Analysis: Biofuel production spurs debate

Analysis: Biofuel production spurs debate
Published: April 5, 2007 at 10:55 AM

UPI Correspondent
WASHINGTON, April 5 (UPI) — The United States and Brazil have high hopes for the future of global biofuels production, but will an increase in ethanol production hurt the poor?

The Inter-American Development bank released a report this week highlighting the potential of “green energy” throughout Brazil and the rest of Latin America. The report predicts biofuel production will skyrocket, especially in developing countries, increasing their energy consumption at a rate three times more than that of industrialized countries.

“This is going to radically transform agricultural production in many parts of the world,” IDB chief Luis Alberto Moreno said Monday.

Moreno said the biofuel industry will bring opportunities for growth and prosperity in the Americas. New jobs are predicted to bring economic development in poor, rural areas that have been forced to rely on imported fossil fuels.

The growth of biofuels is also making waves in the U.S. marketplace, and U.S. corn farmers are responding to the demand, the U.S. Department of Agriculture says. The USDA’s annual report said corn acreage will increase by 15 percent to more than 90.5 million acres in 2007. The Renewable Fuels Association predicts economic opportunity will result for millions of rural Americans.

“The continued trend of increasing corn yields together with improved efficiency and new technologies in ethanol production and other agricultural industries will mean that American farmers will continue to feed the world while renewably fueling our nation,” said RFA President Bob Dineen.

Critics, however, say that the increased stress on foodgrains to be converted to fuel will likely hurt the poor. The criticism has come from academics in the United States and also from world leaders like Cuba’s Fidel Castro.

“It’s just not true. That’s not a major problem,” said Thomaz Almeida, Brazilian research associate for the Council on Hemispheric Affairs in Washington.

Almeida emphasized that while ethanol consumes 14 percent of the corn production, the major loss will be the fact that chicken and beef prices will increase, as U.S. corn is used mainly as a feedstock. While the beef and chicken industries already expect to have a smaller profit for 2007 due to ethanol, “it will not lead people to starve; it will just lead to those industries having a smaller profit,” he said.

In Latin America, Brazilian technology has used sugarcane-based ethanol, which is cheaper than corn ethanol.

In 2005 Brazil’s sugarcane-based production accounted for half of all ethanol traded internationally. Together, the United States and Brazil make up 70 percent of ethanol production.

“If Cuba were to produce ethanol, they’d use the sugarcane method, not corn,” Almeida said.

Former Brazilian Agriculture Minister M.C. Jorge Arrizurieta is also confident that there are enough biofuel sources to go around.

“We can have both food supply and biofuel supply,” he said.

Although the Western Hemisphere produces 80 percent of the world’s biofuels, much of the development plans have yet to be put into action. In Brazil, 90 million of 200 million acres are able to produce crops, yet only 22 million acres can produce sugarcane.

Arrizurieta said the benefits from ethanol will only increase.

“Our technology is being developed. … In 12 years, we can get double the production of ethanol we have today,” he said.

Former Florida Gov. Jeb Bush said he foresees the rewards biofuel production will bring to the United States, the No. 1 consumer of energy. While he said he agrees ethanol is not the sole answer to U.S. energy needs, it’s a strong start, he said Monday.

Much has to be done to meet the U.S. goal of increasing U.S. consumption of biofuels to 35 billion gallons of renewable energy by 2017. The IDB noted that $200 billion in new investment will be necessary for biofuels to provide 5 percent of transport energy in 2020. Investment in clean energy went from $5 billion in 1995 to $38 billion in 2005. Currently, China has agreed to invest $187 billion in clean energy through 2020.

Bush noted that U.S. investment in green energy will be key to increasing needed jobs, lowering gas consumption and using less-harmful technology for the environment.

The platform existing between the United States and Brazil will help “promote the idea of creating a regional ethanol market in the Americas,” Bush said.