SocialismToday           Socialist Party magazine

Socialism Today 110 - June 2007

Biofuels profits

FACED WITH a global crisis, a socialist system would mobilise society’s economic and scientific resources to identify and deal with the problem at hand. The focus and flexibility required comes from the fact that socialism is based on the collective ownership of the means of production with democratic control and management by working-class people.

There would be networks of community and workplace councils, regional and industry-wide bodies, national and international conferences to decide courses of action. Representatives would be accountable with the immediate right of recall and paid an average wage. Decisions would be taken in the interests of the majority. Economic development and use of the world’s natural resources would be planned democratically in an environmentally sustainable way.

That is a stark contrast to the situation today where human and natural resources are ruthlessly exploited in pursuit of profit to the benefit of a small, unaccountable minority individually owning and controlling production and distribution.

Despite years of warning, no decisive action has been taken to tackle global warming which is driven by the greenhouse gases emitted by oil-dependent capitalism. Innumerable summits have been attended by jet-setting politicians, burning up the stratosphere and spouting colossal amounts of hot air. Protocols have been proclaimed. Undoubtedly, awareness has risen. So, too, has the earth’s temperature.

Capitalism searches for so-called ‘market solutions’. A current favourite is biofuels. Biofuel is made from blending conventional petrol with ethanol (eg from corn and sugar), or adding to biodiesel (eg palm oil and soya). Waste products, such as cooking oil and animal fat, can also be used.

In George W Bush’s state of the union speech this year, he set an ethanol production target of 35 billion gallons by 2017 (five times current levels) and 60 billion in 2030. Robert Samuelson’s op-ed column in the Washington Post (24 January) explained the attraction: "The politics are simple enough. Americans dislike high fuel prices; auto companies dislike tougher fuel economy standards. By contrast, everyone seems to win with biofuels: farmers, consumers, capitalists. American technology triumphs. Biofuels create rural jobs and drain money from foreign oil producers. What’s not to like?"

Quite a lot, as it happens. The biofuels currently on offer will not curb greenhouse gasses, will increase deforestation, and strengthen the stranglehold of multi-national corporations.

The US government’s Energy Information Administration says that in 2006 Americans used 315 billion gallons of oil but that is projected to rise 30% to 411.6 billion in 2030. Because ethanol has about two-thirds the energy value of petrol, Bush’s 60 billion-gallon target would offset less than half the projected annual increase – around 40 billion of the 97 billion gallons. (The projections are based on the population rising from 300 million to 365 million, and from 225 million to 316 million vehicles.)

In the US, most ethanol comes from corn. Ethanol receives heavy federal subsidies – 51 cents a gallon to refineries which blend it with petrol. The subsidy is swelling oil company bank accounts and has increased demand for corn, pushing up its price by 50% last year. Corn is fed to animals, raising meat prices. So, fuel subsidies mean more expensive food, hitting working-class and poor people disproportionately hard. In 2000, ethanol used 6% of the US corn crop. In 2006 that was 20%. That is set to double by 2010. The US imposes high import tariffs on ethanol and subsidises US ethanol exports.

Iowa is the biggest corn-growing state in the US and has 21 ethanol-producing plants, with more in the pipeline. If Bush’s targets are reached, Iowa will be transformed from a world exporter of corn to an importer – to feed the nation’s automobiles.

The environmental group, Friends of the Earth US, estimates that ethanol reduces greenhouse gas emissions by 13% at best. If production plants use coal to heat the corn, and many do, there is little or no net benefit. The corn rush is adding pressure to cultivate marginal land more at risk of erosion. Continuous corn crops – as opposed to rotating land use – are more susceptible to weeds and disease, increasing the use of pesticides or genetically modified crops. Fertiliser use will go up, increasing nitrate pollutants in rivers.

George Naylor, an Iowan farmer, summed up the logic: "Farmers do what they do too much of the time based on greed or fear, which is not a good recipe for anything. If the emphasis is on corn to produce ethanol, then that’s the way it will be. Everybody will pile in, and I’ll be among them". (Guardian, 26 January) You can’t buck the market.

The cheapest biodiesel feedstock (source material) is palm oil. In Indonesia, Malaysia and elsewhere, tropical forests are cut down and peat lands drained to clear space for plantations. Deforestation is responsible for a quarter of the world’s carbon emissions. Taking that into account, biodiesel from palm oil can create more emissions than burning conventional diesel. Friends of the Earth reckons that 87% of deforestation in Malaysia between 1985 and 2000 was to make way for palm oil production. (Independent on Sunday, 6 May)

Goldman Sachs estimates that more than a quarter of all available cropland would be needed for the British government to meet its biofuel target from domestically grown crops. Therefore, biofuel crops will be imported, contributing to deforestation elsewhere and burning more fuel in transportation. The increase in biofuel plantations in the neo-colonial countries will hit landless farmers, rural and urban poor, and drive out peasants as multinationals take over land and squeeze farmers by controlling the price paid to producers.

The international outcry against genetically modified plants severely damaged the public image of this industry. The fear that wild and non-GM crops will be contaminated and the ‘dependence culture’ it imposes on poor farmers – forced to buy seeds and fertiliser from multinationals – remains. Now, many in the industry hope that biofuels can rehabilitate its reputation. Yet, some of the scenarios are even scarier. One goal is to engineer reductions in the amount of lignin in biofuel crops. Lignin blocks the process of turning cellulose into ethanol. It is also what makes plants stand upright. What would happen if there was significant cross-pollination? Would forests fall over?

Some people recognise the limitations of current biofuels but argue that they are a step towards producing ethanol from cellulose, the fibrous material in plants, which can be broken down by enzymes into simpler sugars for fermenting into ethanol. Grasses are the prime target. But the technology is still in its infancy, and the issue of land use has to be addressed. After investing billions in refineries to turn crops into biofuels, companies will not shut them down before they have seen a return on their investments. The quick fix option is the most attractive for capitalism, with research and development of cellulose use pushed to the margins.

Today, "Thirty years after it was founded by President Jimmy Carter, the National Renewable Energy Laboratory at the edge of the Rockies here still does not have a cafeteria", and funding is less than at the start of Bush’s presidency. Renewable energy supplies only 6% of US energy needs, most of which comes from old hydroelectric dams. Under current policy, that is set to rise to 7% by 2030. Coal use will increase from 23% to 26%. (New York Times, 25 January)

Royal Dutch Shell is conducting a massive PR offensive to boost its green credentials. Over the last five years it has invested $1 billion on biofuels, solar and wind power, and hydrogen, one of the biggest such investments by any company. But it is less than a fifth of what Shell invested with Chevron in one large oil-sand mining project in Canada. Amy Jaffe, an energy specialist at Rice University, said: "We are getting dirtier. If you need to come up with a fuel source other than drilling for oil under the ground in the Middle East, what is the most obvious thing with today’s economy, today’s infrastructure and today’s technology? Oil shale, liquefied coal and tar sands. It’s all dirty but it’s fast". (New York Times, 25 January)

That sums up the reckless, short-term outlook of capitalism: worry about profit today and to hell with the future. The approach of a socialist society to global warming is of long-term sustainable development, cutting out the waste and duplication in the profit system. It would divert massive resources into the research and development of renewable energy sources. Marx and Engels famously wrote that workers have a world to win. With capitalism hurtling blindfold towards environmental catastrophe, the stakes are even higher. We have a world to save.

Manny Thain


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