Earth Policy Institute Projecting Biofuel Grain Demand At 2X USDA Totals - 140MT

[hatrack]

Investment in fuel ethanol distilleries has soared since the late-2005 oil price hikes, but data collection in this fast-changing sector has fallen behind. Because of inadequate data collection on the number of new plants under construction, the quantity of grain that will be needed for fuel ethanol distilleries has been vastly understated. Farmers, feeders, food processors, ethanol investors, and grain-importing countries are basing decisions on incomplete data.

The U.S. Department of Agriculture (USDA) projects that distilleries will require only 60 million tons of corn from the 2008 harvest. But here at the Earth Policy Institute (EPI), we estimate that distilleries will need 139 million tons—more than twice as much. If the EPI estimate is at all close to the mark, the emerging competition between cars and people for grain will likely drive world grain prices to levels never seen before. The key questions are: How high will grain prices rise? When will the crunch come? And what will be the worldwide effect of rising food prices?

One reason for the low USDA projection is that it was released in February 2006, well before the effect of surging oil prices on investment in fuel ethanol distilleries was fully apparent. Beyond this, USDA relies heavily on the Renewable Fuels Association (RFA), a trade group, for data on ethanol distilleries under construction, but the RFA data have lagged behind movement in the industry. We drew on four firms that collect and publish data on U.S. ethanol distilleries under construction. RFA is the one most frequently cited. The other three firms are Europe-based F.O. Licht, the publisher of World Ethanol and Biofuels Report; BBI International, which publishes Ethanol Producer Magazine; and the American Coalition for Ethanol (ACE), publisher of Ethanol Today.

Unfortunately, the lists of plants under construction maintained by RFA, BBI, and ACE are not complete. Each contains some plants that are not on the other lists. Drawing on these three lists and on biweekly reports from F.O. Licht, EPI has compiled a more complete master list. For example, while we show 79 plants under construction, RFA lists 62 plants. (We welcome any information that will improve this list, which can be viewed at www.earthpolicy.org/Updates/2007/Update63.htm.) According to the EPI compilation, the 116 plants in production on December 31, 2006, were using 53 million tons of grain per year, while the 79 plants under construction—mostly larger facilities—will use 51 million tons of grain when they come online. Expansions of 11 existing plants will use another 8 million tons of grain (1 ton of corn = 39.4 bushels = 110 gallons of ethanol).

EDIT

http://www.enn.com/today.html?id=11972

[LetsThink]

1. Biofuels One of Top Trends for 2007

Sustainable Construction (#7), hydrogen fuel cells (#8) Veggie Buses- biofuel use (#9) are listed among the top 10 trends for 2007 by JWT, the largest ad agency in the US and 4th in the world. These are good things!

http://sev.prnewswire.com/advertising/20061227/NYW00327122006-1.html

[unpossibles]

2. so, is hemp or some other plant a viable alternative?

as far as more energy per bushel, or even easier growing conditions (thus could grow on otherwise non-arable land or on the sea), or faster/more growing seasons?

[Massacure]

4. hemp isn't a great energy crop.

It would work great to replace wood paper and cotton though.

[JohnWxy]

3. In Febrary 2006 Congress sent a bill to Bush for signature to terminate export subsidies for Cotton

The WTO ruled against the U.S. finding us guilty of unfair trade pracices in supporting our cotton exports with export subsidies. These subsidies cost $4 Billion per year. If we do not stop the subsidies we could be subject to trade sanctions by the countries hurt by our export subsidies.

If the export subsidies were stopped, cotton farming in the U.S. would not be profitable and the cotton farmers would look for another profitable crop to grow. Given the demand for corn, the likely candidate for most of these farmers would be feed lot corn (it's the kind of corn sold for ethanol production - cheaper to grow than sweet corn for people).

