The Biofuel Brew Ha-Ha

How the greens are making it more expensive to get blotto

Peter Suderman | April 9, 2008

In Germany, they call it "liquid bread." Here in the U.S., frat boys and hipsters cultivating an ironic air call them brewskies. Most of us just refer to it as "beer." But whatever your name for the stuff, there's little point in denying that people in both countries love their beer.

The difference right now, however, is that while we Americans can continue to toss 'em back as we always have, German beer prices are skyrocketing. Who or what is the culprit? Corporate greed, perhaps, or an alcohol tax designed to push German beer drinkers to kick their six-pack habit?

It's something far less spectacular, but potentially more insidious: biofuel subsidies that are pushing more farmers to ditch their barley crops—which are necessary to make beer*—in favor of crops that earn them lucrative subsidies from regulators trying to fight global warming. Topping the list of these subsidized crops are rapeseed and corn, ingredient which are used in the creation of biodiesel and ethanol-gasoline fuel blends which supposedly reduce the greenhouse gasses that cause global warming.

Thanks to these crop shifts, the price of barley has doubled in the past two years, an increase that eventually gets passed along to consumers. Some brewers have raised their prices already, and many others are planning on raising them soon. German beer drinkers are already feeling the hit on beers like Erdmann's Ayinger, which raised its price from 6.10 euros to 6.40 euros over the last year. That's roughly fifty cents a beer for Germans who consume an average of more than 30 gallons of beer person each year.

But that seems like a fairly small price to pay for such a worthy cause, right? After all, if, as scientists like NASA climatologist James Hansen say, global warming threatens humanity with imminent catastrophe from climactic shifts and sea level rise, then biofuels might be a little more important than brew prices.

Problem is, it turns out that even if you consider climate change a serious threat, biofuels are hardly an effective means of preventing it. In fact, they just might exacerbate the problem. These days, anyone saying otherwise—like, for example, European regulators—must be sloshed.

Two studies published in the journal Science at the beginning of February indicate that, rather than producing less carbon emissions than regular fuels, biofuels, once the full production costs are taken into account, probably produce greater overall emissions than their traditional counterparts. And the difference isn't tiny, either. According to one of the studies, "converting rainforests, peatlands, savannas, or grasslands to produce biofuels in Brazil, Southeast Asia, and the United States creates a ‘biofuel carbon debt' by releasing 17 to 420 times more carbon dioxide than the fossil fuels they replace." As Joe Fargione, a scientist at the Nature Conservancy and author of one of the studies, has explained, "carbon debt" is what results from the additional land clearing, beyond food production, needed to grow biofuel crops. Clearing land releases natural stores of carbon into the atmosphere; so greater reliance on biofuels means increasing our carbon debt.

But it's not just carbon emissions that pose a potential problem, and it's not just Europe that's feeling a biofuel-induced hangover. The United States, for example, spends close to $11 billion a year on ethanol subsidies. By encouraging the planting of biofuels at the expense of other crops, these subsidies pose a serious risk to the world food supply.

According to a report by the Hudson Institute's Dennis Avery, a former Senior Agricultural Analyst for the State Department, worldwide food demand is expected to double by 2050. So replacing millions of acres of cropland with row upon row of biological fuel wells is a dicey prospect at best. When biofuel crops replace food crops, we are, as Avery puts it, effectively "burning food as auto fuel"—giving all sorts of potential new meaning to those fast food-gas station hybrids that currently litter our interstates.

Adding to the problem is that most biofuels are not as efficient as gasoline. For example, according to a report by the Energy Information Administration, biodiesel actually reduces fuel economy, putting out about 11 percent less energy per gallon than petroleum diesel. Meanwhile, a gallon of fuel ethanol is reported to be equal to only .67 gallons of conventional gasoline.

None of this should exactly come as a surprise. Free-market think tanks have been issuing warnings about the efficacy and true costs of biofuels for years. Yet only now are mainstream media figuring it out. Time has run three stories on the issue over the last few months, including a cover story titled "The Clean Energy Scam." The New York Times hyped the Science studies with a lengthy write-up that leapt onto the website's most-read list. Rolling Stone recently ran an expose on the harmful effects of U.S. ethanol policy, and now even liberal Times columnist Paul Krugman's gotten into the act.

Part of the reason for all the attention is that it's becoming increasingly clear that biofuel subsidies, in addition to destroying crops and potentially accelerating anthropogenic global warming, seem to be indirectly fueling the destruction of the rainforest. As farmers switch away from soy beans toward subsidized biofuels and soy bean prices rise as supply goes down, South American farmers have expanded their land-clearing efforts in an effort to pick up the slack. When forests in the Amazon start burning, environmentalists start paying attention.

