"Today, more than ever, we need political leaders who can see the big picture, who understand the relationship between the economy and its environmental support systems." –Lester R. Brown, Plan B 3.0: Mobilizing to Save Civilization
Chapter 4. Food or Fuel?
At the time of the Arab oil export embargo in the 1970s, the importing countries were beginning to ask themselves if there were alternatives to oil. In a number of countries, particularly the United States, several in Europe, and Brazil, the idea of growing crops to produce fuel for cars was appealing. The modern biofuels industry was launched. 1
This was the beginning of what would become one of the great tragedies of history. Brazil was able to create a thriving fuel ethanol program based on sugarcane, a tropical plant. Unfortunately for the rest of the world, however, in the United States the feedstock was corn. Between 1980 and 2005, the amount of grain used to produce fuel ethanol in the United States gradually expanded from 1 million to 41 million tons. 2
Then came Hurricane Katrina, which disrupted Gulf-based oil refineries and gasoline supply lines in late August 2005. As gasoline prices in the United States quickly climbed to $3 a gallon, the conversion of a $2 bushel of corn, which can be distilled into 2.8 gallons of ethanol, became highly profitable. 3
The result was a rush to raise capital and build distilleries. From November 2005 through June 2006, ground was broken for a new ethanol plant in the United States every nine days. From July through September, the construction pace accelerated to one every five days. And in October 2006, it was one every three days. 4
Between 2005 and 2011, the grain used to produce fuel for cars climbed from 41 million to 127 million tons—nearly a third of the U.S. grain harvest. (See Figure 4–1.) The United States is trying to replace oil fields with corn fields to meet part of its automotive fuel needs. 5
The massive diversion of grain to fuel cars has helped drive up food prices, leaving low-income consumers everywhere to suffer some of the most severe food price inflation in history. As of mid-2012, world wheat, corn, and soybean prices were roughly double their historical levels. 6
The appetite for grain to fuel cars is seemingly insatiable. The grain required to fill a 25-gallon fuel tank of a sport utility vehicle with ethanol just once would feed one person for a whole year. The grain turned into ethanol in the United States in 2011 could have fed, at average world consumption levels, some 400 million people. But even if the entire U.S. grain harvest were turned into ethanol, it would only satisfy 18 percent of current gasoline demand. 7
With its enormous growth in distilling capacity, the United States quickly overtook Brazil to become the new world leader in biofuels. In 2011, the United States produced 14 billion gallons of ethanol and Brazil produced under 6 billion gallons; together they accounted for 87 percent of world output. The 14 billion gallons of U.S. grain-based ethanol met roughly 6 percent of U.S. gasoline demand. Other countries producing ethanol from food crops, though in relatively small amounts, include China, Canada, France, and Germany. 8
Most ethanol production growth has been concentrated in the last several years. In 1980, the world produced scarcely 1 billion gallons of fuel ethanol. By 2000, the figure was 4.5 billion gallons. It was still increasing, albeit slowly, expanding to 8.2 billion gallons in 2005. But between then and 2011, production jumped to 23 billion gallons. 9
A number of countries, including the United States, are also producing biodiesel from oil-bearing crops. World biodiesel production grew from a mere 3 million gallons in 1991 to just under 1 billion gallons in 2005. During the next six years it jumped to nearly 6 billion gallons, increasing sixfold. Still, worldwide production of biodiesel is less than one fourth that of ethanol. 10
The production of biodiesel is much more evenly distributed among countries than that of ethanol. The top five producers are the United States, Germany, Argentina, Brazil, and France, with production ranging from 840 million gallons per year in the United States to 420 million gallons in France. 11
A variety of crops can be used to produce biodiesel. In Europe, where sunflower seed oil, palm oil, and rapeseed oil are leading table oils, rapeseed is used most often for biodiesel. Similarly, in the United States the soybean is the leading table oil and biodiesel feedstock. Elsewhere, palm oil is widely used both for food and to produce biodiesel. 12
Although production from oil palms is limited to tropical and subtropical regions, the crop yields much more biodiesel per acre than do temperate-zone oilseeds such as soybeans and rapeseed. However, one disturbing consequence of rising biofuel production is that new oil palm plantations are coming at the expense of tropical forests. And any land that is devoted to producing biofuel crops is not available to produce food. 13
