Newsweek Covers: October 16, 2006

See also: Newsweek September, 2006 & Time April 2, 2007

Compact Fluorescents Release Poisonous Mercury

Mercury in Energy-Saving Bulbs Worries Scientists
March 28, 2007 -- By Lisa Von Ahn, Reuters via ENN

There's an old joke about the number of people it takes to change a light bulb. But because the newer energy-efficient kinds contain tiny amounts of mercury, the hard part is getting rid of them when they burn out.

Mercury is poisonous, but it's also a necessary part of most compact fluorescent bulbs, the kind that environmentalists and some governments are pushing as a way to cut energy use.

With an estimated 150 million CFLs sold in the United States in 2006 and with Wal-Mart alone hoping to sell 100 million this year, some scientists and environmentalists are worried that most are ending up in garbage dumps.

Mercury is probably best-known for its effects on the nervous system. The Mad Hatter in the classic children's book "Alice in Wonderland" was based on 19th-century hat makers who were continually exposed to the toxin.

Mercury can also damage the kidneys and liver, and in sufficient quantities can cause death.

U.S. regulators, manufacturers and environmentalists note that, because CFLs require less electricity than traditional incandescent bulbs, they reduce overall mercury in the atmosphere by cutting emissions from coal-fired power plants.

But some of the mercury emitted from landfills is in the form of vaprous methyl-mercury, which can get into the food chain more readily than inorganic elemental mercury released directly from a broken bulb or even coal-fired power plants, according to government scientist Steve Lindberg.

"Disposal of any mercury-contaminated material in landfills is absolutely alarming to me," said Lindberg, emeritus fellow of the U.S. Department of Energy's Oak Ridge National Laboratory.

The mercury content in the average CFL -- now about 5 milligrams -- would fit on the tip of a ballpoint pen, according to the U.S. Environmental Protection Agency, and manufacturers have committed to cap the amount in most CFLs to 5 milligrams or 6 milligrams per bulb.

The majority of Philips Lighting's bulbs contain less than 3 milligrams, and some have as little as 1.23 milligrams, said spokesman Steve Goldmacher.

To prevent mercury from getting into landfills, the EPA, CFL makers and various organizations advocate recycling.
Besides commercial recyclers and some municipal waste collection services, some retailers accept used CFLs.

IKEA, the Swedish home furnishings chain, has free drop-off programs at all of its 234 stores, 29 of which are in the United States. Spokeswoman Mona Astra Liss said response was slow at first, but has since picked up.

Now advocacy groups are calling on Wal-Mart Stores Inc. and other big chains to get involved.

Andy Ruben, vice president for corporate sustainability at Wal-Mart, said the company was working with the EPA's Office of Solid Waste and others to find mercury and recycling solutions.

RECYCLING HURDLES

One problem with recycling is that it isn't cheap.

Larry Chalfan, executive director of the Zero Waste Alliance environmental group, said the value of the metal, glass and mercury reclaimed from recycling fails to offset the cost of the process. "Someone has to pay," he said.

Costs can range from 20 cents to 50 cents per bulb -- not a paltry sum when some CFLs sell for less than $2 at Wal-Mart.

But, compared with the overall lifecycle cost of buying and using a bulb, recycling would be less than 1 percent, said Paul Abernathy, executive director of the Association of Lighting & Mercury Recyclers, "a small price to keep the mercury out of the environment."

Another obstacle lies in the fragility of the bulbs and their mercury content.

"People who are going to accumulate these things from the public are going to have to address the fact that breakage will happen," Abernathy said. "There's the potential for contamination, and I think right now people are a little hesitant to volunteer to take on this liability."

The U.S. government has no single recycling plan in mind, said Matt Hale, director of the EPA's Office of Solid Waste.

Among the alternatives are special curbside collections by municipalities, mail-back programs by manufacturers and drop-off programs at various places, including retail stores that sell CFLs, he said.

Some methods lend themselves to certain geographic areas more than others, Hale said, because of differences in population density, transportation infrastructure and proximity to recycling sites.

State laws are also a factor.

Federal regulations mandate recycling of fluorescent lighting, while exempting households and other small users. Some states, however, are strict. For example, California no longer allows anyone to throw CFLs in the trash, while Massachusetts requires manufacturers to implement recycling programs and meet certain targets.

As technology advances, however, mercury could become less of an issue, at least as far as light bulbs are concerned.

Last month General Electric Co. said it was working on doubling the energy efficiency of incandescent lights and eventually developing versions comparable with CFLs. These bulbs, which the company hopes to begin marketing in 2010, will cost less than fluorescents but they won't last as long.

Meanwhile, some environmentally minded consumers are embracing CFLs and doing their best to dispose of them responsibly.

"I have CFLs throughout my house," said Lindberg, who lives in California. "None of them have burned out yet. I can't tell you what I'll do with them when they've burned out, but I won't throw them in the garbage."

San Francisco Lawmakers Vote To Ban Plastic Bags

San Francisco Lawmakers Vote To Ban Plastic Bags
March 28, 2007 -- By Reuters via ENN

San Francisco's city council voted Tuesday to become the first U.S. city to ban plastic bags from large supermarkets to help promote recycling.

Under the legislation approved by the city's Board of Supervisors, large supermarkets and drugstores will not be allowed to offer plastic bags made from petroleum products starting in six months.

"Many (foreign) cities and nations have already implemented very similar legislation," said Ross Mirkarimi, the city legislator who championed the new law. "It's astounding that San Francisco would be the first U.S. city to follow suit."

"I am hopeful that other U.S. cities will also adopt similar legislation," he said. "Why wait for the federal government to enact legislation that gets to the core of this problem when local governments can just step up to the plate?"

