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Biofuels: Food, Fuel, and the Future?

July 23, 2010 // 9:00am12:30pm
Event Co-sponsors: 
Environmental Change and Security Program
Brazil Institute
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With nations looking more and more to other, non-traditional sources of energy, the Program on America and the Global Economy (PAGE), the Brazil Institute, and the Global Energy Initiative (GEI) sponsored a comprehensive assessment of the current state of one of those possible sources: biofuels.  As moderator Kent Hughes, Director of PAGE and GEI, pointed out, biofuels is of considerable importance as it “involves our innovation system… and really has implications for food security, for the environment, and in many ways for the future of the planet.”

On the first panel, “Biofuels: The Current State of Play,” C. Ford Runge and Robbin S. Johnson of the University of Minnesota commented upon the role of biofuels within the United States.  Their presentation, based on a policy brief written in conjunction with Calestous Juma of Harvard University, highlighted the pillars of U.S. biofuels policy and provided solutions to make it more effective. 

According to Runge, national biofuels policy in the U.S. is currently comprised of: a 45 cent per gallon “blenders’ tax credit,” a 54 cent per gallon tariff on imported ethanol, and a biofuels production mandate calling for 36 billion gallons by 2022 make up the current biofuels policy in the U.S.  Runge argued that these “excessive and indefensible subsidies to the biofuels sector” are the most expensive way to reduce greenhouse gas (GHG) emissions, compared to efficiency and systems management strategies.  Not only do these credits and mandates replace market signals, they funnel a lot of money to a minor contributor: “even if every bushel of corn the U.S. produces were dedicated to biofuels, it would only support about 15 percent of vehicular energy demand.” Runge said.

Johnson then framed his remarks by pointing out that “biofuels policy is really farm policy masquerading as energy policy,” which highlighted the complexity of the debate.  Johnson provided some context and argued that while biofuels can play a part in our future policy it should not be looked at as a possible sole source of energy.   According to Johnson, “we would like to entertain the notion that after a third of a century of pursuit of biofuels as foreign policy, the future is more likely to be shaped by the role that it can play constructively in a broader energy policy in this country.” 

Johnson also did not shy away from mentioning the environment problems associated with corn-based ethanol production.  He specifically highlighted the nitrogen runoff in the Gulf of Mexico, nitrous oxide emissions from fertilizer, and the extra burden placed on water sources.  Moreover, Johnson argued that with the market for gas-based fuels shrinking, biofuels are not a long-term strategy for capping GHG emissions.  While the two panelists reiterated their hopefulness about biofuels, Runge commented that “we are also somewhat skeptical of the relative importance that biofuels will play in the national energy portfolio.”

Runge and Johnson then offered five policy responses that are needed in order for the U.S. to reach a long-term solution: replace the blenders’ tax credit with a subsidy varying inversely with price, phase out the tariff on imported ethanol, impose a five year moratorium on mandates, introduce conservation-inducing “negative pollution taxes” and credits like hybrid vehicle rebates, and shift subsidies from cellulose plants to cellulosic research and development.

The next panel, “Biofuels in an International Context,” featured several panelists who were able to explicate the increasingly global role of biofuels.  The first speaker, BCS, Inc. Analyst Carl Wolf, who also serves as a consultant to the Department of Energy, summarized the Memorandum of Understanding (MOU) for Biofuels Cooperation between the U.S. and China.  According to Wolf, the bioenergy technology exchange between the two nations is comprised of applied research and development between U.S. and Chinese laboratories and institutions as well as between U.S. and Chinese industrial entities.  Ultimately, Wolf argued that “the harmonization of biofuels policies and standards will help establish global markets and facilitate economic growth.”

Joel Velasco, UNICA’s Chief Representative for North America, described the state of biofuels in Brazil, highlighting sugarcane’s role as a sustainable solution in bioenergy.  Velasco stated that, “sugarcane is Brazil’s number one source of renewable energy, and 600 million tons of CO2 emissions have been avoided thanks to the use of ethanol.”  Furthermore, according to Velasco satellite mapping has shown that sugarcane can be produced on 160 million more acres of Brazil’s land, and given the yield and efficiency gains of the economies of scale associated with sugarcane production, Velasco argued that ethanol prices will continue to drop.  He stressed that “sugarcane is not only a Brazil story” but a global one, and identified four principles for a “viable biofuels value chain: feedstock performance, technology neutrality, sustainability, and open competition.”

Alexandros Petersen, a Senior Fellow at the Atlantic Council, rounded out the discussion by describing the viewpoint of the European Union.  The European Commission has outlined seven overarching goals for biofuels development, including the expansion of feedstock and the support of developing countries.  However, according to Petersen, these goals have not come to fruition in part due to the “perennial E.U. problem of creating ambitious and detailed goals without prior debate.” Furthermore, Petersen argued that in Europe biofuels only serve a transport need and have no true champion among the E.U. member-states.  Thus, Petersen predicted that biofuels will eventually be edged out by other renewable sources of energy, like wind and solar power, as they are more popular in the E.U., recipients of more research and development funding, and championed by specific member-states.

Ultimately, each panelist supported the need to see biofuels in a global context.  They all agreed that open international markets, harmonization of domestic policies, and sustainability must be present for effective biofuels policy.  Furthermore, while it is vital to discuss biofuels policy, in order to best investigate the topic, energy, agriculture, and trade policies are all closely related aspects of this debate that should not be ignored.              

Drafted by Monica Schager.

 
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