Biofuels May Raise GHG Emissions, says Nobel Laureate Paul Crutzen

Biofuels could boost global warming, finds study
September 21, 2007 -- By Zoe Corbyn, Chemistry World

Growing and burning many biofuels may actually raise rather than lower greenhouse gas emissions, a new study led by Nobel prize-winning chemist Paul Crutzen has shown. The findings come in the wake of a recent OECD report, which warned nations not to rush headlong into growing energy crops because they cause food shortages and damage biodiversity.

Crutzen and colleagues have calculated that growing some of the most commonly used biofuel crops releases around twice the amount of the potent greenhouse gas nitrous oxide (N2O) than previously thought - wiping out any benefits from not using fossil fuels and, worse, probably contributing to global warming. The work appears in Atmospheric Chemistry and Physics and is currently subject to open review.

'The significance of it is that the supposed benefits of biofuel are even more disputable than had been thought hitherto,' Keith Smith, a co-author on the paper from the University of Edinburgh, told Chemistry World. 'What we are saying is that [growing many biofuels] is probably of no benefit and in fact is actually making the climate issue worse.'

Crutzen, famous for his work on nitrogen oxides and the ozone layer, declined to comment before the paper is officially published. But the paper suggests that microbes convert much more of the nitrogen in fertiliser to N2O than previously thought - 3 to 5 per cent or twice the widely accepted figure of 2 per cent used by the International Panel on Climate Change (IPCC).

For rapeseed biodiesel, which accounts for about 80 per cent of the biofuel production in Europe, the relative warming due to N2O emissions is estimated at 1 to 1.7 times larger than the quasi-cooling effect due to saved fossil CO2 emissions. For corn bioethanol, dominant in the US, the figure is 0.9 to 1.5. Only cane sugar bioethanol - with a relative warming of 0.5 to 0.9 - looks like a viable alternative to conventional fuels.

Some previous estimates had suggested that biofuels could cut greenhouse gas emissions by up to 40 per cent.

Global picture

The IPCC's N2O conversion factor is derived using data from plant experiments. But Crutzen takes a different approach, using atmospheric measurements and ice core data to calculate the total amount of N2O in the atmosphere. He then subtracts the level of N2O in pre-industrial times - before fertilizers were available - to take account of N2O from natural processes such as leguminous plants growing in forests, lightning, and burn offs.

Assuming the rest of the N2O is attributable to newly-fixed nitrogen from fertilizer use, and knowing the amount of fertilizer applied globally, he can calculate thecontribution of fertilizers to N2O levels.

The results may well trigger a rethink by the IPCC, says Smith. 'Should we go along the road of adding up the experimental evidence for each of the processes or are we better off using the global numbers?'

Critical reception

But other experts are critical of Crutzen's approach. Simon Donner, a nitrogen researcher based at Princeton University, US, says the method is elegant but there is little evidence to show the N2O yield from fertilized plants is really as high as 3-5 per cent. Crutzen's basic assumption, that pre-industrial N2O emissions are the same as natural N2O emissions, is 'probably wrong', says Donner.

One reason he gives is that farmers plant crops in places that have nitrogen rich soils anyway. 'It is possible we are indirectly increasing the "natural" source of N2O by drawing down the soil nitrogen in the world's agricultural regions,' he explains.

Others dispute the values chosen by Crutzen to calculate his budget. Stefan Rauh, an agricultural scientist at the Instituteof Agricultural Economics and Farm Management in Munich, Germany, says some of the rates for converting crops into biofuel should be higher. 'If you use the other factors you get a little net climate cooling,' he said.

Meanwhile, a report prepared by the OECD for a recent Round Table on Sustainable Development questions the benefits of first generation biofuels and concludes that governments should scrap mandatory targets.

Richard Doornbosch, the report's author, says both the report and Crutzen's work highlights the importance of establishing correct full life-cycle assessments for biofuels. 'Without them, government policies can't distinguish between one biofuel and another - risking making problems worse,' said Doornbosch.

A Brief Look at Corn Ethanol

May 9, 2007 -- By Brad Ewing

From the moment we entered this world, many of us have lived in societies powered almost entirely by fossil fuels. We are at the cusp of changing this, but the tradeoffs we face provide no perfect solution. The world supply of fossil fuels such as petroleum cannot sustain projected consumption levels for the rest of this century. The U.S. Government Accountability Office recently observed that world oil production will peak sometime between now and 2040, and that U.S. production peaked in 1970. Weaning Americans from petroleum will require diversification of supply and conservation to reduce demand.

One potential solution to diversify supply of passenger vehicle fuel is ethanol made from cornstarch. Investment in fuel ethanol has risen rapidly since the 2005 oil price hikes, the passage of the Energy Policy Act and replacing the fuel additive MTBE with ethanol. Most studies show that corn ethanol greenhouse gas emissions are slightly lower in comparison to gasoline. In addition, corn ethanol is not a total loss to the food economy because 30 percent of the corn is recovered in a protein rich livestock feed called distillers dried grains. Farmers will also benefit from increased value of their land and crops. The corn ethanol industry stands the best chance to prosper throughout the Corn Belt.

The benefits of corn ethanol are accompanied by difficult problems for both Midwestern and coastal Americans. The use of corn makes ethanol a Midwest issue as the U.S. lacks the infrastructure to efficiently transport the fuel through current pipelines. Complicating the issue further, smog-causing pollutants are higher when consuming corn ethanol rather than gasoline. In fact, the largest producer of corn ethanol in the U.S., Archers Daniel Midland, was ranked the tenth worst corporate air polluter on the University of Massachusetts Toxic 100 list. What is more, some researchers question whether corn ethanol can even provide a net energy gain.

Beyond logistical concerns, corn ethanol is ethically worrisome. Converting the entire U.S. corn harvest to ethanol would satisfy approximately 12.3 percent of the U.S. household vehicle needs or feed 100 million people. In smaller terms, the corn required to produce 25-gallons of ethanol is enough to feed one person for an entire year. In a world of 6.59 billion people with 18,000 children dying every day from hunger and malnutrition, food used as fuel seems unethical--especially when there are other options.

Corn ethanol production will come at a very high price in comparison to energy conservation. The Congressional Budget Office estimates that reducing gasoline consumption 10 percent through fuel economy standards would cost nearly $3.6 billion a year. Achieving the same result by expanding ethanol production would cost taxpayers at least $10 billion a year. As we transition towards a diversified energy portfolio, all forms of energy should face market prices that reflect the costs they impose on society. And with these real costs, we must also recognize the inherent struggles that exist when food and energy markets intertwine.

Big Oil on Peak Oil

Big Oil on Peak Oil
April 19, 2007 -- The Wall Street Journal Energy Roundup Blog

Energy Roundup and several other energy bloggers participated in a conference call yesterday with Red Cavaney, president and CEO of the American Petroleum Institute. Topics included peak oil, ethanol, the Canadian tar sands, refinery capacity and greenhouse-gas emissions caps.

