Less than a decade ago, biofuels were set to take the energy world by storm. They promised a low-carbon alternative to gasoline, while advances in algae technology were taking biofuels beyond the traditional soybeans and corn. In 2015, the contrast could not be starker.
The new frontier of biofuel technology has all but disappeared off the energy agenda, while opposition to traditional biofuels has only grown. The overarching question now is whether biofuels have a place in a sustainable energy future and what role should they play?
The debate over the negative impact of ethanol and soybean-based biodiesel is not a new one. But in an era in which environmental groups are increasingly savvy and the concerns over the economic and environmental implications of climate change are increasing, opponents have a strong case to make. Of course, as with many polemic discussions, the reality is far more nuanced than what we are often led to believe. Related: How Much Water Does The Energy Sector Use?
In the US, the debate has centered on corn and its refined form, ethanol. According to one estimate, ethanol accounts for 40% of corn production in the United States. In 2014 this translated into over 14 billion gallons over the course of the year. This staggering figure has far reaching implications for corn prices and agricultural practices. The requirement that gasoline be blended with 10% ethanol, and the hefty subsidies the industry has received over the years have kept the sector afloat.
Opponents come in many shapes. There are those who would prefer to see arable land in the United States put towards producing food, rather than fuel.
Other groups object to the conversion of undisturbed grasslands into croplands and the environmental hazards that come with large-scale agriculture, including fertilizer runoff, which they argue pollutes adjacent land and water supplies.
Land clearing for biofuel production, detractors further argue, creates a carbon imbalance as the benefits lost from forests or grasslands are not balanced by the benefits of biofuels. The ‘carbon debt’ argument is a strong one, particularly in light of global efforts to reduce carbon emissions and mitigate the devastating impact of climate change.
Further concerns include the loss of biodiversity, soil erosion, the impact on native fauna as habitats change, among others.
Both the 2014 Farm Bill and US Renewable Fuel Standards include incentives to save existing grassland areas but their range is limited. Related: U.S. Seizes On Venezuelan Weakness To Regain Caribbean Energy Foothold
This is not a problem unique to the United States. In the Western Hemisphere, both Brazil and Argentina are major biofuels producers, and each has dealt with its own tribulations.
Brazil is the world’s second largest ethanol producer after the United States, producing close to 7 billion gallons of sugarcane ethanol in 2014. Like the United States, Brazil’s ethanol industry has been bolstered by national fuel mandates and subsidies. Brazil also produces around 920 million gallons of biodiesel from soybean, cottonseed, and animal tallow.
Argentina has focused its efforts on biodiesel production from soybeans, largely for export. Of the 740 million gallons of biodiesel produced in 2014, around 450 million gallons were for export. Argentina once exported the majority of its biodiesel to Europe, however, a litany of trade disputes with both the European Commission and individual countries has left the nation scrambling for other trade partners, including Australia, Peru, and now, controversially, the US. Efforts to boost domestic production and increase the diesel blending mandate to 10% are absorbing some of the slack.
Challenges in South America are not too distant from those affecting the United States. There is a significant international lobby against Brazil’s expansion of agriculture in Amazon areas. There are concerns not just for the fragile biodiversity of the forests but also the people living in them, in particular groups in voluntary isolation. Argentina has faced similar opposition to deforestation to make way for soybean crops. Related: Shell Betting Its Future On LNG
The underlying question is much bigger than each of these examples demonstrates. Without a doubt, the biofuels sector in its current form is unsustainable. Whether policymakers should continue to prop up the industry is questionable.
That said, biofuels will and should continue to play a role in our energy matrix going forward. But our future may not be fueled by soybeans and corn.
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Decision makers across the hemisphere would do well to revert their attention to some of the emerging technologies that have the potential to fulfill many of the promises of biofuels without the detractions of land-clearing, industrial agriculture, and misguided subsidies distorting the market. Of course, most new technologies are a long way from reaching commercial production or economic viability. These efforts are deserving of policy incentives or at the very least further consideration.
Non-traditional biofuels may not have become the panacea many had hoped for but they have a role to play in a diversified energy matrix and innovation should not be discouraged.
By Alexis Arthur for Oilprice.com
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