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January 2008 Archives

January 1, 2008

Four or five biofuel predictions for 2008

Here are five predictions for things that I think are likely to happen in the world of biofuels sometime in 2008.

1. The price of food grains will continue to rise putting pressure on the economics of new build ethanol and biodiesel plants.

2. More municipal authorities will follow San Francisco's lead and start collecting used food oils for use in their own public transport fleets. Bus operators in towns where this does not happen will be offering incentives to passengers to bring along their own for collection like Stagecoach in Kilmarnock in Scotland. Freestyle biofulers will start getting annoyed about this.

3 Somewhere in the US, a federal agent in a car powered by biofuels will knock on the door of someone using veg oil and diesel to power their car and demand that they pay back taxes on 3 month's use, or face a jail term.

4 Rationally or not, rising food prices will increasingly be blamed on biofuels as more food crops are diverted into biofuels. Look out for an alliance of big oil and big food retail on this issue.

5. Cellulosic ethanol based around degrading cellulose and lignin and fermenting the simple sugars they yeild will still be five years away on 31 December 2008

January 2, 2008

Subsituting soy for corn leads to deforestation in Brazil

Subsituting soy for wheat leads to deforestation in Brazil, according to story in Science just before Christmas. According to the Smithsonian Tropical Research Institute'

many American soy farmers are shifting to corn to qualify for the government subsidies. Since 2006, US corn production rose 19% while soy farming fell by 15%.


Its worth reading the short extract on the Smithsonian Tropical Research Institute's website by William Laurence

Worries about biofuels move into different areas

One area of human experience that I can't be bothered to get to grips with is Massively Multiplayer Role-playing Online Games. (If I can't see the whites of their eyes across the Monopoly board, I can't know how they are going to react when I storm off in a huff after landing on their Hotel?). However I do find politics the most interesting form of legalised bloodsport, and in many ways the two areas are not that different, so I was interested to read on Tobold's MMORPG Blog Tobold's take on the Iowa primaries, and what they mean for biofuels and food prices.
Tobold thinks that populous non-farming states should be the first to hold primaries, and it seems to me that although not on-line, getting that kind of change would be a Massively Multiplayer role-playing game (or is that politics)

Asian Biodiesel production economics

Asian Biodiesel production economics are likely to remain tight in 2008 unless the local governments decide to start subsidising their production, according to an article by my colleague Anu Agarwal, writing in ICIS News.

(Disclosure: I work for ICIS: About ICIS)

Anu's piece is interesting because it implies that there is so much demand for palm oil in local markets that these markets are making the alternative use for palm oil -- biodisel -- uneconomic

as Anu says

CPO prices have risen 52% since March this year while palm biodiesel prices rose only 28%

Which makes me wonder what effects Quotas for biofuels will have on the price of gas (raising gasoline prices may not be a bad thing if it leads to more efficient vehicles) and food, which probably would be a bad thing for urban societies.

January 3, 2008

Is ethanol energetically favourable?

Is ethanol energetically favourable? I don't know, you have an idea and MIT has an answer.
Cheers to Biggav for the tipoff

Europe is facing a biofuel feedstock crunch

Here's an American perspective on the European Biofuel feedstock situation. He says Europe is facing a biofuel feedstock crunch, that the same could happen in the US too.

January 4, 2008

Iowa Caucus and the winner's policies

I know when I'm not an expert, and while I find American politics fascinating from a distance like the mating ritual of the Capercaillie its not something that I'd claim any kind of expertise in.
So I'd recommend having a look at what John Davis has to say about yesterday's Iowa Primary in Domestic Fuel. Its clearly firing the starting gun in the race to be the next president of the US, and as John says there's a long way to go. But it is interesting to see the initial front-runners Obama and Huckabee stance on biofuels in his post. Of the two Obama's is the most explicit.

Brazil wants to be a biodiesel superpower too

Brazil wants to be a biodiesel super power as it jockeys for biodisel market share, but may be derailed by the high price of soy, according to, John Waggoner, on ICIS news.

(Disclosure: I work for ICIS: About ICIS)

John's report says

Brazil could become the world’s second largest biodiesel producer, with annual production expected to skyrocket nearly 89% to 850m litres (225m gal) in 2008, a government official said on Thursday.

