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I'm not sure if you people remember that I do not agree with the biofuel path and that we need to go towards the hydrogen-powered vehicles.

http://www.msnbc.msn.com/id/18551000/

U.N.: Not so fast with ethanol, other biofuels
Unchecked growth could see new problems offset climate gains, report says

ROME - Biofuels like ethanol can help reduce global warming and create jobs for the rural poor, but the benefits may be offset by serious environmental problems and increased food prices for the hungry, the United Nations concluded Tuesday in its first major report on bioenergy.

In an agency-wide assessment, the United Nations raised alarms about the potential negative impact of biofuels, just days after a climate conference in Bangkok said the world had both the money and technology to prevent the sharp rise in global temperatures blamed in part on greenhouse gas emissions.

“Unless new policies are enacted to protect threatened lands, secure socially acceptable land use, and steer bioenergy development in a sustainable direction overall, the environmental and social damage could in some cases outweigh the benefits,” the report stated.

Biofuels, which are made from corn, palm oil, sugar cane and other agricultural products, have been seen by many as a cleaner and cheaper way to meet the world’s soaring energy needs than with greenhouse-gas emitting fossil fuels.

European leaders have decided that at least 10 percent of fuels will come from biofuels like ethanol by 2020, and the U.S. Congress is working on a proposal that would increase production of biofuels sevenfold by 2022. With oil prices at record highs, biofuels have become an attractive alternative energy source for poor countries, some of which spend six times as much money importing oil than on health care.

But environmentalists have warned that the biofuel craze can do as much or more damage to the environment as dirty fossil fuels — a concern reflected throughout the report, which was released Tuesday in New York by UN-Energy, a consortium of 20 U.N. agencies and programs.

'Rapid growth' a concern
While saying bioenergy represents an “extraordinary opportunity” to reduce greenhouse gas emissions, it warned that “rapid growth in liquid biofuel production will make substantial demands on the world’s land and water resources at a time when demand for both food and forest products is also rising rapidly.”

Changes in the carbon content of soils and carbon stocks in forests and peat lands might offset some or all of the benefits of the greenhouse gas reductions, it said.

“Use of large-scale monocropping could lead to significant biodiversity loss, soil erosion and nutrient leaching,” it said, adding that investments in bioenergy must be managed carefully, at national, regional and local levels to avoid new environmental and social problems “some of which could have irreversible consequences.”

It noted that soaring palm oil demand has already led to the clearing of tropical forests in southeast Asia.

In addition, the diversion of food crops for fuel will increase food prices, putting a strain on the poor, as evidenced by the recent steep rise in maize and sugar prices, the report said.

“Liquid biofuel production could threaten the availability of adequate food supplies by diverting land and other productive resources away from food crops,” it said, adding that many of those biofuel crops require the best land, lots of water and environment-damaging chemical fertilizers.

While bioenergy crops can create jobs in impoverished rural areas where the bulk of the world’s poor and hungry live, creating biofuels favors large-scale production, meaning small-scale farmers could be pushed off their land by industrial agriculture.

It suggested that farm co-ops, as well as government subsidies, could help small-scale farmers compete.

Such concerns have been raised by Greenpeace International and other environmental groups worried that the biofuel fad is being driven by big agricultural interests looking for new markets.

“More and more, people are realizing that there are serious environmental and serious food security issues involved in biofuels,” Greenpeace biofuels expert Jan van Aken said. “There is more to the environment than climate change,” he said. “Climate change is the most pressing issue, but you cannot fight climate change by large deforestation in Indonesia.”

Agencies saw need to raise 'red flags'
Individual U.N. agencies have previously issued small-scale reports on biofuels, but they were largely optimistic and did not highlight negative consequences because they were not yet known, said Gustavo Best, vice chair of UN-Energy and a biofuels expert at the Rome-based U.N. Food and Agriculture Organization.

But with the surge in interest by the private sector, the rise in commodity prices and an awareness of the strain on water supplies that has resulted from biofuel production, “we now have to raise the red flags and say ‘be careful, don’t go too fast,”’ he said in an interview.

“There are winners and losers,” he said.

That the report exists is something of a miracle, since there has long been opposition among U.N. member states — including OPEC, nuclear and other energy lobbies— to have any kind of international dialogue on energy. There is for example, no U.N. Millennium Goal for energy, and recent U.N. working documents on sustainable development continue to be very fossil-fuel oriented, Best said.

The document is intended for governments to help them craft bioenergy policies that maximize the potential but minimize the negative impacts — even as the technology continues to change.

“We can’t cross our arms and wait to have better data or better methodologies,” Best said. “We need to contribute to the discussion, but in a balanced way.”

The full report is online at
esa.un.org/un-energy/pdf/susdev.Biofuels.FAO.pdf

Damned if you do, damned if you don't!

I remember way back when Henry Ford first introduced his mass produced car. I ran out to the town center screaming, what about the horse, the carriage makers, the blacksmith and the pooper-scooper guy? what will happen to all of them.

No one listened and look, the world is in shambles now.

