Sunday, April 27. 2008
European Biofuel Producers Attack US Subsidies
Posted by Joerg Wolf in International Economics on Sunday, April 27. 2008
From the Wall Street Journal's Environmental Capital blog:
Europe's biofuel industry has long complained about U.S. subsidies. Friday, it took its case to the European Union but the chances of winning a victory look slim. EU biodiesel producers have been simmering about the $1 per gallon tax credit American biodiesel producers get. EU producers say that distorts the market and, in the words of the biodiesel trade group, created a severe injury to the EU biodiesel industry.
The Guardian is a bit more optimistic regarding the European Biodiesel Board's case.
There are quite a few people in the US that are unhappy with the subsidies for biofuels but it's hardly likely that ADM or ConAgra are going to voluntarily give up the checks or their congressmen without a fight.
I think our subsidy for domestic biofuels is horrible and ought to go.
From the Guardian article:
"US biodiesel exports are subsidized by up to $300 a tonne. Some trading firms have also been shipping biofuels to the US, where they add a 'splash' of mineral diesel to qualify for the subsidy and then send the fuel back to the EU."
So in fact some of these US subsidies are actually benefiting EU producers! I love it. The law of unintended consequences always wins.
I wonder what the economics of this are? Does anyone know the cost of shipping fuel from Europe to the US and back? Probably less than $300 a tonne, but I wonder how much less?
In Presidential politics, the state of Iowa is the Alpha and Omega of farm and biofuel subsidies (particularly ethanol but also the other biofuels). For a number of reasons, John McCain largely avoided campaigning in Iowa. This is true for his current campaign and all of his past attempts. Therefore, in theory at least, is less indebted to the biofuel lobby.
biofuel is quite a big BS, it impoverishs soils,use lot of water, it costs more energy for refined it in finale, that'll make poor countries more dependant of the richers, because instead of producing food, they'll opt for the culture of "energising plants"---> more wars for soils and water to come, famines
for the agriculture, why not using the "used oils" that most of restaurants don't know what to do... some of our peasants already do, the problem, it doesn't bring taxes to our governments, and there would be not enough used oils for everybody
Because the economy doesn't produce enough debris protein to do that anyway, plus 100% of that material already gets recycled without having had it dictated by government.
The subsidies are obscene, and have always been, but they are especially so now. Commodity prices obviate any need for them, and frankly with oil at $120/barrel, if you still need a subsidy to produce an analog for petroleum based fuel, you know that it simply isn't worth it. That benchmark's it's baseline value to produce it at something higher that the equivalent of $120/barrel. That's simply ridiculous.
One other point: for a couple of months now I've suspected that the high cost of agracultural commodities has had little to do with biofuels. The rate of biofuel production may have doubled in the past two years, but it's quite small compared to the scale of food crop production.
I beileve that what's making food expensive is the high price of oil. FUel, after all, is one of the biggest inputs into the production of a food crop. Plus, the reason the cost of imported foodstuffs is so extrordinary is getting it from places where there is a surplus relative the the price to where it isn't. There's plenty of food out there, it just costs too much for the poor not that the cost of getting it to them has doubled in the past 20 months.
What's really telling is that if you control for the US dollar rate in the price of oil, it has tracked perfectly with the rise in the aggregated value of agracultural goods.
The price being paid for a lack of cheap and abundant OIL is being paid by the poor of the world, which completely takes the mickey out of the class-struggle theory peddled by anti-capitalists as "anti-globalization" and "altermondialisme". In truth all it does is guarranty that the poor remain miserable and become progressively worse off for a lack of growth.
CNBC came to the same conclusion in its After the Bell program on Thursday. The analysts, many had argued that these subsidies did indeed skew prices, were much more cautious now on that claim because the subsidy has become proportionally a much smaller percentage of the increase in food costs due to their fixed nature.
