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Biofuel Furor

Will power plants get caught in ethanol’s food fight?

Fortnightly Magazine - August 2008

The debate over food vs. fuel never has been louder. Using corn to make the biofuel ethanol is perhaps the best known point of argument. Everyone is asking: Should the United States require a certain percentage of U.S. corn crops be turned into fuel in the face of global food shortages and exorbitant food prices? And what are the effects of diverting food croplands into producing fuel? About one quarter of all corn produced in the United States last year went for ethanol production. While U.S. government studies claim biofuel demand accounts for only 3 percent of the global increase in food prices, a recent World Bank study suggests a far greater correlation—as much as 75 percent (see “Secret report: biofuel caused food crisis,” The Guardian, July 4, 2008) .

But the food-vs.-fuel dispute might affect the electric power industry too.

Part of the problem is that not much of a distinction is being made among biomass fuels. Not all such fuels are the same. Biomass generally is the umbrella term for many fuel sources and biomass energy is derived from three distinct energy sources—wood, waste, and alcohol fuels. Wood energy is derived both from harvested wood and wood waste streams. The largest source of energy from wood is black liquor, a waste product from processes of the pulp, paper and paperboard industry. Waste energy is the second-largest source of biomass energy, mainly from municipal solid waste, manufacturing waste and landfill gas. Biomass alcohol fuel, or ethanol, in the United States is derived almost exclusively from corn, and its principal use is as an oxygenate in gasoline. However, renewable biofuels can come from a diverse set of organic plant materials, including feed grains, plants, trees, other agricultural commodities, algae and various related waste materials.

Irrespective of these distinctions, the nexus between energy and agriculture has sparked the argument that biofuels policies in the developed nations are causing food shortages and price increases. As a result, the prospect of using biofuels for electric generation might become a casualty of the corn-for-cars fight. On a short term basis, the situation likely will be exacerbated by recent flooding in the Midwest; Standard & Poor’s reports that flooding contributed to a 30 percent increase in corn prices in June alone, with full impacts still unknown.

Nascent Industry

With an increased interest in renewable sources of energy in general, biofuels offer tantalizing promise for low-carbon or carbon-neutral electric generation. Wood and derived fuels are the largest non-hydro renewable electricity source. Wood energy has been used for decades to generate electricity, but according to the DOE’s Energy Information Administration (EIA), its contribution has remained virtually flat since 2003. And it might not increase due to fights over air pollution (see sidebar, “Wood Burning Plant Canceled.”) So to meet the growing demand for energy from renewables, new sources of fuels for electric generation are being developed, such as biodiesel.

Biodiesel can be made from more than one plant or animal source