Blade... interesting article. The author seems focused on the worldwide impact of expanded biofuel development and really doesn't seem to address the US in particular. Since I'm not very well informed about this stuff, I'd be curious to hear your take regarding the potential impact to the US of expanded biofuel development. It seems to me that, here in the states, we certainly have the farming capacity to maintain biodiversity while ramping up corn production to meet expanded ethanol production goals. While I understand the alarms raised in the article, I have a hard time seeing how they would apply here. What am I missing?

http://www.msnbc.msn.com/id/18575725/

Fears rise about an ethanol bust
Some analysts warn of an oversupply of the corn-based fuel later this year

President George W. Bush's January, 2006 declaration that the U.S. is "addicted to oil" marked the beginning of a gold rush for corn growers: The government policies the comment helped spur have been a boon for the producers of corn-based ethanol, the all-American fuel that now displaces about 4% of U.S. gasoline supply. Over the past 18 months, farmers have rushed to plant more corn—and are set to produce a record crop this year—while small-time entrepreneurs and agricultural giants alike have built plants to expand capacity. A handful of initial public offerings have fed investors' desire to get in on the action.

But while farmers and producers remain bullish on corn ethanol's prospects, a once-enthusiastic Wall Street is growing skeptical. On May 1, the largest U.S. ethanol producer, Archer Daniels Midland, reported quarterly earnings that fell short of analyst expectations, citing higher corn costs as a problem. ADM shares tumbled 5.4% that day to close at $36.60 as investor disappointment spread throughout the sector. Shares of U.S. Bioenergy, Pacific Ethanol, Andersons, Aventine Renewable Energy, and VeraSun Energy dipped 1% to 2%.

Lurking behind ADM's gloomy news are doubts about the future of corn ethanol. A growing number of analysts, once bullish on the product, are warning that an oversupply may be coming as soon as this year. On Apr. 27, a Lehman Brothers report projected that production will outstrip demand in the second half of 2007, measuring the domestic thirst for corn ethanol at 420,000 barrels per day but supply at 445,000 barrels a day, mainly because the U.S. lacks the infrastructure to move the product to market.

"There's tremendous capacity coming online, but the infrastructure isn't there to keep up with it," says Michael Waldron, an oil markets research analyst at Lehman Brothers who co-authored the report. "We need a nationwide system to pipe it, and until that happens, we'll likely have an excess of product."

"Chicken-and-egg problem"
Waldron says the problem isn't a lack of demand for ethanol, which remains high, especially given that the federal Renewable Fuel Standard mandates at least 4 billion gallons, or about 3% of all U.S. transportation fuels, to come from alternative sources today, and nearly double that amount, or 7.5 billion gallons, by 2012. Lawmakers are expected to give the mandate a significant boost later this year. Rather, the problem is getting ethanol to consumers in various parts of the country. Ethanol requires a separate piping system from gasoline, and since Uncle Sam hasn't appropriated funds to build such infrastructure, ethanol is now primarily transported by rail. But the rail system extends only to major metropolitan areas — not to mention the dual problems of its high cost and carbon dioxide emissions.

"It's a chicken-and-egg problem," says Waldron. "If the infrastructure were there, the demand would be there. In the end the government would have to play a role to help build out a [national] dedicated pipeline."

A growing number of analysts agree with Lehman Brothers' conclusions. "We remain cautious on the ethanol stocks over a 12-month period," wrote Bank of America analyst Eric Brown in an Apr. 24 research note. "Looking ahead we continue to believe that an oversupply of ethanol in the second half of 2007 will depress ethanol's premium to gasoline."

A glut of ethanol stuck in the Corn Belt would be unwelcome news for corn growers and the agricultural entrepreneurs who had set their hopes on a bright future for what has since become a controversial fuel. Farmers are beginning to voice their concern.

"We've got an enormous amount of product coming online in a short period of time," says Geoff Cooper, director of ethanol programs for the National Corn Growers Assn. "The market is surprised by all this volume and can't absorb it now."

Evolving infrastructure
He says the problem of transporting ethanol to parts of the country like the Southeast remains a problem, as does a shortage of storage capacity in these areas. Yet Cooper calls those obstacles "bad news but not disastrous" for corn growers, as a more effective ethanol infrastructure will evolve in the next several years. "The oversupply now is more a bump in the road than a catastrophe," he says.

Plus, not everyone agrees with the emerging consensus among analysts. The Renewable Fuels Assn., an industry trade group for ethanol producers, maintains that the problem is a lack of capacity rather than an excess of it. Using Energy Dept. figures, the RFA calculates that demand now stands at 416,000 barrels a day but production is only 386,000 barrels a day. Even the 80 new ethanol plants expected to be operating by 2009 won't be able to meet the growing demand, according to the association.

"Right now we have ethanol making up 4% of transportation fuels, but we can get to 10% with no changes to cars' engines or retail pumps," says Matthew Hartwig, an RFA spokesman. He acknowledges that transportation is an issue but says rail cars are able to transport the product now, and there are studies under way about a national pipeline.

Short-term pain, long-term gain?
In any case, Hartwig says, any oversupply domestically could be exported to other counties, as demand for fuel is growing in all parts of the world, and gasoline prices are increasing.

Waldron of Lehman Brothers sees another outcome to a glut. An ethanol oversupply would make ethanol blends cheaper for consumers, potentially eliminating the need for the 51¢-per-gallon subsidy blenders get from the government. In other words, too much ethanol means cheaper ethanol, which could ultimately extend its longevity in the marketplace.

"Too much supply could hurt ethanol producers' margins, but in the end it may be a good thing for prices to come down," Waldron says. "A short-term problem for the industry could be healthier for it in the long run."

Copyright © 2007 The McGraw-Hill Companies Inc. All rights reserved.

That's not all that bad a problem to have unless you're an investor looking to turn a short term buck.

The infrastructure for a distribution system WILL happen, and as it does, demand will quickly catch up with that oversupply.