The Battle of the Food-based Biofuels

While we wait for cellulosic ethanol to ramp up to commercial-scale, the corn-based ethanol industry continues to hang on with a little help from Washington — President Barack Obama indicated over the weekend that import tariffs on Brazilian sugarcane ethanol won’t be ending anytime soon. The issue came up after a meeting between Obama and the president of Brazil at the White House.

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Calling it a “source of tension” between the two countries, Obama said at a press conference, “It’s not going to change overnight.” Brazil has reportedly threatened litigation at the World Trade Organization over the 54-cent per gallon tariff.

Food-based biofuels such as corn and sugarcane ethanol have been blasted by environmental groups as being unsustainable, although Oxfam International gave sugarcane ethanol a backhanded compliment last year, essentially calling it the best of the worst.

The anti-poverty charity said that rich countries have spent billions supporting domestically-grown biofuels while blocking cheaper Brazilian ethanol, which Oxfam said is “far less damaging” for global food security. Brazilian ethanol also packs more of an energy punch than corn ethanol, but there are side effects from both industries.

The Oxfam report, released before some of the more recent woes in the ethanol industry, said that demand for corn in the U.S. has skyrocketed due to the strong government support for ethanol, with U.S. and Canadian farmers switching out of soy to grow corn. But that’s pushed up the price of soy, and Oxfam said farmers across South America want in on the high-priced action, and are cutting down rainforests to bring new land into production for soy. And farmers in Brazil may be getting pushed on two fronts — Oxfam said the expansion of sugarcane for ethanol in Brazil could push the farmers further into the Amazon.

The U.S. has been experiencing it’s own biofuel tariff worries lately, but in the biodiesel industry. The EU is planning to slap a tariff on imports of biodiesel from the U.S. European biodiesel producers have railed against the subsidies they say U.S. producers can get, which translates to a lower price at the pump for U.S. biodiesel vs. European brands.

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