Prices of major grains and oilseeds such as corn, wheat, soyabeans, and palm oil that are used to make biofuels are tumbling, indicating green fuels have played virtually no role in the recent global surge in food prices.

Corn and soyabeans have lost more than half of their value, whereas wheat now costs 55% less than at its highpoint in March of this year. Canola fell from a high of $730 (€568.7) a tonne earlier this year to $400/tonne in late October.

Prices of other internationally-traded farm products are following the same downward slope. Both cocoa and coffee have lost more than 40%, and cotton has experienced a similar trend.

Major agricultural commodities are seeing dramatic drops, disproving the opinions of food-versus-fuel critics.

Heavy demand for corn from ethanol producers was sighted as a significant source of corn futures to record highs in June, but since then the sharp decline of corn along with other commodities shows that this was mistaken.

Corn is down about 50% from its record high in June, even as the amount of the grain used to produce the renewable fuel in the US remained the same.

Permalink: http://www.biofuels-news.com/news/no_bio_blame.html

The airlines, led by Boeing, have commissioned two initial studies investigating algae and jatropha-sourced biofuels.

Aeroplane manufacturer Boeing is heading a biofuels initiative, supported by several airlines, which aims to accelerate the development and commercialisation of sustainable aviation fuels.

The basic target is to use biofuels and to replace fossil fuels in 2013.

The group has commissioned two initial studies investigating algae and jatropha-sourced biofuels’ lifecycle carbon dioxide emissions and socio-economic impact.

Airline members of the newly-formed Sustainable Aviation Fuel Users Group comprise Air France, Air New Zealand, All Nippon Airways, Cargolux, Continental Airlines, Gulf Air, Japan Airlines, KLM, SAS and Virgin Atlantic Airways, which claim to collectively account for 15-20% of commercial jet fuel use.

They have teamed up with Boeing and Honeywell’s refining technology developer UOP to research renewable fuel sources with the aim of cutting emissions, reducing the industry’s fossil fuel dependence and its exposure to oil price volatility.

‘The airlines in this group have all previously had their own initiatives and, for the first time, we have joined together as a common force,’ Gulf Air chief strategy officer Tero Taskila comments.

‘It will give us more force behind the cause, which will make it faster and we can address the issues globally.’

‘It is very important that, whatever alternative solution we have in the future, it can be produced locally,’ he adds. ‘It doesn’t make sense to have a refinery in Brussels supplying the rest of the world because taking the fuel around the world will create a carbon footprint.’

Following initial discussions in January, Taskila says members of the group met in Seattle in August with a follow-up meeting scheduled for October.

During this session the members will work to align their existing projects and come up with a detailed plan of how to progress.

Boeing is funding the research, which will be performed by the Natural Resources Defense Council and Yale University.

Permalink: http://www.biofuels-news.com/news/boeing_initiative.html

But recently Finnish oil company Neste has found a way to produce oxygen-free biodiesel. It has two plants running and another two planned. The Fischer-Tropsch process can also be used for biomass to liquids. And algae could in principle produce all the jet fuel used today in an area the size of Belgium, according to Boeing. Others are not so optimistic, and meanwhile jet fuel accounts for almost 60% of the current DoD annual budget. Much more in the article.

Source: A tank of the green stuff,” David Strachan, New Scientist, 16 August 2008.

July 16 (Bloomberg) — Biofuels will get $25 billion in subsidies by 2015 in the U.S., Canada and European Union, with limited cuts in greenhouse gases and higher crop prices, the Organization for Economic Cooperation and Development said.

Subsidies totaled $11 billion in 2006, according to a report prepared for the Paris-based organization. The industry is “highly” dependent on support such as tax breaks, financial aid, import tariffs or compulsory usage, according to the report.

Governments should “refocus policies to encourage lower energy consumption, particularly in the transport sector,” the OECD said.

The U.S. and EU are backing biofuels to cut carbon-dioxide emissions from fossil fuels and reduce reliance on crude-oil imports. The EU wants 10 percent of its transport fuels to come from biofuels by 2020. According to the International Monetary Fund, alternative fuels have caused 20 to 30 percent of the recent gains in food prices.