The city's Department of the Environment said San Francisco uses 181 million plastic grocery bags annually. Plans dating back a decade to encourage recycling of the bags have largely failed, with shoppers returning just one percent of bags, said department spokesman Mark Westland.

Mirkarimi said the ban would save 450,000 gallons of oil a year and remove the need to send 1,400 tons of debris now sent annually to land fills. The new rules would however allow recyclable plastic bags which are not widely used today.

A spokesman for San Francisco Mayor Gavin Newsom, who must approve or veto the legislation, called it sensible. "Chances are good that he is going to sign it," said Nathan Ballard.

Absent-minded killers

Absent-minded killers
March 22, 2007 -- By Jeffrey Sachs, Project Syndicate

We kill other species not because we must but because we are too negligent to do otherwise.

As a species, human beings have a major self-control problem. We humans are now so aggressively fishing, hunting, logging, and growing crops in all parts of the world that we are literally chasing other species off the planet. Our intense desire to take all that we can from nature leaves precious little for other forms of life.

In 1992, when the world's governments first promised to address man-made global warming, they also vowed to head off the human-induced extinction of other species. The Convention on Biological Diversity, agreed at the Rio Earth Summit, established that "biological diversity is a common concern of humanity." The signatories agreed to conserve biological diversity, by saving species and their habitats, and to use biological resources (e.g. forests) in a sustainable manner. In 2002, the treaty's signatories went further, committing to "a significant reduction in the current rate of biodiversity loss" by 2010.

Unfortunately, like so many other international agreements, the Convention on Biological Diversity remains essentially unknown, un-championed, and unfulfilled. That neglect is a human tragedy. For a very low cash outlay - and perhaps none at all on balance - we could conserve nature and thus protect the basis of our own lives and livelihoods. We kill other species not because we must, but because we are too negligent to do otherwise.

Consider a couple of notorious examples. Some rich countries, such as Spain, Portugal, Australia, and New Zealand, have fishing fleets that engage in so-called "bottom trawling". Bottom trawlers drag heavy nets over the ocean bottom, destroying magnificent, unexplored, and endangered marine species in the process. Complex and unique ecologies, most notably underground volcanoes known as seamounts, are ripped to shreds, because bottom trawling is the "low cost" way to catch a few deep sea fish species. One of these species, orange roughy, has been caught commercially for only around a quarter-century, but already is being fished to the point of collapse.

Likewise, in many parts of the world, tropical rainforest is being cleared for pastureland and food crops. The result is massive loss of habitat and destruction of species, yielding a tiny economic benefit at a huge social cost. After cutting down a swath of rainforest, soils are often quickly leached of their nutrients so that they cannot sustain crops or nutritious grasses for livestock. As a result, the new pastureland or farmland is soon abandoned, with no prospect for regeneration of the original forest and its unique ecosystems.

Because these activities' costs are so high and their benefits so low, stopping them would be easy. Bottom trawling should simply be outlawed; it would be simple and inexpensive to compensate the fishing industry during a transition to other activities. Forest clearing, on the other hand, is probably best stopped by economic incentives, perhaps combined with regulatory limits. Simply restricting the practice of land clearing probably would not work, since farm families and communities would face a strong temptation to evade legal limits. On the other hand, financial incentives would probably succeed, because cutting down forest to create pastureland is not profitable enough to induce farmers to forego payments for protecting the land.

Many rainforest countries have united in recent years to suggest the establishment of a rainforest conservation fund by the rich countries, to pay impoverished small farmers a small amount of money to preserve the forest. A well-designed fund would slow or stop deforestation, preserve biodiversity, and reduce emissions of carbon dioxide the burning of cleared forests. At the same time, small farmers would receive a steady flow of income, which they could use for micro-investments to improve their household's wealth, education, and health.

Aside from banning bottom trawling and establishing a global fund for avoided deforestation, we should designate a global network of protected marine areas, in which fishing, boating, polluting, dredging, drilling, and other damaging activities would be prohibited. Such areas not only permit the regeneration of species, but also provide ecological benefits that spill over to neighbouring unprotected areas.

We also need a regular scientific process to present the world with the evidence on species abundance and extinction, just as we now have such a process for climate change. Politicians don't listen very well to individual scientists, but they are forced to listen when hundreds of scientists speak with a united voice.

Finally, the world should negotiate a new framework no later than 2010 to slow human-induced climate change. There can be little doubt that climate change poses one of the greatest risks to species' viability. As the planet warms, and rain and storm patterns change dramatically, many species will find themselves in climate zones that no longer support their survival. Some can migrate, but others (such as polar bears) are likely to be driven to extinction unless we take decisive action to head off climate change.

These measures are achievable by 2010. They are affordable, and in each case would ultimately deliver large net benefits. Most importantly, they would allow us to follow through on a global promise. It is too painful to believe that humanity would destroy millions of other species - and jeopardise our own future - in a fit of absent-mindedness.

Corn Can't Solve Our Problem

Corn Can't Solve Our Problem
March 25, 2007 -- By David Tilman and Jason Hill, The Washington Post

The world has come full circle. A century ago our first transportation biofuels -- the hay and oats fed to our horses -- were replaced by gasoline. Today, ethanol from corn and biodiesel from soybeans have begun edging out gasoline and diesel.

This has been hailed as an overwhelmingly positive development that will help us reduce the threat of climate change and ease our dependence on foreign oil. In political circles, ethanol is the flavor of the day, and presidential candidates have been cycling through Iowa extolling its benefits. Lost in the ethanol-induced euphoria, however, is the fact that three of our most fundamental needs -- food, energy, and a livable and sustainable environment -- are now in direct conflict. Moreover, our recent analyses of the full costs and benefits of various biofuels, performed at the University of Minnesota, present a markedly different and more nuanced picture than has been heard on the campaign trail.

