Sunday, April 29, 2007

Brazilian Ethanol: A Better Biofuel?

In a provacatively titled article, How Biofuels Could Starve the Poor, Ford Runge and Benjamin Senauer argue that the corn ethanol boom might very well empty the larders of the world's poor. Demand created by the ethanol industry has driven corn prices up to over $4 a bushel. In turn, high corn prices are raising the prices of other foodstuffs like chicken and milk. After all, corn is one of the primary inputs into the livestock industry.

While high corn prices might fatten the pockets of corn farmers, poor consumers cannot afford the price hikes. The authors note that 2.7 billion people in the world live on less than $2/day. This means that a small increase in the cost of staple foods may stretch their budgets past the breaking point.

Corn ethanol's effect on the poor adds even more tarnish to its once shiny image. Scientists and academics have debunked almost all of corn ethanol's claims to glory. At first, it was sold as environmentally friendly. However, corn farming comes attendant with all of the environmental harms caused by modern agriculture, such as water pollution and soil erosion. Furthermore, high corn prices create incentives for continuous monocropping, which will increase soil erosion and deplete the soil of nutrients at an acclerated rate. Corn ethanol will not even significantly reduce our carbon dioxide emissions. Scientists at the University of Minnesota estimate that corn ethanol will only reduce emissions by about 12%, if the ethanol is not produced in a coal-fired plant.

Runge and Senauer argue that importing tropical sugar cane ethanol would solve many of these problems. First of all, sugar cane is not a staple food, so price hikes would not decrease the nutrional intake of the world's poor. Furthermore, sugar cane produced on established agricultural lands is far more efficient to produce. Where corn ethanol takes about 7 fossil-fuel intensive steps to produce, sugar cane ethanol only requires 4 or 5. Essentially, refiners can just smoosh the sugar cane, ferment it and distill it. Consequently, production emits far less carbon dioxide. However, when sugar cane is produced on newly cleared lands, the carbon dioxide emissions from destroying vegetation mitigate this advantage.

Brazil produces most of the world's sugar cane ethanol making it the world's largest producer of ethanol along with the United States. Right now 20% of its vehicles are flex fuel and at one time over 50% of its cars ran on E95. Unlike the American corn ethanol industry, the sugar cane ethanol industry is profitable without the monstrous number of subsidies. In order to protect our corn ethanol from Brazilian competition, Congress maintains a $0.51/gallon tax on imported ethanol. Removing this import tax might just take a bite out of the American corn ethanol industry.

So why not remove the import tax and reap the environmental and food security benefits of sugar cane ethanol? It would certainly be politically unpopular. Archer Daniels Midland and the Corn and Soybean lobby would fight it tooth and nail. It would also mean sacrificing the holy grail of current energy policy, energy security. The largest motiviation behind most biofuels policies must be energy security, given the minimial environmental and global warming gains.

As a student of Professor Runge's, I might be biased, but I do not think that energy security is the be-all-end-all that we make it out to be. If Brazil, or another sugar cane growing country, has an absolute advantage in the production of ethanol, why don't we buy it from them and sell them our widgets? I am not glued to the news lately, but I do not think that Brazil is an international security threat to be avoided at all costs.

What I am concerned with is exporting our pollution to other countries and encouraging the clearing of biodiversity-rich rainforests. If an import tax prevents the burning of rainforests maybe it is worth its weight in . . . corn.