Biofuels: Don’t Let This Alternative Energy “Greendoggle” Fool You
by Dave Fessler, Energy and Infrastructure Expert
Friday, March 5, 2010: Issue #1210
As the old sixteenth-century saying goes, “You can’t make a silk purse from a sow’s ear.”
Translation: Sometimes, you can dress something up as much as you want, but it doesn’t change what it really is.
Or in the case of biofuel, what it isn’t.
And to coin a more recent adage, “putting lipstick on a pig” is exactly what biofuel advocates continue to do.
I’m interested in all forms of energy – fossil fuels, renewables, nuclear, etc. And like most Americans, it’s my wish to see us weaned off Middle Eastern oil in my lifetime. For example, in the following ways…
- By moving towards renewable energy resources like wind, solar and geothermal.
- Nuclear fuel is also a viable way to gain greater energy independence – despite the issue of how to store the spent fuel.
- The United States is blessed with a 100-year supply of natural gas – the second-largest reserves in the world.
But biofuels aren’t viable. Here’s why…
The Biofuel Brainwash
A “Greendoggle.”
That’s how I’d describe the misrepresentation of the biofuel industry.
Even with its high greenhouse gas emissions, burning coal represents a better solution than biofuels. Especially when you consider biofuels’ detrimental factors.
Right off the bat, it doesn’t make much sense to take the world’s main food staples – corn, wheat and rice – and turn them into fuel.
But just five years ago, bio-ethanol, bio-diesel and bio-gasoline were billed as America’s solution to imported oil. And all it took to drive prices skyward was dwindling crude oil supplies, rising prices, increasing global demand – and a healthy dose of biofuel hype.
On the surface, biofuels seem like a great renewable energy idea. The argument is that carbon produced from biofuels is “better” than carbon from fossil fuels. Why? Because when the plants (i.e. fuel) are grown, it offsets the carbon production.
Congress bought the hype, passing a law, mandating 35 billion gallons of ethanol production a year by 2017. And to grease the wheels, lawmakers tossed a $0.51 per-gallon subsidy at ethanol producers. Bio-diesel producers received even more – $1 for every gallon produced.
Farmers jumped for joy at the prospect of making some serious dough. Crop rotation plans were dumped in favor of one thing: Corn. And lots of it.
Ethanol production plants popped up across the Midwest. Between 2000 and 2008, the number vaulted from 50 to 140. Sixty more were under construction.
Who knew that America’s solution to imported oil was in U.S. soil all along?
But back the corn truck up…
Biofuel Reality Check
In the quest for energy independence, politicians overlooked a few key details…
- As farmers piled all their resources into growing corn for ethanol, just about every food made with corn rose in price.
- Food producers then found themselves paying three to four times what they paid for corn just a few years before. And they did what any business does: passed the costs along to consumers.
- Aid organizations cut food donations by 50% (more in some cases).
A Wall Street Journal editorial said: “Cornell’s David Pimental and Berkeley’s Ted Patzek found that it takes more than a gallon of fossil fuel to make one gallon of ethanol – 29% more. That’s because it takes enormous amounts of fossil fuel energy to grow corn (using fertilizer and irrigation), to transport the crops, and then turn that corn into ethanol.”
A University of Minnesota study in 2008 was even more sobering: “Converting forests, peat lands, savannas, or grasslands to produce food-based biofuels in Brazil, Southeast Asia, and the United States creates a huge biofuel carbon debt. When land-use changes are taken into account, 17 to 420 times more CO2 is released than the reductions gained when these biofuels displace fossil fuels.”
As demand for corn and other biofuel stocks soared, farmers just started planting corn, ignoring a century’s worth of data on the benefits of crop rotation.
And due to the glut of corn, soybeans, wheat and rice were all in short supply, causing their prices to rise, too.
For example, soybeans had to be grown elsewhere. That turned out to be Brazil. But large-scale deforestation in the Amazon Basin (to increase the available land for soybean production) just adds to the insanity of biofuels.
