Next Generation Energy

An Economic Assessment of Biofuel Support Policies surveyed the global industry and came up with some sobering numbers:

Current budgetary support, mandates and trade restrictions (not considering the most recent US and currently discussed EU initiatives) reduce net GHG emissions by less than 1% of total emissions from ransport. Fossil fuel use is also reduced by less than 1% for most of these transport sectors and by 2-3% in the EU diesel sector.

Given that one could describe the state of industry as fledgling, however, compared with how large some advocates would like to see it, maybe those numbers aren't all that bad. If those numbers were tripled, say, we'd be talking about a small, but consequential contribution to reducing emissions. But now comes the really bad news:

These relatively modest effects come at a projected cost equivalent to about USD 960 to USD 1700 per tonne of CO2-eq. saved, or of roughly USD 0.80 to USD 7 per litre of fossil fuel not used.

Hmm. Let's do some simply math.

First, what kind of contribution can we reasonable expect biofuels to make to climate change mitigation? A widely repeated statistic puts it into perspective. If we all stopped eating corn or feeding it to our livestock, and diverted every acre of it to ethanol, the result would displace about 15% of the America's annual gasoline consumption. That same kind of thinking applies to other forms of biofuels, unless you want to make it from algae, a technology that is still years away from full-scale introduction. So the upper limit is not that big.

Still, following Joe's use of Pacala and Socolow's wedge approach, in which each "wedge" that trims the slope of the rising line on a graph of carbon output is a single gigatonne of carbon not released into the atmosphere, one wedge is as good a target as any. Joe's suite of solutions, which are also somewhat arbitrary, but as valid as other, involves 14 wedges to get us down to the point where we will avoid really, really bad climate effects (and even his target of 450 parts per million of CO2 may be too much). So if biofuels, primarily in the form of still unproven cellulosic ethanol, contribute one wedge that would be 1/14 of the way to saving the planet, or a 7% solution.

Now, 1 Gt of C is equivalent to 3.67 Gt of CO2 (the mass of 1 carbon atom + 2 oxygen atoms being 3.67 times the mass of a lone carbon atom), that means that we're shooting to get rid of 3.67 Gt of CO2.

Recalling the OECD report, we're currently spending somewhere between 960 and 1700 US (or Canadian) dollars for each tonne of CO2 not emitted. That means that to get rid of 3.67 billion tonnes of the stuff, without changing existing agriculture policies, it would cost between $3.52 trillion and $6.24 trillion to reach our target.

Of course, the existing subsidies and other policies could easily be slashed. The real cost of growing biofuel stock is probably much lower, with the excess lining the pockets of the shareholders of Archer Daniels Midland and the like. But clearly there is need for some government assistance, otherwise the current policies wouldn't be nearly so generous. For the sake of an argument, say we could eliminate trade barriers and slash government subsidies by 90%, cutting our costs to a tenth. We'd still be looking at between $350 billion and $620 billion.

That's almost as much as the Gulf War costs. Hmmm. I but digress.

If every wedge were similarly costly, we'd be looking at around $7 trillion to solve the climate crisis. Depending on which economists you trust, that would be about a seventh of the global gross domestic product. If we rationalized all our national economic strategies. Somehow, I don't think that's going to work.

This is not to argue against biofuels in principle. I suspect that there are numerous scenarios in which individual agricultural operations, using appropriate small-scale technologies, can convert waste cellulosic plant matter into fuels to operate their trucks and combines and harvesters, reducing the carbon footprint of the farm to zero. Indeed, I would be most surprised if this doesn't become commonplace relatively soon.

And as I mentioned, in theory, genetically engineering species of algae could make a significant amount of fuels in some locations. But for the foreseeable future — and that's what we're talking about, as we don't have the luxury of waiting for the long-term — biofuels are simply too expensive to make a major contribution.