## Thursday, April 10, 2008

Some issues and news that can be discussed:
Let me stop here. Of course, I oppose subsidies for biofuels and their justification by climate change - especially if the carbon dioxide counting is far from obvious. And I agree with Sean Carroll that biofuels should be viewed as a type of battery - a technology of energy storage. But the statement that it is inevitably a worse method of energy storage than others doesn't look obvious to me.

Of course that higher food prices would be extremely bad and we are already starting to see them. On the other hand, if you could make much lower oil prices, such as USD 1 per gallon as promised in various articles, the positive effects could hypothetically beat the negative effects. I don't think we're there yet. But a properly optimized and genetically modified plant could eventually become a better and cheaper method to capture, store, and use (a part of) solar energy than e.g. solar panels because fuel in your fuel tank could still be more acceptable than recharging of batteries.

So if the market price of the biofuels is lower than the market price of the food you could grow, it is obvious that no responsible farmer or government should support such a silliness. On the other hand, if these inequalities change their direction in the future, the appropriate reasoning could change, too.

But one must be careful that plants grown as food are pretty much the only source of food we (and animals) have while biofuels are not the only fuels. It follows that the price of food may be much more volatile - it may depend on the supply of corn etc. much more sensitively than the price of fuels may depend on the supply. The more types of fuel you will have, the less volatile this commodity will become. So even if you find a good biotechnology giving you an economically viable biofuel assuming the current prices, you should be careful about the extrapolation of your calculations into the future because the ultimate food price relevant for the correct calculations could be much higher than the present one.

If you try to make any long-term plans, you should simply think about the year 2020 or so, a realistic idea about the world's total population, efficiency of agriculture (and artificial food production), the required amount of plants for food, and the estimated required amount of fuels (proportional to their increased GDP per capita).

If you find out that the improvements in agriculture won't be enough to catch up with the increasing population, it is clear that you can't afford biofuels in the long run because the food will be more important and more expensive. If you find out that the improvements in agriculture can feed those 7 or 9 billion people, there is some potential room for an alternative usage of plants.

But there are many other assumptions that should be discussed. For example, agriculture is less than 1% of the U.S. GDP. That's a very tiny fraction. It is so tiny because the food is still relatively cheap. Shouldn't it be more expensive, after all? There is clearly no God-given answer here but one can try to imagine how the world would look like if the farmers were much wealthier because we would have to pay them much more.

#### 1 comment:

1. Two related items caught my eye this week: one I wrote about at length in a post entitled Political Crop and Biodiesel, the other is the recent USGS announcement of an estimated mean undiscovered volumes of 3.65 billion barrels of oil, 1.85 trillion cubic feet of associated/dissolved natural gas, and 148 million barrels of natural gas liquids in the Bakken Formation of the Williston Basin Province, Montana and North Dakota.