Not only are biofuels helping raise food prices, and thus increasing the number of hungry people, most make little sense from an energy efficiency perspective. Although ethanol can be produced from any plant, it is much more efficient and much less costly to use sugar- and starch-bearing crops. But even among these crops the efficiency varies widely. The ethanol yield per acre from sugarcane is nearly 600 gallons, a third higher than that from corn. This is partly because sugarcane is grown in tropical and subtropical regions and it grows year-round. Corn, in contrast, has a growing season of 120 days or so. 14
In terms of energy efficiency, grain-based ethanol is a clear loser. For sugarcane, the energy yield—that is, the energy embodied in the ethanol—can be up to eight times the energy invested in producing the biofuel. In contrast, the energy return on energy invested in producing corn-based ethanol is only roughly 1.5 to 1, a dismal return. 15
For biodiesel, oil palm is far and away the most energy-efficient crop, yielding roughly nine times as much energy as is invested in producing biodiesel from it. The energy return for biodiesel produced from soybeans and rapeseed is about 2.5 to 1. In terms of land productivity, an acre of oil palms can produce over 500 gallons of fuel per year—more than six times that produced from soybeans or rapeseed. Growing even the most productive fuel crops, however, still means either diverting land from other crops or clearing more land. 16
The capacity to convert enormous volumes of grain into fuel means that the price of grain is now more closely tied to the price of oil than ever before. If the price of fuel from grain drops below that from oil, then investment in converting grain into fuel will increase. Thus, if the price of oil were to reach, say, $200 a barrel, there would likely be an enormous additional investment in ethanol distilleries to convert grain into fuel. If the price of corn rises high enough, however, as it may well do, distilling grain to produce fuel may no longer be profitable.
One of the consequences of integrating the world food and fuel economies is that the owners of the world’s 1 billion motor vehicles are pitted against the world’s poorest people in competition for grain. The winner of this competition will depend heavily on income levels. Whereas the average motorist has an annual income over $30,000, the incomes of the 2 billion poorest people in the world are well under $2,000. 17
Rising food prices can quickly translate into social unrest. As grain prices were doubling from 2007 to mid-2008, food protests and riots broke out in many countries. Economic stresses in the form of rising food prices are translating into political stresses, putting governments in some countries under unmanageable pressures. The U.S. State Department reports food unrest in some 60 countries between 2007 and 2009. Among these were Afghanistan, Yemen, Ethiopia, Somalia, Sudan, the Democratic Republic of the Congo, and Haiti. 18
International food assistance programs are also hit hard by rising grain prices. Since the budgets of food aid agencies are set well in advance, a rise in prices shrinks food assistance precisely when more help is needed. The U.N. World Food Programme, which supplies emergency food aid to more than 60 countries, has to cut shipments as prices soar. Meanwhile, over 7,000 children are dying each day from hunger and related illnesses. 19
When governments subsidize food-based biofuel production, they are in effect spending taxpayers’ money to raise costs at the supermarket checkout counter. In the United States, the production of fuel ethanol was encouraged by a tax credit granted to fuel blenders for each gallon of ethanol they blended with gasoline. This tax credit expired at the end of 2011. 20
Still in place, however, is the Renewable Fuel Standard, which is seen by the U.S. Department of Agriculture as part of a strategy to “help recharge the rural American economy.” This mandate requires that biofuel use ramp up to 36 billion gallons annually by 2022. Of this total, 16 billion gallons are slated to come from cellulosic feedstocks, such as cornstalks, grass, or wood chips. 21
Yet for the foreseeable future, production of those cellulose-based fuels has little chance of reaching such levels. Producing ethanol from sugars or starches like corn or sugarcane is a one-step process that converts the feedstock to ethanol. But producing ethanol from cellulosic materials is a two-step process: first the material must be broken down into sugar or starch, and then it is converted into ethanol. Furthermore, cellulosic feedstocks like corn stalks are much bulkier than feedstocks like corn kernels, so transporting them from distant fields to a distillery is much more costly. Removing agricultural residues such as corn stalks or wheat straw from the field to produce ethanol deprives the soil of needed organic matter. 22
The unfortunate reality is that the road to this ambitious cellulosic biofuel goal is littered with bankrupt firms that tried and failed to develop a process that would produce an economically viable fuel. Despite having the advantage of not being directly part of the food supply, cellulosic ethanol has strong intrinsic characteristics that put it at a basic disadvantage compared with grain ethanol, so it may never become economically viable. 23
