Ethanol: US powers on, EU lacks drive
Meanwhile, the EU imports large tonnages of biofuel, primarily from the US.
The Ensus plant on Teeside in the north of England began production last spring. It is designed to turn 1.2m tonnes of wheat a year into ethanol, but will shut for up to four months.
It seems to be a victim of the EU way of doing things, which contrasts sharply with the success of the ethanol industry in the US. The ability of the US to flood the EU with agricultural produce (their ethanol comes from maize) serves as a warning to the EU to look after its agri-business better.
The US ethanol business supports 400,000 jobs, in sharp contrast to the EU’s efforts. The EU’s biofuel industry is hemmed in by regulations which hinder business, and provide plenty scope for politicians to get involved. At the very least, that may serve to explain why implementation of the EU’s Renewable Energy Directive is slow. Perhaps politicians are listening to the chairman of Nestle talking about higher maize prices forcing millions into starvation.
Mr Brabeck-Letmathe is a huge figure in European business, but his comments certainly are not being heeded in the US.
There, the Corn Growers Association said if Nestle is so concerned about food prices, its board should put more of its €25 billion in 2010 profits back into poor communities. The point was made that Nestle profits represent more than half the entire farm value of the 2010 US maize crop.
Politicians may also blame ethanol from US maize for causing food riots in the Middle East, by gobbling up the grains that would otherwise feed the world’s poor. They may believe that limiting production and use of ethanol will leave food abundant, affordable and available all across the globe.
But the Americans are sure of their facts on this, and more than happy with the unhindered success of their ethanol from crops industry.
They point out that US ethanol production uses only about 3% of the world’s grain supply, and that is largely maize that would otherwise be fed to livestock. About one third of it ends up as distillers grains, corn gluten feed and corn gluten meal for export worldwide for animal feed.
The Americans ask critics of ethanol to imagine where fuel prices would be now, without ethanol comprising 10% of the petrol market. They say energy costs would be much higher — and they are the real drivers of all consumer prices including food prices. They also point out that it is ethanol which has encouraged American farmers to increase their maize crop from 84.3 million acres in 1977 to 93.6 million in 2007.
Ethanol has also pushed them to achieve the highest average yield per acre in the world, with the result that most maize for ethanol comes from gains in efficiency and growth, rather than extra land. Despite adverse weather, American farmers produced their third largest corn crop in history last year, and the record high production of 13 billion gallons of ethanol replaced some 445 million barrels of imported oil, and supported more than 400,000 jobs. Thus, ethanol provides US farmers with more income from the private marketplace, rather than government subsidies.
Here in the EU, we are pussyfooting around the biofuel issue, while the US has driven ahead, and can justifiably say ethanol is part of the solution for feeding the world, not the source of the problem — because the ethanol industry keeps developing new ways to use less water and energy and produce more livestock feed by-product. US biofuel companies are also developing new ways to produce fuels from feedstocks such as grass, corn stalks, wood waste, municipal solid waste and algae. Ethanol prosperity has also provided returns to the companies behind advanced technology in maize seeds, and the GPS that helps steer combine harvesters. Ethanol defenders are backed by Britain’s Department for Environment, Food and Rural Affairs, which says biofuels played a relatively small role in the 2008 spike in food commodity prices, and the World Bank, which says the effect of biofuels on food prices has not been as large as originally thought.
But there is no sign of EU politicians aiming to follow the huge success of ethanol in the US. They seem more worried about what their constituents think of farming technology such as genetic modification, than what will happen to mothballed biofuel factories and their workers.