Speaking of insanity…
The Backwards Way to Boost Biofuel
In Sumatra and Borneo, nearly 10 million acres of forest have been burned to create fields for palm oil plantations for biofuel. In Malaysia and Indonesia, they’re about to erase 25 million acres of prime forest.
There are two things wrong with this…
- Burning the forest produces 93 times the greenhouse gases that burning the fuel produced on them would.
- The trees are nearly twice as efficient absorbers of CO2 than the palm plants grown for fuel stock.
The expiration of the $1 per gallon federal biofuel tax credit in January means many biodiesel companies are no longer commercially viable – and might signal the end for this biofuel “Greendoggle” in the United States.
However, some members of Congress are trying to reinstate it. One can only hope that saner heads will prevail.
Good investing,
Dave Fessler
Editor’s Note: Forget biofuels and ethanol plants… there’s a new “green power plant” that is the real deal. It’s known as the Fredonia Reactor, which is 62 times more powerful than a traditional nuclear reactor and runs on what the International Energy Agency calls “the most advanced of the ‘new’ renewable energy technologies.”
Not only that, the Department of Energy states that this resource “could supply one-fifth of all electricity in the country.”
For more details, check out this report – and see for yourself why the independent Hulbert Financial Digest has ranked The Oxford Club’s Communiqué fifth in the United States for risk-adjusted returns over the past 10 years.
- Ethanol Is on Life Support… For Now
- Corn Crop Numbers Boost Ethanol Producers
- The World’s Biggest Food Fight
18 Responses to “Biofuels: Don’t Let This Alternative Energy “Greendoggle” Fool You”
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David Fessler is an Advisory Panelist for Investment U and The Oxford Club, one of the world’s most exclusive and prestigious networks of private investors.
March 5th, 2010 at 1:32 pm
Great Article. Should be read by every American.
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March 5th, 2010 at 1:38 pm
Great article. Every American needs to read and understand. I grew up on a farm, my father was smarter than that, & less greedy.
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March 5th, 2010 at 2:04 pm
Biofuels have some problems but so do all fuels. Corn is easy and a supply was available so it got the fuel ethanol industry started. At most additional corn demand for ethanol may have raised food prices 10%; it was the 100 increase in oil prices that caused the big spike in food prices(oil and corn are now down to pre-spike prices but food prices have fallen only 10% from their peak. Ask food industry why.) Less than 10% of corn grown world wide is eaten directly by humans. The rest goes to feed animals for milk and meat. Ethanol uses only the starch in corn and the remaining 30% (by weight) of the grain is sold as animal feed. The protein is all left in the animal feed so only about half of the corn nutrition used is diverted from the food chain. The corn ethanol boom is over now.
Cellulosic ethanol is going commercial in 2010 at small scale proof of concept plants. It will expand rapidly soon and it can use a wide variety of feedstock, a lot of it now just waste. This waste material and purpose grown materials are distributed all over the US, not just in the US. Marginal land can be used for the purpose grown materials. The price will be lower than corn based within 5 to 10 years and there is enough feedstock to replace all our imported oil from hostile countries.
We maintain access to oil by our huge military presence at very high cost. If the real cost of oil, including the military protection, was charged at the pump the price would be about double and we saw what that does to our economy last year.
There is no mass substitute for liquids fuels for transportation. Now we use almost 100% oil for this. There is a little electric use and that will grow slowly, for urban land transport. But we don’t have a choice, we must break dependence on oil from hostile countries. Home produced ethanol can do that and it also provides thousands of manufacturing jobs which are sorely needed.
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March 5th, 2010 at 2:46 pm
A very true article, but why is the work being done at SUNY in the form of willow biomass not being taken into account, trees planted at 6000 per acre can then be used to clean dirty water[phytoremediation] and then burnt to give heat and power. This can be done on a renewable basis they will grow again for perhaps 20-30 years and harvested on a 3 year cycle. Then perhaps the cellulosic ethanol has been perfected and ethanol from wood could be made. No food products would be used
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March 5th, 2010 at 3:58 pm
Biofuels are not inherently bad. Corn is just the wrong feedstock. Other plants and waste are better feedstocks!