The country produced some 450m litres in 2007, but demand is growing due to the implementation of mandatory blending requirements.

Brazil is mandating a 2% blend in diesel. John continues:

Market sources have told ICIS news that feedstock costs have risen so much in response to demand from biodiesel production that there are doubts about the ability of the programme to generate desired results.

The chief problem is reliance on soy. Which is ironic, since on Tuesday we saw that substituting soy for corn in the US is leading to deforestation in Brazil.

John continues:

Citing global demand and Brazil’s alternatives to soy as feedstock, Energy Ministry Director of Renewable Fuels Ricardo Dornelles said the government in the year ahead would seek to spur cultivation of oilseed crops with higher oil yields.

I'd suggest that they go for castor oil, if it has any uses they will be industrial, there is only so much castor oil that people can drink. Of course this will push inflation into other areas, which are not directly food related. It will be interesting to see how the Brazilians balance the needs of the biofuel industry with the environment and how they manage the lag between planing more crops and the instant need for fuel.

Syntic buys catalyst technology to convert biomass to ethanol

I came across this over on Envirofuel, a company called Syntic Biofuel has got hold of some catalyst technology to convert biomass into ethanol at a cost of around US 37 cents when operating at

This is the kind of "cellulosic" technology that I like, it is well understood and the products from thermal decomposition look easy to manipulate into sensible fuels. I think that most of the competition will take place in the area of yields and rates of reaction, which is where catalysis technology will be important.

Luke has some good questions that will have to be answered if this technology is going to become commercial.

The FT has noticed that there's a link between oil and palm oil prices

The FT has noticed that there's a link between oil and palm oil prices in a piece in today's edition.
In as much of the article that the paper is making free, they say:

The prospect of crude oil staying above $100 a barrel is pushing the price of palm oil to record highs as the commodity is increasingly made into biodiesel, an often cheaper alternative to petroleum-based fuels.

The benchmark March crude palm oil contract on the Bursa Malaysia derivatives exchange climbed as much as M$77, or 2.5 per cent, to a life-time high of M$3,159 ($956) per tonne before closing at M$3,136 on Thursday.

You'll need a subscription to read the rest, (and a bigger line of credit if you're going to start building a biodiesel plant in the next few months using palm oil.)

January 7, 2008

mmm Peaches

mmm Peaches. Peaches could be a source of hydrogen fuel, according to Greenbang. Better, I suppose, than baked beans.

Food vs Fuel a Scottish perspective

There's an interesting , if long in the Sunday Herald a Scottish newspaper, about how the interplay between food and fuel could play out.
The key points of Kenney Kemp's article is that not all countries have more land to farm

The bad news for Scotland is that its farming industry is not in a position to help us avoid rising world food prices by producing more food for ourselves. For one thing, Scotland doesn't have any extra farmland. This is illustrated by the fact that in 1997, the total area under cultivation was 5.5 million hectares - and 10 years later this was about the same.

He adds:

From 1974 until 2005 food prices on world markets fell by three-quarters in real terms, with obesity and gluttony exploding simultaneously. But the days of the great grain mountains appear to have come to an end.

Prediction: look out for more stories like this in the press as the year progresses.

A big hand please for... Danny the Digester

Meet Danny the digester

January 8, 2008

Switchgrass is sustainable and energetically favourable

Switchgrass is sustainable and energetically favourable, according to a story in Technocrat, reporting on the Science Now magazine article Biofuels on a Big Scale.

An ethanol bankruptcy

"the high cost of corn and the low price of ethanol made for difficult economics at the plant"

Look out for more of this this year unless there is a moderation in the price of corn in the US.

The quote comes from a report in the Kansas City Business Journal about E3 Biofuels, which filed for Chapter 11 bankruptcy protection after a fire at the firm's plant at the end of November.

January 9, 2008

There's a wave of approval for switchgrass

There's a tide of approval out there for switchgrass as a biofuels source following an article which appeared in Science Now and reported briefly here on the basis that switchgrass is energetically sustainable

Typical is James Hudnall in his official site in a post no corn for oil, he says:

The idea of using food crops for energy is a bad one to begin with. There are plenty of alternatives. As I’ve said before, switchgrass is the answer. It’s cheaper to grow, takes less energy and less pesticides and fertilizer and it can grow on land unsuitable for farming.