The mandate from the European Union (EU) requiring that 10 percent of its transportation energy come from renewable sources, principally biofuels, by 2020 is similarly ambitious. Among international agribusiness firms, this is seen as a reason to acquire land, mostly in Africa, on which to produce fuel for export to Europe. Since Europe relies primarily on diesel fuel for its cars, the investors are looking at crops such as the oil palm and jatropha, a relatively low-yielding oil-bearing shrub, as a source of diesel fuel. 24
There is growing opposition to this EU goal from environmental groups, the European Environment Agency, and many other stakeholders. They object to the deforestation and the displacement of the poor that often results from such “land grabbing.” (See Chapter 10.) They are also concerned that, by and large, biofuels do not deliver the promised climate benefits. 25
The biofuel industry and its proponents have argued that greenhouse gas emissions from biofuels are lower than those from gasoline, but this has been challenged by a number of scientific studies. Indeed, there is growing evidence that biofuel production may contribute to global warming rather than ameliorate it. A study led by Nobel prize–winning chemist Paul Crutzen at the Max Planck Institute for Chemistry in Germany reports that the nitrogen fertilizers used to produce biofuel crops release “nitrous oxide emissions large enough to cause climate warming instead of cooling.” 26
A report from Rice University that carefully examined the greenhouse gas emissions question concluded that “it is uncertain whether existing biofuels production provides any beneficial improvement over traditional gasoline, after taking into account land use changes and emissions of nitrous oxide. Legislation giving biofuels preferences on the basis of greenhouse gas benefits should be avoided.” The U.S. National Academy of Sciences also voiced concern about biofuel production’s negative effects on soils, water, and the climate. 27
There is some good news on the issue of food or fuel. An April 2012 industry report notes that “the world ethanol engine continues to sputter.” U.S. ethanol production likely peaked in 2011 and is projected to drop 2 percent in 2012. An even greater decline in U.S. ethanol production is likely in 2013 as oil prices weaken and as heat and drought in the U.S. Midwest drive corn prices upward. For many distillers, the profit margin disappeared in 2012. In early July 2012, Valero Energy Corporation, an oil company and major ethanol producer, reported it was idling the second of its 10 ethanol distilleries. Numerous other distilleries are on the verge of shutting down. 28
If the ethanol mandate were phased out, U.S. distillers would have even less confidence in the future marketability of ethanol. In a world of widely fluctuating oil and grain prices, ethanol production would not always be profitable.
Beyond this, the use of automotive fuel in the United States, which peaked in 2007, fell 11 percent by 2012. Young people living in cities are simply not as car-oriented as their parents were. They are not part of the car culture. This helps explain why the size of the U.S. motor vehicle fleet, after climbing for a century, peaked at 250 million in 2008. It now appears that the fleet size will continue to shrink through this decade. 29
In addition, the introduction of more stringent U.S. auto fuel-efficiency standards means that gasoline use by new cars sold in 2025 will be half that of new cars sold in 2010. As older, less efficient cars are retired and fuel use declines, the demand for grain-based ethanol for blending will also decline. 30
Within the automobile sector, a major move to plug-in hybrids and all-electric cars will further reduce the use of gasoline. If this shift is accompanied by investment in thousands of wind farms to feed cheap electricity into the grid, then cars could run largely on electricity for the equivalent cost of 80¢ per gallon of gasoline. 31
There is also a growing public preference for walking, biking, and using public transportation wherever possible. This reduces not only the demand for cars and gasoline but also the paving of land for roads and parking lots. 32
Whether viewed from an environmental or an economic vantage point, we would all benefit by shifting from liquid fuels to electrically driven vehicles. Using electricity from wind farms, solar cells, or geothermal power plants to power cars will dramatically reduce carbon emissions. We now have both the electricity-generating technologies and the automotive technologies to create a clean, carbon-free transportation system, one that does not rely on either the use of oil or the conversion of food crops into fuel. 33
1. Lester R. Brown, Food or Fuel: New Competition for the World’s Cropland, Worldwatch Paper 35 (Washington, DC: Worldwatch Institute, March 1980); Constanza Valdes, Brazil’s Ethanol Industry: Looking Forward (Washington, DC: U.S. Department of Agriculture (USDA), June 2011).