Some highlights:

Cavaney is sanguine about the prospect of peak oil. He believes that, even after the world’s oil production hits its peak — whenever that happens — the downward slope of production will likely be gradual, rather than sharp. He also thinks much of the world is “under-explored,” suggesting the peak can be put off a little while longer with more exploration overseas. He also thinks hydrocarbons will always be with us, in one capacity or another. “Man left the Stone Age not because he ran out of stone. We’ll leave the age of oil, but it won’t be because we ran out of oil. It will be because other technologies have come in that will be more reliable and cost-effective.”

He claimed his industry is agnostic about the controversies surrounding global warming. “We’re not scientists or experts in that area,” he said. “But we have concluded there are sufficient signals that it’s important we get on with trying to mitigate the outcomes that may flow from path we’re on.”

He also expressed no preference for any of several potential congressional actions to limit greenhouse-gas emissions. But he also said he doubted a carbon tax would be imposed any time soon. “Most economists…say a carbon tax would be the most efficient way to maximize reductions,” he said. “But…if you talk to political advisors, that’s the last vote they’ll take.”

He was a little more heated in defending his industry against charges that it is standing in the way of a broader rollout of ethanol in the U.S. The Wall Street Journal reported earlier this month that oil-company policies make it harder for many service stations to stock a fuel called E85, a blend of 85% ethanol and 15% gasoline. And earlier this year, representatives of auto makers and the Clean Fuel Development Coalition told the Journal that oil companies weren’t doing their part to make ethanol more widely available.

Cavaney said such critics “have their own agenda.” The auto industry, he implied, has not taken ethanol use seriously, using flex-fuel vehicles and E85 primarily as marketing tools. He said his industry is doing everything it can to encourage ethanol use, but that corn-based ethanol will never be a widespread substitute for gasoline and cellulosic ethanol is still years away from commercial viability.

He also warned against relying on any one substitute for fossil fuels. “There is no one silver bullet,” he said. “Anybody that focuses that way will miss a lot of opportunities.”

Crop Prices Pushing Up Cost Of Food Globally

Crop Prices Soar, Pushing Up Cost Of Food Globally (Subscription)
April 9, 2007 -- By Patrick Barta, The Wall Street Journal

Soaring prices for farm goods, driven in part by demand for crop-based fuels, are pushing up the price of food world-wide and unleashing a new source of inflationary pressure.

The rise in food prices is already causing distress among consumers in some parts of the world -- especially relatively poor nations like India and China. If the trend gathers momentum, it could contribute to slower global growth by forcing consumers to spend less on other items or spurring central banks to fight inflation by raising interest rates.

Politicians in markets where food costs are a particularly sensitive matter are moving to counter rising prices before they take a bigger economic toll or fuel unrest. But it remains unclear whether those policies will be enough to contain the current pressures, or whether a longer-term bout of food-price inflation -- similar in ways to the recent climb in prices for oil and other commodities -- is in the offing.

One of the chief causes of food-price inflation is new demand for ethanol and biodiesel, which can be made from corn, palm oil, sugar and other crops. That demand has driven up the price of those commodities, leading to higher costs for producers of everything from beef to eggs to soft drinks. In some cases, producers are passing the costs along to consumers. Several years of global economic growth -- led by China and India -- is also raising food consumption, further fanning the inflationary pressures.

Food-price inflation has been climbing -- in some cases sharply -- in India, China, Europe, and even smaller economies like Turkey, South Africa and Poland. In Hungary, it is running at more than 13% a year, compared with less than 3% in 2005. In China, food prices are climbing at a 6% pace, more than three times the speed of a year ago. Prices are also up in Germany, Italy and the United Kingdom. They may even be picking up in Japan, the world's second-largest national economy, though the signs are tentative since overall prices there are only just starting to rise after a prolonged economic downturn.

The U.S., too, is seeing some stirrings, with food costs rising 3.1% in February from the year before -- a rate one percentage point higher than in mid-2005. Economists say U.S. food prices are expected to rise faster than the general rate of inflation this year. Wholesale prices of meat, poultry and eggs have already increased.

If the trend continues, U.S. consumers are likely to see higher prices at the supermarket for everything from milk to cereal to soda pop, since corn is used to feed livestock and make high-fructose corn syrup, a key ingredient in many soft drinks. A spokesman for the National Chicken Council, a poultry-industry group, recently testified to a congressional subcommittee that Americans should expect higher chicken prices because of what the group described as "the ethanol crisis."

Doomsday predictions of a major food shortage in China and elsewhere have circulated for years but haven't materialized. And some economists believe the recent increase in crop demand probably can be met without severely straining the global economy. They think prices could come back down over time, especially if some countries that have more land that could be put under cultivation -- particularly Brazil -- can greatly increase production. Technological advances, such as better seed varieties, could also help boost production to keep up with demand.

In the meantime, higher farm prices aren't bad for everyone. They could help boost incomes for the rural poor in developing nations, who have been bypassed by gains in the manufacturing and service sectors. In some cases, the rising demand for food also reflects the growing wealth of once-destitute populations around the globe.

So far, higher prices haven't sparked a major rise in overall global inflation, which remains relatively low and stable by historical standards. Moreover, food prices are notoriously volatile, and some of the increases are due to short-term or local factors that could reverse in time.

But many economists believe the forces causing the current bout of food inflation will persist, or recur in years ahead. Many countries are facing shortages of land and water that didn't exist during past food-price spikes, so they can't easily plant more to ease the strain.

Researchers at Swiss bank UBS AG note that average food prices in China have grown faster in the past five years than in the previous five, as more agricultural land is taken up for factories or high-rise condominiums. Changes in diets are also exacerbating the problem, as rising incomes allow the Chinese and consumers in many other places to eat more.

Some economists contend that China and India appear to be reaching a point at which nothing short of a bumper crop of key commodities will be enough to meet local needs and prevent further surges in food prices. In fact, China and India have achieved historically high production of some crops in recent years, only to see prices continue to climb.

Global grain stocks are at their lowest level in 30 years, after several years of strong global economic growth, and could become even tighter if farmers divert more crops to make ethanol or other fuels. By some estimates, about 30% of the U.S. grain harvest is likely to be devoted to ethanol production by 2008, up from 16% in 2006.

All of this puts the world's central banks in a bind. Although they have confronted spurts in energy prices, many of them haven't had to cope with prolonged increases in food prices since the 1970s. Since then, food-price inflation has remained relatively benign, even as incomes world-wide have climbed, allowing consumers to beef up their diets.

In more recent years, central banks have tried to ignore surges in food prices as long as they didn't get too out of hand, mostly because they tended to be short-lived. A change in weather, for example, could quickly turn a food shortage into a glut, sending prices tumbling.

But a more sustained bout of food-price inflation, if it emerges, could force banks to keep interest rates higher than they would otherwise be. India, for one, has increased interest rates several times over the past year in part to combat food-price inflation.

