At this point, serious greens still promoting biofuels are in a tight corner.
Global grain stocks are at all-time lows and prices at all-time highs. That means heavy incentives to clear new land to plant crops — in precious rainforest regions in South America and Southeast Asia that sustain indigenous peoples and store titanic amounts of carbon. These lands are also concentrated centers of biodiversity. Sacrificing them for car fuel is a heinous crime.
Anyone who wants to argue that such efforts amount to “economic development in the Third World” will have to account for a stark fact: transnational agribusiness interests, prominently Cargill and Archer Daniels Midland, siphon off the bulk of profits for Brazilian soy and Asian palm. Their environmental and social record is dismal.
That’s why it’s monumentally depressing to see reports like this one, from the Atlanta Journal Constitution, about what’s become of the U.S. biodiesel industry.
Biodistillers nationwide now realize that their industry’s survival depends on the vagaries of world trade. Cheaper soy and palm oil from Asia, Africa, and Latin America increasingly replace domestically grown soy oil. Environmentally conscious Europe takes most of the U.S.-produced fuel.
So to produce this “homegrown renewable fuel,” we’ve resorted to importing the feedstock from environmentally sensitive areas and sending the fuel to Europe. What’s more, the U.S. taxpayer is underwriting the whole thing: biodiesel producers get a $1 excise tax credit on each gallon of alternative fuel that is mixed with regular diesel — even when it’s shipped overseas, the newspaper reports.
Even someone from the USDA — that tireless booster of biofuel — is cocking an eyebrow at the arrangement. “And we’re not really lessening our dependence on foreign fuel supplies,” a USDA economist gushed to the newspaper, presumably with a sense of wonder.
Evidently, the economics around biodiesel as a domestic fuel have collapsed, even accounting for the $1/gallon subsidy:
It takes 7.7 pounds of soy oil — or $4.34 — to produce a gallon of biodiesel, according to the Food and Agricultural Policy Research Institute. Add overhead and other processing costs (about 70 cents per gallon), federal and state taxes (54 cents), and subtract the dollar tax credit, and a gallon of biodiesel could sell for $4.58 at the pump. Regular diesel sold for $3.86 a gallon Wednesday in Atlanta.
So how can these companies profitably sell the stuff to Europe? For that, thank the ever-sinking dollar. Adjusted for the abysmal dollar/euro exchange rate, U.S. producers are competitive with their European rivals.
As long as the dollar stays in the dumps, pushed down by the crisis on Wall Street and voracious oil use (unmitigated by biofuel), U.S.-made biodiesel, feedstock sourced from the global south, will continue to flow to Europe.
The question becomes this: to what ecological end?