2. Valdes, op. cit. note 1; U.S. use of corn for ethanol production from USDA, Feed Grains Database, electronic database, at www.ers.usda.gov/data-products/feed-grains-database.aspx, downloaded 5 June 2012.
3. U.S. Department of Energy (DOE), Energy Information Administration (EIA), “U.S. All Grades All Formulations Retail Gasoline Prices,” at www.eia.gov/petroleum/data.cfm#prices, viewed 6 June 2012; International Monetary Fund (IMF), “IMF Primary Commodity Prices,” at www.imf.org/external/np/res/commod/index.aspx, updated 6 July 2012; Chicago Board of Trade futures data from TradingCharts.com, Inc., “Oilseed & Grain Futures/Commodities Charts/Quotes,” at futures.tradingcharts.com/grains_oilseeds.html, viewed 11 June 2012; conversion of corn to ethanol from Renewable Fuels Association (RFA), “Ethanol Facts: Agriculture,” at ethanolrfa.org/pages/ethanol-facts-agriculture, updated March 2012.
4. Pace of ethanol plant construction from Lester R. Brown, “Exploding U.S. Grain Demand for Automotive Fuel Threatens World Food Security and Political Stability,” Plan B Update (Washington, DC: Earth Policy Institute, 3 November 2006).
5. Figure 4–1 from USDA, Production, Supply, and Distribution, electronic database, at www.fas.usda.gov/psdonline, updated 12 June 2012; USDA, op. cit. note 2.
6. IMF, op. cit. note 3; Chicago Board of Trade, op. cit. note 3.
7. Grain required to fill an SUV tank calculated from corn to ethanol conversion from RFA, op. cit. note 3, and minimum consumption level for survival from World Food Programme (WFP) and United Nations High Commissioner for Refugees, WFP/UNHCR Guidelines for Estimating Food and Nutritional Needs in Emergencies (Rome: 1997); potential ethanol production from entire U.S. grain harvest calculated using data from USDA, op. cit. note 5; U.S. gasoline consumption from DOE, EIA, Annual Energy Outlook 2012 Early Release (Washington, DC: February 2012), and from energy conversion factor from Oak Ridge National Laboratory, “Bioenergy Conversion Factors,” at bioenergy.ornl.gov/papers/misc/energy_conv.html, viewed 12 June 2012; number of people who could be fed calculated from USDA, op. cit. note 2, and from U.N. Population Division, World Population Prospects: The 2010 Revision, electronic database, at esa.un.org/unpd/wpp/index.htm, updated 3 May 2011. Because the total grain consumption includes industrial use and seed, this is thought to be a conservative estimate.
8. Ethanol production from F.O. Licht, World Ethanol and Biofuels Report, vol. 10, no. 16 (24 April 2012), p. 323; share of gasoline demand from DOE, op. cit. note 7, with energy conversion factor from Oak Ridge National Laboratory, op. cit. note 7.
9. F.O. Licht, World Ethanol and Biofuels Report, vol. 6, no. 4 (23 October 2007), p. 63; F.O. Licht, World Ethanol and Biofuels Report, vol. 7, no. 18 (26 May 2009), p. 3; F.O. Licht, op. cit. note 8.
10. Biodiesel production data from F.O. Licht, cited in Suzanne Hunt and Peter Stair, “Biofuels Hit a Gusher,” Vital Signs 2006–2007 (Washington, DC: Worldwatch Institute, 2006), pp. 40–41; F.O. Licht, World Ethanol and Biofuels Report, vol. 7, no. 2 (23 September 2008), p. 29; F.O. Licht, World Ethanol and Biofuels Report, vol. 10, no. 14 (27 March 2012), p. 281; ethanol quantity from F.O. Licht, op. cit. note 8.
11. F.O. Licht, 27 March 2012, op. cit. note 10, p. 281.
12. Table oils from USDA, op. cit. note 5; Bob Flach et al., EU-27 Annual Biofuels Report (Washington, DC: USDA, 2011); European feedstocks from “Biofuel Blending Targets and Production in Selected Countries,” in Keith L. Kline et al., Biofuel Feedstock Assessment For Selected Countries (Oak Ridge, TN: Oak Ridge National Laboratory, February 2008); U.S. feedstocks from DOE, EIA, Monthly Biodiesel Production Report (Washington, DC: 5 June 2012).