"In 1972, the last time grain stocks were this low, the story didn't end well in terms of inflation," says Carl Weinberg, chief economist at High Frequency Economics in Valhalla, N.Y. In those days, inflation soared not just because of higher oil costs but also because of a global jump in food costs, all of which helped trigger a major U.S. recession and a global slowdown. "Food prices were an important part of what started [inflation] rolling" in the 1970s, Mr. Weinberg says.

But since the 1970s, the Federal Reserve and some other central banks have come to believe that they can avoid raising interest rates in the face of transitory increases in food and energy prices if they have established enough credibility as inflation fighters to keep such price increases from spilling over to the rest of the economy.

Today, the inflation risks may be greatest in developing economies. In the Philippines, food accounts for 50% of the basket of goods included in the consumer-price index, an inflation benchmark. In Thailand, it's about 35%, according to data from Macquarie Bank Ltd. In the U.S., food makes up only about 15% of the CPI.

In one bustling open-air market in downtown Shanghai, shoppers say they are paying as much as two times the price they paid last year for green vegetables, and the cost of meat and vegetable oils have also soared.

Such blows to the pocketbook "give us more pressure for daily life," says Xu Wen, a 53-year-old retiree who was purchasing some rolled noodles in a small shop last week. Already, she says, she and her husband are spending almost half their monthly income on food -- a percentage that continues to increase over time. "We ordinary people have no way out," she says. "This is something the government needs to be concerned about."

Government officials are taking pains to show they are addressing the problem. In December, Chinese Premier Wen Jiabao toured a Beijing supermarket to check up on prices, and China has begun limiting the construction of corn-based ethanol plants to ensure there is enough corn for humans and livestock. Chinese officials have even banned new golf courses on farm land and have been unwinding subsidies they once paid to grain distributors to sell excess corn overseas.

Still, analysts estimate Chinese stockpiles of surplus corn now stand at only about 30 million metric tons, down from more than 100 million tons at the end of the past decade, as demand picks up. (The Chinese government doesn't provide official estimates of its stockpiles).

That would imply that China only has two to three months of surplus supply based on current consumption trends, making the country highly vulnerable if it has a bad crop. Although China remains a net exporter of corn now, analysts believe it will become a net importer sometime in the next few years.

Some economists say China will have to take more aggressive steps to prevent future food problems. These changes could include allowing the proliferation of large -- but more efficient -- corporate farms similar to the ones that drove many small growers out of business in the U.S. in recent decades. Such a push would be extremely difficult for China because it needs to preserve jobs for the tens of millions of people who live in rural areas.

Pressures are also building in India. Monika Katyal, a 32-year-old homemaker, complains that she has had to cut back on purchases of many luxuries, such as cosmetics, as her family's monthly bill for groceries has climbed as much as 50% in recent months.

"I came here to do some shopping for myself, but now it doesn't look like I will be able to do that," she said recently, as she studied the price on a bottle of ketchup in a New Delhi grocery.

In addition to raising interest rates, Indian officials have also lifted import duties on corn and barred exports of wheat, to make sure supplies are available for domestic consumption.

But it isn't clear whether those and other moves will be enough to make a big difference in the long run. The main problem is that yields of some crops aren't growing fast enough to keep up with India's rapidly increasing food demand. India's corn production, for example, has climbed about 4% a year since 2001, says Amit Sachdev, a New Delhi-area agriculture-industry analyst, while demand has been increasing nearly 5.5% a year.

"If I look at the trend line, [it] indicates to me that the requirements are going up much faster than what you can produce" in India, he says.

US biofuels: A field in ferment

US biofuels: A field in ferment (Subscription)
December 7, 2006 -- By Katharine Sanderson, Nature

To move US biofuels beyond subsidized corn will be a challenge, reports Katharine Sanderson.

Critics of the US ethanol industry have long derided it as an environmentally questionable subsidy to Mid-western farmers that simply serves a transparently political purpose. Voters in Iowa, the buckle in the US corn belt, get first say in the process of choosing presidential candidates. All such candidates are in favour of turning corn (maize), which the state produces in abundance, into ethanol. This pre-presidential support is good for the Iowan economy, but not necessarily that great for the environment.

Studies that compare the energy that goes into making ethanol — expended during the harvesting, fertilizing and transporting of the corn to refineries, and then refining it — with the energy that is released when it is burned routinely show that the net gain is at best small. The American Coalition for Ethanol says that ethanol contains twice the amount of energy that is used to make it; critics see no net gain whatsoever.

This criticism has had little effect, and since 1980, US ethanol production has risen from an average of 6,500 barrels (1 million litres) a day to 260,000 barrels a day. Federal mandates call for a further doubling by 2012. But it is increasingly clear to many in the industry that the criticisms of corn-based ethanol have merit, and in 2006, the need for an alternative was given the highest profile it could get when President George W. Bush brought it up in his state of the union address. In order to improve US energy security, he said, his government intended to make cellulosic ethanol (ethanol made from the rougher and woodier parts of plants) a competitive biofuel within six years.

Corn stores
The advantage of an ear of corn as a source of ethanol (or for that matter as a bit of food) is that it is mainly starch, which is made up of sugars linked in a regular way with bonds that can be broken easily. Breaking the bonds between sugars and using yeast in the fermentation to produce ethanol is a straightforward task for the biorefineries. The disadvantage is that corn is a crop that needs a lot of inputs — fertilizers, water and pesticides — and that doesn't put as much of the sugar it creates through photosynthesis into its ears as one might wish. A lot of the sugar is instead turned into stalks and 'stover' — structural material rich in cellulose and considerably more difficult to break down.

Plants that store up a significant amount of energy in easily usable forms such as starch or sugar are exceptions, encouraged in their oddities by millennia of selective breeding — and of them all, only sugar cane grown in the tropics puts enough energy into its easily purified products to make bioethanol obviously attractive. Most plants put the bulk of the energy they store up from the sun into cellulose and a related polymer, hemicellulose, and woody plants add another substance, lignin, to the mix. Cellulose makes up the plant's cell walls and, like starch, it is a polymer of sugars containing six carbon atoms linked one to the next. Hemicellulose, on the other hand, is based on a five-carbon sugar, xylose, although it contains many other sugars as well; its various components are thrown together in messy looking chains with many branches. Lignins are huge crosslinked jumbles of organic molecules which reinforce cellulose and hemicellulose to turn them into wood.

The energy that the plants put in to making the bonds in these various substances could, in principle, be extracted by fuel makers. And these molecules — particularly cellulose, which is both the most abundant and the easiest to dismantle — are much more plentiful than starches and sugars. But they are also much harder for microbes to break down; if they weren't, there'd be no trees, just pools of green goo. As yet, there are no cellulosic ethanol refineries operating at full commercial capacity, and assessments of the technology's readiness for market vary a great deal, as do opinions on how to get there from here. Government incentives and tax breaks might be one solution, but big energy companies also have a role to play, as do the smaller companies that have already worked on developing the technology, but have not yet found the best ways of spreading and licensing it.