Better late than never, though it's worth making sure that environmentalists fully appreciate the law of unintended consequences here: Policies designed to increase use of biofuels contribute to global warming, reduce the planetary food supply, destroy the rainforests—and, oh yes, drive up beer prices. And yet both the U.S. and Europe are spending tens of billions a year on subsidies. Maybe we should grab a drink, while we can still afford one.

Peter Suderman is a writer and policy analyst at FreedomWorks. He blogs at www.FreedomTalks.org.

*The original version of this article referred to barley as necessary for "making hops." The mistake has been corrected.

Help Reason celebrate its next 40 years. Donate Now!

Try Reason's award-winning print edition today! Your first issue is FREE if you are not completely satisfied.

javier|4.9.08 @ 5:31PM|#

energy-conscious environmentalists are making it more pricey for you to get drunk.

Crossing the fucking line.

Hey!|4.9.08 @ 5:33PM|#

You know who must be drunk? The person at Reason who thinks bullshit shimmying banner ads (You are the 999,9999...) are a beautiful thing.

|4.9.08 @ 5:34PM|#

NOW THEY'VE GONE TOO FAR!

Beer Fan|4.9.08 @ 5:36PM|#

biofuel subsidies that are pushing more farmers to ditch their barley crops-which are necessary to make the hops that goes into beer

Barley (or another grain) is what goes into malt, which is the primary (often only) source of carbs to fuel the fermentation.

Hops are an herb that is commonly used to flavor beer and has some preservative properties.

|4.9.08 @ 5:37PM|#

You know who must be drunk? The person at Reason who thinks bullshit shimmying banner ads (You are the 999,9999...) are a beautiful thing.

You know who must be drunk? The person who is not using Firefox with Adblock Plus.

Tacos mmm...|4.9.08 @ 5:41PM|#

This article did not seriously say that barley is used to make hops, did it? I demand a correction. Immediately.

Timothy|4.9.08 @ 5:41PM|#

Or those of us who are stuck at offices that won't give us admin rights to our PCs to let us install firefox.

thoreau|4.9.08 @ 5:44PM|#

Man, now Warren will REALLY need a drink!

Bingo|4.9.08 @ 5:52PM|#

Luckily tequila is safe from the ethanol nasties!

T|4.9.08 @ 5:53PM|#

That's it. I'm punching the next enviromentalist I see.

johnl|4.9.08 @ 5:53PM|#

How can a libertarian maintain credibility when he doesn't know what beer is made out of?

|4.9.08 @ 5:59PM|#

Starting with the hit job done on nuclear power decades ago and continuing to the credulous biofuel boosters today, much of the environmental movement should be on their knees begging my forgiveness.

The road to hell, dumbshits.

|4.9.08 @ 6:01PM|#

We should start making fuel out of cannabis and raising the price of that. That'll stop 'em.

|4.9.08 @ 6:03PM|#

Hops made from barley????????????????????????????
That is without question the stupidest, most idiotic, amoeba brained thing that has EVER been written on this website. Peter Suderman should be required to thrash a ton of barley with his erect penis and pick ten bushels of hops with his butt cheeks before another word of his is ever published.

What kind of world are we living in?
Hey thoreau, is this frosty mug for me?

THX I needed that.

|4.9.08 @ 6:09PM|#

Those bastards! I mean, I don't drink, but still... beer made the British Empire great, dammit! That has to count for something, right?

|4.9.08 @ 6:12PM|#

Good thing Suderman isn't the science corespondent.

Ska|4.9.08 @ 6:13PM|#

Grain = hops = Epic fail

Tacos mmm...|4.9.08 @ 6:22PM|#

Not quite. Mexican farmers are plowing up their agave to plant corn. Expect tequila prices to rise.

Tacos mmm...|4.9.08 @ 6:23PM|#

That is without question the stupidest, most idiotic, amoeba brained thing that has EVER been written on this website.

For a magazine called Reason...

Drink if you can afford it!

Bingo|4.9.08 @ 6:24PM|#

Goddamnit, where's my gun!

javier|4.9.08 @ 6:25PM|#

Topping the list of these subsidized crops are rapeseed and corn

what is rapeseed?? something that needs to be aborted???

LarryA|4.9.08 @ 6:26PM|#

Barley into hops? I don't drink, and I spotted that one.

