Biofuels Are Poised To Displace Oil

Biofuels such as ethanol and biodiesel have the potential to significantly reduce global dependence on oil, according to a report issued by the Worldwatch Institute on June 7.

"Coordinated action to expand biofuels markets and advance new technologies could relieve pressure on oil prices while strengthening agricultural economies and reducing emissions of global warming gases," says Worldwatch Institute President Christopher Flavin.

The market for biofuels is growing rapidly but is still very small. In 2005, worldwide production was slightly more than 670,000 barrels per day, the equivalent of only 1% of the global transport fuel market. But output has doubled since 2001 and "is poised for even stronger growth as the industry responds to higher fuel prices and supportive government policies," according to the report.

Brazil is the world???s leading producer of biofuels, with half of its sugarcane crop providing more than 40% of its nondiesel transport fuel. In the U.S., where 15% of the corn crop provides about 2% of the nondiesel transportation fuel, ethanol production is growing even more rapidly.

The report says this growth may allow the U.S. to overtake Brazil as the world???s biofuel leader this year. Both countries are now estimated to be producing ethanol at less than the current cost of gasoline.

With new technologies, the Worldwatch Institute says, biofuels could provide 37% of U.S. transport fuel within the next 25 years and up to 75% if automobile fuel economy doubles. Over the same period, biofuels could also replace 20???30% of the oil used in the European Union.

According to the report, the long-term potential of biofuels is in the use of nonfood feedstocks that include agricultural, municipal, and forestry wastes as well as fast-growing, cellulose-rich energy crops such as switch grass. The cellulosic ethanol industry is in its infancy, however. Iogen, a Canadian company, currently operates the only plant in North America.

Biofuels can also spur problems of their own, if not managed well, the report contends. For instance, it says that growth of biofuels could drive up food prices by diverting crop yields to produce fuel.

But the National Corn Growers Association maintains that such a conflict need not exist. NCGA says the U.S. is sitting on a surplus of 2.4 billion bushels of corn, or the equivalent of more than 6 billion gal of ethanol, more than the total amount of ethanol the industry plans to produce in 2006.

The group projects the nation's corn producers will easily be producing a 15 billion-bushel crop by 2015. "That means that we can produce a minimum of 16 billion gal of ethanol or more than 10% of our fuel needs and still meet all other market needs for corn," NCGA President Gerald Tumbleson says.??