Big companies are losing money converting corn to ethanol in spite of government subsidies (read taxpayer money) for ethanol fuels which are usually a blend with gasoline.

The impact on greenhouse gases is minimal. In theory the advantage over fossil fuels is that plants will absorb CO2 as they grow. It is then released again when burning the fuel, so this should be a carbon neutral process.

But in reality it depends on the efficiency of the production process. If you burn coal to create electricity that is used by an ethanol plant then the net emission of greenhouse gases could be higher than if you just burned gasoline. And then you still have to produce fertilizers.

The US is still highly dependent on foreign oil. American oil imports have fallen but you cannot attribute that to biomass ethanol production alone. Drivers are more conscious about there driving habits and new cars get more fuel efficient.

As always people disagree on the impact of higher demand for corn on food prices. While wholesale prices are skyrocketing the retail cost is also influenced by labor and energy needs.

Of course if you live in a corn growing state like Iowa or Illinois you may enjoy the growth of jobs and businesses around you.

Livestock producers argue that rising corn prices are making it harder for them to make a profit.

To counter this a lot of research is being done on the use of other crops. Switch grass has been proposed as an alternative and so is waste material. The progress in developing cellulose ethanol is very slow though. Another option is improving the corn variants so the contain more sugar.

In Brazil biofuels have been produced from sugar cane in much more efficient ways since many years. To protect their own struggling farmers the US are subjecting imports of foreign ethanol to high tariffs as opposed to the subsidies for the home grown variant. But that is a whole different political discussion.

You can read more about the politics and business interests surrounding biofuels at http://www.ft.com/indepth/ethanol .

It’s not all good news though. A big controversy is building on the influence this is having on the world food prices. Already prices of agricultural crops have gone up substantially in the last 12 months.

You can make ethanol from corn, then mix it with gasoline to drive your car. More corn is needed because it is also used to feed the cattle in the US and Europe. So it changes from a low value commodity into a high value renewable energy source.

The same is happening with palm oil which is a basic cooking ingredient in most of Asia. More and more plantations are being seen as fuel farms because the oil is mixed into a biodiesel and prices of palm oil is becoming a problem for low-income residents.

biofuel or food?

Some other voices: A Swedish bus company ‘Flygbussarna Airport Coaches’ is advertising their transition to environmental biofuel using some funny pictures.

Tags: biofuels, biodiesel, ethanol