Ethanol uses corn, but it doesn't fuel food prices and it isn't the catalyst in the increasing volatility in commodity markets. That was the prompt response from the ethanol industry in the wake of renewed food versus fuel allegations last week.
"Oil and energy prices are much more responsible for increased food prices than anything else," said Bruce E. Dale, Editor in Chief of the Great Lakes Bioenergy Research Center, Bioproducts and Biorefining Michigan State University
"We are not going to make progress in dealing with our energy problems until we make reasonable and realistic comparisons between oil alternatives and the costly status quo of continuing oil dependence," Dale said.
Dale and Tom Buis, chief executive officer for Growth Energy, want to push this discussion deeper into the facts.
"Let's have this debate, but let's have it on facts," Buis said.
"The notion that ethanol is causing today's food crisis ignores reality: the reality of the market, the reality of global trade agreements, the reality that other countries have their own domestic farm policies, and the reality that Wall Street's rampant speculation is driving up food prices," Buis said.
For those who don't want to take his word, Buis pointed people to several reports, including a U.S. Department of Energy's Oak Ridge National Laboratory report that found corn ethanol's contribution to indirect land use change as 'minimal to zero'.
Buis also said ethanol detractors decry the use of corn for ethanol without crediting the industry for the animal feed it gives back in the form of distiller's grains. The percentage of the U.S. corn crop going to ethanol is "just part of the story because you're getting back very high protein animal feed."
On the commodity market side, Buis and market analysts point to non-commercial players as the driving force.
While most believe ethanol plays a part in tightening the supply/demand equation in the corn market, analysts more often point to those who don't have a vested interest in the commodity – who don't hold any product – as driving the market.
"There's no correlation between futures and the cash market," analyst Richard Brock said recently in a presentation unrelated to the food versus fuel debate. "So much cash is in there it's just one speculative crap shoot."
Another aspect of the debate is government support. Though ethanol subsidies are largely discussed, Buis pointed out few are aware of the many tax breaks given to the oil industry and fewer still consider government protection of shipping lanes in the volatile areas of the world from which oil is shipped.
"A lot of their tax breaks are so well hidden in the tax code, it's hard to get a good hand on it," Buis said, noting those tax breaks are indefinite. "Ours are very transparent and they come up for renewal."
The long-term impact of ethanol bashing is that it will hamper development of second-generation alternative fuels, said Todd Becker, of Great Plains Renewable Energy, Nebraska. For a country that claims to wants an independent fuel supply, Becker said, decrying ethanol is not the way to achieve either energy independence or a greener, renewable energy supply.
"If we don't show the industry we support a strong first generation platform than there won't be a second generation," Becker said.
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