Some biofuels, if properly produced, do have the potential to provide climate-friendly energy, but where and how can we grow them? Our most fertile lands are already dedicated to food production. As demand for both food and energy increases, competition for fertile lands could raise food prices enough to drive the poorer third of the globe into malnourishment. The destruction of rainforests and other ecosystems to make new farmland would threaten the continued existence of countless animal and plant species and would increase the amount of climate-changing carbon dioxide in the atmosphere.

Finding and implementing solutions to the food, fuel and environment conflict is one of the greatest challenges facing humanity. But solutions will be neither adopted nor sought until we understand the interlinked problems we face.

Fossil fuel use has pushed atmospheric carbon dioxide higher than at any time during the past half-million years. The global population has increased threefold in the past century and will increase by half again, to 9 billion people, by 2050. Global food and fossil energy consumption are on trajectories to double by 2050.

Biofuels, such as ethanol made from corn, have the potential to provide us with cleaner energy. But because of how corn ethanol currently is made, only about 20 percent of each gallon is "new" energy. That is because it takes a lot of "old" fossil energy to make it: diesel to run tractors, natural gas to make fertilizer and, of course, fuel to run the refineries that convert corn to ethanol.

If every one of the 70 million acres on which corn was grown in 2006 was used for ethanol, the amount produced would displace only 12 percent of the U.S. gasoline market. Moreover, the "new" (non-fossil) energy gained would be very small -- just 2.4 percent of the market. Car tune-ups and proper tire air pressure would save more energy.

There is another problem with relying on a food-based biofuel, such as corn ethanol, as the poor of Mexico can attest. In recent months, soaring corn prices, sparked by demand from ethanol plants, have doubled the price of tortillas, a staple food. Tens of thousands of Mexico City's poor recently protested this "ethanol tax" in the streets.

In the United States, the protests have also begun -- in Congress. Representatives of the dairy, poultry and livestock industries, which rely on corn as a principal animal feed, are seeking an end to subsidies for corn ethanol in the hope of stabilizing corn prices. (It takes about three pounds of corn to produce a pound of chicken, and seven or eight pounds to grow a pound of beef.) Profit margins are being squeezed, and meat prices are rising.

U.S. soybeans, which are used to make biodiesel, may be about to follow corn's trajectory, escalating the food vs. fuel conflict. The National Biodiesel Board recently reported that 77 biodiesel production plants are under construction and that eight established plants are expanding capacity.

In terms of environmental impact, all biofuels are not created equal. Ethanol is the same chemical product no matter what its source. But ethanol made from prairie grasses, from corn grown in Illinois and from sugar cane grown on newly cleared land in Brazil have radically different impacts on greenhouse gases.

Corn, like all plants, is a natural part of the global carbon cycle. The growing crop absorbs carbon dioxide from the atmosphere, so burning corn ethanol does not directly create any additional carbon. But that is only part of the story. All of the fossil fuels used to grow corn and change it into ethanol release new carbon dioxide and other greenhouse gases. The net effect is that ethanol from corn grown in the Corn Belt does increase atmospheric greenhouse gases, and this increase is only about 15 percent less than the increase caused by an equivalent amount of gasoline. Soybean biodiesel does better, causing a greenhouse gas increase that is about 40 percent less than that from petroleum diesel.

In Brazil, ethanol made from sugar cane produces about twice as much ethanol per acre as corn. Brazilian ethanol refineries get much of their power from burning cane residue, in effect recycling carbon from the atmosphere. The environmental benefit is large. Sugar-cane ethanol grown on established soils releases 80 percent less greenhouse gases than gasoline.

But that isn't the case for sugar-cane ethanol or soybean biodiesel from Brazil's newly cleared lands, including tropical forests and savannas. Clearing land releases immense amounts of greenhouse gases into the air, because much of the material in the plants and soil is broken down into carbon dioxide.

Plants and soil contain three times more carbon than the atmosphere. The trees and soil of an acre of rainforest -- which, once cleared, is suitable for growing soybeans -- contain about 120 tons of organic carbon. An acre of tropical woodland or savanna, suitable for sugar cane, contains about half this amount. About a fourth of the carbon in an ecosystem is released to the atmosphere as carbon dioxide when trees are clear-cut, brush and branches are burned or rot, and roots decay. Even more is lost during the first 20 to 50 years of farming, as soil carbon decomposes into carbon dioxide and as wood products are burned or decay.

This means that when tropical woodland is cleared to produce sugar cane for ethanol, the greenhouse gas released is about 50 percent greater than what occurs from the production and use of the same amount of gasoline. And that statistic holds for at least two decades.

Simply being "renewable" does not automatically make a fuel better for the atmosphere than the fossil fuel it replaces, nor guarantee that society gains any new energy by its production. The European Union was recently shocked to learn that some of its imported biodiesel, derived from palm trees planted on rain-forest lands, was more than twice as bad for climate warming as petroleum diesel. So much for the "benefits" of that form of biodiesel.

Although current Brazilian ethanol is environmentally friendly, the long-term environmental implications of buying more ethanol and biodiesel from Brazil, a possibility raised recently during President Bush's trip to that country, are cloudy. It could be harmful to both the climate and the preservation of tropical plant and animal species if it involved, directly or indirectly, additional clearing of native ecosystems.

