Bio-fuels Can Only Take Us So Far

There's a lot of excitement out there about bio-fuels, which is also spurring considerable investment.

The exuberance needs to be tempered.

Bio-fuels fall into two categories: ethanol, which is fuel oil produced from plant matter that can be mixed with gasoline, and bio-diesel, which is diesel fuel produced from plant matter.

The big advantage of both is that they are "renewable" fuels, i.e., the crops used to make them can be regrown, and they emit far less carbon into the atmosphere than oil-based fuels. Another advantage is that they can be produced in the U.S., reducing reliance on imported fuels from politically unstable parts of the world.

Congress has decided to provide heavy subsidies for bio-fuels, on the order of more than $.50/gallon.

Some countries are going further. For example, Brazil intends to supply 100% of its auto-fuel needs from bio-fuels and already is half-way there.

For the U.S., however, it is not likely that bio-fuels can provide more than 20% of our gas-guzzling requirements, and even that is a stretch. First, in the U.S., most of our bio-fuels are coming from corn, which is not a very efficient crop for producing such fuels. Sugar cane (Brazil) and palm oil (Indonesia) produce far more energy units for each unit of energy invested than corn.

(In fact, some scientists have argued that producing fuel from corn may be a net energy loser. Consider the fertilizer and pesticide inputs, as well as tractors used for plowing and harvesting, etc.)

Second, converting cropland to fuel production is likely to drive up food costs if done on a large enough scale. Not really a good trade-off.

Third, in many parts of the world, including parts of the U.S., growing crops for fuel requires using up precious fresh water resources. Again, not a good trade-off.

All of which is a good way of saying that in the bio-fuels gold-rush, we need to have better oversight of what is going on. For example, we should discourage any scheme that involves irrigating fields to produce bio-fuels. Likewise, we should encourage development of bio-fuels from sources, such as switch-grass, that don't compete with foodstuffs and that can be grown on land that otherwise likely would not be productive.

And while we're at it, we should make sure that subsidies for bio-fuels are not more generous than they are for other renewable forms of energy, while also rationalizing subsidies for conservation measures that may save more energy. It makes no sense to convert vast tracts of land to bio-fuel production simply to power behemoth SUV's carrying a single person apiece on their long commutes to work each day.

Perhaps the next Congress could tackle these issues in a true comprehensive energy bill, instead of the bastardized piece of legislation that Dick Cheney and the oil companies drew up in private a few years ago.