More Biofuels Woes
That strong wind you might have felt earlier this week was just more air rushing out of the biofuel bubble. Monday’s statistics from the U.S. Department of Agriculture–that farmers expect to plant 8 percent fewer acres of corn in 2008, compared with 2007–is very bad news for the already struggling ethanol industry. It takes a lot of corn to make ethanol, and the feedstock is a major cost of creating the biofuel. U.S. farmers’ plan to plant less corn this year means that record-high corn prices, which are already above $5 a bushel, will likely stay high. It doesn’t take an economist to figure out what the grim numbers portend for ethanol manufacturers. Higher feedstock costs, at the same time that yet more ethanol production capacity is coming online, could mean another very tough year for the ethanol market.
Beyond being a pain for ethanol producers, the high corn prices will further exasperate the tensions between using the crop for fuel rather than for food. In a New York Times article, one expert issues a frightening warning:
“We’re hoping for good yields,” said David Orden, a senior research fellow at the International Food Policy Research Institute in Washington. “If we get bad yields and tight commodity markets are pushed even tighter, we’ll get food prices skyrocketing, inflationary pressures and food riots in developing countries, and countries cutting off their exports.”
No one knows, of course, whether it will be a good year or not for growing corn in the United States. If it is a bad year, look for even more criticism of ethanol biofuel and, in particular, the Renewable Fuel Standards that mandate that petroleum suppliers use nine billion gallons of ethanol this year. But even if it’s a good year for growing corn, expect the poor profit margins for ethanol producers to continue and more grumbling about the economics of biofuels.
Keep Reading
Most Popular
DeepMind’s cofounder: Generative AI is just a phase. What’s next is interactive AI.
“This is a profound moment in the history of technology,” says Mustafa Suleyman.
What to know about this autumn’s covid vaccines
New variants will pose a challenge, but early signs suggest the shots will still boost antibody responses.
Human-plus-AI solutions mitigate security threats
With the right human oversight, emerging technologies like artificial intelligence can help keep business and customer data secure
Next slide, please: A brief history of the corporate presentation
From million-dollar slide shows to Steve Jobs’s introduction of the iPhone, a bit of show business never hurt plain old business.
Stay connected
Get the latest updates from
MIT Technology Review
Discover special offers, top stories, upcoming events, and more.