Concerns about the environmental effects of ethanol production are starting to be felt in the United States as well. It appears that American farmers may add 10 million acres of corn this year to meet booming demand for ethanol. Some of this land could come from millions of acres now set aside nationwide for conservation under a government-subsidized program. Those uncultivated acres absorb atmospheric carbon, so farming them and converting the corn into ethanol could release more carbon dioxide into the air than would burning gasoline.

There are biofuel crops that can be grown with much less energy and chemicals than the food crops we currently use for biofuels. And they can be grown on our less fertile land, especially land that has been degraded by farming. This would decrease competition between food and biofuel. The United States has about 60 million acres of such land -- in the Conservation Reserve Program, road edge rights-of-way and abandoned farmlands.

In a 10-year experiment reported in Science magazine in December, we explored how much bioenergy could be produced by 18 different native prairie plant species grown on highly degraded and infertile soil. We planted 172 plots in central Minnesota with various combinations of these species, randomly chosen. We found, on this highly degraded land, that the plots planted with mixtures of many native prairie perennial species yielded 238 percent more bioenergy than those planted with single species. High plant diversity led to high productivity, and little fertilizer or chemical weed or pest killers was required.

The prairie "hay" harvested from these plots can be used to create high-value energy sources. For instance, it can be mixed with coal and burned for electricity generation. It can be "gasified," then chemically combined to make ethanol or synthetic gasoline. Or it can be burned in a turbine engine to make electricity. A technique that is undergoing rapid development involves bioengineering enzymes that digest parts of plants (the cellulose) into sugars that are then fermented into ethanol.

Whether converted into electricity, ethanol or synthetic gasoline, the high-diversity hay from infertile land produced as much or more new usable energy per acre as corn for ethanol on fertile land. And it could be harvested year after year.

Even more surprising were the greenhouse gas benefits. When high-diversity mixtures of native plants are grown on degraded soils, they remove carbon dioxide from the air. Much of this carbon ends up stored in the soil. In essence, mixtures of native plants gradually restore the carbon levels that degraded soils had before being cleared and farmed. This benefit lasts for about a century.

Across the full process of growing high-diversity prairie hay, converting it into an energy source and using that energy, we found a net removal and storage of about a ton and a half of atmospheric carbon dioxide per acre. The net effect is that ethanol or synthetic gasoline produced from this grass on degraded land can provide energy that actually reduces atmospheric levels of carbon dioxide.

When one of these carbon-negative biofuels is mixed with gasoline, the resulting blend releases less carbon dioxide than traditional gasoline.

Biofuels, if used properly, can help us balance our need for food, energy and a habitable and sustainable environment. To help this happen, though, we need a national biofuels policy that favors our best options. We must determine the carbon impacts of each method of making these fuels, then mandate fuel blending that achieves a prescribed greenhouse gas reduction. We have the knowledge and technology to start solving these problems.

Al Gore Excerpt With House & Senate Committee: March 21, 2007

"I promise you--I say this to each of you as individuals--I promise you a day will come when our children and grandchildren will look back and they'll ask one of two questions. Either they will ask, "What in God's name were they doing? Didn't they see the evidence? Didn't they realize that four times in 15 years the entire scientific community of this world issued unanimous reports calling upon them to act. What was wrong with them? Were they too blinded and numb with the busyness of political life or daily life to take a deep breath and look at the reality of what we're facing? Did they think it was perfectly alright to keep dumping 70 million tons every single day of global warming pollution into this earth's atmosphere? Did they think all the scientists were wrong? What were they thinking? Or, they'll ask another question. They may look back and they'll say, "How did they find the uncommon moral courage to rise above politics and redeem the promise of American democracy?" And do what some said was impossible and shake things up. And tell the special interest, "Okay, we've heard you and we're going to do the best we can to take your considerations into account, but we're going to do what's right." I'm going to do my part to make sure that you have all the support that I and lots of other folks can muster for you in both parties. When you do the right thing."

- Al Gore, March 21, 2007

Check out another nice post from Grist

Food to Fuel Increases World Food Prices

Massive Diversion of U.S. Grain To Fuel Cars Is Raising World Food Prices
March 21, 2007 -- By Lester R. Brown, Earth Policy Institute

ECO-ECONOMY UPDATE:
Massive Diversion of U.S. Grain To Fuel Cars Is Raising World Food Prices

If you think you are spending more each week at the supermarket, you may be right. The escalating share of the U.S. grain harvest going to ethanol distilleries is driving up food prices worldwide.

Corn prices have doubled over the last year, wheat futures are trading at their highest level in 10 years, and rice prices are rising too. In addition, soybean futures have risen by half. A Bloomberg analysis notes that the soaring use of corn as the feedstock for fuel ethanol “is creating unintended consequences throughout the global food chain.”

The countries initially hit by rising food prices are those where corn is the staple food. In Mexico, one of more than 20 countries with a corn-based diet, the price of tortillas is up by 60 percent. Angry Mexicans in crowds of up to 75,000 have taken to the streets in protest, forcing the government to institute price controls on tortillas.

Food prices are also rising in China, India, and the United States, countries that contain 40 percent of the world’s people. While relatively little corn is eaten directly in these countries, vast quantities are consumed indirectly in meat, milk, and eggs in both China and the United States.

Rising grain and soybean prices are driving up meat and egg prices in China. January pork prices were up 20 percent above a year earlier, eggs were up 16 percent, while beef, which is less dependent on grain, was up 6 percent.

In India, the overall food price index in January 2007 was 10 percent higher than a year earlier. The price of wheat, the staple food in northern India, has jumped 11 percent, moving above the world market price.

