corn futures?

How climate change will disproportionately affect the world’s poor is a message making the rounds of late, after the publication of the second IPCC report earlier this year. How climate change policies, such as carbon taxes, will either help or hurt the poor is also a topic we’ve been discussing of late.

Now researchers at the University of Minnesota have assessed the impact of an increased dependence on biofuels on the developing world … and the outlook isn’t good.

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In short, conflating food and energy lands us in a quagmire in which corn (and ethanol) prices are still tethered to oil:

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According to the U.S. Energy Information Administration’s latest projections, global energy consumption will rise by 71 percent between 2003 and 2030, with demand from developing countries, notably China and India, surpassing that from members of the Organization for Economic Cooperation and Development by 2015. The result will be sustained upward pressure on oil prices, which will allow ethanol and biodiesel producers to pay much higher premiums for corn and oilseeds than was conceivable just a few years ago. The higher oil prices go, the higher ethanol prices can go while remaining competitive — and the more ethanol producers can pay for corn.

As the price of corn goes up, the costs will ripple outward: higher feed prices will ratchet up costs for chicken, turkey, pork, milk, and eggs. And more land will be devoted corn, meaning less land is available for other crops, sending those prices upwards as well.

And all this effort for paltry environmental benefits.

Thinking of ethanol as a green alternative to fossil fuels reinforces the chimera of energy independence and of decoupling the interests of the United States from an increasingly troubled Middle East.

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