13. Yields per acre from D. J. Connor and C. G. Hernandez, “Crops for Biofuel: Current Status and Prospects for the Future,” in R. W. Howarth and S. Bringezu, eds., Biofuels: Environmental Consequences and Interactions with Changing Land Use (Ithaca, NY: Scientific Committee on Problems of the Environment, Cornell University, 2009), p. 68, and from U.N. Food and Agriculture Organization (FAO), The State of Food and Agriculture 2008 (Rome: 2008), pp. 16, 57.
14. Yields per acre from FAO, op. cit. note 13, p. 16.
15. Net energy ratios from Connor and Hernandez, op. cit. note 13, p. 70.
16. Ibid.; gallons per acre from FAO, op. cit. note 13, p. 16.
17. Number of automobiles from Ward’s Automotive Group, World Motor Vehicle Data 2011 (Southfield, MI: 2011); global income distribution based on Isabel Ortiz and Matthew Cummins, Global Inequality: Beyond the Bottom Billion – A Rapid Review of Income Distribution in 141 Countries (New York: UNICEF, 2011), with gross domestic product from World Bank, World DataBank, electronic database, at databank.worldbank.org, downloaded 11 June 2012, and world population from op. cit. note 7.
18. Hillary Rodham Clinton, “Remarks at the Clinton Global Initiative Closing Plenary,” speech, 25 September 2009; IMF, op. cit. note 3; Chicago Board of Trade, op. cit. note 3; examples of unrest from Lester R. Brown, “World Facing Huge New Challenge on Food Front: Business-as-Usual Not a Viable Option,” Plan B Update (Washington, DC: Earth Policy Institute, 16 April 2008), and from Thomas L. Friedman, “The Other Arab Spring,” New York Times, 7 April 2012.
19. Celia W. Dugger, “As Prices Soar, U.S. Food Aid Buys Less,” New York Times, 29 September 2007; number of child deaths from malnutrition from Save the Children, A Life Free from Hunger: Tackling Child Malnutrition (London: 2012), p. iv; countries where the WFP supplies food aid include both Emergency Operations and Protracted Relief and Recovery Operations from WFP, “Operations,” at www.wfp.org/operations, viewed 12 June 2012.
20. Doug Koplow, A Boon to Bad Biofuels: Federal Tax Credits and Mandates Underwrite Environmental Damage at Taxpayer Expense (Cambridge, MA: Earth Track and Friends of the Earth, 2009); Susan Reidy, “Biofuels Industry Post-Tax Breaks,” Biofuels Business Quarterly, 20 March 2012.
21. U.S. Environmental Protection Agency (EPA), "EPA Finalizes Regulations for the National Renewable Fuel Standard Program for 2010 and Beyond,” regulatory announcement (Washington, DC: February 2010); USDA, A USDA Regional Roadmap to Meeting the Biofuels Goals of the Renewable Fuels Standard by 2022, Strategic Production Report (Washington, DC: 23 June 2010).
22. David Biello, “The False Promise of Biofuels,” Scientific American, vol. 305, no. 2 (August 2011), pp. 59–65; Robert Wisner, “Cellulosic Ethanol: Will the Mandates be Met?” Ag Marketing Resource Center Energy Newsletter, University of Iowa, September 2009.
23. Mario Parker, “Range Fuels Cellulosic Ethanol Plant Fails, U.S. Pulls Plug,” Bloomberg, 2 December 2011; Robert F. Service, “Is There a Road Ahead for Cellulosic Ethanol?” Science, vol. 329, no. 5,993 (13 August 2010), pp. 784-85; F.O. Licht, World Ethanol and Biofuels Report, various issues.
24. European Commission, “Biofuels and Other Renewable Energy in the Transport Sector,” at ec.europa.eu/energy/renewables/biofuels/biofuels_en.htm, viewed 19 June 2012; land acquisitions for biofuel production from George C. Schoneveld, The Anatomy of Large-scale Farmland Acquisitions in Sub-Saharan Africa, Working Paper 85 (Bogor, Indonesia: Center for International Forestry Research, 2011), pp. 1, 7–9; jatropha as a biofuel from Promode Kant and Shuirong Wu, “The Extraordinary Collapse of Jatropha as a Global Biofuel,” Environmental Science & Technology, vol. 45 (August 2011), pp. 7,114–15.