In the United States, the U.S. Department of Agriculture projects that the wholesale price of chicken in 2007 will be 10 percent higher on average than in 2006, the price of a dozen eggs will be up a whopping 21 percent, and milk will be 14 percent higher. And this is only the beginning.

In the past, food price rises have usually been weather related and always temporary. This situation is different. As more and more fuel ethanol distilleries are built, world grain prices are starting to move up toward their oil-equivalent value in what appears to be the beginning of a long-term rise.

The food and energy economies, historically separate, are now merging. In this new economy, if the fuel value of grain exceeds its food value, the market will move it into the energy economy. As the price of oil climbs so will the price of food.

Some 16 percent of the 2006 U.S. grain harvest was used to produce ethanol. With 80 or so ethanol distilleries now under construction, enough to more than double existing ethanol production capacity, nearly a third of the 2008 grain harvest will be going to ethanol.

Since the United States is the leading exporter of grain, shipping more than Canada, Australia, and Argentina combined, what happens to the U.S. grain crop affects the entire world. With the massive diversion of grain to produce fuel for cars, exports will drop. The world’s breadbasket is fast becoming the U.S. fuel tank.

The number of hungry people in the world has been declining for several decades, but in the late 1990s the trend reversed and the number began to rise. The United Nations currently lists 34 countries as needing emergency food assistance. Many of these are considered failed and failing states, including Chad, Iraq, Liberia, Haiti, and Zimbabwe. Since food aid programs typically have fixed budgets, if the price of grain doubles, food aid will be reduced by half.

Urban food protests in response to rising food prices in low and middle income countries, such as Mexico, could lead to political instability that would add to the growing list of failed and failing states. At some point, spreading political instability could disrupt global economic progress.

Against this backdrop, Washington is consumed with “ethanol euphoria.” President Bush in his State of the Union address set a production goal for 2017 of 35 billion gallons of alternative fuels, including grain-based and cellulosic ethanol, and liquefied coal. Given the current difficulties in producing cellulosic ethanol at a competitive cost and given the mounting public opposition to liquefied coal, which is far more carbon-intensive than gasoline, most of the fuel to meet this goal might well have to come from grain. This could take most of the U.S. grain harvest, leaving little grain to meet U.S. needs, much less those of the hundred or so countries that import grain.

The stage is now set for direct competition for grain between the 800 million people who own automobiles, and the world’s 2 billion poorest people. The risk is that millions of those on the lower rungs of the global economic ladder will start falling off as higher food prices drop their consumption below the survival level.

In February 2007 the World Food Programme Director James T. Morris reported that 18,000 children are now dying every day from hunger and malnutrition. This daily loss of life is six times the number of U.S. combat fatalities in Iraq over the last four years.

There are alternatives to this grim scenario. A rise in auto fuel efficiency standards of 20 percent, phased in over the next decade would save as much oil as converting the entire U.S. grain harvest into ethanol.

One option that is gaining momentum is a shift to plug-in hybrids. Adding a second storage battery to a gas-electric hybrid car along with a plug-in capacity so that the batteries can be recharged at night allows most short-distance driving—daily commuting and grocery shopping, for example—to be done with electricity. If this shift were accompanied by investment in thousands of wind farms that could feed cheap electricity into the grid, then cars could run largely on electricity for the equivalent cost of $1 per gallon gasoline.

Encouragingly, three auto manufacturers—Toyota, Nissan, and GM—have announced plans to bring plug-in hybrid cars to market. Plug-In Partners, which is spearheading a national campaign to shift to plug-in hybrid cars, already has 508 partners, including electrical utilities, corporations, state and city governments, and farm and environmental groups. Among its fast-growing list of partners are the American Public Power Association, Electric Power Research Institute, American Wind Energy Association, American Corn Growers Association, and the cities of Los Angeles, Dallas, Chicago, and Boston. Already a number of Partners have collectively pledged to purchase for their own fleets more than 8,000 plug-in hybrids as soon as they reach the market.

Ethanol euphoria is not an acceptable substitute for a carefully thought through policy. For Washington, it is time to decide whether to continue with the current policy of subsidizing more and more grain-based fuel distilleries or to encourage a shift to more fuel-efficient cars and a new automotive fuel economy centered on plug-in hybrid cars and wind energy. The choice is between a future of rising world food prices, spreading hunger, and growing political instability, or one of stable food prices, sharply reduced dependence on oil, and much lower carbon emissions.

Water Prices Rising Worldwide

Water Prices Rising Worldwide
March 7, 2007 -- By Edwin H. Clark, II, Earth Policy Institute

ECO-ECONOMY UPDATE:
Water Prices Rising Worldwide

The price of water is increasing—sometimes dramatically—throughout the world. Over the past five years, municipal water rates have increased by an average of 27 percent in the United States, 32 percent in the United Kingdom, 45 percent in Australia, 50 percent in South Africa, and 58 percent in Canada. In Tunisia, the price of irrigation water increased fourfold over a decade.

A recent survey of 14 countries indicates that average municipal water prices range from 66¢ per cubic meter in the United States up to $2.25 in Denmark and Germany. Yet consumers rarely pay the actual cost of water. In fact, many governments practically (and sometimes literally) give water away for nothing.

The average American household consumes about 480 cubic meters (127,400 gallons) of water during a year. Homeowners in Washington, DC, pay about $350 (72¢ per cubic meter) for that amount. Buying that same amount of water from a vendor in the slums of Guatemala City would cost more than $1,700.

The price people pay for water is largely determined by three factors: the cost of transport from its source to the user, total demand for the water, and price subsidies. Treatment to remove contaminants also can add to the cost.

