The Biofuel Brew Ha-Ha

How the greens are making it more expensive to get blotto

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.