Over on Ecoworld we had a little reality check in switching to switchgrass

According to the BBC report, “One acre (0.4 hectares) of the grassland could, on average, deliver 320 barrels of bioethanol.” That suggests (320 x 640) that 204,800 barrels per year per square mile would come from this switchgrass - an improbable amount. So we called one of the study’s authors, Dr. Ken Vogel at the University of Nebraska, to ask him to clarify this number. It turned out the BBC reporter had mixed up barrels and gallons. The researchers had actually estimated switchgrass can yield 4,896 barrels per square mile per year.

and there's a pretty straight report on Green Car Congress.

January 10, 2008

Check out ethanol plant closures in the US

Check out the updating ethanol plant closures in the US on Earth2TechMaps' Biofuel Deathwatch. Not a name I'd have chosen myself, but the site makes the point that while there are bright spots, like many candidates for the 08 Presidential race are talking about biofuels. What I suspect this map shows is that the economics of new build ethanol from corn is more than a little shaky.

I guess it points up two things. The fact that the ethanol industry is not very integrated between the farm and the pump, which means that, unlike the gasoline business which can capture value from the ground to the forecourt, its not very robust. And secondly if you will take between 17 and 20% of a crop for a new use the price of that crop is likely to rise dramatically. If you've not factored that into the costs of operating the plant, you're going to take a bath.

ADM, Bayer and Daimler love biofuels

ADM, Bayer and Daimler love biofuels, according to this story from ICIS News, written by Mark Watts.

(Disclosure: I work for ICIS: About ICIS)

It is interesting to see an engine maker, a major chemicals player, and one of the world's biggest corn companies getting together to look at a tropical shrub. In what is good news for jatropha growers. Mark says:

Bayer Crop Science said it planned to develop and register herbicides, soil insecticides and fungicides for disease and pest control of jatropha plants

Which should help yields and might make jatropha more commercially attractive. I wonder if Bayer Crop Science will be smart enough to develop pesticides and fungicides that permit other crops to be intermingled with Jatropha to help the economics of plantations.

A tough end to 2007 and start to 2008 for biodiesel makers in the US

It was a tough end to 2007 and hard start to 2008 for biodiesel makers in the US. There have been at least three petitions for bankruptcy for US Biodiesel producers in the last few days of 2007 and the first few days of 2008.
Most recently U.S. Bioenergy of America filled for Chapter 11 protection last week but before that
Green Country Biodiesel filed to have assets at its Chelsea, Oklahoma facility liquidated just before Christmas.
However, its not all bad news Earth Biodiesel, successfully staved off an attempt by creditors to get it wound up in mid December. Earth Biodiesel distributes BioWillie, among other things.

January 11, 2008

Need a research grant?

If you need a research grant and you are a bona fide researcher, the South Asian Eastern Regional Centre for Tropical Biology would be interested in hearing from you. Submission details are available by following the link. Submissions must be in by 19 January.

Hattip to Info Lomba.

Primafuel to build plant in West Sacramento

Primafuel will build a 60m gallon biodiesel plant in West Sacramento with a $164,000 grant from the California Air Resources Board, so its not all doom and gloom.

Hattip to Sacremento Executive.

January 14, 2008

The next two weeks are going to be important for biofuels in Europe

The next two weeks are going to be important for biofuels in Europe. Setting the tone for policy we have the UK Royal Society calling for Biofuels to meet a 50% reduction in greenhouse gasses than the fossil fuels they replace or be banned.

The Royal Society says:

Unless biofuel development is supported by appropriate policies and economic instruments then there is a risk that we may become locked into inefficient biofuel supply chains that potentially create harmful environmental and social impacts. New technologies need to be accelerated that can help address these issues, aided by policies that provide direct incentives to invest in the most efficient biofuels.

We have all three branches of the European Project, the Union, Commission and Parliament haggling (sorry debating) over what direction policy should take and just what proportion of environmental protection should be built in to a European Biofuels policy. This should all come to a head by or around 23 January.

According to ICIS News (Disclosure: I work for ICIS: about ICIS), the Commission is brushing off fears about impact of biofuel targets

The environmental problems caused by biofuels and also the social problems are bigger than we thought they were. So we have to move very carefully,

Stavros Dimas, EC environment commissioner, told the BBC, according to ICIS news.

This is good stuff. Should biofuels be produced to keep farmers happy and on the land and hang the environment, or is there a way of helping the environment and farmers.

How to get your biofuel policy wrong

Belgium wins today's prize for how to get your biofuel policy wrong. According to SenterNovem.

Belgian motorists are paying over 35 million euro too much excise duty to the government because biofuels are only available at a few locations.

I don't think beligan motorists could be happy about this.

Will 2008 be the year that society turns against biofuels?

Will 2008 be the year that society turns against biofuels? Big questions today, but with good reason. Food costs alone will continue to rise because of the use of food crops to make biofuels. I know that the amounts are small in some cases but in closely balanced markets with little excess production it takes only a tiny imbalance to send prices rising dramatically.
The news that the US Department of Agriculture USDA expects the price of corn in the US to rise by 10% by the end of 2008. That will take the price of a bushel up to around $4.30 at the top end of projections. The proportion of the corn crop to be used in conventional ethanol production will be static at around 25%. This is probably due to the old supply/demand equations and the difficulty in securing cheap credit to build ethanol plants.
These factors should make the industry think hard about other sources of biofuels and to push for greater fuel efficiceny.

January 15, 2008

A biopowered hummer, now there's a thought

Over on Climate Change Action, they've found a cartoon which ties excess consumption and biofuels together quite nicely. The thing with all of our fuels is that they have so much intrnisic value they should be used sparingly..

GM Backs second generation biofuels

General Motors is getting into biofuels by backing Coskata to produce a combined pyrolysis and fermentation process (with gm bacteria that convert carbon monoxide and hydrogen to ethanol) from a wide range of waste materials.

Coskata says its process:

has the potential to yield over 100 gallons of ethanol per ton of dry carbonaceous input material, reducing both operational and capital costs. Coskata's exclusively licensed separation technology dramatically improves the separations and recovery component of ethanol production, reducing the required energy by as much as 50%.

Coskata estimates that it can produce the fuel at less than $1/gal.

Now this is interesting stuff, given the amount of waste that the world produces. In the UK we produce 11m tonne potentially suitable waste for this type of process, this could translate to around 1100 m (US gal) ethanol, or about 20% of the US production from corn in 2006.


Calls for cutting the US ethanol subsidy to cut price of US milk

There is a call in the US to cut the ethanol subsidy to help reduce the price of milk. One one hand it looks like a lot of cattle in the US are fed on corn, not wholesome grass... On the other, the volume of corn that's going into ethanol in the US is beginning to hit consumers in their pockets.

January 16, 2008

Everyone's going have to get with it -- Lutz, GM

“Everybody’s going to have to get with it,” says General Motors’ “car czar, Bob Lutz. “Business as usual is not acceptable.”

That quote comes from The Car Connection Blog. To which I initially thought "blimey" after yesterday's news that GM was going to start supporting biofuel production. Then I thought it again after this quote

But then again, the normally conservative executive suggested that if the country is really serious about slashing fuel consumption, it should bite the bullet and sharply rise fuel taxes.

The best way, he said, “is to use market mechanisms to transition the American (motor vehicle fleet) to something more like what Europeans drive.”

There's also good news that the firm is looking at scrapping some big V6 ad V8 engines, switching to front wheel drive and smaller engines.

The car maker has promised to make 50% of its vehicles capable of running on ethanol-based E85 fuel by 2012, though it remains to be seen if supplies will grow to meet potential demand.

Is the Levitahan turning? will Amercians be sold cars as are high tech, which Europeans would think of as mid tech? and will the Administration take notice and up the tax take on fuel?... stay tuned for more on these themes.