What would this mean? Since the amount of acres planted in cotton is almost equal to the number of acres planted in corn for ethanol in a relatively short time you would see the supply of corn almost DOUBLE (note that doesn't mean all the corn would be grown for ethanol, some would probably choose to grow sweet corn). Yes, not all the acreage suitable for cotton would be good for corn. THat's why I said "almost double". But , on the other hand, some of those acres planted in cotton in the deep south and texas would be suitable for SUGAR CANE - which produces far more ethanol than corn does.

Time to End US Cotton Subsidies - Christian Science Monitor
http://www.globalpolicy.org/socecon/trade/subsidies/2005/0310timetoend.htm

Now, if you are interested in this subject, maybe just because $4 Billion in export subsidies bother you, maybe because cotton is one of the worst crops for draining the earth of nutrients - go to www.Congress.org. They make it easy to email your Congressmen. You just type in your zip code and up pop your Seanators and Representatives! Email them and tell them to tell the Bushter to sign the bill terminating cotton subsidies. WE'll be saving money and growing more corn for food as well as meeting the demand for ethanol.

[amandabeech]

5. Unless the drought breaks in Texas, I don't know if anything

will be planted there, cotton, corn or sugar cane.

If the cotton patch decides to move to ethanol, it will probably with grain sorghum, which likes the southern climate and soils better than any type of corn. Grain sorghum may be made into ethanol or it may be used for animal feed.

I doubt if many cotton farmers will switch to sweet corn unless they are close to processing plants or a city with a strong tradition of farmers' markets.

[Dogmudgeon]

6. Food and Fuel; Guns and Butter; it's "simple" economics

In economics, the idea goes by the name of the Production Possibilities Curve, but several other names are used, like the Production Probability Frontier and the Guns-And-Butter Curve. (The linked page that briefly describes it also cites Herman Göring as the source of the term "Guns and Butter".)

It's simple to understand. You have a given amount of money to spend on Guns and Butter ... or, in the case of agricultural use, Food and Fuel. When you plot one of them as the X variable and the other one as the Y variable, you get a stereotypical-looking curve (or line, depending on how you graph it).

Sure, it's possible to modify the curve, to push it outward. As JohnWxy posted, by eliminating cotton tax breaks, some of the farmland will be freed to grow sugar cane, which is more efficient than corn, and will produce more ethanol. Well, that's provided the farmers choose to grow sugar cane, but it's a good bet that many of them will if the price of sugar cane increases to get top dollar from the ethanol manufacturers.

The problem comes with sustainability. Our economy needs to grow at a minimum of 2.5% per annum to prevent stagnation and depression. Increases in efficiency can help, but only so much. And 2.5%/yr might even be too-low a figure; I've seen 2.8% and even 4% quoted, and it's obviously not a purely scientifically-established number.

Using the Rule of 70 (or 72) (or 69.3), a 2.5% growth rate per year leads to a doubling time of 70/2.5 years, or 28 years. I will leave it to the ethanol proponents AND detractors to figure out how many doublings our agriculture could sustain. Determining the proper place of ethanol and other cropland-using biofuels will soon become an important part of government policy -- and screaming over the supremacy of the Invisible Hand.

Of course, this doesn't mean we ought not produce ethanol. I strongly support biofuel R&D and production. But everywhere we turn in dealing with our current bunch of cascading problems, we are faced with systems and sustainability problems. We MUST deal with ALL of our problems in a multi-disciplinary way, and make homeostasis the buzzword du jour; what M. King Hubbert called "The Steady-State Economy" (for more background, see Hubbert’s Prescription for Survival, A Steady State Economy at the Energy Bulletin website).

Maintaining homeostasis (though not stagnation!) on the Earth and moving industrial growth into space would provide the kind of a frontier we need to keep the entrepreneurs happy and productive, and would reduce the time required to open human habitation in space. Sadly, as with alternative energy sources, we could have begun the process some thirty years ago, but we didn't; our business community committed itself to Massive Riches Through Imaginary Wealth (and spent a few idle bucks on computer technology, fortunately). We'd better hope, or, more to the point, we'd better make sure they don't pull the same stunt with new energy production and homeostasis-achieving economics.

--p!