Biofuels: Not All Hands To the Pump
With work beginning on a new biodiesel plant in Co Wexford, Ireland, biofuel critics have continued to argue that mass biofuel production will lead to farmers converting most of their tillable land to plants for biofuel production, pushing up food prices. However, such large-scale conversion is unlikely for several reasons, not least that biofuel consumption remains very limited in Ireland. As the construction of a large-scale biodiesel production plant in Ireland got underway, some commentators have been presaging that the growth of biofuel sales in the country will cause a vast agricultural shift from food production to fuel production, pushing up prices of the former.
However, in Ireland, such a dramatic shift is unlikely for a number of reasons, not least because, as in many of its neighboring countries, the consumption of biofuels remains very limited. In Ireland, biofuels accounted for just 0.045% of the transport sector’s energy in 2005, compared to 3.75% in Germany and 2.23% in Sweden. Furthermore, notwithstanding the EU’s target of 2% biofuel penetration by 2005, Ireland opted for a 2008 biofuels target of only 2.2%.
There are a number of other reasons why farmers are unlikely to switch from food to fuel in large numbers. Firstly, the agricultural community is unlikely to consider biofuels a secure enough investment to completely abandon food production. Testament to this issue of security, in Germany, rapeseed sales have fallen dramatically since the start of the year as tax rebates have made prices of petroleum fuels more favorable than biofuels. Secondly, as second-generation technologies develop, the range of biomass that can be broken down to make biofuels will increase significantly.
It should also be noted that countries do not need to produce all of the biofuel that they use as large amounts can be imported from countries such as Brazil and the US, which have large-scale biofuel production industries. For example, in Sweden, a leader in the use of biofuels, the majority of the ethanol is imported. Furthermore, it is less costly than domestic production.
In sum, while the increasing usage of biofuels will undoubtedly have some impact on the agricultural landscape, claims that swathes of food production will be converted to biofuels production are unfounded, at least in the short to medium term. The most likely outcome is that biofuels will come from a range of sources, including domestic production, imports and second-generation technology.
Read more about Biofuels Market Outlook: Market Drivers, Growth Opportunities And Regulatory Change
“In sum, while the increasing usage of biofuels will undoubtedly have some impact on the agricultural landscape, claims that swathes of food production will be converted to biofuels production are unfounded, at least in the short to medium term.”
I beg to differ. Grasslands are already being ploughed under to grow more corn for the USA’s ethanol industry; production of rapeseed, driven largely by demand for biodiesel, in Europe is now close to its limit. Large areas of the Pampas in Argentina are being converted from wheat to soybeans for their oil (again, driven partly by biodiesel demand). Kenya’s delta region, currently an area rich in wildlife, is destined to become a large sugar-cane monoculture to produce ethanol. The list goes on …