In early January, the Wall Street Journal ran a gushing article on how Brazil had managed to wean itself from foreign oil dependence by making a huge bet on sugar-based ethanol. "Flex-fuel" cars that can run on either gasoline or ethanol have become all the rage, and in recent months fans of biofuels have been pointing to the huge South American nation (now the tenth largest economy in the world) as an example of how renewable energy can make a significant difference in a nation's energy mix. Brazil has even become a major exporter of ethanol, as nations like Japan and Sweden stock up, hoping the renewable energy source will help them meet their Kyoto Protocol-mandated carbon dioxide emission cuts.
Now comes word (via TreeHugger) from Platts.com, a trade publication that covers the energy industry, that ethanol prices are spiking in Brazil, and some consumers are switching back to gasoline. On March 3 the high prices pushed the Brazilian government to mandate lowering the amount of ethanol mixed into regular gasoline from 25 percent to 20 percent
One reason for the price hike is that Brazil is between sugarcane harvests. The skyrocketing price of refined sugar worldwide (itself partly a result of the increasing consumption of ethanol) is another. And still another is the rising demand, both from Brazilian drivers and foreign buyers.
What does it all mean? Well, if Brazil wants to continue to export ethanol and keep the price low enough for it to be a cheap alternative to gasoline, it's going to have to make more. And that means planting more sugar. Which in turn could mean, worry some critics of the developing world's rush to biofuels, cutting down more natural forests and displacing food production meant for domestic consumption.
Welcome to the "biofuel republic" -- a play on the old "banana republic" moniker. An article published last week by the Institute of Science in Society, (brought to us by Energy Bulletin) worries that the world's hunger for biofuels is going to lead to another round of Northern colonization of Southern nations.
"The industrialized countries are looking to the Third World to feed their addiction:" write Dr. Elizabeth Bravo and Dr. Mae-Wan Ho. "The land is there for the taking as is cheap labor, and the environmental damages of large plantations, biofuels extraction and refining can all be outsourced, exactly as they were in the extraction of crude oil."
The authors worry that the expansion of biofuel crops will undermine developing nation "food sovereignty" and that the refining and distribution of biofuels will produce new carbon emissions. They also note that in Brazil, the demand for sugar-based ethanol is so great that it is encouraging Brazil to expand its soya-based ethanol and biodiesel production.
And that brings up yet another potential worry. SciDev.Net reports today that Greenpeace has released a comprehensive study of instances in which genetically modified organisms have "contaminated" natural crops or otherwise illegally been introduced into the food chain meant for human consumption. There is evidence, says the report, that Brazil already has a thriving black market for genetically modified soya seeds.
Evidence of health problems deriving from genetically modified soyabeans is scant. But the lack of controls and the utter carelessness documented by the Greenpeace report are alarming. Put all the pieces together. Huge economic incentives for expaned biofuel production are already being unleashed on the developed world. Genetically modified crops that are resistant to insects and drought will be in high demand.
And we really don't have a clue how it will all play out in the long run.