The OECD expects 13 percent of global grain and 20 percent of vegetable oil to go into biofuels production in the next 10 years, up from 8 percent and 9 percent last year. That will mean a 5 percent gain in wheat prices and a 7 percent advance in corn costs, the group said.
Ethanol made from sugar cane is the most effective in reducing pollution, cutting emissions by at least 80 percent compared with fossil fuels, the OECD said.

Ethanol made from wheat, sugar beet and vegetable oil, the most common feedstock in Europe, provide 30 to 60 percent savings. Corn-based ethanol cuts emissions by less than 30 percent, according to the OECD.

To contact the reporter on this story: Marianne Stigset in Oslo at mstigset@bloomberg.net

Aditya Chakrabortty
The Guardian,
Friday July 4, 2008

Biofuels have forced global food prices up by 75% – far more than previously estimated – according to a confidential World Bank report obtained by the Guardian.

The damning unpublished assessment is based on the most detailed analysis of the crisis so far, carried out by an internationally-respected economist at global financial body.

The figure emphatically contradicts the US government’s claims that plant-derived fuels contribute less than 3% to food-price rises. It will add to pressure on governments in Washington and across Europe, which have turned to plant-derived fuels to reduce emissions of greenhouse gases and reduce their dependence on imported oil.

Senior development sources believe the report, completed in April, has not been published to avoid embarrassing President George Bush.

“It would put the World Bank in a political hot-spot with the White House,” said one yesterday.

The news comes at a critical point in the world’s negotiations on biofuels policy. Leaders of the G8 industrialised countries meet next week in Hokkaido, Japan, where they will discuss the food crisis and come under intense lobbying from campaigners calling for a moratorium on the use of plant-derived fuels.

It will also put pressure on the British government, which is due to release its own report on the impact of biofuels, the Gallagher Report. The Guardian has previously reported that the British study will state that plant fuels have played a “significant” part in pushing up food prices to record levels. Although it was expected last week, the report has still not been released.

“Political leaders seem intent on suppressing and ignoring the strong evidence that biofuels are a major factor in recent food price rises,” said Robert Bailey, policy adviser at Oxfam. “It is imperative that we have the full picture. While politicians concentrate on keeping industry lobbies happy, people in poor countries cannot afford enough to eat.”

Rising food prices have pushed 100m people worldwide below the poverty line, estimates the World Bank, and have sparked riots from Bangladesh to Egypt. Government ministers here have described higher food and fuel prices as “the first real economic crisis of globalisation”.

President Bush has linked higher food prices to higher demand from India and China, but the leaked World Bank study disputes that: “Rapid income growth in developing countries has not led to large increases in global grain consumption and was not a major factor responsible for the large price increases.”

Even successive droughts in Australia, calculates the report, have had a marginal impact. Instead, it argues that the EU and US drive for biofuels has had by far the biggest impact on food supply and prices.

Since April, all petrol and diesel in Britain has had to include 2.5% from biofuels. The EU has been considering raising that target to 10% by 2020, but is faced with mounting evidence that that will only push food prices higher.

“Without the increase in biofuels, global wheat and maize stocks would not have declined appreciably and price increases due to other factors would have been moderate,” says the report. The basket of food prices examined in the study rose by 140% between 2002 and this February. The report estimates that higher energy and fertiliser prices accounted for an increase of only 15%, while biofuels have been responsible for a 75% jump over that period.
It argues that production of biofuels has distorted food markets in three main ways. First, it has diverted grain away from food for fuel, with over a third of US corn now used to produce ethanol and about half of vegetable oils in the EU going towards the production of biodiesel. Second, farmers have been encouraged to set land aside for biofuel production. Third, it has sparked financial speculation in grains, driving prices up higher.

Other reviews of the food crisis looked at it over a much longer period, or have not linked these three factors, and so arrived at smaller estimates of the impact from biofuels. But the report author, Don Mitchell, is a senior economist at the Bank and has done a detailed, month-by-month analysis of the surge in food prices, which allows much closer examination of the link between biofuels and food supply.

The report points out biofuels derived from sugarcane, which Brazil specializes in, have not had such a dramatic impact.

Supporters of biofuels argue that they are a greener alternative to relying on oil and other fossil fuels, but even that claim has been disputed by some experts, who argue that it does not apply to US production of ethanol from plants.

“It is clear that some biofuels have huge impacts on food prices,” said Dr David King, the government’s former chief scientific adviser, last night. “All we are doing by supporting these is subsidising higher food prices, while doing nothing to tackle climate change.”