The FarmPolicy.com News Summary

New Studies Regarding Biofuels

Gautam Naik http://online.wsj.com/article/SB120241324358751455.html?mod=todays_us_page_ one, writing in today's Wall Street Journal, reported that, "While the U.S. and others race to expand the use and production of biofuels, two new studies suggest these gasoline alternatives actually will increase carbon-dioxide levels.

"A study published in the latest issue of Science finds that corn-based ethanol, a type of biofuel pushed heavily in the U.S., will nearly double the output of greenhouse-gas emissions instead of reducing them by about one-fifth by some estimates. A separate paper in Science concludes that clearing native habitats to grow crops for biofuel generally will lead to more carbon emissions."

(read full study here)

The Journal article noted that, "The Renewable Fuels Association [RFA] in the U.S. said that 'biofuels alone are not the silver bullet' for the world's energy or environmental challenges. It said earlier analyses of greenhouse-gas reductions show corn-derived ethanol reduces greenhouse gas emissions by 22% on average, though those studies didn't include the effect of changing land use.

"'We absolutely assert that ethanol production and use is a responsible way to address the environmental, energy and economic challenges the world faces today,' spokesman Matt Hartwig said. He said the group's researchers will study the papers and formulate a response."

To view a statement regarding this issue from RFA President Bob Dinneen, just click here http://www.ethanolrfa.org/industry/conference/blog/2008/02/08/rfa-responds- to-new-studies/.

The Journal article reported that, "In the second study, researchers found that the effect of biofuels varied hugely, depending on where and how they were produced. For example, an increasing amount of land in Brazil is being used to grow sugarcane for ethanol. Converting the undeveloped land into sugarcane fields releases CO2. It would take 17 years for the positive effect of using sugarcane ethanol from those fields instead of petroleum-based fuels to overcome the CO2 farming the land put into the air. Draining and clearing peatlands in Malaysia and Indonesia to grow palm oil emits so much CO2 that palm biodiesel from those fields would have to be burned for more than 420 years to counteract it."

Elisabeth Rosenthal http://www.nytimes.com/2008/02/08/science/earth/08wbiofuels.html?ref=scienc e&pagewanted=all  reported in today's New York Times that, "Almost all biofuels used today cause more greenhouse gas emissions than conventional fuels if the full emissions costs of producing these 'green' fuels are taken into account, two studies being published Thursday have concluded.

"The benefits of biofuels have come under increasing attack in recent months, as scientists took a closer look at the global environmental cost of their production. These latest studies, published in the prestigious journal Science, are likely to add to the controversy.

"These studies for the first time take a detailed, comprehensive look at the emissions effects of the huge amount of natural land that is being converted to cropland globally to support biofuels development."

The Times article stated that, "Together the two studies offer sweeping conclusions: It does not matter if it is rain forest or scrubland that is cleared, the greenhouse gas contribution is significant. More important, they discovered that, taken globally, the production of almost all biofuels resulted, directly or indirectly, intentionally or not, in new lands being cleared, either for food or fuel.

"'When you take this into account, most of the biofuel that people are using or planning to use would probably increase greenhouse gasses substantially,' said Timothy Searchinger, lead author of one of the studies and a researcher in environment and economics at Princeton University. 'Previously there's been an accounting error: land use change has been left out of prior analysis.'"

The article stated that, "In the wake of the new studies, a group of 10 of the United States's most eminent ecologists and environmental biologists today sent a letter to President Bush and the speaker of the House, Nancy Pelosi, urging a reform of biofuels policies. 'We write to call your attention to recent research indicating that many anticipated biofuels will actually exacerbate global warming,' the letter said.

"The European Union and a number of European countries have recently tried to address the land use issue with proposals stipulating that imported biofuels cannot come from land that was previously rain forest http://www.farmpolicy.com/?p=601.

"But even with such restrictions in place, Dr. Searchinger's study shows, the purchase of biofuels in Europe and the United States leads indirectly to the destruction of natural habitats far afield.

