The Failure of Bio-Fuel Alternatives,
The Abundance of Cheap Fossil Fuels,
& Bio-Fuel Harm to Food Supply & Price
What is to be Done?
AID, New School Panel, 25 March 2011: Food Crisis & Impact on Developing Countries
The Failure of Bio-Fuel Alternatives,
The Abundance of Cheap Fossil Fuels,
& Bio-Fuel Harm to Food Supply & Price
What is to be Done?
Thomas W. O’Donnell
The New School University, NYC
Graduate 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
Outline
1.
2.
3.
4.
The Failure of Bio-Fuel Alternatives
The Abundance of Cheap Fossil Fuels
Bio-Fuel Harm to Food Supply & Price
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
http://www.eia.doe.gov/neic/speeches/howard070106.pdf
Transport problems
Transport emissions
due to petroleum!
Cifras de 2006
http://www.eia.doe.gov/neic/speeches/howard070106.pdf
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 (geoestrategia 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
Source: Keith Collins, Chief
Economist, USDA
EIA Energy Outlook, Modeling,
and Data Conference
March 28, 2007
Corn Ethanol Production . . .
10
30
9
27%
25
8
7
20
6
5
15
4
10
3
2
5
1
Ethanol
/0
8F
20
07
/0
5
20
04
/0
2
20
01
/9
9
19
98
/9
6
19
95
/9
3
19
92
/9
0
19
89
/0
7
19
86
19
83
19
80
/0
4
0
/0
1
0
Share of Corn Production
Percent
Billion gallons
expect to use 27% of ’07 corn crop for nearly 9 bil. gal.
Source: Keith Collins, Chief
Economist, USDA
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
% Share Met by E&B
80
∆ Total Gas/Distillate Use
70
3.5
E/B share of
∆ total fuel use
60
4
3
50
2.5
40
2
∆ E/B use
30
1.5
20
1
10
0.5
0
0
2006
2008
2010
Source: 2007 EIA Annual Energy Outlook
2012
2014
2016
Change in Use (quad BTUs)
Change in Fuel Use Since 2005 Met by
Ethanol/Biodiesel
Source: USDA, 2009
See notes herein
Projected Corn Ethanol Production…
The.
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.
Source: USDA, 2009
See notes herein
Projected Corn Ethanol Production…
The.
Source: Keith Collins, Chief
Economist, USDA
USDA Baseline Biofuel Production
40
Billion gallons
35
“20 in 10”
30
25
22 billion deficit
20
15
10
5
0
2007/08
2009/10
2011/12
Ethanol
2013/14
Biodiesel
2015/16
Chief
Economist
USDA
-ethanol
efficiency
improvements
2010 report
(2005 & 2008 data)
14000
45%
US Corn Ethanol
40%
12000
35%
10000
Million Bushels
30%
8000
Production
25%
Ethanol
6000
%
20%
15%
4000
10%
2000
5%
0
0%
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
45%
$6.00
US Corn Ethanol
40%
$5.00
35%
$/bushel
30%
Price ($/bushel)
$4.00
%
25%
$3.00
20%
15%
$2.00
10%
$1.00
5%
0%
$0.00
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010
Source: Keith Collins, Chief
Economist, USDA
EIA Energy Outlook, Modeling,
and Data Conference
March 28, 2007
Corn Ethanol Production . . .
expect to use 27% of ’07 corn crop for nearly 9 bil. gal.
30
9
Comment (TO’D):
8
9 b gal is 10 days
U.S. consumption,
but 27% corn acres
7
6
5
25
20
15
4
10
3
2
5
1
Ethanol
/0
8F
20
07
/0
5
20
04
/0
2
20
01
/9
9
19
98
/9
6
19
95
/9
3
19
92
/9
0
19
89
/0
7
19
86
19
83
19
80
/0
4
0
/0
1
0
Share of Corn Production
Percent
Billion gallons
10
300
US Cereals and bakery products
250
1982-84 = 100
200
150
Retail cost
100
Farm-to-retail
spread
50
Source: USDA
See notes herein
0
Food and Oil Commodity Prices
Corn
Rice
Wheat
Oil
1980
1986
1991
1996
2003
2011
Oil Consumption per capita
Gallons
per day
per capita
T. O’Donnell, Ph.D. | [email protected] |
TomOD.com
23
EIA 2003
Oil Consumption per capita
Ethanol
Gallons
per day
per capita
T. O’Donnell, Ph.D. | [email protected] |
TomOD.com
24
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
Hubbert’s ½-depletion peak
Source: US DoE
Already
consumed
To be
consumed
Reservas
Reserves
Increasingly uncertain resources
Potential for liquid hydrocarbon production
(Gbbl)
“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
Already
consumed
To be
consumed
Reservas
Reserves
Increasingly uncertain resources
Potential for liquid hydrocarbon production
(Gbbl)
“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
References
“Long Term World Oil Supply: A Resource Base / Production
Path Analysis” Energy Information Administration (EIA), DOE,
2000).
http://www.umich.edu/~twod/oilns/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.
The problem of transportation
Efficiency = 1 x 2 x 3 x 4 x …
Petroleum Coal
95%
Refinery
Natural
Gas
Liquefy
Biocombustibles
Ethanol &
Diesel
Water
Hydroelectric
Solar y
wind
Nuclear
Thermoelectric
Batteries
Hydrogen
Internal
combustion
Electric motors
Hydrogen cell
Electric motor
Transmission
3
Friction
3
3-4
Individual:
Automobiles, motorcycles,
light trucks
3-4
Friction
Mass
transport vans, busses,
trains, metros
2
Friction
Mass transport:
Vans, busses,
trains, metros
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

Source: Keith Collins, Chief
Economist, USDA
Projected Corn Ethanol Production…
expect 12 bil. gal. in 2016/17– 30% of corn crop
Billion gallons
14
12
10
8
6
4
2
/1
7
20
16
/1
3
20
12
/0
9
20
08
/0
5
20
04
/0
1
20
00
/9
7
19
96
/9
3
19
92
/0
9
19
88
/0
5
84
19
19
80
/0
1
0
Source: Keith Collins, Chief
Economist, USDA
Projected Soy Biodiesel Production…
Nota
expect 700 mil. gal. in 2016/17 – 23% of soyoil production
800
Million gallons
700
600
500
400
300
200
100
0
2000/01
2003/04
2006/07
2009/10
2012/13
2015/16