25. Opposition to biofuels in Barbara Lewis, “EU Energy Chief Against Higher Biofuel Target for Now,” Reuters, 7 February 2012, from Greenpeace, “Fueling the Flames: Biodiesels Tested: How Europe’s Biofuels Policy Threatens the Climate,” fact sheet (Vienna, Austria: 2011), and from WWF, “WWF Position on Biofuels in the EU,” position paper (Brussels: July 2007); deforestation as a result of biofuel production from Catherine Bowyer, Anticipated Indirect Land Use Change Associated with Expanded Use of Biofuels and Bioliquids in the EU – An Analysis of the National Renewable Energy Action Plans (London: Institute for European Environmental Policy, 2010); “land grabbing” from Lorenzo Cotula, “The International Political Economy of the Global Land Rush: A Critical Appraisal of Trends, Scale, Geography and Drivers,” The Journal of Peasant Studies, vol. 39, nos. 3–4 (July–October 2012), pp. 649–80.
26. Industry stance from RFA, Accelerating Industry Innovation: Ethanol Industry Outlook 2012 (Washington, DC: 2012); emissions in National Research Council, Renewable Fuel Standard: Potential Economic and Environmental Effects of U.S. Biofuel Policy (Washington, DC: National Academies Press, 2011); Emanuela Menichetti and Martina Otto, “Energy Balance & Greenhouse Gas Emissions of Biofuels from a Life Cycle Perspective,” in Howarth and Bringezu, op. cit. note 13; Timothy Searchinger et al., “Use of U.S. Croplands for Biofuels Increases Greenhouse Gases Through Emissions from Land-Use Change,” Nature, vol. 319, (29 February 2008), pp. 1,238–40; Paul Crutzen et al., “N2O Release from Agro-Biofuel Production Negates Global Warming Reduction by Replacing Fossil Fuels,” Atmospheric Chemistry and Physics, vol. 7, no. 4 (August 2007), pp. 11,191–205.
27. Pedro Alvarez et al., Fundamentals of a Sustainable U.S. Biofuels Policy, research paper (Houston, TX: James A. Baker III Institute for Public Policy, Rice University, 2010); National Research Council, op. cit. note 26.
28. F.O. Licht, op. cit. note 8, pp. 317, 323; David Shaffer, “Ethanol Makers Feel the Squeeze,” Minneapolis Star Tribune, 5 June 2012; Roxana Hegeman, “Ethanol Makers Idle Plants Amid High Corn Prices,” Associated Press, 29 June 2012.
29. U.S. automotive fuel from DOE, EIA, “U.S. Product Supplied of Finished Motor Gasoline (Thousand Barrels),” at eia.gov/petroleum/data.cfm, updated 28 July 2011; size of U.S. motor vehicle fleet based on Polk Company data cited in National Automobile Dealers Association, NADA DATA 2012 (McLean, VA: 2012); Lester R. Brown, “U.S. Gasoline Use Declining: Keystone XL Pipeline Not Needed,” Plan B Update (Washington, DC: Earth Policy Institute, 6 October 2011).
30. Corporate Average Fuel Economy (CAFE) standard in 2025 from U.S. Department of Transportation (DOT), National Highway Traffic Safety Administration (NHTSA), “President Obama Announces Historic 54.5 mpg Fuel Efficiency Standard,” press release (Washington, DC: 29 July 2011); EPA-estimated fuel efficiency for 2008–12 from DOT, NHTSA, Summary of Fuel Economy Performance (Washington, DC: 12 March 2012).
31. Cost of wind energy to power cars from Michael B. McElroy, “Time to Electrify: Reducing Our Dependence on Imported Oil – While Addressing the Threat of Climate Change,” Harvard Magazine (July/August 2011), pp. 36–39.
32. For more information, see Lester R. Brown, “Paving the Planet: Cars and Crops Competing for Land,” Eco-Economy Update (Washington, DC: Earth Policy Institute, 14 February 2001).
33. For more information, see Lester R. Brown, World on the Edge (New York: W. W. Norton & Company, 2011).
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