The most expensive part of making ethanol from cellulose is pretreating the biomass to make it accessible to the enzymes that will then cut the sugars from the polymers so that they can be fermented. Typical pretreatments reduce the feedstock's volume chemically using acids, peroxides and ammonia, often along with some form of mechanical pressing or shredding. Unfortunately, this is not a step that can be skipped to cut costs, says Charles Wyman of the University of California, Riverside, because high sugar yields are essential, and untreated biomass gives very low yields. "The only step more expensive than pretreatment is no pretreatment," he says. Instead, the hunt is on for pre-treatment technologies that involve fewer chemicals, require less energy and don't degrade the sugars that are set free in the process.

After the pre-treatment stage comes the snipping out of the sugars, which is the point at which biotechnologists think they can greatly improve on the current process. Abengoa Bioenergy of St Louis, Missouri, a subsidiary of the Spanish engineering group Abengoa, recently invested $10 million in Dyadic International, a biotechnology company that is concentrating on enzymes for degrading cellulose.

Based in Jupiter, Florida, Dyadic didn't start out as an energy company — in the 1970s it was a leading supplier of pumice for stonewashing jeans. But the enzymatic expertise it developed for distressing denim was then turned to a number of other ends. One of those was breaking down wood, a job that in nature largely falls to fungi. The company's research has centred on a filamentous mess of a fungus discovered by accident in a Russian forest that now, after ten years of processing and genetic engineering, makes up Dyadic's patented C1 fungal cell system. The fungus has been fully sequenced and encouraged to overexpress the genes that then make cellulases and xylanases — the proteins that break up cellulose and hemicellulose to produce fermentable sugars. "We have the world's most prolific filamentous fungus," boasts Dyadic's chief executive Mark Emalfarb.

Cellulose solutions
Emalfarb believes that the cellulosic ethanol market could eventually be worth $20 billion a year in the United States, and suggests that there is enough raw material available in the United States to produce 2.4 billion barrels of cellulosic ethanol a year. This is a bit more than half of what some estimates claim is needed to completely replace petrol as a fuel — the United States gets through some 3.3 billion barrels a year, but the energy content of ethanol is lower than that of petroleum.

The current leader in the cellulosic ethanol market, Iogen, also uses fungal enzymes. The company makes small commercial quantities of ethanol from straw at its pioneering cellulosic ethanol facility in Ottawa, Canada. As the first of its kind, this is an undoubted achievement. But even when it reaches its full capacity, which it is taking quite some time to do, it will be capable of producing only 2.5 million litres (16,000 barrels) a year, which is not a great deal.

Iogen chief executive Brian Foody is not worried. The critical steps for getting the right enzymes, the right pretreatment systems and the right yeast systems, have all been done, he says. "We just need to go through the nuts and bolts of the process." This means making sure that the demonstration plant works well enough to be replicated elsewhere — the company is looking to build new facilities in Idaho, Saskatchewan and Germany.

Iogen recently secured a $30-million investment from the bankers Goldman Sachs, bringing the total invested in it since the 1970s up to $130 million. But not all potential investors are convinced. "I don't really understand what Iogen is doing," says Matt Drinkwater, market analyst at New Energy Finance in London, UK. And his concerns are not unique to Iogen — many of the companies in the sector, he says, hold details of their processes so close to their chests that they are hard to evaluate, whether they be relatively small outfits such as Iogen or giants such as DuPont, which is also developing cellulosic ethanol technologies. Robert Wilder, who manages the Wilderhill clean energy index — the first such index to be accepted on Wall Street — agrees, but acknowledges the constraints that the chief executives of small cellulosic ethanol companies work under in terms of not tipping their hands to larger competitors.

Smells like green spirit
Perhaps because of these uncertainties over the technology's readiness, most of the money that has been invested recently in ethanol production both within the United States and beyond has been in the more traditional technologies. The sizable investments being made by agribusiness giant Archer Daniels Midland — the biggest ethanol producer in the United States and, perhaps tellingly, a company run by a chief executive who was recruited from the oil industry — seem mostly to be in traditional corn ethanol. The same applies to high-flying UK entrepreneur Richard Branson's recent investments in Ethanol Grain Processors of Tennessee and a new grain-based Californian ethanol venture, Cilion.

But there is some evidence that enthusiasm for investing in corn ethanol may be waning. Various ethanol companies that were riding high earlier in the year saw their stock slump after the summer when oil prices came down from their $78 a barrel peak.

This might mean the market is aware that, although subsidies may be able to keep it profitable for the time being, there is no way that corn ethanol can make a marked difference to long-term energy use in the United States. To make enough ethanol to start seriously displacing oil imports requires a process that can use cellulosic materials such as switchgrass, a tall prairie grass, or miscanthus, a grass imported from Asia, which provide far more tonnes of biomass per hectare than corn kernels ever can, and can be grown on land not suitable for conventional agriculture. Other sources could be farm waste or trees or newly engineered plants of some sort.. This leads to something of an investing impasse: the companies in the business at the moment make money; the ones that might take it to the next stage do not, in large part because no one has made the heavy capital investments needed for plants that make use of the technologies that have already been piloted.

One way round this is to invest across the board. This is the strategy pursued by Vinod Khosla, the Silicon Valley venture capitalist who is one of the founders of Cilion. Khosla is also involved in cellulosic technologies through two companies based in Cambridge, Massachusetts: Celunol, which has just started to operate its own pilot plant, and Mascoma, which concentrates on process engineering and which last month raised $30 million in second-round venture funding. Farther afield in the biofuels world, Khosla is also a major investor in Kergy, a company that turns biomass into fuel in a completely different 'thermochemical' way, using just heat and catalysts. For some observers, such as Dan Schrag, a geochemist at Harvard University, these approaches are more attractive than fermentation, not least because they need no witches' brews made from fiddly feedstock-specific enzyme. "When the dust clears, cellulosic ethanol is unlikely to be where we end up," he predicts.

To Drinkwater, investors such as Khosla, with their broad-based approach to the problem, are exactly what the industry needs to drive the market forwards and get it over the final bump it needs to clear before commercial success. Unfortunately, there are few such people. In their absence, many in the industry, not without self-interest, see the responsibility resting with governments to provide attractive tax incentives. "All forms of energy should face market prices that reflect the cost to society that they impose," says Foody. And to set those market prices, the right tax incentives and government mandates need to be in place.

But government incentives won't make the scientists any smarter, and observers outside the pioneering companies believe there is still basic work to be done before those companies, or their eventual competitors, make the process economically viable. Thus they welcome increasing levels of basic research from the government, such as the US Department of Energy's pledge of $250 million to set up two bioenergy research centres that are largely focused on cellulosic ethanol. The European Union has set aside E100 million (US$132 million) for cellulosic ethanol in its seventh Framework Programme on research.

Ethanol alternative
Companies large enough to afford it are also following the basic research route rather than placing early bets on particular technologies. BP has announced it will invest $500 million over ten years to fund an Energy Biosciences Institute, which will be a dedicated facility based at a university. The University of Cambridge, Imperial College London, Massachusetts Institute of Technology, Stanford, the University of California, Berkeley, and Lawrence Berkeley National Laboratory have all been mentioned as possible hosts — the final decision is expected in December.