The cost of transporting water is determined largely by how far it has to be carried and how high it has to be lifted. Growing cities and towns may have to go hundreds of kilometers to find the water needed to satisfy their increasing thirst. California cities have long imported water from hundreds of kilometers away. And China is constructing three canals that are 1,156 kilometers, 1,267 kilometers, and 260 kilometers long to transfer water from the Yangtze River to Beijing and other rapidly growing areas in the northern provinces.

Pumping water out of the ground or over land to higher elevations is energy-intensive. Pumping 480 cubic meters of water a height of 100 meters requires some 200 kilowatt-hours of electricity. At a price of 10¢ per kilowatt-hour, the cost is $20—not including the cost of the pump, the well, and the piping. One hundred meters is not an unusual lift for wells tapping falling supplies of groundwater. In Beijing and other areas in northern China, for instance, lifts of 1,000 meters are sometimes required.

Mexico City, at an elevation of 2,239 meters, has to pump some of its water supply over 1,000 meters up a mountain. The operating costs alone amount to $128.5 million annually. Pumping this water requires more energy than is consumed overall in the nearby city of Puebla, home to 8.3 million people. Amman, Jordan, faces a similar problem related to delivering water to higher elevations.

In most places water is not purchased or exchanged in a market. But formal water markets are developing in the western United States, Australia, and Chile. Where these water markets do exist, they provide examples of how high the scarcity value of the water—that is, the amount that other potential users would be willing to pay for it—can be. Water prices in Australia’s markets peaked at near 75¢ per cubic meter in December 2006, climbing 20-fold in a year in part due to prolonged drought. In the U.S. West, water prices typically range between 3¢ and 10¢ per cubic meter. This is just the cost of the water itself and does not include the expense of treating or transporting it. In some western U.S. cities, water is so scarce that cities are selling sewage effluent for as much as $1 a cubic meter to be used for irrigating gardens.

In India, water scarcity has prompted some farmers to profit by selling their water instead of farming. The water they formerly used to irrigate their crops is instead pumped from their wells and trucked to nearby cities. The farmers are harvesting water rather than food and at the same time promoting a rapid drop in underground water tables.

The final factor affecting how much people pay for water is the amount it is subsidized. Water subsidies can be very large. For instance, water revenues in the city of Delhi are less than 20 percent of what it spends each year to provide water. On average worldwide, nearly 40 percent of municipal suppliers do not charge enough for water to meet their basic operation and maintenance costs.

Subsidies often benefit only higher-income families. Frequently, urban slum residents in developing countries have no access to municipal water supplies and instead purchase water from private purveyors who bring it in by truck. In part because unscrupulous vendors often control this distribution, the prices are very high, typically exceeding $1 per cubic meter. In several Asian cities, for instance, households forced to purchase water from a private vendor pay more than 10 times as much as middle-income families who are connected to the municipality’s distribution system. The poorest households in Uganda spend 22 percent of their income on water, while those in El Salvador and Jamaica use more than 10 percent of their income to satisfy water needs.

Water subsidies are not limited to the developing world. Farmers in California’s Central Valley, for example, use roughly one fifth of the state’s water and pay on average slightly over 1¢ per cubic meter, just 2 percent of what Los Angeles pays for its drinking water and only 10 percent of its replacement value. One analysis of a new U.S. project in central Utah found that the water it will provide will cost close to 40 times more than irrigators pay for it.

Water is currently managed as if it were worthless instead of the life-sustaining, valuable, and increasingly scarce resource that it is. A key step in moving toward more rational water management is to place a price on water that reflects its value and scarcity. This can, of course, result in substantial price increases that particularly hurt low-income families. The best way to avoid this problem is to use a block rate pricing system where a low level of consumption—that required to satisfy basic needs—is very cheap, while prices increase at higher levels of consumption. In Osaka, Japan, for instance, users pay a set monthly fee that includes 10 cubic meters of water; beyond that prices increase in steps from 82¢ per cubic meter up to $3 or more for high-volume users. In addition, ensuring that the poorest households are connected to a secure water supply can protect them from price gouging by private vendors.

Although pricing water at a reasonable cost can generate political problems in the short run, it can lead to substantial efficiencies in the longer run and eliminate a perverse drain on government budgets. Higher prices will lead farmers and industries to use water more efficiently and encourage households to buy more water-efficient appliances and reduce the amount of water they waste. Many efficiency improvements are relatively inexpensive, and most pay for themselves. Any improvement that reduces hot water use, for instance, can pay for itself over time because it saves energy as well as water.

Indeed, there are many links between energy and water. Not only are substantial amounts of energy required to extract, transport, and treat water, but just as the oil price shocks of the 1970s stimulated energy conservation, so too could pricing water to better reflect its real cost stimulate similar conservation efforts by industries, farmers, and households.

Distillery Demand For Grain To Fuel Cars Vastly Understated

Distillery Demand For Grain To Fuel Cars Vastly Understated: World May Be Facing Highest Grain Prices in History
January 4, 2007 -- By Lester R. Brown, Earth Policy Institute

ECO-ECONOMY UPDATE:
World May Be Facing Highest Grain Prices in History

Investment in fuel ethanol distilleries has soared since the late-2005 oil price hikes, but data collection in this fast-changing sector has fallen behind. Because of inadequate data collection on the number of new plants under construction, the quantity of grain that will be needed for fuel ethanol distilleries has been vastly understated. Farmers, feeders, food processors, ethanol investors, and grain-importing countries are basing decisions on incomplete data.

