Running on Hype: The Real Scoop on Biofuels

by Brian Tokar

You can hardly open up a major newspaper or national magazine these days without encountering the latest hype about biofuels, and how they’re going to save oil, reduce pollution and prevent climate change. Bill Gates, Sun Microsystems’ Vinod Khosla, and other major venture capitalists are investing millions in new biofuel production, whether in the form of ethanol, mainly derived from corn in the US today, or biodiesel, mainly from soybeans and canola seed. It’s literally a “modern day gold rush,” as described by the New York Times, paraphrasing the chief executive of Cargill, one of the main benefactors of increased subsidies to agribusiness and tax credits to refiners for the purpose of encouraging biofuel production.

The Times reported in mid-2006 that some 40 new ethanol plants are currently under construction in the US, aiming toward a 30 percent increase in domestic production. Archer Daniels Midland, the company that first sold the idea of corn-derived ethanol as an auto fuel to Congress in the late 1970s, has doubled its stock price and profits over the last two years. ADM currently controls a quarter of US ethanol fuel production, and recently hired a former Chevron executive as its CEO.

Several well-respected analysts have raised serious concerns about this rapid diversion of food crops toward the production of fuel for automobiles. WorldWatch Institute founder Lester Brown, long concerned about the sustainability of world food supplies, says that fuel producers are already competing with food processors in the world’s grain markets. “Cars, not people, will claim most of the increase in grain production this year,” reports Brown, a serious concern in a world where the grain required to make enough ethanol to fill an SUV tank is enough to feed a person for a whole year. Others have dismissed the ethanol gold rush as nothing more than the subsidized burning of food to run automobiles.