One intriguing possibility for such research to pursue is replacing ethanol with another form of alcohol. The fact that ethanol is easy to ferment can blind people to the fact that it has almost as many inherent problems as a fuel as corn has as a feedstock. Its tendency to pick up water wherever it goes makes it hard to transport, particularly in pipelines. It's corrosive. It's more volatile than one might wish. And its energy density is low compared with regular petrol.

For these reasons, BP and DuPont are working with British Sugar to adapt their ethanol fermentation facility in East Anglia to produce butanol — an alcohol with four carbons in it, as opposed to ethanol's two. This requires training microbes in new tricks, but it is not as hard a problem as breaking down woody plant material. The East Anglia plant will use locally grown sugar beet as the feedstock, but in the long term the aim would be to use a cellulosic feedstock. "We accept that taking stuff out of the food chain is not the right way to go," says Robert Wine, a BP spokesman.

Drinkwater thinks that an industry demand for butanol as an end product could actually increase interest in cellulosic approaches. "Most refiners would be much happier to use butanol than ethanol," he says. If oil companies become confident in biofuel technologies, investors would in turn be more confident of the biofuels industry as a whole, giving the industry that elusive final shove that it seems to need.

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.

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.

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.

Corn-based ethanol's a flawed concept

Corn-based ethanol's a flawed concept
February 16, 2007 -- By Myra P. Saefong, MarketWatch

Ethanol as an alternative energy source is a flawed concept -- at least when corn is used to produce it.

And the consequences of using corn to create ethanol are far-ranging - they even impact consumers and the price they pay for meat.

So is it worth it? It depends who you ask.

"There have been numerous studies completed regarding the energy efficiency of ethanol vs. its production," said John Eichberger, vice president of government relations for the National Association of Convenience Stores.

"These range from a positive net energy return in excess of 30% to a negative net energy return of more than 30%," he said. "Researchers on both sides of the issue argue that the other research is significantly flawed."

Even so, policymakers insist that ethanol is a "positive replacement product for crude-oil based fuels and have proceeded down a path to subsidize and mandate its use," said Eichberger, whose trade organization represents the convenience and petroleum-retailing industry.

There's no doubt that renewable fuels are a good idea, said Darin Newsom, a senior analyst at Omaha, Nebraska-based DTN. "That means putting more research into more efficient ways" of making them.

That said, "corn is a short-term end to the means."

Invest energy to get energy

"Some of the warts associated with ethanol production are [real] -- it does use a lot of water, electricity and natural gas," said Newsom.

So "the problem with corn-based ethanol is that, at best, you don't get more energy out of it than it costs to grow and make it," said Sean Brodrick, a contributing editor at MoneyandMarkets.com.

"At worst, you lose energy."

A math and science lesson is in order.

An easy-to-read measure of whether ethanol's economically viable can be derived from taking a look at its "energy return on energy invested," or EROI, according to Brodrick.

"It is at the crux of why corn-based ethanol is a boondoggle," he said.

EROI can be expressed as "net energy," he explains. The EROI for corn-based ethanol is 1.2:1, so the net energy is 0.2, he said.

That means you put in 1 British thermal unit to get 1.2 BTUs from it, he said.

"At EROI of 1.2 to 1, the 3.9 billion gallons that the U.S. produced in 2005 required 3.29 billion gallons of BTU energy input, resulting in a 'net energy' of 610 million gallons," he said.

And that's being generous, he said. "There are some computations that show corn-based ethanol has a net energy of zero. Others show it as a net energy loser."

So it all depends on how you look at it.

A "break even" with the cost of production would be largely based on the cost of crude oil and the cost of corn, said Rick Kment, an analyst at DTN.

For example, if crude-oil prices are at $70 to $100 per barrel, very high corn prices can be paid and ethanol can still economically work in the system, he said.

But with $30 crude and $4 corn, "it becomes unprofitable," he said.

At current price levels, DTN estimates a net profit -- after depreciation and all other factors -- to be near 5 cents per gallon of ethanol produced, he said.

That's down from a 50-cent per gallon net profit at the first of the year, and down from $2.50 a gallon in June 2006, Kment said.

March crude-oil futures closed Thursday at $57.99 a barrel on the New York Mercantile Exchange, while March corn futures were trading around a 10-year high above $4 a bushel on the Chicago Board of Trade. And March ethanol stood at $2.08 a gallon on the CBOT.

'Dead argument'

Still, there are many more experts who say there's really no question as to whether corn-based ethanol puts out more than it uses up.

"The argument over the energy balance of ethanol is really a dead argument," said Matt Hartwig, a spokesman for the Renewable Fuels Association, the national trade group for the ethanol industry. "Study after study has proven them [the critics] to be flat out wrong," he said.

Hartwig called attention to the Web site for the biomass conversion research laboratory at Michigan State University.

A Feb. 5 note on the site prepared by Bruce Dale, professor of chemical engineering at the university, said the net energy analysis is "simple and has great intuitive appeal," with net energy defined as ethanol's heating value minus the fossil energy inputs required to produce the ethanol.

But "it is also dead wrong and dangerously misleading."

Tadeusz Patzek, professor of civil & environmental engineering at the University of California at Berkeley, said in a report last year that the "energy cost of producing and refining carbon fuels in real time, e.g., corn and ethanol, is high relative to that of fossil fuels deposited and concentrated over geological time."

"We do not value energy per se, but rather the services or 'qualities' that the energy provides," argued Dale.

"We need to carefully choose our metric of comparison," he said.

One gallon of ethanol contains 84,000 BTUs, which is about 2/3 that of gasoline, according to Neil Koehler, chief executive of Pacific Ethanol Inc.

"Since ethanol burns more completely (and cleanly) than gasoline, this lower energy density can be completely offset by increased efficiency," he said.

It's eating at corn

But ethanol's impact on the corn market has been "dramatic," said DTN's Newsom.

"If ethanol demand increases to projected levels, corn supplies will be incredibly low at the end of the 2006-2007 marketing year in August 2007," he said.

The U.S. produced an estimated 4.9 billion gallons of ethanol last year and used more than 5.5 billion, according to the Renewable Fuel Association's Hartwig. Ethanol is blended in more than 46% of the nation's gasoline, he said.

"It would seem that the corn market is poised for a long-term rally in price," said Newsom. He predicts that the high of $5.54 a bushel from 1996 seems like a "reasonable price target."

Meanwhile, limitation in the corn market itself should be considered.

"Corn-based ethanol will be of limited supply," said Charles Perry, chairman of energy-consulting firm Perry Management. The U.S has a limited amount of productive land so we "can spare only a limited amount of our corn crop for ethanol."

At the same time, this corn use for ethanol has been "hampering feeding, with some talk in the livestock industry of herd reduction due to higher feed costs," said Newsom.

"Our food prices will go through the roof -- $4-$5 corn makes for very expensive beef, pork and chicken," said Bernie Feshbach, president of investment firm Feshbach & Sons.