The U.S. Department of Agriculture (USDA) projects that distilleries will require only 60 million tons of corn from the 2008 harvest. But here at the Earth Policy Institute (EPI), we estimate that distilleries will need 139 million tons—more than twice as much. If the EPI estimate is at all close to the mark, the emerging competition between cars and people for grain will likely drive world grain prices to levels never seen before. The key questions are: How high will grain prices rise? When will the crunch come? And what will be the worldwide effect of rising food prices?

One reason for the low USDA projection is that it was released in February 2006, well before the effect of surging oil prices on investment in fuel ethanol distilleries was fully apparent. Beyond this, USDA relies heavily on the Renewable Fuels Association (RFA), a trade group, for data on ethanol distilleries under construction, but the RFA data have lagged behind movement in the industry.

We drew on four firms that collect and publish data on U.S. ethanol distilleries under construction. RFA is the one most frequently cited. The other three firms are Europe-based F.O. Licht, the publisher of World Ethanol and Biofuels Report; BBI International, which publishes Ethanol Producer Magazine; and the American Coalition for Ethanol (ACE), publisher of Ethanol Today.

Unfortunately, the lists of plants under construction maintained by RFA, BBI, and ACE are not complete. Each contains some plants that are not on the other lists. Drawing on these three lists and on biweekly reports from F.O. Licht, EPI has compiled a more complete master list. For example, while we show 79 plants under construction, RFA lists 62 plants. (We welcome any information that will improve this list, which can be viewed at www.earthpolicy.org/Updates/2007/Update63_data.htm).

According to the EPI compilation, the 116 plants in production on December 31, 2006, were using 53 million tons of grain per year, while the 79 plants under construction—mostly larger facilities—will use 51 million tons of grain when they come online. Expansions of 11 existing plants will use another 8 million tons of grain (1 ton of corn = 39.4 bushels = 110 gallons of ethanol).

In addition, easily 200 ethanol plants were in the planning stage at the end of 2006. If these translate into construction starts between January 1 and June 30, 2007, at the same rate that plants did during the final six months of 2006, then an additional 3 billion gallons of capacity requiring 27 million more tons of grain will likely come online by September 1, 2008, the start of the 2008 harvest year. This raises the corn needed for distilleries to 139 million tons, half the 2008 harvest projected by USDA. This would yield nearly 15 billion gallons of ethanol, satisfying 6 percent of U.S. auto fuel needs. (And this estimate does not include any plants started after June 30, 2007, that would be finished in time to draw on the 2008 harvest).

This unprecedented diversion of the world’s leading grain crop to the production of fuel will affect food prices everywhere. As the world corn price rises, so too do those of wheat and rice, both because of consumer substitution among grains and because the crops compete for land. Both corn and wheat futures were already trading at 10-year highs in late 2006.

The U.S. corn crop, accounting for 40 percent of the global harvest and supplying 70 percent of the world’s corn exports, looms large in the world food economy. Annual U.S. corn exports of some 55 million tons account for nearly one fourth of world grain exports. The corn harvest of Iowa alone, which edges out Illinois as the leading producer, exceeds the entire grain harvest of Canada. Substantially reducing this export flow would send shock waves throughout the world economy.

Robert Wisner, Iowa State University economist, reports that Iowa’s demand for corn from processing plants that were on line, expanding, under construction, or being planned as of late 2006 totaled 2.7 billion bushels. Yet even in a good year the state harvests only 2.2 billion bushels. As distilleries compete with feeders for grain, Iowa could become a corn importer.

With corn supplies tightening fast, rising prices will affect not only products made directly from corn, such as breakfast cereals, but also those produced using corn, including milk, eggs, cheese, butter, poultry, pork, beef, yogurt, and ice cream. The risk is that soaring food prices could generate a consumer backlash against the fuel ethanol industry.

Fuel ethanol proponents point out, and rightly so, that the use of corn to produce ethanol is not a total loss to the food economy because 30 percent of the corn is recovered in distillers dried grains that can be fed to beef and dairy cattle, pigs, and chickens, though only in limited amounts. They also argue that the U.S. distillery demand for corn can be met by expanding land in corn, mostly at the expense of soybeans, and by raising yields. While it is true that the corn crop can be expanded, there is no precedent for growth on the scale needed. And this soaring demand for corn comes when world grain production has fallen below consumption in six of the last seven years, dropping grain stocks to their lowest level in 34 years.

From an agricultural vantage point, the automotive demand for fuel is insatiable. The grain it takes to fill a 25-gallon tank with ethanol just once will feed one person for a whole year. Converting the entire U.S. grain harvest to ethanol would satisfy only 16 percent of U.S. auto fuel needs.

The competition for grain between the world’s 800 million motorists who want to maintain their mobility and its 2 billion poorest people who are simply trying to survive is emerging as an epic issue. Soaring food prices could lead to urban food riots in scores of lower-income countries that rely on grain imports, such as Indonesia, Egypt, Algeria, Nigeria, and Mexico. The resulting political instability could in turn disrupt global economic progress, directly affecting all countries. It is not only food prices that are at stake, but trends in the Nikkei Index and the Dow Jones Industrials as well.

There are alternatives to creating a crop-based automotive fuel economy. The equivalent of the 2 percent of U.S. automotive fuel supplies now coming from ethanol could be achieved several times over, and at a fraction of the cost, by raising auto fuel efficiency standards by 20 percent.

If we shift to gas-electric hybrid plug-in cars over the next decade, we could be doing short-distance driving, such as the daily commute or grocery shopping, with electricity. If we then invested in thousands of wind farms to feed cheap electricity into the grid, U.S. cars could run primarily on wind energy—and at the gasoline equivalent of less than $1 a gallon. The stage is set for a crash program to help Detroit switch to gas-electric hybrid plug-in cars.

