Is the future for bio-fuels less certain now that crude has fallen to below $50.00 a barrel?
Forgetting for a minute all the arguments about replacing food crops with bio-fuel crops and possible reducing world food production, let’s just focus on the pure economic considerations of Bio-fuels. Given that the cost of production for many bio-fuels is between $30-$80, you could be forgiven for thinking that without a crude oil price above the $70-80 dollar range; many bio-fuels are going to struggle to be competitive.
The one huge factor, we all need to take into account is government subsidies for bio-fuels and alternative energy. Industry experts believe alternative fuels like jatropha (used in aviation fuel, much like ethanol is used in gasoline for cars), are still 5 years away from a sufficient supply level to be an economically viable alternative, and until then will need government subsidies to compete on price with crude oil.
However, the Brazilian example with ethanol should prove the way forward ( Brazil is considered to have the world’s first sustainable bio-fuels economy and the bio-fuel industry leader , as after some years under government subsidies, the sugar cane (ethanol) industry is now not only self-sufficient in Brazil but is exporting much of its product to the United States and Europe.
This is the solution, short term government subsidies to achieve the long-term desired goal of energy self-sufficiency and sustainability. Eliminating the reliance on fossil fuels, and therefore much of the human environmental impact on the environment, is in my view the number one battle in the fight to win the climate change war. Lets be clear about one thing, this is a war…..both to change social, political, and environmental views and stimulate real change in how we move forward from here.
There are many bio-fuels and other alternative energy options available out there. Companies like Terasol Energy are focusing on plant science and developing crops like ” jatropha (jatropha curcas) and next generation short cycle crops, such as crambe, that maximize the use of degraded or marginal lands that are otherwise unsuitable for food crop cultivation”… All we need to do is support these efforts; directly or indirectly through our pressure on governments and local politicians to continue the push toward alternative energy and economically viable bio-fuels.
Sound like an environmental campaigner on a soapbox? Far from it; I am an ex-banker with bail-out fatigue. If we are going to support or bail-out anything these days it needs to be our future…..the green economy.
Bio-fuels are one part of the solution, regardless of the price of crude, we need to focus our efforts on sustainable alternatives which will provide the jobs and economic growth we so desperately need. The high price of crude stimulated the search for alternatives….lets find the solutions before the price rises again.