"For instance, if vegetable oil prices go up globally, as they have because of increased demand for biofuel crops, more new land is inevitably cleared as farmers in developing countries try to get in on the profits. So crops from old plantations go to Europe for biofuels, while new fields are cleared to feed people at home."

Juliet Eilperin http://www.washingtonpost.com/wp-dyn/content/article/2008/02/07/AR200802070 4230_pf.html reported in today's Washington Post that, "Clearing land to produce biofuels such as ethanol will do more to exacerbate global warming than using gasoline or other fossil fuels, two scientific studies show.

"The independent analyses, which will be published today in the journal Science, could force policymakers in the United States and Europe to reevaluate incentives they have adopted to spur production of ethanol-based fuels. President Bush and many members of Congress have touted expanding biofuel use as an integral element of the nation's battle against climate change, but these studies suggest that this strategy will damage the planet rather than help protect it.

"One study -- written by a group of researchers from Princeton University, Woods Hole Research Center and Iowa State University along with an agriculture consultant -- concluded that over 30 years, use of traditional corn-based ethanol would produce twice as much greenhouse gas emissions as regular gasoline. Another analysis, written by a Nature Conservancy scientist along with University of Minnesota researchers, found that converting rainforests, peatlands, savannas or grasslands in Southeast Asia and Latin America to produce biofuels will increase global warming pollution for decades, if not centuries."

The Post article added that, "Tim Searchinger, who conducts research at Princeton and the D.C-based German Marshall Fund of the United States, said the research he and his colleagues did is the first to reveal the hidden environmental cost of producing biofuels.

"'The land we're likely to plow up is the land that we've had taking up carbon for decades,' said Searchinger, the lead author. Estimating that it would take 167 years before biofuel would stop contributing to climate change, he added, 'We can't get to a result, no matter how heroically we make assumptions on behalf of corn ethanol, where it will actually generate greenhouse-gas benefits.'"

A press release http://www.gmfus.org/economics/press/article.cfm?id=132&parent_type=R issued yesterday by The German Marshall Fund of the United States (GMF) indicated that, "A study published today by Science magazine finds that biofuels that use cropland are likely to increase greenhouse gases because previous analyses of biofuels ignored a crucial factor - the use of land.

"Most prior studies have found that substituting biofuels for gasoline will reduce greenhouse gases because biofuels sequester carbon through the growth of feedstock.   These analyses have failed to count the carbon emissions that occur as farmers worldwide respond to higher prices and convert forest and grassland to new cropland to replace the grain (or cropland) diverted to biofuels.

"Using a worldwide agricultural model to estimate emissions from land use change, the new study found that corn-based ethanol, instead of producing a 20% savings, nearly doubles greenhouse emissions over 30 years and increases greenhouse gasses for 167 years.  Biofuels from switchgrass, if grown on U.S. corn lands, increase emissions by 50%.  A separate paper released today by two other authors finds that biodiesel from soybeans has similar effects as corn ethanol.  This result raises concerns about large biofuel mandates and endorsed the particular value of making biofuels from municipal, industrial or agricultural waste products.  Ethanol from Brazilian sugarcane might also produce greenhouse benefits with strong safeguards."

The press update also included several related links http://www.gmfus.org/economics/press/article.cfm?id=132&parent_type=R for additional viewing.

Philip Brasher http://www.desmoinesregister.com/apps/pbcs.dll/article?AID=/20080207/BUSINE SS01/80207028/-1/BUSINESS011, writing yesterday at The Des Moines Register Online, noted that, "Ethanol and biodiesel could increase greenhouse gas emissions more than the fossil fuels they displace because of the impact of converting forests and grasslands worldwide to crop production, according to two new studies.

"Biofuels have been promoted as a way to limit climate change by reducing the use of gasoline and diesel. Previous studies have estimated that production and use of ethanol reduced emissions by 20 percent over gasoline.

"But those projections did not take into account the impact of converting land to crop production to meet global demands for food and fuel. Clearing and breaking land to grow crops releases carbon into the atmosphere."