It is time for a moratorium on the licensing of new distilleries, a time-out, while we catch our breath and decide how much corn can be used for ethanol without dramatically raising food prices. The policy goal should be to use just enough fuel ethanol to support corn prices and farm incomes but not so much that it disrupts the world food economy. Meanwhile, a much greater effort is needed to produce ethanol from cellulosic sources such as switchgrass, a feedstock that is not used for food.

The world desperately needs a strategy to deal with the emerging food-fuel battle. As the leading grain producer, grain exporter, and ethanol producer, the United States is in the driver’s seat. We need to make sure that in trying to solve one problem—our dependence on imported oil—we do not create a far more serious one: chaos in the world food economy.

Is It Time for a New Tax on Energy?

Is It Time for a New Tax on Energy?
February 9, 2007 -- By Phil Izzo, Wall Street Journal

Economists Say Government Should Foster Alternatives – But Not How Bush Proposes

The government should encourage development of alternatives to fossil fuels, economists said in a WSJ.com survey. But most say the best way to do that isn't in President Bush's energy proposals: a new tax on fossil fuels.

Forty of 47 economists who answered the question said the government should help champion alternative fuels. Economists generally are in favor of free-market solutions, but there are times when you need to intervene," said David Wyss at Standard & Poor's Corp. "We're already in the danger zone" because of the outlook for oil supplies and concerns about climate change, he said.

A majority of the economists said a tax on fossil fuels would be the most economically sound way to encourage alternatives. A tax would raise the price of fossil fuels and make alternatives, which today often are more costly to produce, more competitive in the consumer market. "A tax puts pressure on the market, rather than forcing an artificial solution on it," said Mr. Wyss.

President Bush has made a strong push on energy initiatives over the past month but he has steered clear of proposals that would raise taxes. In his State of the Union address, Mr. Bush set targets that call for a 20% reduction in gasoline use over the next 10 years. He proposed regulations to tighten gas-mileage standards and force fuel suppliers to use more alternative fuels. In addition, his budget proposal presented to Congress this week provides substantial funding for biofuel, clean coal and renewable energy programs.

In the survey, which was conducted Feb. 2-7, just two economists recommended regulations that require energy companies use more alternatives, one of the keys of the Bush plan, while six advised subsidies for producers of alternative fuels. "With subsidies, the government chooses the market solution," said Diane Swonk at Mesirow Financial. "I'd favor taxes in this area."

Other economists in the survey, though, said the smartest course for the government is to let market forces determine the future of alternative energies. "The more we mess with things the more problems we create," said Brian S. Wesbury of First Trust Advisors. "Government interference in the marketplace can do damage to long-term development of alternate energies."

Biggest Economic Risks

Although crude-oil prices have eased from levels hit last year, the economists said dependence on fossil fuels remains a threat. When asked to pick the greater geopolitical threat to the economy, by almost an 3-to-1 margin the economists chose a disruption in crude oil supplies caused by tensions in the Mideast over the impact on spending and confidence that could follow a major terrorist attack. "The economy has already proven it can survive terror attacks. It had a harder time with almost $80 per barrel oil," said Ms. Swonk.

The economists generally expect oil to remain below $60 a barrel for the remainder of this year. The average forecast puts crude oil futures at $57.98 a barrel in June and $58.72 in December. That roughly matches the price at which crude futures have traded in New York this week, but is well below the nominal highs set last year at around $77 a barrel.

"Demand for energy is going to grow, and energy likely to come from existing sources isn't going to grow fast enough," said Daniel Laufenberg at Amerprise Financial. "It's not a crisis today, but higher prices are telling us now is the time the start preparing."

Sarbanes-Oxley Fallout

The survey also gauged economists' sentiment on concerns expressed by business leaders that Sarbanes-Oxley rules, other regulatory enforcement and litigation are hurting the competitiveness of U.S. financial markets. Twelve of 51 economists who responded to the question said they feel these forces are hurting market competitiveness "a lot and are a serious threat to the economy." Thirty-six of the economists said markets are being hurt some but not enough to be a major economic worry.

Regarding Sarbanes Oxley specifically, a majority – 26 of 50 economists – said they believe the rules have had a "more negative than positive" impact on the economy. Four others said the impact has been entirely negative. In contrast, 19 economists deemed the impact "more positive than negative" and one said it has been an entirely positive influence on the economy.

Among other findings in the survey:

• Economists, on average, increased their forecast for first-quarter gross domestic product growth by three-tenths of a percentage point to 2.5% following the release of the government's first estimate of fourth-quarter growth last week. That report put growth for the period at a 3.5% rate. GDP is the broadest measure of economic output. Expectations of modest improvement in growth for the rest of the year were changed little. For the fourth quarter of 2007, the economists forecast growth at a 3% rate.

• The economists are skeptical that the federal budget will be balanced by 2012, a goal that is shared by President Bush and Democratic leaders. The economists put the probability of attaining that goal at 32%.

• There is a split on where the Federal Reserve's federal-funds rate is headed this year. Some 69% of respondents expect the next move to be a decrease, while 31% see a rate increase on the horizon. However, most don't see any move until some time in the summer.

• Sentiment improved a bit on the outlook for home prices. On average, economists expect a closely watched index calculated by the Office of Federal Housing Enterprise Oversight will show that prices rose 3.52% last year, up from an earlier forecast of 2.76%. Ofheo's report on 2006 prices is expected to be released early next month. For 2007, the economists see a price decline of 0.18% compared to an earlier forecast of a 0.49% decline. However, when one outlier, who forecast a 20% drop, is removed, the economists expect a modest gain in home prices this year.