Also, "the use of corn makes ethanol a regional (Midwest) issue as the U.S. lacks the infrastructure to move the product around to meet demand," said Newsom.

But the logistics involved with ethanol production could be irrelevant.

"More attention needs to be paid to the personal economics of ethanol since many consumers are more concerned with cost, than with how a fuel is derived," said Geoff Sundstrom, a spokesman for motorist group AAA.

The industry will get a chance to discuss all of these things soon. The Renewable Fuels Association's 12th annual National Ethanol Conference is next week from Feb. 19-21 in Tucson, Ariz.

The group's Web site says registration for the conference is closed because it's reached its capacity. Interested parties are being placed on a waiting list.

The Sum of All Ears: Corn Ethanol to Replace Gasoline, A Bad Idea

Excerpts from:
The Sum of All Ears
January 29, 2007 -- By Paul Krugman, The New York Times via Economist's View

Corn Cop-Out, Commentary, NY Times: For those hoping for real action on global warming and energy policy, the State of the Union address was a downer. There had been hints and hopes that the speech would be a Nixon-goes-to-China moment, with President Bush turning conservationist. But it ended up being more of a Nixon-bombs-Cambodia moment.

Too bad... The only real substance was Mr. Bush’s call for ... ethanol to replace gasoline. Unfortunately, that’s a really bad idea. There is a place for ethanol in the world’s energy future — but that place is in the tropics. Brazil has managed to replace a lot of its gasoline consumption with ethanol. But Brazil’s ethanol comes from sugar cane.

In the United States, ethanol comes overwhelmingly from corn, a much less suitable raw material. In fact, ... researchers ... estimate that converting the entire U.S. corn crop — the sum of all our ears — into ethanol would replace only 12 percent of our gasoline consumption.

Still, doesn’t every little bit help? Well, this little bit would come at a very high price compared with ... conservation. The Congressional Budget Office estimates that reducing gasoline consumption 10 percent through ... fuel economy standards would cost ... about $3.6 billion a year. Achieving the same result by expanding ethanol production would cost taxpayers at least $10 billion a year...

What’s more, ethanol production has hidden costs. ...[T]he Department of Energy ... says that the net energy savings from replacing a gallon of gasoline with ethanol are only ... about a quarter of a gallon, because of the energy used to grow corn, transport it, run ethanol plants, and so on. And these energy inputs come almost entirely from fossil fuels, so it’s not clear ... ethanol does anything to reduce carbon dioxide emissions.

So why is ethanol, not conservation, the centerpiece of the administration’s energy policy? Actually, it’s not entirely Mr. Bush’s fault.

To be sure, ... Mr. Bush’s people seem less concerned with devising good policy than with finding something, anything, for the president to talk about that doesn’t end with the letter “q.” And the malign influence of Dick “Sign of Personal Virtue” Cheney, who no doubt still sneers at conservation, continues to hang over everything.

But even after the Bushies are gone, bad energy policy ideas will have powerful constituencies... Subsidizing ethanol benefits two well-organized groups: corn growers and ethanol producers (especially the corporate giant Archer Daniels Midland). As a result, it’s bad policy with bipartisan support. For example, earlier this month legislation calling for a huge increase in ethanol use was introduced by five senators, of whom four, including ... Barack Obama and Joseph Biden, were Democrats. In a recent town meeting in Iowa, Hillary Clinton managed to mention ethanol twice...

Meanwhile, conservation doesn’t have anything like the same natural political mojo. Where’s the organized, powerful constituency for tougher fuel economy standards, a higher gasoline tax, or a cap-and-trade system on carbon dioxide emissions?

Can anything be done to promote good energy policy? Public education is a necessary first step, which is why Al Gore deserves all the praise he’s getting. It would also help to have a president who gets scientific advice from scientists, not oil company executives and novelists.

But there’s still a huge gap between what obviously should be done and what seems politically possible. And I don’t know how to close that gap.

Ethanol From Corn Is Not The Solution!

Ethanol From Corn Is Not The Solution
January 16, 2007 -- By Lester R. Brown, The Huffington Post

In the announcement of their "100 Hour" agenda, Democrats targeted expanding research and investment in alternative energy as a key priority. This development is long overdue, and should be celebrated as a major step towards embracing a diversified 21st century energy economy.

The plan, however, has a major pitfall: an over-reliance on corn based ethanol.

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: soaring grain prices and potential chaos in the world food economy.

Ethanol from corn has long been hailed as a solution to our nation's reliance on oil. As a result of soaring oil prices, investors have rushed to expand ethanol production - most clearly seen in the explosion of ethanol distilleries in the last year. Unfortunately this rush to invest in crop-based ethanol is pitting the world's poorest against the world's wealthy motorists.

Furthermore, a report released by me and my colleagues at the Earth Policy Institute (EPI) earlier this month revealed that this surge in ethanol plant construction has been vastly underestimated by both industry papers and ultimately the USDA, which has understated the amount of corn that will be required for ethanol in 2008 by more than half.

The USDA projects that distilleries will require only 60 million tons of corn from the 2008 harvest. But here at the Earth Policy Institute, we estimate that distilleries will need 139 million ton. 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?

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.

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.

Eco-Economy Update

Eco-Economy Update
November 3, 2006 -- By Lester R. Brown, Earth Policy Institute

EXPLODING U.S. GRAIN DEMAND FOR AUTOMOTIVE FUEL THREATENS WORLD FOOD SECURITY AND POLITICAL STABILITY

Now that the year's grain harvest is safely in the bin, it is time to take stock and look ahead. This year's harvest of 1,967 million tons is falling short of the estimated consumption of 2,040 million tons by some 73 million tons. This shortfall of nearly 4 percent is one of the largest on record.

Even more sobering, in six of the last seven years world grain production has fallen short of use. As a result, world carryover stocks of grain have been drawn down to 57 days of consumption, the lowest level in 34 years. The last time they were this low wheat and rice prices doubled.

The growth in world grain consumption during the six years since 2000 averaged roughly 31 million tons per year. Of this growth, close to 24 million tons were consumed as food or feed. The annual growth in grain used to produce fuel ethanol for cars in the United States alone averaged nearly 7 million tons per year, climbing from 2 million tons in 2001 to 14 million tons in 2006.

Now the amount of grain used to produce fuel is exploding. Investment in crop-based fuel production, once dependent on government subsidies, is now driven by the price of oil. With the current price of ethanol double its cost of production, the conversion of agricultural commodities into fuel for cars has become hugely profitable. In the United States, this means that investment in fuel ethanol distilleries is controlled by the market, not by government.

The huge profits from converting corn into ethanol following the late 2005 oil price hikes have led to a jump in groundbreakings for new ethanol distilleries in the last few months. The World Ethanol and Biofuels reports, published biweekly by F.O. Licht, show construction starting on an astounding 54 new ethanol distilleries in the United States between October 25, 2005, and October 24, 2006. With a typical construction period of 14 months, virtually all of them will be producing by the end of 2007. Together these plants, with 4 billion gallons of annual ethanol production capacity, will consume 39 million tons of grain per year, nearly all of it corn. (See data at http://www.earthpolicy.org/Updates/2006/Update60_data.htm.)