Mr. Brasher added that, "One of the studies made public today by the journal Science estimates that corn-based ethanol could nearly double greenhouse gas emissions because of the impact on land usage."

The Register article added that, "The second study, done by researchers with the Nature Conservancy and the University of Minnesota, looked at the greenhouse-gas impact of converting various types of land - including rain forests and savannas - to crops. It found that in most cases, they result in higher carbon emissions.

"Converting rain forests to palm oil production for biodiesel can release as much as 420 times more carbon dioxide than is saved by displacing petroleum diesel, the study said.

"The only time there is a reduction in carbon dioxide emissions from biofuels is when abandoned farmland is used to grow biofuel feedstocks such as perennial grasses or when the fuels are made from corn stover, forest thinnings and other wastes, the study found.

"Matt Hartwig, a spokesman for the Renewable Fuels Association, said the world is going to need to grow more food to meet demand in China, India and elsewhere regardless of what happens with biofuel production.

"'To assume all of this is going to happen because of a move to biofuels is I think a bit of a stretch,' he said."

***
Also yesterday, Dow Jones News writer Siobhan Hughes http://online.wsj.com/article/BT-CO-20080207-719317.html reported that, "The 2007 U.S. energy law that mandated blending more ethanol and biodiesel into the gasoline supply may need to be changed because of concerns that the requirements will be hard to meet and are too strict, U.S. lawmakers said Thursday."

The article added that, "'While it appears likely that there will be enough ethanol and biodiesel production capacity to satisfy the requirement, it is not clear how all of this biofuel will find its way into the fuel tanks of our cars and trucks,' Senate Energy and Natural Resources Committee Chairman Jeff Bingaman, D-N.M., said at a Thursday hearing. 'Because the law was signed only weeks before the 2008 requirement came into effect, refiners had no opportunity to ensure that sufficient infrastructure would be in place to handle that much of an increase.'"

And Philip Brasher http://www.desmoinesregister.com/apps/pbcs.dll/article?AID=/20080207/BUSINE SS01/80207019/-1/BUSINESS011 reported yesterday at The Des Moines Register Online that, "The chairman of the Senate energy committee said that the nation's new biofuel mandates may require more production than the country can handle over the next few years."

"[Sen. Jeff Bingaman, D-N.M.], speaking at a committee hearing, said it is not clear that the nation's existing fuel distribution system is adequate to handle the biofuels," the article said.

Farm Bill Issues

DTN Political Correspondent Jerry Hagstrom reported today (link requires subscription http://www.dtn.com/forms/ag/try/dtnonline/ ) that, "Senate Finance Committee Chairman Max Baucus, D-Mont., has prepared a farm bill conference proposal and is seeking support for it from four other farm bill conferees, a Senate Democratic aide said Thursday.

"Under the proposal, the increase in nutrition funding would go from $5.4 billion over 10 years in the Senate bill to $9 billion. The Senate bill allows the increase in food stamp benefits to expire after five years. The Baucus proposal would make the increase permanent. Nutrition groups and the Bush administration have criticized the Senate bill for including only a five-year increase."

Flushing out additional details of the conference proposal, Mr. Hagstrom went on to explain that, "In addition, the increase in energy programs under the Baucus proposal would go from $1.1 billion to $1.5 billion over 10 years; the increase in conservation funding would go down from $4.6 billion in the Senate bill to $3.6 billion, and the permanent disaster aid provision would remain at $5 billion over five years. Baucus and Conrad [Senate Budget Committee Chairman Kent Conrad, D-N.D.] are the authors of the permanent disaster aid provision."

And with respect to funding, the DTN item stated that, "The aide said the programs would be funded through 'non-controversial loophole closures.' The aide declined to say if Baucus would continue trying to define the doctrine of economic substance. The initial Senate Finance Committee package that helped fund the Senate farm bill defined what it means to have economic substance or value when businesses claim a tax credit. Defining economic substance translated into some businesses seeing their taxes increased. At least four federal appeals courts have stated that Congress needs to better define economic substance."

