Industrial and Environmental Biotech in the Blogosphere

This week we start off with a United Nations report that urges caution on biofuels. Green Inc, a New York Times blog writes,

“The study concluded that whether a biofuel is climate-friendly or not depends largely on whether it is based on crops or production residues. Biofuels of the latter category were generally considered beneficial for the environment, and generating electricity locally from waste materials was found — in most cases — to be more energy efficient than converting biomass to liquid fuels.”

This paper was also written about in the blog, Futurism Now, the post called, Biofuels Will Increase Global Warming According to Study

They explain,

“That is because the land required to plant fast-growing poplar trees and tropical grasses would displace food crops, and so drive deforestation to create more farmland, a powerful source of carbon emissions.”

Not so fast, check out the Sustainable Production of Biofuels.

And biofuels continues to be the topic of the week. The biofuel review writes this week about a report from the Imperial College of London. The report has an upbeat tone about the future of biofuels and The biofuel review ends their post with a quote from Clare Wenner, Head of Renewable Transport at the Renewable Energy Association that says,

“Imperial College London has verified the results which show that these fuels can be produced in a sustainable way. With the right legislative framework, including the implementation of environmental rules under the Directive, it will be possible to limit indirect land use effects. Land will always be used for food and fuel, and the overall balance of these impacts could be positive as far as food is concerned. In fact, it seems likely that wheat-based biofuels production will not affect the amount of wheat exported by the EU as a whole.”

Then it’s more biofuels from Creamer Media’s Engineering News

According to Engineering News,

“Pretreatment and gasification technologies are on the verge of making second-generation biofuels a commercial reality, according to new analysis from Frost & Sullivan, entitled ‘Worldwide Market Analysis of Second Generation Biofeedstock.”

Engineering news interviewed Frost & Sullivan senior research analyst Phani Raj Kumar Chinthapalli,

“The use of second-generation biofuels is expected to reduce 
the emission of greenhouse gases (GHG), particularly carbon 
dioxide (CO2), from combustion engines by 80% to 85% in comparison with conventional fossil fuels. The lifecycle emissions for second-generation biofuels are in the negative range, which implies consumption of CO2 rather than emission.”

That’s it for this week, see you next week.

Setting the Record Straight

I was pleased to read AP reporter Deborah Jian Lee’s story on Jan. 12, saying that the food and fuel debate has “receded to a murmur, and even the Grocers Manufacturers Association, one of the most vocal biofuel critics, seems to be backing off a bit.” Biofuel producers will likely remember that last May the Capitol Hill newspaper Roll Call revealed that the Grocery Manufacturers Association had launched a public relations effort to blame biofuels for rising food prices. I asked the question then whether the press would set the record straight, as noted economists and BIO have tried to do throughout the year.
It was interesting to note the comments of the GMA’s Scott Faber, who apparently said ethanol production is “just one in seven sources of commodity price inflation.”

How Much Corn Is in a Barrel of Oil?

A segment on the Discovery Channel’s show “How Stuff Works” caught my eye this week and prompted that question. The segment points out that Xanthan gum, fermented from corn syrup, is used in oil drilling. Xanthan is combined with the drilling mud used to cool drilling equipment, and it helps to clear dirt and rock from the mud as well as maintain a pressure cap on the bore hole.

The primary markets for Xanthan gum are of course food and cosmetic ingredients — check your supermarket shelves for the number of products containing it. But enough is used in oil production that a 2006 Saudi Aramco white paper explored establishment of a Xanthan gum production plant in Saudi Arabia to meet oil drilling needs. The white paper projects the market for Xanthan gum for 2007 and 2008 among the Gulf Cooperation Council countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates), using Saudi Aramco’s exploration and production models. For 2007, the projected need was nearly 15 million pounds, and for 2008, nearly 12.5 million pounds.

Arguments about the diversion of food and land for biofuel fail to consider exactly how many non-food products contain corn.

