While fossil fuels still account for more than 95 percent of the global transportation fuel market, biofuel production is growing roughly 15 percent per year, a rate over ten times that of oil. Under mounting pressure to improve domestic energy security and combat global climate change, countries are now turning to ethanol and biodiesel to meet rising transportation fuel demands. In 2005, the U.S. pledged to nearly double ethanol production by 2012, and the European Community recently announced that biofuels will meet 10 percent of their transportation fuel needs by 2020.
However, not everyone is enthusiastic about the biofuel "boom." Critics are highlighting the potential environmental and social costs of biofuels, including the consequences of increased food prices on the global poor. The development of cellulosic ethanol could dispel some of these concerns, but additional research and investment are needed to make this technology commercially viable and environmentally sustainable. The following discussion will highlight the potential benefits and drawbacks of biofuels as a renewable energy source in the transportation sector.
Figure 1: World Ethanol Production, 1975-2005
Source: EarthTrends, 2007 using data from Earth Policy Institute, 2006.
The Biofuel Boom
Ethanol production more than doubled between 2000 and 2005 to nine billion gallons, or 1.2 percent of global fuel use. Biodiesel production, which started from a smaller base, quadrupled (Earth Policy Institute, 2006). While corn-based U.S. ethanol and sugarcane-based Brazilian ethanol account for nearly 90 percent of global production, other countries are rapidly expanding output using a variety of sugar and grain crops (see Figure 2). Europe is currently the leading producer of biodiesel, which is processed from vegetable oils that are derived from soy beans, oil palm, and rapeseed, among other crops.
The automotive industry is transforming as well. Although most vehicles can utilize a 90:10 ratio of gasoline and ethanol, automakers are now upping production of "flex-fuel" cars that run on E85 (as well as gasoline), a mix of 85 percent ethanol and 15 percent gasoline.
Figure 2: Top Five Biofuel Producers in 2005
Source: EarthTrends, 2007 using data from WorldWatch, 2006 and U.S. Department of Energy, 2006
The Benefits of Biofuels in an Oil-Addicted World
Although political instability and slowing production are raising concerns over the future of oil, demand for oil is predicted to increase by 22 percent between 2003 and 2015, largely due to growth in the transportation sector (EIA, 2006). Producing biofuels as an alternative to gasoline reduces a country's dependence on foreign oil while also creating domestic jobs and stimulating the rural economy. In addition, biofuels generate less smog-producing carbon monoxide (currently responsible for 800,000 premature deaths each year) and result in fewer greenhouse gas (GHG) emissions than oil.
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Box 1: Ethanol Production in Brazil In the 1970s, amid record high oil prices and a struggling sugar industry, Brazil became a world leader in ethanol production from sugarcane. Since then, Brazil has saved some $100 billion in foreign exchange while also boosting rural incomes, improving air quality, and reducing greenhouse gas emissions. Nearly half of Brazil's sugarcane crop is destined for ethanol each year, accounting for 40 percent of transportation fuel use. However, concerns exist that ethanol-driven agricultural expansion will accelerate deforestation in the Brazilian Amazon (WRI, 2005). |
The Food versus Fuel Debate
The potential appetite of the world's 800 million car owners is vast--it took 13 percent of the U.S. corn harvest in 2005 to displace less than three percent of fuel needs (RFA, 2007). As the fuel market increasingly competes with food and livestock feed markets over the same crops, the prices of food commodities--from bread to poultry to cooking oil--are expected to rise, which could have serious consequences for the over 800 million people worldwide facing persistent hunger. Confirming these fears, corn prices doubled last year, causing social unrest in Mexico where corn tortillas are a dietary staple (BBC News, 2007).
On the other hand, biofuel production can boost incomes in rural areas, where three-quarters of the world's poor reside, which may increase their ability to secure food supplies. The extent to which higher crop prices will hurt or help poor people in developing countries will likely vary from region to region. Deeper analysis is needed to understand the global and local impacts of expanded biofuels demand.
Figure 3: Biofuel Yields of Selected Ethanol and Biodiesel Feedstocks
Reproduced from WorldWatch, 2006. Biofuels for Transportation: Global Potential and Implications for Sustainable Agriculture and Energy in the 21st Century
Weighing Environmental Costs and Benefits
When crops grow, they absorb carbon dioxide from the atmosphere, thus negating any greenhouse gas emissions that result from burning biofuels. However, planting, fertilizing and harvesting the crop requires machinery that utilize fossil fuels, as do the fermentation, distillation and transportation processes. All together, the energy required to generate one gallon of corn-based ethanol is equal to about 60-75 percent of the energy produced (NRDC, 2006). As a result, GHG emissions are only reduced by 15-40 percent relative to oil on a per gallon basis (WorldWatch, 2006).
More positively, biodiesel and sugar-based ethanol yield higher net energy gains than corn ethanol, decreasing GHG emissions by 45-75 percent and 40-90 percent respectively. However, decisions to increase biofuel use to levels that have measurable impacts on greenhouse gas concentrations must be carefully weighed against the environmental costs of production--agriculture is a leading driver of deforestation, soil erosion and water pollution.
The Promise of Cellulosic Ethanol
Cellulosic ethanol is made from a wide variety of plant materials, including wood wastes, crop residues and grasses, some of which can be grown on marginal lands not suitable for food production. The process for converting these to fuel is often more efficient because plant material rather than fossil fuels can be used to provide heat and power. As a result, cellulosic ethanol has an energy yield at least four to six times the energy expended during production and can reduce greenhouse gas emissions by 65-110 percent relative to gasoline (WorldWatch, 2006). A 2005 study by the U.S. Departments of Energy and Agriculture estimated that cellulosic ethanol could displace 30 percent of the nation's transportation fuel needs without impacting food harvests (USDA and DOE, 2005).
However, generating cellulosic ethanol remains technically complex and commercially unprofitable. Bringing the price down to competitive levels will require significant investment and, in some cases, additional research and development; it remains unclear how long this will take. Even then, some cellulosic feedstocks may cause environmental problems, depending on how they are grown, processed, transported and used.
Figure 4: Cost Ranges for Ethanol and Gasoline Production, 2006
Reproduced from WorldWatch, 2006. Biofuels for Transportation: Global Potential and Implications for Sustainable Agriculture and Energy in the 21st Century
The Future of Biofuels
The future of biofuels is uncertain, depending largely on the price of oil, government policies, and technological developments. The potential social and environmental risks associated with biofuels must be carefully weighed when deciding how much to produce and in what types of feedstocks to invest. One can be certain that ethanol and biodiesel cannot solve all of the economic and environmental problems associated with fossil fuels. Measures that reduce overall demand for energy, such as increasing the fuel economy of automobiles and expanding mass transit options in cities, will also be necessary.
RELATED LINKS:
European Commission Biofuels Strategy
U.S. Department of Energy Biomass Energy Databook
EarthTrends
Climate and Atmosphere Searchable Database
Agriculture and Food Searchable Database
EarthTrends Podcast: Episode 4 (a discussion of biofuels featuring an interview with WRI's Liz Marshall)
Related WRI Policy Notes
Agriculture and Climate Change: Greenhouse Gas Mitigation Opportunities and the 2007 Farm Bill
