NEW YORK -- The world's economy is acquiring a new energy addiction: biofuels. Crop-based fuels such as ethanol and biodiesel are quietly becoming a crucial component of the global energy supply, despite growing concerns about their impact on the environment and world food prices, according to a report in The Wall Street Journal.
Biofuels production is rising rapidly, while other fuel sources are failing to keep pace with demand. As a result, biofuels are making up a larger portion of the world's energy-supply gap than many analysts expected. That means the debate over biofuels probably [image-nocss] will shift from whether they are good or bad to the more difficult question of how to make sure their production keeps growing—without wreaking economic and environmental havoc.
Global production of biofuels is rising annually by the equivalent of about 300,000 barrels of oil a day. That goes a long way toward meeting the growing demand for oil, which last year rose by about 900,000 barrels a day.
Without biofuels, which can be refined to produce fuels much like the ones made from petroleum, oil prices would be even higher. Merrill Lynch commodity strategist Francisco Blanch told the newspaper that oil and gasoline prices would be about 15% higher if biofuel producers weren't increasing their output. That would put oil at more than $115 a barrel, instead of the current price of around $102. U.S. gasoline prices would have surged to more than $3.70 a gallon, compared with an average of a little more than $3.25 today.
Biofuels are playing "a critical role" in satisfying world demand, said Fatih Birol, chief economist of the Paris-based International Energy Agency. Without them, "it would be much more difficult to balance global oil markets," he said.
The implications are huge. After an initial burst of enthusiasm in 2005 and 2006, environmentalists and some economists now blame biofuels for a host of global problems. These include a sharp jump in the price of corn and other biofuel crops, which has triggered a rise in global inflation and protests in poor nations.
Many environmentalists now believe biofuels contribute substantially to greenhouse gases—those responsible for global warming—instead of reducing them, as was previously believed, in part because farmers clear forest land to grow biofuel crops. Scientists say deforestation causes a large, quick release of carbon into the atmosphere when existing plant life is destroyed.
International agencies, including the Food and Agriculture Organization of the United Nations, have called on governments to deal with problems caused by biofuels, and some countries have started to rethink their support for the fuels. But cutting back on them won't be easy, according to the Journal report. Just as developing nations continue to gobble up coal, despite the high environmental cost, Western consumers seem to want whatever it takes to ensure enough fuel for their cars.
As global energy consumption grows, "there will be pressure to continue relying on these sources regardless" of their negative impacts, Jeff Brown, a Singapore-based economist at consulting firm FACTS Global Energy Group, told the newspaper. "The only other choice is higher [oil] prices."
It's possible newer biofuels will be developed that pose fewer problems. In India and Africa, farmers are expanding production of jatropha, an inedible shrub that is grown on marginal land and requires relatively little water. There also is rising interest in miscanthus, a perennial grass grown in Britain and elsewhere that can be used to generate energy without driving up the cost of crops needed for human consumption.
Still, most farmers prefer to grow biofuel crops they are familiar with, such as corn. And most "second-generation" biofuels are coming on more slowly than many experts had hoped, meaning it might be several years, if ever, before they are viable on a large scale.
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