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March 5th, 2010 at 4:24 pm
Interesting and plausible. All should read it. IF true what will we do about it? Sounds like we are going backwards. We need to do more about wind and solar energy.I worked for NASA when we developed solar cells and the wind turbine for the Dept. of Energy after our space program was cut way back by then Pres. Nixon. NASA usually comes through always.
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March 5th, 2010 at 9:41 pm
Today bio fuels are considered as by products of starch or from molasses and hence ojected to as depleting food resources. It is true that European and North American countries cannot conceive of any vegetable source other than the above mentioned ones. But there are tress yielding non edible oil which can be processed into bio diesel. This source, apart from serving as an additional gateway for bio energy also provides a green cover to earth and helps absorb atmospheric Carbon dioxide to uniomaginable extent. Africa has already proved the prospects in exploiting this source. In India, we have gone one step further. we have cultivated these plants in dry lands (without interfering with fertile lands of regular food crops) and have also raised other food crops ( as inter crops). That is this program has a three fold effect namely, (i) a vegetative biofuel source without involving food crops, (ii) a clean environment through reduction of atmospheric Carbon dioxide) and (iii) bringing un-utilized arid lands under productive activity and providing additional area of food crops. If persons really interested in bio energy can visit these areas in India, they will understand the situation by way of SEEING is BELIEVING.
This will also help investors to form joint ventures in bringing a few million acres under this program as a social development activity in providing opportunities for agricultural labour.
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March 5th, 2010 at 10:53 pm
During the past three decades, the demand for electric energy and power has increased tremendously due to rapid population growth, intense industrialization, ever growing need of transportation, advance communication, etc. Due to this phenomena, the cost of electricity and power has become more expensive, may they be the product of fossil fuel based engines, nuclear and nature’s prime movers. Parallel to this, the demand for alternative source of energy, that is cheap, clean and safe, is strongly felt. This has opened up even greater business opportunities.
What Is The Solution To These Business Opportunities?
While bio-fuels and renewable energies are currently the solutions to these business opportunities, the answer to these business opportunities both in short term and long term bases is still the powerful, miracle machines called C-M1 and C-M3.
C-M1 is a machine that consumes only 3-4% energy from its generated 100% output energy. As illustrated in the Hydroelectric Power Generation (The Water Recycling Concept), the Input/Output ratio is 1:25. C-M1 has so many applications. Aside from large scale electric generations, this machine can be also used in irrigation, flood control, water supply to rural and urban areas, oil (black gold ) extraction, cooling system, power generator for buildings and industries, and many more.
C-M1 will practically solve and revolutionize the energy requirement of mankind especially in the field of electricity and transportation. It will relieve man from his total dependence on known Conventional Prime Movers namely: fossil-fuel based engines, nuclear, and nature’s prime movers such as hydro, geothermal, wind, solar, sea wave and sea current, all of which have drawbacks and very expensive to build. Since it is not fossil fuel based engine, nuclear, etc. therefore it does not produce toxic waste, radiation, heat, air-water. Detrimental to all living things and environment. In hydroelectric power generation, dam – an expensive and delicate structure to build, is no longer needed. Therefore, destruction of rivers and watersheds is prevented and the use of expensive pylons, transmission lines and equipment will be minimized or even eliminated, since C-M1 can be built within the city. It can operate for 100 years without the possibility of breakdown due to very few moving parts; therefore, blackouts and brownouts are minimized.THE STRUCTURE OF C-M1 Compared to conventional hydroelectric power plant of the same capacity, C-M1 structure is very simple that it requires only small space. Due to its simplicity, it is 40% to 60% cheaper and 6 to 7 times faster to design and build. A one –megawatt structure can be done within 4 to 6 months.
The United States Patent and Trademark Office (USPTO) under the Paris Convention, has accorded C-M1 with Non-Provisional Patent Application Number: US 12/231,697 with Confirmation Number: 4807 while its Foreign Filing License was granted on September 23,2008. Likewise, C-M3 – The G-Force Emulator, the compact model of C-M1 is accorded with Non-Provisional Patent Application Number: US 12/288,988 with Confirmation Number: 7585 while the Foreign Filing License was granted on November 17,2008. This extent of record-recognition by USPTO has given the inventor the right to patent C-M1 and C-M3 Machines in any country of the world.
