Tuesday, June 12, 2007

Food price rises force a cut in biofuels

Jane Macartney in Beijing and Tim Reid in Washington

China’s communist rulers announced a moratorium on the production of ethanol from corn and other food crops yesterday at the very time that Western leaders are rushing to embrace alternative food-based fuel technology.

Beijing’s move underlines concerns that ethanol production is driving up rapidly the costs of corn and grain. It appears to reflect a growing reality about food-based alternative fuel: it is far more expensive both economically and environmentally, than Western politicians are likely to admit.

Calls for biofuels are politically attractive for European and US politicians, amid rising petrol prices and concerns about global warming and an overreliance on Middle Eastern oil.

Communist officials in Beijing, however, who do not have the political concerns of democratically elected leaders in the West, have reacted to a rapid rise in food prices and an intense demand on farm land that threatens to make ethanol production unsustainable.

President Bush, who with Britain wants to see a huge increase in corn-based ethanol, called in January for the annual production of 35 billion gallons of corn-based ethanol in the US.

Although that is a hugely popular rhetoric in the Mid-west wheat belt states — the heart of America’s political battleground — environmentalists soon pointed out that such a goal would require an additional 129,000 square miles of farmland, an area the size of Kansas and Iowa combined.

The rush to corn-based ethanol is causing food-price inflation in the US, as it increases the cost of corn grain feedstock and the availability of the crop for such staples as cereal and corn syrup. The ethanol boom has created mass planting of corn at the expense of other crops, which helps to drive up prices, too. Futures prices for corn in the US have nearly doubled in eight months.

In China grain security has for decades been at the top of the party’s political priority list, and a 43 per cent increase in the price of China’s staple meat — pork — over last year to recent record highs as a result of rapidly rising feed prices is certain to have triggered concern at the highest level of the party.

Xu Dingming, an official of the National Energy Leading Group, told a recent seminar: “Food-based ethanol fuel will not be the direction for China.”

The Government would ask producers to switch to such nonfood crops as cassava and sorghum, used to make various distilled liquors. Four Chinese companies make corn-based ethanol, with a total annual production capacity of more than one million tonnes. Since those companies are in production and demand exists for ethanol supplies, they will not be required to stop.

Domestic corn prices are climbing amid tight supplies despite a record 2006 crop because of rising demand from corn processing industries, including fuel ethanol producers.

Environmentalists in the West are giving warning that corn-based ethanol is not such a “green” alternative as it appears. Massive amounts of fossil fuels must be burnt to plant the extra crops and corn production erodes soil about 12 times faster than it can be reformed, according to one study.

It is far more environmentally friendly and efficient to make fuel from sugar cane.

Corn qualities

— A recent test found that corn-based ethanol gives 35 per cent more energy than it takes to produce

— This is possible because corn used to make ethanol absorbs “free”, renewable solar energy while growing

— The same test found that greenhouse gas emissions a gallon of fuel used were 18 to 29 per cent lower with ethanol than with fossil fuels

— World ethanol production has increased massively in the past decade, championed by the US. Its production is the third-largest use of corn there, accounting for 17 per cent of last year’s crop

Sources: Government of Queensland, Australia; Renewable Fuels Association; Argonnne National Laboratory

No comments: