The hidden agenda behind biofuel

With higher petrol prices, biofuel has been touted as a possible answer to the world’s energy needs. But Mariam Mayet explains how the argument for biofuels can also be used to mask the introduction of genetically modified crops. In reality, biofuel would require massive state support – support that could be spent on other socio-economic priorities.

On the 12th May, Syngenta South Africa (Pty) Ltd, a subsidiary of Swiss Agrochemical giant, Syngenta, notified the South African public of its intention to seek commodity clearance for its genetically modified (GM) maize, Event 3272, for use in the production of ethanol. [1] This precedent setting application, the first GM application for commercial approval in the world for a non-feed, non-food GM crop, (using a food crop), has simultaneously also been launched in the US, the EU and China.

The application by Syngenta illustrates its expediency and desperation: Syngenta hopes to cash in on a potentially lucrative burgeoning global bioethanol market, riding on the back of escalating oil prices and supply fluctuations, while at the same time, securing new markets for its GM products where there is little risk of consumer rejection.

However, Syngenta’s application is also mysterious, for two reasons. The application made to South Africa is for clearance to expedite imports and not for growing. It is a guarded secret as to where Syngenta hopes to grow the GM maize. South Africa does not import GM maize from the US, for several reasons, including the fact that the US has approved many more GM events (varieties) than has South Africa and contamination by unapproved GMOs cannot be ruled out or avoided. [2] In any case, the US will rely on its own domestic market to sustain the demand for ethanol from maize in that country. South Africa, does, however, import huge amounts of GM maize from Argentina. Will Argentina become the factory farm or will it be another developing country?

Second, the application seems to be superfluous in the light that Diversa Corporation, well known to anti-biopiracy activists, recently brought to the market, the same enzyme alpha-amylases, used in Syngenta’s GM maize. The enzyme is derived from a deep-sea micro-organism [3] and is meant to convert the starch present in maize into sugars for processing into ethanol. This same rationale is being given by Syngenta to the South African authorities as motivation to grant approval for the GM maize! What makes it all the more curious is that Syngenta owns substantial shares in Diversa.

Interest in ethanol as a biofuel is not new. It began during the oil crisis of the 1970s at that time when several countries, led by the US, began to phase out lead from gasoline. In 1978, the US Congress approved the National Energy Act, which included a Federal tax exemption on gasoline blended with 10% alcohol. Federal subsidies also reduced the cost of ethanol to around the wholesale price of gasoline. [4] Thus, in the US, ethanol relies heavily on subsidies to remain economically viable as a gasoline- blending component. The current Federal subsidy of 51-cents-a-gallon makes it possible for ethanol to compete as a gasoline additive. The US also imposes a 54-cent-a-gallon tariff on imported ethanol, thus promoting its domestic ethanol production.

However, gleaning from the literature, the ethanol subsidy is due to expire in 2007/8, and it is not clear whether ethanol will continue to receive political support.

In the US, ethanol is derived mainly from maize and is blended in quantities up to 10% in gasoline (also called E10 or low-blend). In terms of the Energy Bill passed called “EPAct 2005”, the volume of ethanol will be increased from the current 4 billion gallons/year to 7.5 billion. It is reported that a booming ethanol industry will consume 20% of the 2006 US maize crop, cutting the maize surplus in half by 2007, or 1.14 billion bushels. Some 54 million tonnes of the 2006 maize crop is projected to go to ethanol plants, up 34% from 40.6 million tonnes). [5]

There are 97 ethanol plants in the US with a capacity of 4.5 billion gallons (17 billion litres) a year. There are 44 projects under way that will add 1.4 billion gallons of capacity this year. By early 2007, the US it is expected to be producing at a rate of 24.6 billion litres of ethanol, requiring 2.15 billion bushels of maize. [6] This implies an increase in maize production in the US to sustain the demand for maize. Currently, the US is the world’s largest maize derived ethanol producer, accounting for 33% of the global market. Brazil is the world leader in ethanol production, derived from sugarcane, accounting for 37% of the global market. [7]

At the beginning of 2006, South Africa phased out the use of lead, which created a boon to the ethanol industry, as ethanol can be used as an additive to boost the octane number of unleaded fuel. In addition, and following on from the lead of the US, at the launch of the National Energy Regulator of South Africa in November 2005, Deputy President Phumzile Mlambo-Ngcuka said that the South African Cabinet had approved a proposal by the Departments of Minerals and Energy (DME), Agriculture and Land Affairs, and Science and Technology, to explore biofuels as an important component of South Africa’s energy mix.