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March 5th, 2010 at 11:05 pm
Regarding the Fredonia Reactor mentioned in the Editor’s Note at the bottom, as a member of the Chairman’s Circle of The Oxford Club, I wonder why I have not heard about it before now. Do I have to sign up to become a member all over again in order to get the details about it?
Thomas Connors
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Investment U Reply:
March 6th, 2010 at 9:00 am
Thomas,
The Fredonia Reactor report can be found on the Oxford Club website under the Investor Reports section, it should be one of the very top reports on that page.
Thank you,
Investment U
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March 6th, 2010 at 7:19 am
Biofuels – It gets me that no one has followed the chain of events in this whole mess. I agree that biofuels are probably not he answer;however the real bad guy in this whole mess was started years before the biofuel subsidies and that is the USDA and our elected representatives and FARM SUBSIDIES and the TAX CODE(section 1034 I think).
This is a problem that exists all over the world (the US has had a fight with Europe for years over farm subsidies – the dumping of surplus subsidies grain by Europe on the US market driving down prices in the US because Europe’s subsidy was higher). I have to give some to the US government because they have in the past tried to get other countries to correct their subsidies so everyone was on an equal foot so US farmers could be competitive in the world grain market. Fact-Brazil was burning down its forests long before biofuels(in the US) because of cheap land, cheap labor, and developing a sustainable food supply and fuel source(the first biofuel country)and they also developed a grain export market.
Fact – farmers are on an average tractor jockeys,and on an average poor business people(there are some really good at it but most have survived on government hand outs and debt write offs-there should be some research done on farmers going bankrupt, keeping the land and machinery and continuing to farm over the past 30 years). Farmers farm as a way of life and the goal is the independence – as a group they are very competitive among themselves for land and inputs to production which has created a overproduction mentality which has the result of individual farmers getting bigger and bigger pushing other farmers out(comes down to farming the government program).
Fact – there has never been a shortage of corn or soybeans(possibly wheat but little if any wheat is used in biofuels) – the price of corn is based on perception in the futures market not by supply and demand-I live in a marginal rural area where corn and soybeans are raised-since the push of biofuels there has always been piles of grain on the ground due to overproduction – yes a lot of it goes to the ethanol plants because that is the only market for it – the food market is not large enough to take the large supply.
The piles eventually get cleaned up; however before ethanol there were piles that would sit out almost to the next harvest – I assume this grain was being dumped on the world market at fire sell prices-the government had it floored in at $1.50 per bushel and owned most of it if not all(farmers borrowed at the loan price and then just turned the grain over to the government).
Do you start to understand that there is more to this ethanol business then just biofuels – it is the government getting stuck with millions of bushels of corn under their USDA programs that date back decades. At this point in time the USDA could close all of its Farm Service Offices (there are a lot of them – Bush tried to close a bunch because with computers operations can be centralized but could not get the job done) because of the high price of grain – they, to my knowledge, still floor the price of corn in at $1.50 and beans somewhere around $4.50+. Farmers should not even have to walk into a Farm Service office but it has become a busy place because of crop insurance that has been expanded into a very rich subsidy for farmers and the people that own farmland – your tax dollars at work.
So if you think that ethanol is bad for ethanol’s sake there are many more reasons that ethanol is on the table besides the subsidies that a gallon of biofuel is given-the problems are much deeper-think what is going to happen when cellulose ethanol and algae make inroads in a big way. Forgive my spelling – I am too lazy to get a dictionary today.
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March 6th, 2010 at 3:58 pm
Hey, US already doesnt import much from the middle east, most middle east oil goes to Asia as its closer. In the next few year the US will get even less oil from middle east as its crowded out of the market.
Canada is the US biggest oil supplier and will get bigger.
