IATP finds itself in an interesting place in the recent tidal wave of interest around biofuels. Our initial interest came from our work with local farmers and rural communities in Minnesota and surrounding states. These farmers and their communities were looking for a way to add value to their crops when prices were at record lows. The debate was far from today's discussion of food scarcity. In those days, maybe five to seven years ago, the focus was all on how to control apparent over-production, which was depressing prices and generating unsustainably large income support payments from the craziness that is federal U.S. agricultural policy. Exports had decidedly failed to expand in the wake of the Uruguay Round Agreements, despite the apparently authoritative promises of corporate traders and government officials alike.
Many U.S. farmers were already trade-sceptics, understanding that their problem was they sold something worth relatively little (corn or soy or wheat) to firms that turned it into something relatively valuable (meat or bread or Frosted Flakes). Farmers could also see that the reason the raw materials were not worth much was that very few firms were in charge of this process of adding value to grain, giving those firms the market power to keep prices low, even when global supply was not epecially high.
Then came biofuels, and a whole new, domestic market. Here was a chance to recapture some of that precious market power, and to make a contribution to reducing greenhouse gases at the same time.
Five years on, the scene is much more complicated. That surplus production disappeared in a few bad harvests, dried up by drought in the major grain-growing regions of the world (did someone say, climate change?). Prices for agricultural commodities have started to climb, while a number of people are pointing to the obvious (if simplistic) moral dilemma of using scarce land, water and soil for fuel rather than for food, especially in a country whose energy use is wholly unsustainable and largely responsible for climate change that is going to hurt some of the world's poorest (and least energy wasteful) countries. (Read here for IATP's take on aspects of that question.) Everyone wants a piece of the money they see attached to this latest craze and not enough people are honest about either the potential or the risks involved.
Here are a few thoughts to get us started: 1. biofuels have many feedstocks and can be made in more than one way. What is true for corn grown in Minnesota and processed by a farmer-owned ethanol plant will not necessarily hold for palm oil grown in Malaysia and processed in Germany, or even for soybeans grown in Minnesota to make bio-diesel for local use. 2. Different countries and regions have different allocations of arable land and water: they can and should consider the potential to use that land to generate energy on its merits. It may make sense to use agricultural crops for energy in one province or region and not in another within the same country. 3. We need to distinguish public investment from subsidies. Where can the state make a contribution to overcome the myriad distortions that plague energy and agricultural markets, to protect an important new opportunity? Where are programs designed simply to pay farmers, or processors, to continue with the bad old unsustainable agriculture? There is a difference - we need to develop and agree on the standards by which we will distinguish good public expenditure from bad.
How about starting with commodities that are local, fairly priced and sustainably grown? And all in the context of an energy policy that is about reducing use--in the case of the U.S., reducing energy use dramatically. It sounds easy but it isn't. We have to move away from the increasingly shrill nature of the debate now in progress and back to grounding the discussion in something more tangible. Not biofuels: Yes or No? But Biofuels: What kind? Where grown? How used? For What? Who benefits? Those are the questions IATP is asking -- see here and here for short analyses of very different aspects of biofuels production.
It would be a pity for the biggest new market in a generation to evaporate in bad policy choices and greed. Just as it would be criminal to allow energy-hungry rich countries to continue their bid to commandeer the land of the developing world. There is more than one good way out of the seeming impasse - let's explore some options.
