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What is the real cost of corn ethanol?

Ronald R Cooke, Financial Sense ONline
..Thanks to Federal mandates and subsidies, corn used for the production of corn ethanol is expected to increase from ~ 700 M Bushels in 2000/2001, to 3.2 B bushels in 2007/2008 – an increase of 357 percent. On December 11, 2006, the USDA estimated 2006-2007 U.S. ending stocks would be 935 million bushels, down from 1.97 billion bushels in 2005-2006. That decreases the ending stocks by more than 50 percent and puts the ending stocks to use ratio at 8%, – the lowest in 11 years.

It should be obvious to all, we are going to need a lot more acreage and big yield improvements if corn production is going to keep up to demand. Prices could exceed $4.50 per Bu by the end of 2008. That’s a price increase of 125% over 2005/2006 season prices.
Score one for the agribusiness lobby. ..
(2 Feb 2007)
Some readers may tire of reading about the problems of corn-ethanol in the US, as we’ve certainly run plenty of articles about them. Unfortunately the gross subsidies and their consequences are still increasing, so we must persist. Ron Cooke challenges all the benefits claimed by the industry and makes important points on ‘Who Benefits’ from the current bonanza. -LJ

Making sure it’s worth the candle

Mark Botha, Business Day (South Africa)
…The current promotion of renewable energy sources is prudent. However, government needs to tread carefully to ensure that the desire to develop a renewable energy economy meets the logic of its intended consequences. An illustration of where this can break down can be found in proposals set out by the draft biofuels industrial strategy, released by the minerals and energy department in November last year.

…It looks good on paper, but a deeper level of questioning raises, at the very least, four distinct problems.

…First, critically, the energy efficiency of biofuels is dependent on the feedstock used in the generation of the fuel. Sugar is efficient but maize is questionable. Most optimistically, ethanol fuel produced by maize yields only 30% more energy than is consumed in its production. The most sceptical studies indicate that once all transport costs and other embedded energy is accounted for, the final energy output is actually less than 80% of that used in the production of the fuel.

Second, we need to question how well-suited the South African landscape and climate are for the expanded production of a monocrop agriculture that would result from the strategy. This question is significantly sharpened when one considers the scientific predictions of climate change. While it is true that certain pockets of SA will receive more rainfall in the future, the country will, by and large, get hotter and drier. We have limited water supply resources and commercial agriculture already accounts for 70% of the country’s water usage. Is it responsible to place an added burden on these resources, when other sectors of society and the economy will be thirstier?

We also need to question whether SA has the quantities of deep, fertile soils that are found in subtropical countries such as Brazil, where fervent biofuel industries are ripe with potential. Also, what about the integrity of our ecosystem biomes that have already been so heavily affected by man-made activities? Of prime concern must be SA’s grasslands, which provide vital ecological services such as water retention and filtration. They are already in a precarious situation and would be further damaged by expanded monoculture activity.

Third, the issue of food security needs to be analysed. Yes, the strategy calls for the use of surplus produce, but what about those years when surplus crops are not realised? Such periods could be more frequent in a climate-changed environment, and one wonders what will take precedence – crops for food, or crops for fuel? Ethanol is derived from yellow maize, while South Africans strongly prefer white maize. Which will be the cultivar of choice?

A possible scenario is that the displacement of food crops by biofuel crops will drive inflationary pressures on prices and maize will shift from the top of a person’s food list to the bottom of a rich person’s.

…Lastly, and perhaps most pointedly, the benefits claimed in terms of job creation and the second economy may never materialise. The expansion of agricultural production will be capitalised on by those with means, and will almost certainly need to be highly mechanised to remain competitive.

…It is unwise, however, simply to criticise the draft strategy without providing solutions. So let’s look as some viable alternatives for government to be considering in SA’s search for a secure, clean energy future.

Top of the list in terms of liquid- fuel efficiency are simple demand-side management issues. Another arm of government, the arts, culture, science and technology department, released a technology audit of the transport fuels sector in May 2001, in which it said that the largest energy-saving potential would be found in improved vehicle efficiencies. If only government would listen to itself.

…These measures will be, by far, the cheapest and simplest way to manage our rising fuel demand and greenhouse gas emissions. This does not mean that a biofuel industry must be written off, but rather that we must be clear-headed in our expectations and our intentions of such an industry. It is up to government to ensure that in the decisions we make today, we are not unintentionally creating even greater problems for our children to solve.

Botha is conservation director of the Botanical Society of SA.
(15 Feb 2007)

Corn-based ethanol has fish, wildlife officials worried

Babe Winkelman, The Pilot-Independent (Minnesota)
…Like a growing number of natural resources professionals across the country, [Todd Bogenschutz, upland biologist for the Iowa Department of Natural Resources] is worried about the future of farmland conservation, particularly in an era of corn-based ethanol.

Some are calling it a modern day gold rush, what with ethanol plants sprouting up like weeds across the Great Plains. The problem for conservationists and wildlife officials like Bogenschutz, more corn-based ethanol requires more corn production. And more corn production means far less wildlife habitat – habitat that produces a bounty of pheasants, ducks, songbirds and other wildlife, as well as decreases pollution into our waterways.

…Corn-based ethanol is marketed as a cleaner burning fuel than gasoline, but most policymakers have yet to raise any questions about what its production means to other aspects of the environment.

Like lost wildlife habitat.

Like the consequences of more field erosion – commonplace with corn rotations – and what that means for our rivers and streams and the fish that swim in them; the increased inputs of farm chemicals like atrazine and nitrogen fertilizer sand how they will impact the environment and public health.

What’s certain is that more demand for corn-based ethanol will only increase corn production, and that means farmers will have to plant in environmentally fragile areas – areas that should never see row crops.
(14 Feb 2007)

The Cinderella Plant

Karen Palmer, Newsweek International
Africans used to think jatropha was a worthless bush. Now it may be an important new source of energy.
Jatropha Circas is the Cinderella of the plant world. Throw a seed in the poorest soil on the planet, and up comes a bush that will likely last 50 years. During a drought, jatropha bushes simply drop their leaves and keep pumping out seedpods. Livestock won’t eat it, pests don’t appear to like it. For longer than anybody can remember, Africans used it as living fences meant to keep back the encroaching Sahara and Kalahari deserts. It wasn’t good for much else.

Now this humble bush appears poised to become a global star. In recent years studies have shown that jatropha oil burns with one fifth the carbon emission of fossil fuels, making Africa’s hardscrabble ground a potentially fertile source of energy. Scientists estimate that if even a quarter of the continent’s arable land were plowed into jatropha plantations, output would surpass 20 million barrels a day. That would be good news for Europe, where the thirst for biodiesel is growing.

…So far, however, most ventures are still in the planting and growing stages; at present, the continent is producing almost no jatropha oil. “If we had the finest refinery here today, we still couldn’t operate because there’s no feedstock,” admits Jack Holden, director of Goldstar Biodiesel, a biofuels firm.
(19 Feb 2007)