Starting with the hit job done on nuclear power decades ago

I'd start with the Nader hit job done on the Corvair. "Small cars? We don't need no small cars."

Not quite. Mexican farmers are plowing up their agave to plant corn. Expect tequila prices to rise.

Corn tortillas and tamales are already jumping in price.

Tacos mmm...|4.9.08 @ 6:32PM|#

what is rapeseed?? something that needs to be aborted???

A seed used for food oil production. The oil has been termed canola for commercial purposes, since rape oil was projected to sell poorly.

lunchstealer|4.9.08 @ 6:35PM|#

Rapeseed, or oilseed rape, is the plant from which Canola oil is produced.

|4.9.08 @ 6:40PM|#

You better rephrase that. An awful lot of energy-conscious environmentalists are really down on biofuels, with a few exceptions like sugar cane and possibly switchgrass. Just go check a few articles at grist.org -- they hate corn, rapeseed and soy biofuels. The call it a boondoggle, same as just about everybody who isn't getting a rich subsidy out of it.

What you mean is "European regulators"; it's hardly a surprise that they get it wrong.

|4.9.08 @ 6:41PM|#

Oh yes, they are also huge fans of post-french-fry biodiesel, but then again, so is McDonald's.

|4.9.08 @ 6:43PM|#

1. It is irresponsible to broadly cast "biofuels" as stealing farmland and raising the prices of food. Every article that speaks to biofuels should distinguish between food-derived and non-food-derived fuels. You did not even mention any of this. Corn ethanol does not equal sugar ethanol does not equal wood ethanol. Specifics such are these are necessary. Otherwise, you, Mr Suderman, are misleading the reader.

2. Adding to the problem is that most biofuels are not as efficient as gasoline...Meanwhile, a gallon of fuel ethanol is reported to be equal to only .67 gallons of conventional gasoline."
Speaking to ethanol: Ethanol does not cause vehicles to be less efficient. Efficiency is logically defined as the useful product received from a machine divided by the energy put into it. Per unit of energy, many cars operate as efficiently, if not more efficiently, while burning ethanol. Again, you are misleading the readers. Yes, one gallon of ethanol contains less energy than one gallon of gasoline. That is why everyone should pay less for a gallon of ethanol. One is paying for the energy. My car doesn't run on gallons; it runs on energy.

Yes, I certainly agree that corn ethanol does not make sense (food for fuel, resource use, etc.), but please keep an open mind about biofuels and be responsible in your reporting. Cellulosic ethanol from trees can be produced using far less energy and will be a net zero (or nearly so) carbon process. As reporters lump all biofuels into the same category and cast them all in a negative light, those working on developing much better fuels will find it extremely difficult to raise funding (non-gov't, please!) to continue R&D.

Brandybuck|4.9.08 @ 6:52PM|#

You know who must be drunk? The person who is not using Firefox with Adblock Plus.

I'm not nearly as drunk as that guy at Reason who put up the ads that make me block the ads. He's the type of guy who lets his dog shit in my roses, and then blames *ME* for not using Firefox PooprScoopr™

Peter|4.9.08 @ 7:05PM|#

Here's what I call making lemonade out of lemons, libertarian style. Greenland just established their first microbrewery, http://www.brewhouse.gl/
where they've started making beer from water that runs off the melting arctic ice right in their own backyard. And apparently it's not bad. A truly free market approach to "global catastrophe" ... and with BEER no less. $100 bucks to anyone who feels like sending a sixer of this stuff to Al Gore.

Kolohe|4.9.08 @ 7:13PM|#

To pile on, I wince, but understand, when reporters (of many organizationa) get military terminology mixed up.

How the heck does the editorial staff allow a mistake about potent potables slip by, though?

|4.9.08 @ 7:15PM|#

Is it too late to heap further scorn and derision on Suderman for the Barley = Hops thing, or is that still cool?

|4.9.08 @ 7:16PM|#

Per unit of energy, many cars operate as efficiently, if not more efficiently, while burning ethanol. Again, you are misleading the readers. Yes, one gallon of ethanol contains less energy than one gallon of gasoline. That is why everyone should pay less for a gallon of ethanol. One is paying for the energy. My car doesn't run on gallons; it runs on energy.

Blather blather blather; everyone should pay less for a gallon of ethanol and everyone should give me fifty cents on my birthday. Where's my fucking pony?

|4.9.08 @ 8:07PM|#

libertarian energy researcher,

you said,

It is irresponsible to broadly cast "biofuels" as stealing farmland and raising the prices of food. Every article that speaks to biofuels should distinguish between food-derived and non-food-derived fuels.