Virgin to trial biofuel in transatlantic 747 flight:

Virgin Atlantic has been flying from London Heathrow to Schipol Airport, the Netherlands, in a series of trial flights, according to 24 oranges, a Dutch blog in English. Gina Cobb is neither insightful or offering a very useful perspective on her blog about the proposal to use 20% biofuel blend. But then I guess she's playing it for laughs.

Howver, Flight Global has the Virgin Atlantic test flights happening next month. I'd rather believe that source.

January 17, 2008

Biofuels for municpal power generation

If you're into using biofuels for municpal power generation, it might be worth going along to the inaugural Bio Power Generation Forum meeting in Beligium in April

MIT scientists use e. coli to make butanol

Scientists at MIT are using e. coli to make iso-butanol. It will be interesting to see how its technology differs from the DuPont/BP process for biobutanol. Gevo, partly funded by Koshla ventures has an exclusive licence for the MIT technology.
Hattip to Biggav

Which blend would you like? Jeff Broin's view of the future

Jeff Broin ceo of POET, a large US ethanol producer, says that drivers should be able to chose the blend of ethanol that they want in their gas and this would improve the outlook for the ethanol industry, according to a report on Reuters.

Some how I can't see engine makers buying that vision of the future.

January 18, 2008

Ethanol powered hybrids could be 15x more efficient than gasoline powered cars

Ethanol powered hybrids could generate much less carbon in use (15 times less, but what does that mean 1/15th or just under 7% of the original amount?) more efficient than gasoline powered cars, according to the EcoGeek, who'd like the different automotive camps to stop arguing and just get along..

Cellulosic ethanol could not get off the ground -- Sen Peterson

I say, I say, I say, what have cellulosic ethanol and lead got in common?
They're both hard to get off the ground. Thank you I'm here all week.

Bad joke that, but over on Gristmill, there's an interesting comment about House Agriculture Committee chairman, Colin Peterson speaking at a Reuter's conference said;

"I really think the more I look at this whole cellulosic issue, there is a lot bigger problem to overcome here than people realize in terms of the feedstocks. We have a lot of work to do in that regard," he said. "I'm not sure cellulosic ethanol will ever get off the ground."

He's missing a trick, if you use pyrolysis to generate gas from biological feestocks then you can use cellulose as the starting material.

More on Pongamia

I was sent a link to Roshini Greener Biofuel, an Indian company which specialises in plantations of non-edible oils.The firm sees considerable scope for these plantations, particulalrly Pongamia in arid parts of the world.

January 21, 2008

UK parliamentary committee calls for biofuel moratorium

The UK' House of Commons Environmental Audit committee, which keeps an eye on government environmental policies said today that the UK should pause in its policy to use biofuels to see if they really are environmentally sound, according to Reuters.
This is interesting, because it reflects some aspects of the politically impartial Royal Society's findings last week, and also because, although the committee has no power to change policy, and it may be politically driven in its findings (Tim Yeo, the chairman is a Conservative MP, and the policy is driven by the Labour government) there is a chance it reflects some growing disquiet in society that the biofuels industry will have to address.

This is how to promote biofuels....

Fields of Fuel, a new film about how good biodiesel can be will be launched at the Sundance Film Festival, which is fair enough. What I really like though, is the excitement in the blog...

Indonesia plans to pack 10% biofuel into blends by 2010

Indonesia plans to blend 10% biofuels in its fuel by 2010, according to Cassava vs Yams. Which makes me wonder where that leaves the econonmics of western biofuel producers predicated on palm oil imports. Palm oil is up 12% since the start of the year, according to the blog.

Oh No, the Brazilians are coming (with an eye dropper)

Oh no, the Brazilains are coming, and they're going to inundate the US with 700m gal of ethanol in 2008, according to my pal William Lemos, reporting for ICIS news in Houston.

(Disclosure: I work for ICIS. About ICIS)

The sneaky Brazilians are going to do it by importing via Caribbean countries so the imports will be free of the 54cent/gal tariff that they would attract if they came directly from Sao Paulo. Lets get this in perspective: in 2006, the US used 179 100million gallons of gas in 2005. This will be coming in at the margin, but it is unlikely to destabilise the US corn-based, subsidy-driven ethanol market which produced around 5000 m gallons of ethanol in 2006, any more than the rising price of corn.


http://www.icis.com/Articles/2008/01/18/9094209/brazil-to-inundate-us-with-cbi-ethanol-in-2009.html

January 24, 2008

Nasa supports research into the impact of biofuels on environment

Nasa is promoting research on the way that using parennial grasses to produce biofuels might affect the risks of wildfire and change the environment at South Dakota State University.