A Tale of Two Studies

Don Mitchell of the World Bank’s Development Prospects Group has released an official version of his analysis of biofuels’ impact on the rise in global food prices. An early version of the study was leaked to the Guardian in London on July 4.

Mitchell attributes 70 to 75 percent of the increase in food commodities prices to “biofuels and the related consequences of low grain stocks, large land use shifts, speculative activity and export bans.” In other words, Mitchell assumes that U.S. and EU support for biofuel production is the direct cause of other phenomena that have contributed to the rise in food commodity prices. Mitchell attributes the remaining 25 to 30 percent of food price increases to the rising price of oil and the weakening of the U.S. dollar.

And how did biofuels contribute to low grain stocks? According to Mitchell, it is because biofuel crops were grown “on land that could have grown wheat.” Mitchell notes that worldwide wheat acreage declined by only 1 percent and wheat stocks actually grew. Nevertheless, in his opinion, more wheat should have been grown.

Mitchell’s assumptions contrast with the conclusions of other studies, including a recent one by Purdue University economists released by the Farm Foundation. That study follows others in concluding that the rising price of oil is the largest contributor to rising food costs, in part because it is a stronger driver of demand for biofuels than government policy has been. Researchers at Texas A&M University came to this same conclusion, as has been discussed on this blog.

Despite the fact that Mitchell admittedly “does not consider how supply would respond to high commodity prices and moderate price increases over time,” he nevertheless concludes that “biofuels policies which subsidize production need to be reconsidered in light of their impact on food prices.” The Purdue study concludes with a much more cautious note: “The challenge facing policy makers is to find policy options that deal with the short-term effects created by rising food prices without creating a new set of long-term problems.”

Not a Secret After All

On Friday July 4, The Guardian newspaper of London published a story (“Secret report: biofuel caused food crisis”) about a “confidential,” unpublished World Bank report it had obtained purportedly demonstrating that biofuels are responsible for 75 percent of the global rise in food prices. “The damning unpublished assessment is based on the most detailed analysis of the crisis so far, carried out by an internationally-respected economist at global financial body,” according to The Guardian.

In the story The Guardian reporter quotes a source from Oxfam, the humanitarian aid and development organization, which released its own report condemning biofuels in June. However, she does not cite a published report by the World Bank that attributes the rise in food prices to a combination of factors, including the rising price of oil, depreciation of the U.S. dollar, declining stockpiles of grains, and production of biofuels.

This official World Bank report says, “Three quarters of the increase in global maize production (emphasis mine) in the last three years went to ethanol in the US.” Translated, this means that the United States is using increased production of corn to make biofuels, not taking corn out of traditional markets for food, feed and fiber. It is not the same as saying that biofuel production accounts for three quarters of the global rise in food prices – meaning all grains, meats, poultry, etc. According to the USDA, biofuels production has not reduced exports of food or feed. U.S. corn exports reached record levels in 2007-08, and soybean exports are up as well. The U.S. livestock industry is still the top user of corn, with more corn expected to be fed to livestock in 2008 compared to 2007.

The Guardian’s story was picked up and repeated by other news organizations, even though other reporters appeared not to have actually seen the “secret” World Bank study. As Reuters noted, “Due to Friday’s Independence Day holiday in the United States the Guardian report could not immediately be confirmed.” Yet, Reuters ran the story. The Guardian then picked up the 75 percent figure as established fact in an editorial on Monday July 7.

The Wall Street Journal revealed on Monday that the World Bank report was not a secret, it was a working draft that was intended to be incorporated in a position paper released in April. “Bob Davis of the WSJ spoke with Donald Mitchell, the author of the draft report—which wasn’t secret at all, but a working paper. And like all working papers, it doesn’t reflect the official position of the World Bank.”

The Guardian story is reminiscent of Time magazine’s one-sided report back in April on the indirect land-use effects of biofuel development. That article set the stage for the current media backlash against ethanol, though few reporters have ever questioned the facts of the story.