The pace of groundbreakings is accelerating. From November 2005 through June 2006, ground was broken for one new plant every nine days. From July through September 2006, construction starts increased to one every five days. In October 2006, it was one every three days.

Since it typically takes many months for a company to decide to build a distillery, select a site, buy the land, acquire the needed permits, and arrange the financing, the post-Katrina jump in oil prices has only begun to show up in groundbreakings for new plants in the last few months.

To calculate the amount of grain that will be going into ethanol, we start with the 41 million tons of the 2005 crop that were used to produce ethanol and add to that 39 million tons for the new construction starts for a total of 80 million tons of corn. This does not include the additional grain required by the expansion of several existing plants. Nor does it involve the numerous new grain-based ethanol distilleries in other countries, principally those in Europe and China.

Given the recent acceleration in new groundbreakings and the scores of new plants in the planning stages, we could see even more construction starts in the next 12 months. If so, these distilleries could easily absorb an additional 40 million tons of grain.

In looking forward to 2007, how much will we need to increase the harvest to avoid a further drawdown in stocks? First, we need a rise of 73 million tons just to overcome the 2006 production shortfall. Beyond that we will need 24 million tons of additional output to cover the estimated annual growth in food and feed needs. If we then add 39 million additional tons to supply the 54 new distilleries cited above, for the U.S. alone we are looking at a growth in demand of 136 million tons of additional grain from the 2007 harvest if we are to avoid a further decline in stocks.

For a world where the growth in the grain harvest has averaged scarcely 20 million tons per year since 2000, the chances of such a huge jump in the harvest next year are not good, even with the stimulus of high grain prices. Beyond this, farmers must contend with spreading shortages of irrigation water and the prospect of even more intense heat waves as the earth's temperature rises.

Escalating competition for the U.S. corn crop is already driving up prices. In some corn-growing states such as Iowa, Indiana, and South Dakota, completion of the plants under construction and those planned means distillery requirements would take virtually the states' entire corn harvest.

The local competition between new distilleries, on the one hand, and more traditional feedlots, dairies, and pork, poultry, and egg producers, on the other, will be intense. To some degree, the one-third of the corn byproduct that emerges from the distillery as distillers grain will offset the loss of corn for feeding. Distillers grain, consisting mostly of fiber and protein and containing little energy, is, however, much better suited to feed beef and dairy cattle with their unique digestive systems, than pigs and chickens.

Corn importers like Japan, Egypt, and Mexico are also worried that the likely reduction in U.S. corn exports, which are 70 percent of the world total, will disrupt their livestock and poultry industries. In some importing countries in sub-Saharan Africa and in Mexico, corn is the staple food. In the United States corn supplies sweetener for soft drinks and is used in breakfast cereals, but most corn is consumed indirectly. The milk, eggs, cheese, chicken, ham, ground beef, ice cream, and yogurt in the typical refrigerator are all produced with corn. In effect, the refrigerator is filled with corn. And the price of every item in the refrigerator is affected by the price of corn.

Wheat and corn prices have climbed by a third or more over the past several months. Corn and wheat futures are both trading at 10-year highs. With corn stocks at the lowest level on record and demand soaring, corn prices appear headed for historic highs. Wheat and rice prices will likely follow corn prices upward. By the end of 2007, the emerging competition between the 800 million automobile owners who want to maintain their mobility and the world's 2 billion poorest people who want simply to survive will be on center stage. If grain prices do climb to all-time highs, food riots and political instability in lower-income countries that import grain, such as Indonesia, Nigeria, Mexico, and scores of other countries, could disrupt global economic progress.

This clash between motorists and people over the food supply is occurring when 854 million of the world's people are chronically hungry and malnourished and some 24,000 of them, mostly children, die each day. The U.N. Millennium Development Goal of reducing by half the proportion of people suffering from hunger by 2015 is now failing as the number who are hungry edges upward, and it could collapse completely in the face of the food-for-cars onslaught.

The attempt to solve one problem--growing U.S. dependence on imported oil--is creating another far more serious problem. Fortunately this can be avoided. The 3 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 automobile fuel-efficiency standards by 20 percent.

On the food-versus-fuel issue, the world desperately needs leadership--a strategy to deal with the emerging food-fuel competition. As the world's leading grain producer and exporter, as well as its largest producer of ethanol, the United States is in the driver's seat.

Corn vs. Wheat: Water, Biofuels, & Agricultural Subsidies

Excerpts from:
"For Kansas Farmers, Water Is a Vanishing Commodity"
September 16, 2006 -- By Alexei Barrionuevo, The New York Times

ULYSSES, Kansas — ...When the early homesteaders first arrived here in the mid-1800’s the area was so hot and dry in the summer that it was thought to be unfit for farming. Then Mennonites from Russia and Ukraine brought red Turkey wheat to Kansas, said Craig Miner, a Kansas historian. And it grew.

Kansas became America’s top wheat grower, regularly producing close to one-fifth of the country’s total harvest. With their sheaves of wheat, called shocks, stacked upright everywhere in the fields to dry, wheat became so ingrained in the Kansas mind-set that Wichita State University adopted the name Shockers for its mascot.

But in the last two decades, farmers have increasingly turned to corn and soybeans, which need nearly twice as much water.

“That part of the state is going to be out of water in about 25 years at the current rate of consumption,” said Mike Hayden, the secretary of the Kansas Department of Wildlife and Parks and a former Kansas governor.

Until recently, farmers had little incentive to conserve water, said Thomas J. Lear, a farmer south of Garden City. Now with the high cost of energy, he pays more attention to how he uses his water. Twice a day he checks on the 29 pumps that drive sprinklers watering his corn and soybeans. But this fall, he will do something his family has not done for more than a decade — grow more irrigated wheat — because it requires less water than corn and soybeans, which make up 85 percent of his farmland.

He sees the future for this parched area in more drought-resistant crops like grain sorghum, which can be used in ethanol plants as a corn substitute, and in sunflowers or cotton. “For a generation we thought the water was infinite,” Mr. Lear said. “What is going to drive conservation is the high cost of pumping. It is going to force you to do what you ought to do anyway.”

Still, he is not giving up on corn just yet. Next year he is planting a drought-resistant corn seed on a test plot, for a major seed manufacturer whom he declined to name. If the seed companies can “come up with a way for us to be better off out here,” he said, “that would be great.”

Excerpts from:
"Crop Rotation in the Grain Belt"
September 16, 2006 -- By Alexei Barrionuevo, The New York Times

GARDEN CITY, Kan. — Once the driving force behind transforming the United States into the “breadbasket of the world,” wheat is being steadily replaced by corn as the crop of choice for American farmers.

Genetic modifications to corn seeds, the growing demand for corn-based ethanol as a fuel blend and more favorable farm subsidies are leading farmers to plant corn in places where wheat long dominated. In Kansas, known for a century as the Wheat State, corn production quietly pulled ahead of wheat in 2000, with Kansas producing 23 percent more corn than wheat last year.