Solazyme produces "thousands of gallons" of algal biofuel

Solazyme says it is producing "thousands of gallons" of biofuels from algae . Solazyme says it has signed a biodiesel feedstock development and testing agreement with Chevron Technology Ventures.

Another butanol process

Another butanol process is being developed, this time by the Washington University St Louis, this partly ferments cellulose and lignin into butyrate, which is then further fermnted, according to The Energy Blog.

January 25, 2008

UN FAO has more doubts about biofuels

Over on Greenbang, there's an interesting comment on the UN Food and Agriculture Organisation's latest thoughts on biofuels and the spike they are causing in agricultural commodity prices.
http://ap.google.com/article/ALeqM5hIipI7rsh-IaoutsJKgAmzG5Mh0gD8UBKQ6O1
Its worth reading the report on Regan Suzuki's comments on the effects that biofuels could have in terms of the competition for agricultural land, water and human rights.

The FAO is very much on the side of poor farmers and quite right too.

For what it's worth I think, the development of biofuels must be done with the free informed consent of the current land holders and tennants.
If it is then there is a chance that these poor farmers will be able to grow cash crops that will be used to make fuel for developed countries. That extra income could enable them to move away from the poverty associated with subsistence farming and build a coalition of need between the poor and the rich. (making the poor richer in the process).

This will only work though if there is a free and open market in biofuels, and providing we can manage the transition. In the short term I think that it will be difficult because of the low level of grain reserves.

Dripping to biofuel

Reserchers at the North Carolina State University (you may remember them from an earlier post about self digesting sweet potatoes) have exclusively licensed their Centia technology to Diversified Energy Corp. Which says the process can produce jet fuel and a range of other biofuels.

Will the process work with glycerine?

hattip to Greenbang
hattip to Renewable Energy

ConAgra drops Clovis ethanol plan on costs

ConAgra looks to have pulled out of a plan to build an ethanol plant in Clovis, New Mexico, because the price of corn and water would have been too high, according to the Albuquerque Journal.

Corn you can expect, but this is the first time that I've seen the cost of water as a reason not to build a plant. But then New Mexico is pretty dry.

January 28, 2008

Drying of the West

You might not want to build an ethanol plant west of the Mississippi after you've read this article in National Geographic Magazine about the Drying of the West. It looks like the Western states of the US have been enjoying something of a bath for the past 200 years and global warming is pulling the plug. Water is going to get scarcer and more expensive over a large part of the US, and that's going to make more ethanol projects ConAgra's in Clovis, New Mexico look doubtful.

Somehow I don't think that converting half of the corn crop to ethanol would make enough of a dent in the US' generation of carbon dioxide to make much of a dent in the process.

Burning biomass with coal

Burning biomass with coal to reduce carbon dioxide emissions at power plants could yeild enviornmental benefits. It at least has the benefit of using minimal energy to process the biomass before burning.
According to Earth2Tech blog

A Polish coal plant, which will cofire biomass (burn biomass at the same time as coal) to help reduce its emissions by 25% compared with the country’s current coal plants, is due to come online in 2009. A major Polish power group, Poludniowy Koncern Energetyczny, estimates its total cost at €500 million ($735 million

This is exactly the dilemma of most ethanol-based biofuels, it makes some difference but probably not much overall. (like jumping from the 20th instead of the 36th floor of a building you're less likely to die, but not much). Much better to work hard at reducing demand through greatly increased efficiency of electrical equipment.

Ethanol plants are a bad idea...

Ethanol plants are a bad idea and politicians are at leas venal, according to Residual Forces, which is pretty strident on its dislike of ethanol plants and the demands that they place on water in Minnesota.

January 29, 2008

Consider the trout

Call me short sighted but I'd been banging on about the water, but I'd completely forgotten the fish. A hole that has been filled by Flyfishmagazine, in its ethanol or ground water post. so consider the trout when you're thinking about locating your ethanol facility

UK Parliamentary podcast on biofuels

The British Parliament has discovered pod casting and has decided to make biofuels the subject of its first trial podcast.