In my area we saw a wild cat strike by Port of Los Angeles and Port of Long Beach truckers over the cost of fuel. Plus all three of the Chinese shipping companies, COSCO, CSCL, and the Hong Kong based OOCL and Japn's Mitsui announced over the last few months that they were going to rely more on private haulers, who will have to absorb their own fuel costs somewhere in the rates, and laid off some of its own drivers and their trucks.
But in agreement with Joe it seems almost criminal to continue to provide subsidies to biofuels when they should be profitable without help now.
"it costs more energy for refined it in finale" Yes!
All current forms of biofuel require significant processing before they can be used. This processing requires a lot of energy. Virtually all the figures and statistics you see for biofuel are based on production using the cheapest form of energy to produce the biofuel. And the cheapest form of energy is not biofuel! In fact it is usually coal or gas. This may be why even with expensive energy, biofuel still needs a subsidy.
If you re-calculated the costs of biofuel produced only using energy from other biofuel, the costs and benefits (if any) would be very different.
There is a scientist called Pimental who has attempted to do this calculation, he claims that the net energy yield of a biofuel-powered biofuel production plant would be [i]negative[/i]. That means it requires more than 1 unit of biofuel to produce 1 unit of biofuel.
[url=http://www.everything2.com/index.pl?node_id=1305951]I've got a summary of his work here, with links to original sources[/url].
I wonder, Frenchie, if in France they use the excess nuclear power (at night, perhaps) to generate biofuel? My understanding is with nuclear power, the fuel cost is near zero so the longer you keep the plant running each day, the cheaper the power.
John, no, I am afraid they only recover the warm water (that is used for cooling the reactor) for crocodiles farms around the nuclear sites, otherwise France is also the electricity provider for EU : Spain, Italy, Switzerland, Germany, dunno about Belgia and Holland (got to check.
As far as "clean" and cheap energy is concerned, I think there are some studies and tests with water, hydrogen. I'll bring a link with a french enterprise in the south of France later
thanks for the link
Alvaro, it's al Gore, the nobel price, that big master of BS
There's a difference between advocating for the development of biofuel (which does have tremendous potential - when it becomes technologically and economically feasible, but which requires R&D and thus a major commitment in taxpayer funds to open that path) as Al Gore does, along with other forms of renewable energy sources (one of the big underrated and yet already technologically and economically feasible permanent or constant sources of energy, unlike wind and sun based sources) is geothermal energy - here in Nevada there's plenty of "low hanging" fruit ready to develop, yet not too much political backbone to invest in a major step toward long-term energy independence.
And: I've been known for strongly attacking Al Gore's "An Inconvenient Truth" for its Disneyland approach, attempting to "popularize" science which (of course) merely invites cutting corners in its delivery and suggests half-truths that, especially among the common sense challenged people in the US, set off all sorts of counterproductive nitpicking and sidetracking stupidity, which only protracts and benefits pathological and procrastinating sociopaths who prefer to live cheap in their own times, rather than do right by their (grand) children.
Don't put Al Gore in the same corner as the Big Agrobusiness which has a near-sighted interest in diverting food production to gas stations, and don't give a darn about the wrecking effects (and international security implications!) of increased strains on food prices worldwide. Big agrobusinesses are amoral as they're focused on their bottom line, and therefore shouldn't be given a front row position in this debate.
Al Gore is far too intelligent to miss that angle, even though his passion perhaps plays tricks on his message.
Actually Al Gore COMPLETELY missed that angle. It's the agrabiz economists who were warning people five years ago about food competing with fuel.
They were dismissed as people resisting the illumination of "new-think" for the sake of big corn, or big peanut, or big soy, whatever it is the activists call the ag equivalent of "big oil".
Actually one nice option is using nuclear power to some form of hyforgen or hydrozene that can be used as a gasoline analog, especially to take up the peak and nominal loads over the course of the day. If it wan't for the fact that you just can't turn up a nuclear reactor when you need more juice between 06h and 19h each day, it could provide 100% of a market's electricity.
