Debate about current generation biofuels continues
27 April 2007
There has been a change in the economy of staple food crops lately. Such raw materials used to be examples of low price elasticity: people didn't start to buy more breakfast cereals just because the price for corn went down. Only for large foodcompanies changes in commodity prices could result in a change in recipy, exchanging one starch or oil crop for another (corn, potato, wheat; palm, soy, oilseed rape or sunflower). The total volume of starch, oil, sugar, plant protein, showed a calm and steady pattern. Locally, harvests could fail and have great impact, but on a global scale the consequences remained relatively limited.
The article by Marcel aan de Brugh, published in the issue of March 31st 2007 of the Dutch daily NRC analyses why this no longer seems to be the case. As a result of the preference in the West for plant oil over animal fat, but mainly as a result of using agricultural produce as biofuels, demand, and therefore price, has increased substantially.
Biodiesel produced from plant oil, for example, has captured 2% of the German fuel market already. That involves 6 billion liters of plant oil, 10 times the amount in 2000. The European Commission has announced that, by 2020, 10% of transport fuel has to consist of biofuel, giving rise to expectations of further price rises of involved crops at the same time.
In other parts of the world it has been bio-ethanol which has increased demand for food crops like corn. In the US, about 20% of the corn harvest is transferred into biofuel. In Mexico where another type of corn is used for baking tortillas, price of this staple food has risen by 25% nevertheless. Some other complaints raise doubt with biofuel producers as well. They point out that the booming Chinese economy results in more meat consumption and subsequently a bigger demand on crops for feeding these animals.
Another factor is that in the west, more and more animal fat is exchanged for plant oil (in the eyes of the biofuel industry the reduced amount of animal feed involved does not compensate for this effect). Yet another factor is caused by European food companies trying to avoid using genetically modified soy, thus adding to the scarcety of soil seed rape and thus increasing its price.
It is expected that price effects will result in shifts in crop acreage, thus matching supply with demand. The increase in total demand will inevitably result in more land being used for agriculture at the expense of nature reserves and the environment.
And thus, a measure like biodiesel development, intended to protect the environment, has itself turned into an environmental threat. The fall of mineral oil prices has slowed down the use of plant oils for fuel for the moment. Plans to set up plants in the area of Rotterdam harbour to produce either bio-ethanol or biodiesel have been shelved, so the article mentions.
In the longer run a sizeable contribution is expected from a new generation of biofuels derived from plant waste material like, straw and saw dust. Nedalco has announced to develop a plant with its American partner to produce bioethanol from sugar beet pulp and other crop waste. How soon such a technology will develop into contributing significantly to reaching the European goals for 2020, remains to be seen. Currently, the world production of plant oil amounts to a mere 3% of global fuel demand. Trying to cover 10% of European fuel demand through biofuels is qualified by a representative of a food company as mere humbug. What counts for the European consumer, because of high taxes on fuel in this part of the world, is the price, explains a gasoline pump owner just across the German border near Nijmegen.
source: Dutch daily NRC, March 31st 2007 Marcel aan de Brugh