Cheers Isabel

Vinod Kohlsa's latest thoughts on biofuels

Now Mr K likes cellulosic biofuels and biomass.

January 30, 2008

Is the price of corn too low?

Is the price of corn too low? Is the rising price of corn feeding through to inflation in the price of food. The answer may not be as clear cut as first appears, sure the price of corn has increased greatly, from a lowish base over the past couple of years, but some research done in October last year and lurking in the Colorado Corn Growers Association's website paints a different picture. (below) sourced from StrathKirn® Inc.

Cornprice%20graph2.png

In a press releaseDr. Jim McLaren, president of StrathKirnm says

"the $2 price increase in corn simply isn’t the accurate cause for the massive inflation in the food chain. When you consider that a 14 oz. box of corn flakes contains just 3 cents worth of corn, even a doubling of the corn price doesn’t have that much impact.”

Most of the increase in food prices is down to the increase in oil costs, says McLaren. Worryingly for the biofuel industry and the rest of us the report adds...

“Looking at the facts, it is simply inaccurate to think corn price increases have a large impact on food prices. In fact, it suggests that corn has been under priced, especially considering the market value of it as a replacement for crude oil."

I guess part of the reason that we can afford to eat bread in the era of $90+/bbl oil is that there is currently a disconnect, or only a weak connection between the price of grains and the price of crude. I also guess that if the proportion of world crop of food grains that goes into gasoline substitutes increases then the connection between the two prices will strengthen. Finally, it will be the marginal bushel in the market that is prepared to pay the most that sets the price for grains. Currently there is an excess of grain production over consumption and until the market gets a lot tighter the link will remain weak. It wont' stop people linking that the corn price is rising because of ethanol production.

Is the rising price of corn forcing up the price of food?

Is the rising price of corn forcing up the price of food? Despite the measured tones (and graph) in my previous post (Is the price of corn too low?),the price of bagels in New York seems to be more closely tied to the price of a bushel of wheat than I had previously imagined, at least according to the Bridge and Tunnel Club blog, and the New York Metro . I'm guessing that wheat and corn can be interchanged quite easily in markets like animal feed and that the demand for corn is pushing up the price of wheat as a substitute...
Of course that blog has the advantage over my earlier data source that it was written more recently and confines itself to the raw material. .
It is possible that New York's bagel-eating lovers are being gulled by quick-witted, sharp-suited bagel-vendors with an eye for a fast buck, but maybe they're cutting their own throats (and taking bagels out of the mouths of their own children at this price).
Maybe the punter is prepared to take the price rise if they're told its because the visible contents of the product have gone up in price rather than the invisible gasoline that's been used to drag the corn to the mill and the flour to the bakery and from there to the vendor on the corner. But the contention that wheat is $14.22 /bushel is a bit rich, March delivery wheat is currently at around $9.27.

January 31, 2008

Tapioca shortage may hit china's biofuels

According to a report on reuters, China is facing a tapioca shortage which may hit the country's bioethanol business.
This looks like demand has outstripped supply, in December 2006 ust over a year ago the Chinese government saw the biofuel potential of non-food crops and Chinese people were being exhorted to plant non-food crops, including cassava (from which tapioca comes) to provide a bedrock for biofuels production. I guess, like everywhere else appealing to peoples patriotic duty is less effective than appealing to thier wallets.

The US Ethanol Import tariff is under review

The 54-cent litre import duty on ethanol into the US could be reviewed in the 2009 budget, according to a report on Reuters discussed breifly on Facts About Ethanol. As the writer says the President proposes but Congress disposes. It will be interesting to see who lines up on which side of the debate,and wheter there is any protection for truely second generation technology (ceulluosic ethanol derived from chemical/biological means instead of pyrolysis)...

About January 2008

This page contains all entries posted to The Big Biofuels Blog in January 2008. They are listed from oldest to newest.

December 2007 is the previous archive.

February 2008 is the next archive.

Many more can be found on the main index page or by looking through the archives.

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