This year’s drought-ravaged crop is expected to be the second-smallest harvest for American farmers since 1978. It follows a year in which American farmers planted the fewest acres of wheat since 1972. And while corn acreage nationwide passed wheat about a decade ago, its footprint and that of soybeans are spreading across a greater swath of the Midwest, farther north and west into the Dakotas and central Minnesota — traditional wheat country, where growing corn and soybeans was once almost unthinkable.

“It is getting harder and harder for American farmers to say they feed the world,” said Ken Cook, president of the Environmental Working Group, an environmental research group based in Washington. “Instead, they feed S.U.V.’s.”

The decline of wheat and the broad relandscaping of America’s farmland have come about for several reasons. Better seed technology has given corn and soybeans a widening edge over wheat, and more favorable subsidies have encouraged farmers to abandon wheat. Changing consumer tastes and food packaging advancements have slowed American wheat demand.

But the growing biofuels industry is creating the strongest drag on wheat lately, as corn and soybeans are increasingly favored for their use in ethanol and biodiesel.

The spread of corn and soybeans at the expense of wheat, while not expected to significantly affect food prices, could nevertheless put more pressure on scarce water supplies, since both crops are more water- and energy-intensive than wheat.
...

Wheat has long been associated with the United States’ standing as the breadbasket of the world for its ability to feed the world through food shipments. American presidents used wheat to support Allied troops in both world wars and tried to wield it as a diplomatic weapon against the Soviet Union. Huge wheat surpluses regularly helped the United States balance its trade deficits.

In the early 1970’s American farmers controlled half of the world’s wheat exports, but this year the United States will account for just 22 percent, according to U.S. Wheat Associates, an export trade group.

Driving the shift away from wheat have been advances in hybrid and genetically modified seeds for other crops. Major companies like Monsanto have been spending millions of dollars developing improved forms of corn, soybeans and cotton — not wheat — and those investments are paying off handsomely. Seeds engineered to resist drought and insects have yielded huge gains and have helped produce record corn harvests the last three years.

The more-resistant seeds have made it possible for farmers in colder climates with shorter growing seasons to produce successful corn harvests. North Dakota, which for decades was the second-biggest producer of wheat after Kansas, has lost 1.69 million wheat acres since 2000, a 16 percent decline. Corn acres in the state, meanwhile, have shot up by 670,000, or 62 percent.

In Kansas, wheat acreage is down 20 percent from 1980, though it has been fairly stable statewide the last four years. But without genetic modification, wheat is lagging behind.

American corn yields rose by 30 percent from 1995 to 2005, while wheat yields grew by only 17 percent. In recent years corn has pulled further ahead, with an annual growth rate in yield that is four times that of wheat.

So far, public resistance to genetically engineered wheat has been strong. Buyers in Europe and Japan said they would refuse American wheat if it was genetically modified. American farmers are divided on the issue. Monsanto dropped an effort to produce the world’s first genetically engineered wheat two years ago, yielding to the concerns of farmers that the crop would endanger exports. The wheat was genetically modified to be resistant to Monsanto’s Roundup herbicide, which would have allowed farmers to spray their fields to kill weeds while not damaging the crop.

The company has said it is not giving up on wheat research. But the genetic engineering of corn, cotton and soybean crops is less controversial because those crops are used primarily in animal feed, clothing and food oils, while wheat is more likely to be used directly in food.

Syngenta, a Monsanto competitor, said it was continuing to develop a genetically engineered wheat that was resistant to fusarium, a fungus that damages crops and produces dangerous toxins. The crop could be ready for the market by early next decade but the company has not decided whether to put it on a commercial path, said Anne Burt, a Syngenta spokeswoman.

To a lesser extent, the structure of the federal farm program has also signaled to farmers that growing corn and soybeans is a better economic bet than wheat. The federal government rewards high corn production by guaranteeing growers the repayment of loans that become deficient when prices fall below the government loan rate of $1.95 a bushel. Corn prices that fell below $2 a bushel in recent years led to record payments to farmers: $4.6 billion last year and $2.9 billion in 2004. Wheat prices have generally averaged $3 a bushel, staying above the $2.75-a-bushel government floor.

Corn’s higher yields and better subsidy support have meant that it is much more economically attractive to grow an acre of corn than wheat on average, government statistics show. But wheat subsidies have not been adjusted much to account for the larger yields farmers obtain with corn through better seed technology.

Tighter wheat supplies could further lift wheat prices, which have hovered above $4 a bushel in recent months, but most experts do not expect food prices to rise much as a result of the switch to biofuels crops.

The cost of wheat is less than 10 percent of the total cost of products like bread and cereal.

The rub is in the trade-off over resources. While it takes more energy to produce a bushel of wheat than corn, an acre of corn uses a far larger overall basket of resources: energy, fertilizer and water.

Recent high prices for wheat, driven by drought in some of the world’s prime wheat-growing regions, may prompt some American farmers to plant more wheat acres this fall. But that is not likely to reverse wheat’s decline, analysts say.

Neither will diplomacy. For decades, America’s dominance of grains, especially wheat, was viewed as a potential diplomatic weapon, from the time President Gerald Ford tried to trade grain for discounted oil from the Soviet Union to President Jimmy Carter’s grain embargo against Moscow in 1980.

And other countries are picking up the slack. Major competitors — including Europe, Australia, Argentina and Black Sea countries like Ukraine — have increased their wheat output. America’s traditional customers like China are also growing more wheat for their own consumption, limiting the need for imports.

The high-protein Atkins diet that symbolized the low-carbohydrates fad helped reduce per-person flour consumption by 9 percent from 1997 to 2004, said Marcia Scheideman, president of the Wheat Foods Council in Washington.

Over all, the incentives to grow corn and soybeans have led farmers to try to grow corn against all odds, even as the economics have gotten tougher with higher costs of fertilizer and fuel for irrigation.

Stung by high costs to pump water, Larry Kepley, a farmer in Ulysses, west of Garden City, decided a few years ago to go back to dry-land farming, similar to what his great-grandfather did in 1888 when he first arrived in the area. The family had been irrigating since 1941.

Dry-land farming meant sticking with wheat. Still, wanting to experiment with corn, he planted 50 acres of dry-land corn last fall, figuring he needed 60 bushels an acre to break even. He got 17 bushels an acre. “It was an utter failure,” he said.

Mr. Lightner, the Garden City farmer, said he was more fortunate to have shallower water wells that made irrigation less costly than on Mr. Kepley’s farmland.

But the plastic tubes that line his rows of corn, delivering water into the soil every 60 inches, are the real key, he said. The water is pumped by natural gas and costs Mr. Lightner $50 to $120 an acre.

With higher fuel costs making his corn crop prohibitively more expensive last year, he planted 300 more acres of wheat, which he grudgingly admires as a crop with “nine lives.” But this time, the wheat failed him.

“The drought got it and then the hail came through, so I don’t have to worry about it anymore,” Mr. Lightner said. “For now, I’ll stick with corn.”