Thursday, February 14, 2008

Green indeed

Global fuming
Investor Relations Magazine

Jan, 2008

What’s green and intoxicating? Ian Williams fuels up

‘Green’ has different connotations, the most (over)used conjuring benign visions of environmental soundness. Another implies being gullible and easy to trick. The two sometimes even converge – for example, when health-conscious consumers are tricked into buying overpriced tap water decanted into disposable bottles made of potentially toxic petrochemicals and trucked across continents.

You may think nothing could be greener than bio-fuels, but there are ominous aspects to this issue. Sugarcane is one of the most potent sources of vegetable energy, which is why Brazilians began to put the stuff in their gas tanks when they weren’t drinking it in their caipirinhas. But even cachaca producers complain that bio-ethanol production is driving their costs up the spouts of their stills, while environmentalists note with concern that sugarcane plantations are encroaching on the Amazon rainforest, one of the globe’s last big carbon sinks.

For some Caribbean countries faced with huge imported fuel bills and idle fields because of US and EU protectionism, sugar alcohol as fuel makes sense. But in a world where billions go hungry every day, turning corn into gasoline seems obscene: the grain it takes to fill one SUV tank with bio-ethanol could feed a person for a year.

What’s more, the idea is as dubious economically as it is ethically. There are processes that use waste oils, cornstalks, grass or almost any organic garbage to make bio-diesel, but they do not have big lobbyists on the Hill. Corn gas is economically sustainable only in an insulated environment of corporate welfare, a cocoon of subsidies, tax breaks and high-tariff barriers against imported sugar. It is not even slightly environmentally sustainable. It uses almost as much carbon-based fuel in its production as it delivers, while the resulting higher corn prices will lead to the prairies being plowed, destroying the regrowing carbon sink there.

But corn ethanol makes lots of political sense because politicians collect sack-loads of campaign contributions from its manufacturers and the Florida sugar barons who could not otherwise compete with the Caribbean and Brazil. And in US politics, it’s never a bad thing to have the farm lobby on your side. In the current paranoid climate, it also helps to imply that every dollar that goes to the Midwest corn barons is not going to a fundamentalist Arab sheikh.

Most perniciously, the green glow around corn gas relieves the pressure on Washington and Detroit to do anything about the gas-guzzling monstrosities wallowing along America’s roads. Washington refuses to set carbon limits, enforce stricter fuel efficiency standards or in any way lessen the nation’s addiction to cheap liquid fuel, while simultaneously pumping tax dollars to the corn gas emitters.

Some years ago, Speculator predicted the imminence of the $100 barrel of oil. My grim satisfaction at being correct is made even grimmer by the acquisition of an oil-heated home in the mountains and a car to get to and from it. Even so, I still believe gas is far too cheap in this country – and only higher fuel taxes will force economic design on Detroit and rational planning on the cities.

1 comment:

Anonymous said...

Right on Ian. For Caribbean and Pacific islands locally produced and used biofuels makes sense. We pay far too much for importing our fuel, and we do actually have surplus crops and lands - but for our own use. If we are to begin exporting biofuels then you are right - a lot of detrimental issues come up, and only some can be overcome.
Espen in Samoa