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March 7th, 2010 at 5:07 am
Henry Ford built a 1930 Auto that had plastic parts made from Hemp, Powered this Auto with fuel made from hemp. Hemp was processed into rope, paper, paint, medicines, cloth and many other uses. Hemp was considered a gift from god for its many uses. Hemp grows so tall that it prevents weeds from getting sunlight so they die.Hemp requires no pesticides. Hemp does not harm the earth, it removes more polution from the air than any other plant. The only draw back with hemp is it was the top compeditor to big oil and Dupont so big oil and Dupont went to the best government that money can buy and had hemp labeled, Marijuana and the gov. started a campain against hemp and with a doctor that was there”expert witnes” to say that marijuana when smoked made people violent. Now you know why the earth is so poluted and why it will only get worse.
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March 7th, 2010 at 4:16 pm
A great article and very on the mark for the lunacy of creating false markets for products that cannot function financially in the real world. When Germany cut back on solar subsidies the market cap of every major producer dropped dramatically. The cut back on food production is ludicrous to make ethanol at more cost than it can be sold for. Denmark has the highest concentration of wind power generation in the world and even their Energy Minister has declared it a financial boondoggle.
Technology designed in Canada uses almost no outside power to create conversion of bio-solids and organic matter into clean green renewable energy. No CO2 no NOX gases during combustion, no fossil fuels used in the processing and 50% of all feed stock becomes usable fuel. Landfills can be rehabilitated, no new trees have to be cut, and a minimal carbon footprint is the result.
No odor, clean, renewable, green energy and systems that last for 25+ years. There is an alternative and it is being adapted by the world. Currently operations in The USA, Canada, Britain and Ireland all attest to the efficacy of this incredible system. It makes coal burn cleaner and has even been used to neutralize PCB contaminated soil.
There is a simple alternative that is cost effective that doesn’t break down that has never relied on government subsidies or handouts. Perhaps that is the problem.
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March 8th, 2010 at 7:07 pm
I disagree with those that thought this was a great article. Too bad David appears to not know anything about current farming practices or why groceries got high in price. Corn used for ethanol is not the same corn that most people think of when they are buying food at there local grocery. Corn used for ethanol is number 2 yellow corn and typically used for animal feed, not human.When used in dry grind ethanol production, it produces a co-product (DDGS) that is used to replace corn displaced from it’s usual use as an animal feed. DDGS has proven to be better, cheaper animal feed than corn. By using DDGS in animal diets the need for whole kernel for the animal diet is negligible. The corn at the grocery store is still there and not taken from anyone’s mouth. Food prices went up because the index funds forced oil excessively high in the furures market price speculation and therefore transportation and manufacturing costs went up. Corn has fallen from high prices to very low break even at best prices, but how much have groceries come down in price. They haven’t! In the grand scheme agriculture very few acres were switched to plant corn but yields increased tremendously and more than made up a bulk of increased use of corn for ethanol. As a farmer with an ethanol plant within a half mile of my front door,I kept my same rotation of wheat, corn, and soybeans. The only thing that has made me change rotation strategy has been due to excessive rainfall that has delayed or prevented planting crops at the appropriate times. AS far as “subsidy” to ethanol, most think it went to the ethanol plants and farmer. The fact is the “subsidy” was a blenders credit and for the most part has gone to refiners and oil companies as they were the ones that have done most of the blending of ethanol with gasoline. I would guess that most people don’t know or have forgotten that ethanol replaced MTBE in gasoline for our autos. MTBE is a carcinogenic found to be poluting our fresh water supplies. It was a product produced by the petroleum industry to satisfy the clean air requirements placed on our fuel supply and used in almost every gallon of gasoline. Without having a safer product readily available and an incentive to use that product, it would have been impossible get the industry to change the recipe for our auto gas. How wonderful to have a product that we could reproduce and add to the Green environment. The blending credit has actually saved the taxpayers incredible amounts of tax dollars by creating a market for corn that actually returns a profit to farmers. With corn being profitable the support offered to agriculture has been tremendously reduced by an amount many times greater than the blenders credit. Before