You might have a point if any non food source biofuels were being produced in commercial quantities in either Europe or the US.

Since the only way of meeting the ethanol mandates is to use food based ethanol assuming that all commercial quantities of ethanol are food based ethanol is perfectly reasonable.

l.e.r.|4.9.08 @ 8:08PM|#

P Brooks ...and where's your meaningful addition to the discussion?

"Should" as in "it would be stupid not to do so", not as in a requirement or whatever your knee jerk reaction was.

Bernd|4.9.08 @ 8:23PM|#

Timothy - http://portableapps.com/apps/internet/firefox_portable

HTH

Tacos mmm...|4.9.08 @ 8:31PM|#

Every article that speaks to biofuels should distinguish between food-derived and non-food-derived fuels. You did not even mention any of this. Corn ethanol does not equal sugar ethanol does not equal wood ethanol. Specifics such are these are necessary. Otherwise, you, Mr Suderman, are misleading the reader.

A biofuel that is not made directly from food plants will still raise food prices, as land that was formerly used to grow food will be converted to growing fuel, and/or it will result in a reduction in uncultivated land (read: rainforest) to plant additional crops.

That is why everyone should pay less for a gallon of ethanol. One is paying for the energy. My car doesn't run on gallons; it runs on energy.

The price of vehicle fuel owes more to it's ease of production and transport than to its energy content - you don't buy "per BTU" at the pump, you buy "per gallon/liter." Ethanol is very poor on both counts, especially since it is highly corrosive to pipelines and must be shipped by tanker.

Cellulosic ethanol from trees can be produced using far less energy and will be a net zero (or nearly so) carbon process.

I was not aware that cellulosic ethanol could be produced on any reasonable scale with any reasonable efficiency at this point.

l.e.r.|4.9.08 @ 9:01PM|#

Tacos mmm...
Please don't get me wrong...I'm not advocating biofuels as a panacea. It has problems, but they aren't all created equally, and making it sound that way in an article is misleading. That is my point.

Your 1st point: If the crop is grown on non-food agriculture land (e.g. managed forests that currently exist), then it won't raise food prices. Also, I was not supporting replacing all gasoline with biofuels. Ethanol, specifically, has a place in the mix (octane booster).

Your 2nd point: But, the efficiency of the vehicle does care about "gallons". Yes, the cost of processing and transporting goes into the cost of the product, but the value the customer gets out of the product is the energy. Ethanol should be made locally, thus mitigating some of those issues. Also, the corrosion issue in pipelines is something brought up often in articles, though the authors never talk about how Brazil has pipelines of ethanol. The real problem is having gasoline and ethanol share a pipeline. Ethanol absorbs water; gasoline does not. That is the real issue.

Hopefully, better forms (higher energy content, non-food, non-food ag land, low water use) will be developed soon after. Cellulosic ethanol is within a few years. It's what we have now.

Your 3rd point: It's not. That is why I asked that articles differentiate between biofuels and gets facts straight. The more misinformation there is (related to biofuels or any other topic), the harder it is to get rid of the bad ones to make room for the better ones.

|4.9.08 @ 9:03PM|#

30 gallons/yr? That's less than a pint/day.
Friggin lightweights.

|4.9.08 @ 9:25PM|#

I quite reading after the barley/hops error...

|4.9.08 @ 11:06PM|#

I've got to admit. I'm not even going to try to read this article.

"Here in the U.S., frat boys and hipsters cultivating an ironic air call them brewskies."

There is no such thing as a frat boy who cultivates an "ironic air". Or, if there is, he certainly is NOT using the word brewski.

And I've never heard a hipster use the phrase.

Once at article starts out with such a blatant falsehood, why bother reading further.

Guys who use the word brewski are either in law enforcement, or like to make jokes that the perfect woman has a flat head to put their brewski on while she...

Which is why of course they never actually get any.

Tacos mmm...|4.9.08 @ 11:21PM|#

If the crop is grown on non-food agriculture land (e.g. managed forests that currently exist), then it won't raise food prices. Also, I was not supporting replacing all gasoline with biofuels. Ethanol, specifically, has a place in the mix (octane booster).

You mean the managed forests that we use for furniture, housing and paper? Better than food, I suppose. In any case, I find octane boosters to be less than useful, since I live more than a mile above sea level.

Ethanol should be made locally, thus mitigating some of those issues.

