Jamaica: Perils of ethanol

Source: http://www.jamaica-gleaner.com/gleaner/20070708/focus/focus4.html

published: Sunday | July 8, 2007

Edward Seaga, Contributor

The supply of petroleum to meet global fuel needs is within sight of
the peak of supply. From there on, the supply of oil will dwindle
until there is no further supply available. Authorities put the peak
at less than 30 years and the end of supply at some 50 years.

Contemplating a future without energy for industrial and commercial
use and the operation of household equipment, is to contemplate a
world without light or mechanised transport of any sort and without
processed foods, or other manufactured products, such as
pharmaceuticals; no communication would exist, whether telephone,
television, radio or computer.

Realisation of the threat of this technological Armageddon is driving
intensive thinking and planning for production o fuels.

Wrong start

Ethanol has the head start, but a wrong start. Ethanol production is
now from sugar cane in Brazil, the world's leading producer, with corn
in the United States not far behind. Between them, both countries
produce some 80 per cent of the 10 billion gallons of global supply.

The problem is that this is only a small amount of what is needed.
President Lula of Brazil, recently announced that Brazil will increase
its output of ethanol from five to 25 billion gallons and President
George Bush is urging the country to increase American supply
sevenfold from five billion to 35 billion gallons by 2017.

This seems like a solution, but it is not. It is only a part solution
for three good reasons:

First, far more than the combined projected total production of Brazil
and the United States will be required to produce any substantial
substitution of gasoline. This raises grave problems of its own which
constitute the other two good reasons.

Expansion of Brazilian production of ethanol from sugar cane means
larger scale invasion of the Amazon to clear more land increasing
substantially the damage this is already causing to the atmospheric
shield which protects the earth from global warming. The increased
ocean temperature resulting from global warming is melting polar ice
more extensively and more rapidly, lowering temperatures and
prolonging winters. The scenario now being drawn is the possibility in
the not too distant future of the arrival of another "little ice age",
freezing over northern Europe and Canada, creating a standstill.
Elsewhere, melting of the polar caps will increase the sea level which
will inundate all low lying habitations in cities, towns and villages.

Another catastrophe

Using corn as the feedstock for ethanol production presents another
catastrophe. The total output of corn in the entire United States
would replace only 12 per cent of the current usage of gasolene, says
the respected Journal Foreign Affairs in a chilling review of the
problems of ethanol entitled, 'How bio-fuels could starve the poor', a
point recently made by Fidel Castro.

But it will not take full use of the corn crop to create a huge
disaster in the supply of corn, soya and other vital cereals for food.
The movement of prices of these essential cereals will rise as more
and more corn is diverted to provide fuel. These prices will be
unaffordable by the poor across the world.

Since some 50 per cent or more of the income of the poor is spent on
food it will not take long for this to be translated into industrial
pressure for increased wages, or increased cost of production of goods
supplied by the poor. Where this inflationary spiral of prices would
stop depends on the extent of corn utilised in the production chain.
But one thing certain is that great damage would be done to national
and household economies by the upward spiralling of food prices.

It appears that a course has been set by the two giant ethanol
producers which will court damaging consequences. In that event, where
does a small ethanol producer like Jamaica stand? Jamaica, at present,
is importing Brazilian ethanol from Brazil from which the water has
been removed, rehydrating the product here and shipping it under the
CBI duty free concession to the United States as a finished product.
Production from a feedstock of fruit juices was where the ethanol
industry started in Jamaica towards the end of the 1980s. It used
imported grape juice from Spain as the feedstock. There was much
difficulty then because the number one American producer, ADM, the
foremost cereal producer, objected to the concessions being granted to
Jamaican ethanol using imported grape juice feedstock. That is no
longer the case as the American economy is in need now of all the
ethanol it can obtain.

Proper feedstock

But a sustainable ethanol industry in Jamaica cannot be built on
imported feedstock which can be subject to change. The proper
feedstock for a Jamaican industry to produce ethanol locally is from
sugar cane. But there could be a problem here. No one can
authoritatively say whether sugar cane can be produced in Jamaica at a
cost low enough for Jamaican ethanol to compete against foreign
ethanol. This could mean that cane produced here may have no value as
a feedstock for ethanol production.

Sugar production is facing a doubtful future in Jamaica. The time is
not far off when a decision has to be made regarding the future of
sugar. Considering that a substantial portion of the more than 100,000
acres of prime land is in jeopardy if sugar production is
discontinued, it would seem to be a matter of urgency to determine
whether sugar cane could still be grown for ethanol as a substitute
for sugar production. But, judging from the apparent lack of work
going on to determine the feasibility of low cost production of local
sugar cane, it is possible that the single solution which could be
available for the sugar problem could escape. If so, the country
should prepare itself for the onslaught of higher prices, particularly
in food and drink, without any redeeming option.

The looming crisis in energy has given enough indications of a
timetable which spells out the need to act now to avoid perilous
prices which could be a grave setback to the future.

Edward Seaga is a former Prime Minister. He is now a Distinguished
Fellow at the University of the West Indies. Email: odf@uwimona.edu.jm

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