THE DEFINITIVE TRUCKING SITE

August 2009

FOR A VARIETY of reasons Ethanol’s progress and, to a lesser degree, that of biodiesel into the US big leagues, is being impeded by comprehensive articles in prominent magazines and energy heavyweights. According to Fortune Magazine, biofuels producers are battling to achieve acceptable profit margins in the US. So far Ethanol fares better when the price of corn (maize) is low and the price of crude oil high. Over the past year the maize price in the US doubled and the crude price halved its 2008 high. Despite these conditions the Ethanol price increased by just 10%. 

In a bid to rescue their industry, Ethanol producers are lobbying government to increase the maximum 10% blend allowed by legislation to a maximum of 15%. Vehicle and engine builders – especially marine engines – are putting up stiff opposition to any increase in the maximum blend until they are satisfied the large dose will not result in problems such as early corrosion and over-heating. A more daunting challenge to the financial viability of biofuels is the powerful lobby headed by Princeton Professor Tim Searchinger and other likeminded people who believe that, when maize is used to produce Ethanol, deforestation will take place somewhere in the world and lead to third world farmers compensating for the decrease in food supplies. 

According to Prof Searchinger, as reported by the respected Fortune Magazine, maize based Ethanol is less carbon friendly than oil and will nearly double the greenhouse gases over 30 years rather than produce a 20% reduction. Fatih Birol, the chief economist of the International Energy Agency, reckons that $100 billion of projects planned for the non-conventional/alternatives sector were either delayed or cancelled last year because of the return of cheap oil (making many projects very uncompetitive) and the disappearance of easy credit financing, reports Martin Spring in his excellent newsletter, On Target. 

Second thoughts are also developing in the UK. If the UK government removes the 20 P per litre tax levy advantage biofuels currently enjoy over low sulphur diesel, the local biofuels industry will be under severe threat. It seems the UK authorities are no longer confident that transport fuels from renewable energy are sustainable. The only remaining bright star for biofuels in the UK is that the government will stick to its promise that from 2011, 5% of all transport fuel consumed there must be a biofuels product.