I see no reason to suspect that ethanol will be grown locally any more than corn, wheat or potatoes. Most of the agriculture in this country occurs in a 200 mile wide strip running N/S through the midwest for reasons of economics. Growing fuels locally would likely add to the cost.

That is why I asked that articles differentiate between biofuels and gets facts straight. The more misinformation there is (related to biofuels or any other topic), the harder it is to get rid of the bad ones to make room for the better ones.

I anticipate that biofuels will be necessary, at some point, for modes of transportation that require higher densities of stored energy than batteries will ever conceivably supply, i.e., air travel. For motor vehicles, however, I'm a bigger fan of electricity.

zoltan|4.10.08 @ 1:03AM|#

I'm not sure if this is related, but I wonder if a similar effect is going on in America. Here in Austin at a local pizza shop, the owner put a sign up saying something about how grain or wheat prices have gone up because they've been arbitrarily decided that way...or something. Maybe a little conspiratorial sounding, but not unlike our lovely mixed economy. So is the price being set or is it going up because people are abandoning those crops for the (more) heavily subsidized ones?

|4.10.08 @ 4:49AM|#

Tch, tch.

Looks like the greenies should have applied their "precautionary principle" to their own policy prescriptions for abating CO2 pollution.

|4.10.08 @ 9:24AM|#

My meaningful contribution is this: your claim that ethanol should cost less is nothing but wishful thinking. Ethanol, as you admit, is a less efficient store of energy than gasoline, and it costs too much, both in terms of financial investment and energy consumed in the production process. Just because you think it "should" be priced at some sort of energy parity doesn't mean it can be.

"My car doesn't run on gallons; it runs on energy." is a meaningless, circular proposition; think in terms of operating cost per mile. Ethanol is a losing proposition all the ay around.

Everyone should have a [flying] car that runs on peanut shells and dandelions.

Freeranger|4.10.08 @ 9:31AM|#

With the exception of some waste to fuel processes, biofuels make no economic or environmental sense. If fossil fuels get costly enough, they will make economic sense but we'll still be harming the environment. Several studies show biofuels increase global CO2 emissions while increasing nutrient and pesticide pollution. Shut down the mandates and subsidies and impose a carbon tax and most biofuels die while conservation, wind, solar and nuclear easily make up the difference, the bonus being a cleaner environment.

|4.10.08 @ 9:45AM|#

Is Peter Suderman the new intern? This article came in at about "below average college newspaper" level, you'll do better with practice. Beer drinkers: Proost!

ed|4.10.08 @ 10:13AM|#

Those $2.39 4-packs of 16 oz. Keystone Ice are looking better and better these days.
That's right. We won't drink less. We'll drink worse.

LarryA|4.10.08 @ 10:44AM|#

I quite reading after the barley/hops error...

I think you meant "quit reading."

|4.10.08 @ 10:53AM|#

The whole food crop v. other crop argument is a red herring, to the extent that

(a) the purpose of biofuels is to reduce CO2 emissions,

(b) any biofuels (except, I suppose, for the still-notional algae diesel) require that new land be plowed up, and

(c) plowing up that land incurs a CO2 debt that will take decades, if not centuries, for the biofuels grown there to pay off. Not to mention

(d) since when are environmentalists in favor of plowing up lots of land?

The only conceivable justification for biofuels is energy independence. Everything else is eyewash. The question becomes, what are the fully loaded costs of biofuels, and is the resulting increase in energy independence worth it?

|4.10.08 @ 11:27AM|#

I think pretty much everyone with a brain has figured out that biofuel subsidies are a bad idea, for all the reasons cited above.

I don't think they're the largest cause of the price inflation, though. I would blame speculation in the commodities markets for sending the price of everything grown through the roof. Stocks and bonds are shakey and the money had to go somewhere. When rice doubles and wheat triples in price in the space of a year it has nothing to do with traditional supply and demand.

The crash in commodities will be quite spectacular. Plus, you're headed for an over-planting for next season which will come to harvest at the "crashed" price and, well, things will get cheap again and farmers will be fd.

economist|4.10.08 @ 12:59PM|#

I think ManBearPig is responsible. Or crab people.

economist|4.10.08 @ 1:01PM|#

I already mentioned this effect of biofuel subsidies in an earlier thread.

Bubba Zanetti|4.10.08 @ 1:48PM|#

The price for the 75cl bottle of Duvel just went up $1.00 in Boston.

Reason Magazine

Get Reason E-mail Updates!

Site comments/questions:

Media Inquiries and Reprint Permissions:

Editorial & Production Offices:

advertisements