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In Severe Drought, A Silver Lining for Advanced Biofuels

Alex Lauderbaugh — August 7, 2012

With much of the arable land in the United States experiencing a significant and extended drought, the question arises: Why would we sacrifice food production for fuel crops such as corn?  Underlying this question are two major concerns about the use of corn ethanol for gasoline substitutes or additives.

The first issue is that of rising food costs, and the complications added by biofuel production.  Droughts reduce crop yields, driving up the cost of primary foodstuffs, such as grains and vegetables.  Furthermore, corn planted in the U.S. for fuel ethanol is inedible for humans, reducing the area of land dedicated to food production; approximately 40% of the U.S. corn harvest is for ethanol.  The net effect is, then, straightforward: food costs more because of grain-based fuel production.

The second issue is more subtle.  Since corn used for fuel is also affected by the drought, yields decrease, the cost of ethanol increases, and ethanol as a source of renewable fuel becomes less competitive.  Unfortunately for industrial distillers, the federal subsidies for corn ethanol expired at the end of 2011.  Such subsidies might otherwise be able to help the producers cope with these decreasing margins.  To compound this distress, the supply of ethanol (though not necessarily corn-based) as a gasoline additive is required to grow at the same rate as gasoline consumption.  This bodes poorly for corn’s future as an economically viable renewable fuel source.

There may be a bright side to this story, however.  Expensive advanced biofuels could benefit from the current economic conditions to gain traction in the market.  Advanced processing of biofuels tends to utilize the waste products of food production, minimizing the impact of droughts on food prices compared to the current situation.  Furthermore, these new fermentation methods utilize robust crops, such as switchgrass, that are generally drought resistant, and precursor crop yields would not be negatively affected by the current climate conditions.   These properties alleviate the concerns about reduced food production as well as the direct effects on yields for fuel production.

Unfortunately, while various enzymatic methods are being developed to turn cellulose into sugar for fermentation, these advances have not yet reached economies of scale.  Supporting the industry’s development, the U.S. departments of Energy (DOE) and Agriculture (USDA) have recently announced a $41 million investment in diversifying feedstocks and the technologies that allow them to produce ethanol.

Thus, though the circumstances facing many U.S. farmers and ethanol refiners are unfortunate, the long run implications of the current drought may be positive.  While ethanol necessarily contains less energy than gasoline, cellulosic biofuels reduce greenhouse gas emissions by about 86% compared to gasoline and, like all forms of ethanol, are biodegradable.  Since the fuel is produced using food byproducts or inedible vegetation from non-arable lands, its cultivation doesn’t impact food production. More than a dozen advanced biofuel refineries are currently in operation in the U.S., with more coming online in the near future.

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