The article added that, "A Conrad aide said Conrad is still talking with Senate, House and administration officials and that there is 'no deal' with Baucus. Another Democratic aide said some senators are becoming concerned that the administration may strike a deal with the House on the farm bill as it did on the stimulus package and that Baucus's maneuvering may be an attempt to get ahead of such an administration maneuver."

Reuters writer Charles Abbott http://www.reuters.com/article/politicsNews/idUSN0738075520080207?sp=true reported yesterday that, "Congress does not want to make further cuts in U.S. farm subsidies despite a veto threat from President George W. Bush, the chairman of the Senate Agriculture Committee said on Thursday.

"'I don't have the votes for it,' said Chairman Tom Harkin, who is in charge of House-Senate negotiations over the final version of the five-year, $286 billion farm bill."

Mr. Abbott explained that, "Lawmakers have voted for farm subsidy reforms but not the $200,000 AGI cap. The House farm bill proposes a $500,000 AGI limit for part-time farmers and a 'hard' cap of $1 million AGI for full-time farmers. The Senate would set a $750,000 "soft" cap with no limit if two-thirds of income is from agriculture.

"During a telephone news conference, Harkin said, 'I assume we'll strike some kind of a median in between' the House and Senate bills. But there is no support for a new round of cuts, said the Iowa Democrat."

The Reuters article pointed out that, "Harkin said he wanted to send the farm bill to Bush before mid-March. That is when congressional economists update their estimates of the cost of federal programs. The new estimate is expected to allow less money for farm supports."

Also, additional specifics regarding subsidy payment limit provisions can be viewed in this Reuters article from yesterday, "Farm subsidy reform is farm bill issue http://www.reuters.com/article/politicsNews/
idUSN0740666820080207?sp=true ."

Sugar Deal?

David Rogers http://www.politico.com/news/stories/0208/8383.html reported yesterday at Politico.com that, "A sugar industry plan to help U.S. and Mexican growers manage the fallout from the North America Free Trade Agreement on the sweetener market has set off a farm bill brawl with rival corn refiners, who have enlisted almost every other commodity group in the American barnyard to kill the proposal.

"The sugar lobby insists that its intentions are misunderstood and nothing in the proposal would limit U.S. sales to Mexico of high-fructose corn syrup. But the White House is already moving this week to oppose sugar's plan, and even old allies in Congress are warning the industry that it may have overreached in this case.

"House Agriculture Committee Chairman Collin Peterson (D-Minn.) said Wednesday that the initiative now lacks the support needed to be attached in the pending farm bill talks. 'I kind of told the sugar guys if they couldn't get support for this - pretty broad-based support - it's going to be difficult to do,' Peterson said. 'Right now, they don't' have it."

Mr. Rogers stated that, "Behind the fight is the question of how to deal with NAFTA's promise that U.S. and Mexican markets would be opened up not just for sugar but for corn syrup producers, who have long wanted access to the Mexican soft drink industry. Long after NAFTA, Mexico continued to protect its sugar growers by imposing tariffs on U.S. fructose, but these were dropped last month, setting up a situation in which displaced Mexican sugar will then come into the U.S.

"Jack Roney, an economist for the American Sugar Alliance, said that without some plan, growers on both sides of the border face a downward spiral of prices, and the industry's goal is only to better manage the fallout by modifying the existing market allotment system. In the first two years, 70 percent of the displaced Mexican sugar could come into the U.S, and 60 percent after that, he said. But no cap would be imposed on fructose exports from the U.S. to Mexico, Roney said, and the entire arrangement would have to be approved by the U.S. and Mexican governments."

Keith Good

FarmPolicy.com is a free newsletter and is made possible by the generous support of The German Marshall Fund of the United States http://www.gmfus.org/trade/template/index.cfm.

To subscribe to the FarmPolicy.com Email Briefing, send an Email to, farmpolicy-on@list.farmpolicy.com

Keith Good President FarmPolicy.com, Inc.
Journalism Fellow German Marshall Fund of the United States
(t) 217.356.2269 Champaign, Illinois