massive enough. And how is algae ever going to be scaled up big enough to make a contribution to our fuel supply? There are some "dead zones" (low oxygen level water) off of the Texas coast and in the Gulf of Mexico. Set up containment booms, seed with algae and harvest. Long term it would help rehabilitate the areas. But what happens when a storm hits?

Mitch H. said...

Yeah, the amount-of-grain-to-fill-a-gas-tank-with-ethanol thing is only valid if people were eating field corn. Which they aren't, by and large. The main consumer of the field corn which is getting displaced by ethanol corn is the cattle industry. Which means that there's a lot more corn going into your hamburger than you'd eat if somebody had just milled it into, oh, I don't know, cornbread. The other big consumer is the various processed-food producers who use corn syrup.

Anyways, the South American investment in soybean cultivation goes back before the current biofuel boom. It was a big thing back in 2001, 2002. Heard of soybean rust? It was enabled by said soy boom, as it made its way through the soy-growing farm belts, jumped the Carribean, and made itself at home in the American South. That was a couple of years ago. South American Big Soy is not the product of biofuel agriculture.

The high cost of beef due to higher costs of American beef production as a result of more expensive corn? That might be valid, but the cattle ranchers have been eating away at the Amazon since I was in grade school, and they'll probably be still eating away at it when I keel over and die. It's hard to keep landhungry ranchers from claiming land which doesn't obviously belong to someone with the wherewithal to protect it from, well, greedy people like them.

LarryD said...

Mitch, I think you're overlooking displacement effects. Corn for ethanol brings a higher price than corn for food (including feed uses) so corn production switches until food corn price rises to compete. Just like the farmers who are switching from soybeans to corn.

M. Simon said...


Thanks. Static analysis never works. And non-static analysis is very hard. Too many factors. Which is why command and control economies perform poorly. They can't adjust fast enough to respond to all the factors. Many of which are unknown.