What's Behind the Hype? The Real Deal on Biofuels

Biofuels are the hot topic these days. They have generated excitement for their potential to reduce dependence on fossil fuels, stimulate rural development in the U.S. and open new markets for developing countries. Critics have argued that biofuels production may be energy-inefficient, harms the environment, and will increase food insecurity in the developing world. Here are some biofuels basics, to help you wade through all the conflicting prognoses.

What are biofuels?

     Biofuels are carbon fuels derived from organic matter that is available on a renewable basis. Biofuels can be liquids, gases, or solids, and can come from agricultural crops, trees, wood and wood wastes and residues, grasses, or animal wastes[1]. The major biofuels used today are ethanol, a gasoline alternative, and biodiesel, a diesel alternative.

Are they good for the environment?

That depends on what your environmental priorities are, and how biofuels are produced. Biofuels emit fewer greenhouse gases than traditional fuels, and plants grown to produce biofuels trap CO2 from the atmosphere. Thus, biofuels can help slow or reverse global warming.
    However, biofuels production has led to deforestation in Brazil, Indonesia and Malaysia, as more land is devoted to growing energy crops. Ethanol production also strains water resources, and fertilizer runoff can also cause problems in surrounding communities. Biofuels seem to have the potential to ameliorate climate change and reduce fossil fuel use, but environmental safeguards must be in place to ensure that we do not destroy other natural resources in the process.

Food vs. Fuel?

Biofuels skeptics argue that devoting more farmland to biofuels will decrease the amount of food available and increase food prices. Corn prices, for example, have increased dramatically in the world market as a result of corn-based ethanol production in the U.S. Many poor people in Mexico are now struggling to afford tortillas, a staple of their diet, because prices have doubled in response to corn costs.
    On the flip side, a growing demand for biofuels could open new economic opportunities for poor nations. The tropical climates of many developing countries are better-suited for producing biofuels than the cooler climates of many developed countries, giving the developing countries a comparative advantage in this new market. Furthermore, experiments have proven that trees, shrubs, and grassland plants can produce biofuels on degraded soils. (Read more at: http://www.cedarcreek.umn.edu/.) Perhaps biofuels production need not compete with food production; studies like these show promising results.

What’s happening now with biofuels?

     The U.S.has set a target of 7.5 billion gallons of biofuels in 2012, approximately twice the amount produced domestically in 2006. Both production and imports of biofuels will increase dramatically. The EU recently set a target for 2012 for biofuels to comprise 10% of their fuel market.
    Many developing countries are responding to these potential market opportunities. Malaysia, Thailand, and Indonesiaare producing more palm oil, the Philippines is producing more coconut oil, and India is planting more jatropha (an evergreen plant), all in order to increase biofuel production. Developing countries, however, do not have the same government support and infrastructures in place that developed countries enjoy, and many developed countries maintain trade barriers to protect their own biofuel industries.

Stay Tuned…

     As Congress re-authorizes the Farm Bill this year, biofuels are likely to receive more government support. Many community, however, are protesting proposed ethanol plants because of the environmental repercussions.
    Currently, the World Trade Organization treats most biofuels, with the exception of biodiesel, as agricultural or chemical products. As international trade increases, the WTO may re-classify biofuels as environmental or industrial goods, which would impact the amount of tariffs that governments could impose on biofuels imports.
    Production, consumption, and international trade in biofuels are all increasing. The debate will likely intensify in the coming years as biofuels impact agricultural industries, rural development, and fuel use. The long-term effects are still uncertain, but the discussion will undoubtedly continue.