Touted as a cleaner, greener fuel, by reducing CO2 emissions by 60%, ethanol is said to bring huge socio-economic benefits through especially job creation. According to Busi Nxumalo, South Africa’s Energy Development Corporation’s (EDC) business and market analyst, a strong local biofuels industry will also make a significant contribution to South Africa’s GDP. According to him, if a 10% blended bioethanol is achieved, it will add 0,25% to the country’s GDP. In addition, a 10% blending ratio will enable South Africa to save R2.5-billion a year in imports, which equates to a reduction of 1% in overall national foreign expenditure. [8]

Industry lobby groups are feverishly pushing the South African government to create the economic regulatory framework to do two things: to make the blending of ethanol into petrol mandatory for oil companies, and to allow a 30% reduction in the fuel levy to be extended to bioethanol industry, as it currently does, the biodiesel industry. Indeed, Ngubane has said very recently that the EDC was investigating the viability of adding a 10% ethanol blend to petrol. [9]

However, once maize is harvested, three energy expenditures in ethanol production raise the total costs. These include energy to the transport of maize grain to the ethanol plant, energy expended to provide the capital equipment requirements for the plant, and energy expanded in the plant operations for the fermentation and distillation processes. The effective energy balance of ethanol as a biofuels is therefore in doubt.

A study by Pimental and Patzek shows that turning plants such as maize, soyabeans and sunflowers into fuel uses more energy than the resulting ethanol or biodiesal generate. [10] Ethanol for example can’t be transported via pipeline - it has to be carried from distillation plants via truck and railraod, which creates additional energy costs. Thus, bio-ethanol from maize has a much worse energy balance and does not have environmental benefits.

Using maize for ethanol production is costly in terms of land use, fossil energy, and most importantly it subverts valued human food and animal feed from direct use. The fact that ethanol production has a negative energy balance further precludes its place as an alternative liquid fuel for the future. It must also be borne in mind that maize prices are the dominant cost factor in ethanol production, and ethanol supply is extremely sensitive to maize prices. Ethanol production will drop when maize is in short supply and prices are higher.

It is therefore apparent that bioethanol production for a fuel blend will require enormous government assistance and subsidies to be viable for the bioethanol industry as a whole, subsidies that can be more appropriately allocated to other pressing socio-economic priorities for South Africa.

* Mariam Mayet from the African Centre for Biodiversity. This article is based on a briefing document produced by the African Centre for Biosafety entitled “South Africa, Bioethanol and GMOs: A heady muxture”

* Please send comments to or comment online at www.pambazuka.org

References:
[1] Such clearance would be given by the Executive Council, Genetically Modified Organisms Act, and will therefore serve as a blank cheque, for the international grain traders, to ship the GM maize into South Africa in huge quantities.

[2] Personal Communication, National Department of Agriculture, February 2006.

[3] “It came from beneath the sea” Nature Biotechnology, Vol. 23, No.10, Oct. 2005, pp. 119-1201.

[4] Joseph DiPardo Outlook for Biomass Ethanol Production and Demand, Energy Information Administration.

[5] Ethanol, Biodiesel eats into Corn Stockpiles, 15 May 2006 http://www.planetarket.com/dailynewstory.cfm/newsid/36348/story.htm

[6] According to the United States Department of Agriculture’s chief economist, Keith Collins. Ethanol, Biodiesel eats into Corn Stockpiles, 15 May 2006 http://www.planetarket.com/dailynewstory.cfm/newsid/36348/story.htm

[7] Worldwatch: State of the World 2006, Chapter 4, Endnote 13.

[8] South Africa Sows Crops-to-Energy Seeds, Engineering News 5 December 2005.

[9] Energy body probes ethanol-mixed petrol, 17 May 2006 http://www.news.cornell.edu/stories/July05/ethanol.toocostly.ssl.html