Weather, Not Biofuels Contributes to Food Crisis

Could it be, that weather, not biofuels, are responsible for the increase in corn prices?  That is what Tim of Environmental Economics suggests. 

 Citing rains and floods, as being responsible for leaving 4 million acres unplanted (according to the AP),  Tim quotes the AP,

“That would likely lift corn prices further, forcing consumers to pay higher grocery bills for meat and pork, as livestock producers would be forced to pass on higher animal feed costs and thin their herd size.”

This is further evidence to suggest that the solution to the global food crisis is not a one size fits all approach, but rather a complicated science-based solution to a complicated science-based problem.

Science is about gathering data, stopping, thinking, and then gathering data, stopping, and thinking some more etc.  To date, the hysteria surrounding this problem, has not been about science but rather gathering data, then having a knee-jerk reaction, after which there is a lot of running around and panicking.  To solve this problem, we need to get back to the science, gather some more data, then stop, and think carefully.

Can Stopping Ethanol Solve the Current Food Crisis?

President Bush spoke out last week on the global food crisis, suggesting that reducing trade barriers would help increase food supplies.

We’re also urging countries that have instituted restrictions on agricultural exports to lift those restrictions. Some countries are preventing needed food from getting to market in the first place, and we call upon them to end those restrictions to help ease suffering for those who aren’t getting food.
“We’re also urging countries to remove barriers to advanced crops developed through biotechnology. These crops are safe, they’re resistant to drought and disease, and they hold the promise of producing more food for more people.”

Richard North, a British parliamentary researcher and co-author of Scared to Death says essentially the same thing:

As well as liberalising trade, we need to encourage increased agricultural productivity.
“Only farmers can solve the global food crisis, and to help them achieve this we need to make them more efficient.”

The problem is illustrated most clearly by a chart sent to me by Richard Hamilton, CEO of Ceres, Inc. The average yield of agricultural producers around the world (gold bar) is less than half that obtained by producers in the United States (green).

It was put most succinctly perhaps by Clifford D. May, president of the Foundation for the Defense of Democracies:

“By all means, send food aid to those who are starving. But over the longer run, Third World farmers need to be helped to grow more of their own food — not to rely on charity from overseas.”

But what about the environmental impact of increasing agricultural production around the world. Is switching to energy crops such as switchgrass for biofuels better?

Indur M. Goklany, author of “The Improving State of the World,” doesn’t think so. On the Cato@Liberty blog, he writes:

Farmers will do what they’ve always done: they’ll produce the necessary biomass that would be converted to ethanol more efficiently. They’ll use their usual bag of tricks to enhance the yields of the biomass in question: they’ll divert land and water to grow these brand new crops. They’ll fertilize with nitrogen and use pesticides. The Monsantos of the world — or their competitors, the start-ups — will develop new and genetically modified but improved seeds that will increase the farmer’s productivity and profits. And if cellulosic ethanol proves to be as profitable as its backers hope, farmers will divert even more land and water to producing the cellulose instead of food. All this means we’ll be more or less back to where we were. Food will once again be competing with fuel. And land and water will be diverted from the rest of nature to meet the human demand for fuel.”

But U.S. farmers’ usual bags of tricks are pretty good.

A study by the U.S. Department of Agriculture and University of Nebraska, published in January in the Proceedings of the National Academy of Science, announced the results of five-year field trials for farm-grown switchgrass. The analysis shows that fertilizer, herbicide and fossil energy requirements were lower than expected based on the results from economic models. It also showed that farm-managed switchgrass grown on marginal land that is not useful for corn production outperformed natural switchgrass grown on prairie land in terms of harvest.

So yes, farmers will make individual decisions as to what to plant and grow. And energy crops will give them better options for marginal, ecologically sensitive land. And worldwide, farmers should be looking to adopt the same tools as American growers.