The Failure of Bio-Fuel Alternatives, The Abundance of Cheap Fossil Fuels, & Bio-Fuel Harm to Food...

The Failure of Bio-Fuel Alternatives,The Abundance of Cheap Fossil Fuels,

& Bio-Fuel Harm to Food Supply & PriceWhat is to be Done?

The Failure of Bio-Fuel Alternatives,The Abundance of Cheap Fossil Fuels,

& Bio-Fuel Harm to Food Supply & PriceWhat is to be Done?

Thomas W. O’Donnell

The New School University, NYCGraduate International Affairs

-&-Universidad Central de Venezuela, CENDES, Caracas

Ohio State University, Columbus, OH – S2011

AID, New School Panel, 25 March 2011: Food Crisis & Impact on Developing Countries

AID, New School Panel, 25 March 2011: Food Crisis & Impact on Developing Countries

Outline

1. The Failure of Bio-Fuel Alternatives2. The Abundance of Cheap Fossil Fuels 3. Bio-Fuel Harm to Food Supply & Price4. What is to be Done?

History and projections

IEA of OECD

Demand

EIA of U.S. DoE

http://www.eia.doe.gov/neic/speeches/howard070106.pdf

Transport problems


Cifras de 2006

Transport problems


Cifras de 2006

Transport emissions due to petroleum!

Problematic renewable hydrocarbon “alternative"

http://www.iea.org/textbase/country/graphs/weo_2006/gr12.jpg

"Alternativa" de hidrocarburos renovables

1. El etanol – Balance de energía – No celulósicas de maíz– celulósicas de maíz y no consumibles – La caña de azúcar, ejemplo Brasil– Monto de la tierra, elección de la tierra, los precios de los alimentos (geo-

estrategia más tarde)– Costo, las subvenciones– Mínimo impacto en la autosuficiencia (geo-estrategia más tarde) 2. Bio-diesel

http://www.iea.org/textbase/country/graphs/weo_2006/gr12.jpg

Corn Ethanol Production . . .expect to use 27% of ’07 corn crop for nearly 9 bil. gal.

0

1

2

3

4

5

6

7

8

9

10

1980

/01

1983

/04

1986

/07

1989

/90

1992

/93

1995

/96

1998

/99

2001

/02

2004

/05

2007

/08F

Bil

lio

n g

allo

ns

0

5

10

15

20

25

30

Per

cen

t

Ethanol Share of Corn Production

Source: Keith Collins, Chief Economist, USDAEIA Energy Outlook, Modeling, and Data ConferenceMarch 28, 2007

27%

Bush “20 in 10” Proposal

Reduce U.S. gasoline use by 20% in the next 10 years

Path:– Modify CAFÉ– Require 3 billion gallons of renewable

and alternative fuels by 2017

Easy to achieve?

Role of Ethanol and Biodiesel ?

Source: Keith Collins, Chief Economist, USDA

Change in Fuel Use Since 2005 Met by Ethanol/Biodiesel

0

10

20

30

40

50

60

70

80

2006 2008 2010 2012 2014 2016

% S

har

e M

et b

y E

&B

0

0.5

1

1.5

2

2.5

3

3.5

4

Ch

ang

e in

Use

(q

uad

BT

Us)

Source: 2007 EIA Annual Energy Outlook

∆ Total Gas/Distillate Use

∆ E/B use

E/B share of ∆ total fuel use


Projected Corn Ethanol Production… The.

Source: USDA, 2009See notes herein

Energy Independence and Security Act of 2007 ("EISA")

• Renewable Fuel Standard ("RFS") increases bio-fuel production

• Funding encourages production of cellulosic and advanced biofuels.

• EISA signed Dec 07, took effect Jan 09.

• Under the EISA, the RFS will be expanded from the original mandate of – 7.5 billion gallons by 2012 to – 36 billion gallons by 2022– Minimum portions of the mandate must be satisfied by

advanced biofuel, cellulosic biofuel and biodiesel.

Projected Corn Ethanol Production… The.

Source: USDA, 2009See notes herein

USDA Baseline Biofuel Production

0

5

10

15

20

25

30

35

40

2007/08 2009/10 2011/12 2013/14 2015/16

Bil

lio

n g

all

on

s

Ethanol Biodiesel

“20 in 10”

22 billion deficit


Chief Economist

USDA --

ethanol efficiency

improvements

2010 report(2005 & 2008 data)

19810

2000

4000

6000

8000

10000

12000

14000

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

US Corn Ethanol

Production Ethanol

%

Mill

ion

Bush

els

1981$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

US Corn Ethanol

$/bushel %

Pric

e (

$/bu

shel

)

Corn Ethanol Production . . .expect to use 27% of ’07 corn crop for nearly 9 bil. gal.

0

1

2

3

4

5

6

7

8

9

10

1980

/01

1983

/04

1986

/07

1989

/90

1992

/93

1995

/96

1998

/99

2001

/02

2004

/05

2007

/08F

Bil

lio

n g

allo

ns

0

5

10

15

20

25

30

Per

cen

t

Ethanol Share of Corn Production

Comment (TO’D):

9 b gal is 10 days U.S. consumption, but 27% corn acres

Source: Keith Collins, Chief Economist, USDAEIA Energy Outlook, Modeling, and Data ConferenceMarch 28, 2007

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

0

50

100

150

200

250

300US Cereals and bakery products

1982-84 = 100

Retail cost

Farm-to-retail spread

Source: USDASee notes herein

Food and Oil Commodity Prices

Corn

Rice

Wheat

Oil

1980 1986 1991 1996 2003 2011

T. O’Donnell, Ph.D. | [email protected] | TomOD.com

23

Oil Consumption per capita

EIA 2003

Gallons per day

per capita

T. O’Donnell, Ph.D. | [email protected] | TomOD.com

24

Ethanol

Oil Consumption per capita

Gallons per day

per capita

The Failure of Bio-Fuel Alternatives

What sort of “energy independence” can cellulosic corn-based ethanol bring to the U.S.?

• To replace U.S. gas production with ethanol made from corn – the dominant and government-subsidized mode of producing ethanol in the U.S. Consider:

• Use claims from articles in NATURE: Note, the oil consumption of the U.S. is about 21 million barrels per day (21 mbbl/d).

• Hence, two Iowas, totally dedicated to producing corn for ethanol, AND, using not today’s methods of corn-to-ethanol production, but the as-yet not fully developed cellulosic methods, whereby nearly the entire corn plant, not merely the starches and sugars of the corn kernels, was turned to into ethanol, would replace, approximately:

• 1/21 * 100 ~ 5% of U.S. oil demand. Not what one would call “energy independence;” nor would it bode well for the price of corn flakes or Mexican tortillas, etc.

Oil Theories

Source: US DoEHubbert’s ½-depletion peak

Reserves

“An oil transition is not a shift from abundance to scarcity: fossil fuel resources abound. Rather, the oil transition is shift from high quality resources to lower quality resources that have increased risks of environmental damage, as well other risks”. Environ. Res. Lett. 1 (2006) A E Farrell and A R Brandt

Reservas Increasingly uncertain resources

Potential for liquid hydrocarbon production (Gbbl)

To be consumed

Already consumed

“Long Term World Oil Supply: A Resource Base / Production Path Analysis” Energy Information Administration (EIA), DOE, 2000).

http://www.umich.edu/~twod/oil-ns/articles/longterm_usgs_oil_peak_estim_eia2006.pdf

The authors’ note: “EIA presentation on estimates of the world conventional oil resource base and the year when production from it will peak and then begin to decline. A version of this presentation was given by former EIA Administrator Jay Hakes to the April 18, 2000 meeting of the American Association of Petroleum Geologists (AAPG) in New Orleans, Louisiana.”

“U.S. Geological Survey World Petroleum Assessment 2000 – Description and Results” “Chapter ES” (i.e., “Executive Summary”): http://energy.cr.usgs.gov/WEcont/chaps/ES.pdf

The USGS 2000 report referred to, and used in, the above EIA report: http://pubs.usgs.gov/dds/dds-060/ and often referred to very negatively by adherents of the Peak Oil school.

References




http://energy.cr.usgs.gov/WEcont/chaps/ES.pdf

http://pubs.usgs.gov/dds/dds-060/

The problem of transportation

Efficiency = 1 x 2 x 3 x 4 x …

Masstransport vans, busses,trains, metros

Batteries

Petroleum CoalNaturalGas Water NuclearBio-

combustibles

Refinery Liquefy Hydroelectric Thermoelectric

Solar y wind

Individual:Automobiles, motorcycles, light trucks

Internal combustion Hydrogen cell

Mass transport: Vans, busses,trains, metros

Hydrogen

Ethanol & Diesel

3-4323-4

Transmission3

Electric motors

Electric motor

95%

FrictionFriction Friction

There are no “alternative fuels” able to transform today’s transport system in accord with:

- Environment - Agriculture - Information revolution economy - Congestion & sprawl - Social justice

What To Do?

- Transform transportation itself not its fuel This need not be a ‘utopian’ program

References

5. Conclusions

Projected Corn Ethanol Production… expect 12 bil. gal. in 2016/17– 30% of corn crop

0

2

4

6

8

10

12

14

Bill

ion

gallo

ns


Projected Soy Biodiesel Production… expect 700 mil. gal. in 2016/17 – 23% of soyoil production

0

100

200

300

400

500

600

700

800

2000/01 2003/04 2006/07 2009/10 2012/13 2015/16

Mill

ion

gallo

nsNota


The Failure of Bio-Fuel Alternatives, The Abundance of Cheap Fossil Fuels, & Bio-Fuel Harm to Food...

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