there is a claim made about how expensive the “ag bill” is that congress debates every year, be awarr that two thirds of funding for the “Ag Bill” is used for programs like food stamps and not as a direct subsidy to agriculture. I wish I had the time and literary skills to actually address the half-truths expressed by David and others, but writing and arguing is not my expertise. I sure wish the press and other publications such as this one would refrain from printing so many opinions in the limelight and also check the source of information from several layers deep as was done in the old days of journalism. There is so much misinformation that the general public, as well as so called experts such as David, take for granted just because they read it in print from a source and repeat the information without performing the due diligence to really verify the material as to the latest and most honestly fair analysis. Now that the media blitz to discredit ethanol has all but destroyed the corn ethanol industry, look what has happened. The large oil companies like Valerol, Shell, and British Petroleum (BP) have gobbled up many ethanol plants in the US and have formed partnerships to gain control of the ethanol industry in Brazil! I wonder who had the money to provide for all the misinformation that made ethanol go from the tremendous home grown solution it could have been to once again something controlled by the same people that loved to bringing expensive oil subsidized by our military from outside our borders. If I remember correctly, I believe there were some unheard of revenues in the oil industry just proceeding the media attack on ethanol. If 10% of my market share was being mandated by having a replacement additive in our fuel blends, I would think there would have been a huge incentive to use some of those high profits to monopolize the industry again. If we don’t grow the ethanol industry inside our borders, this country will continue to be dependent on foreign fuel.
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March 9th, 2010 at 2:06 pm
For more details regarding C-M1, Pls visit http://www.cangrier-m.com , the energy of the future.
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March 19th, 2010 at 11:50 pm
Your critique on corn based ethanol and palm oil based biofuels has merit. In both cases there are more economically and environmentally desirable techniques to generate these necessary resources to supplant fossil fuels. So do not make a broad brush condemnation. There is much promise in the R&D pipeline for cellulosic biomass ,algae,etc.
I speak as a pioneer who originated and directed the Pacific Gas and Electric Co.’s Renewable Energy R&D Program in 1976. Also be aware that nuclear energy is NOT economically viable.We can generate far more energy with solar ,wind,geothermal etc. dispatched on a smart grid at half the cost of nuclear. Why are there ZERO privately financed nuclear plants in the world? All are massively government subsidized,a great waste of taxpayer money.
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April 4th, 2010 at 6:18 pm
This article is a disappointment, and an example of a Flawed analysis of Biofuels. For starters, Biodiesel (not ethanol)is environmentally sustainable and won’t affect food prices as long as we produce other commodities other than food products, and prohibit the destruction of forests to grow palm oil. There are strides being made in the production of biodiesel such as; cellulosic biomass, and algae. Algae researchers are seeking ways to cost effectively mass produce biodiesel. I suspect it won’t be long before they figured that out. Further, 100% Biodiesel has no harmful emissions, and current production from cooking oils produce a byproduct that can be used to make soap. Many products which run on fossil fuels if not already converted to 100% biodiesel, can! For instance, my neighbor runs his home furnace on Biodiesel, cars, trains and planes can run on 100% biodiesel… and more products can easily be manufactured to run on biodiesel as well.
And I agree with fellow blogger; Harold Segelstad. “We can generate far more energy with wind, solar, geothermal,etc. diapatched on a smart grid at half the cost of nuclear”. Amory Lovins world renowned scientist, and co-founder of think tank; Rocky Mountain Institute, testified in front of the Dept of Energy in (2006?) and in various conferences and appearances since, that nuclear energy is Not a viable option. It simple is Not cost effective.
Natural Gas is Not viable either. In fact, natural gas is a BAD Idea. The EPA has launched an investigation into the a natural gas process called, “fraking”. It is destructive and the “Fraking process” poisons underground water supplies with “hydrochloric acid, benezene”, and other known toxins. Colorado cattle ranchers have reported livestock died from drinking the water, birth rates are lower, and an in flux of livestock birth defects.
reference: (http://splashdownpa.blogspot.com/2010/03/university-of-pittsburgh-scientist.html)
(www.propublica.org/…/epa-launches-national-study-of-hydraulic-fracturing)
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