Actually there is a new technology for nuclear fission plants in which the power can be dialed up and down in the course of a few minutes. It is called [url=http://en.wikipedia.org/wiki/Pebble_Bed_Reactor]Pebble Bed Reactor[/url] (PBR).
It has another, compelling advantage in that it has a thermal equilibrium that is [b]higher[/b] than the operating temperature. Put another way, due to Doppler broadening it is power-limited and inherently self controlling. This means that there is [b]no possibility of melt-down[/b]. That, along with other features such as inert, gas-only coolant, make it much less likely to have other, heat-related accidents.
It has a number of other advantages, also. There are risks, but in all cases they appear to be less risks than traditional designs.
---
To clarify my earlier point, I didn't mean to suggest that nuclear power generates biofuel directly (I like Joe's hydrogen/hydrazine option, but it isn't biofuel, technically), I meant that nuclear power could provide the steam and heat needed to process biofuels.
[url=http://www.ecolo.org/archives/archives-nuc-en/2004-10-21-EPR-Flamanville.htm]EPR in Flamanville[/url]
I live about 15 km from a nuclear implant, my customers are mostly nuclear engeeners and technicians, the security measures are serious ; doesn't seems that the nowadays implants are dangerous, pollution dues to oil microparticules makes more problems and kills more people.
I must say, I greatly admire the French approach to nuclear power. Tell me, in France, how do you manage the political opposition from the ignorant or fearful or Al Gore?
"The EPR is not a revolutionary reactor, but an optimized version of the pressurized water reactors in operation today, who already work very well and are quite clean and very safe"
Back when the US used to build nuclear plants, it seems that every new one had to be a new, 'revolutionary' design. This greatly increased the costs and also made the technology seem more risky than it is. France has a better approach using designs that have well understood risks.
"oil microparticules makes more problems and kills more people"
Indeed. You are trading the chance of harm (a nuclear accident or waste spill) for the certainty of harm (pollution from oil or coal), plus a chance of smaller harm (accident in oil of coal plant).
The Pebble Bed Reactor will be tried by China soon and we (US) will look like idiots if it works.
the political opposition is low, mainly represented by the "greens", that only got around 1% of the votes for last presidential election.
Not many people feel concerned by the nuclearr energy threat, it brings jobs and "devises".
here is a witness of a former socialist minister about global warming :
[url=http://www.bloomberg.com/apps/news?pid=20601088&sid=aVvwX1RTVGr8&refer=muse]Claude Allegre[/url]
I think Areva has a few projects in the US, UK, south Africa, China for an EPR program
Biofuel should, at this point, be killed dead, dead, dead. It isn't anywhere near a technological level to make it truly scalable, cost-effective and really renewable with anywhere near zero impact on the environment. It is a shame that the biofuel lobby scored so much political success; now that it's on its return, it should be brought to a dimension comparable to how Grover Norquist likes government.
It costs tons of taxpayer money and is -- until biomass farming at sea is feasible -- the hoax of the century.
Biofuel lobbyists should be outlawed, and incarcerated in countries where the price increases in foodstuffs cause real shortages and hunger.
Bravo to Senor Degives-Más . Precisely correct. The problem is that the biofuels advocates are very politically saavy. When national leaders were casting around for a way to look concerned adnd green, biofuels stepped in and provided an answer which was simple, easily enacted into law, profitable for politically influential groups - and dead wrong.
QED. It's going to be politically difficult to reverse, because once a politically influential group becomes use to the public teat it's extremely difficult to wean them from it.
[url=http://www.mdi.lu/eng/affiche_eng.php?page=accueil]the french enterprise in the south[/url]
[url=http://www.theaircar.com/acf/air-cars/air-cars.html]air cars[/url]
[url=http://www.youtube.com/watch?v=QmqpGZv0YT4]a video[/url]
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