Tag: "Biotechnology"

Beneficiary of Billion Dollar Green Fuels Program Files for Creditor Protection

Today, the Environmental Protection Agency (EPA) released its final ruling on blend volumes of renewable fuels for the calendar years 2014, 2015 and 2016. The challenge for the EPA is the lack of advanced biofuels to meet obligated minimum levels. The Energy Independence and Security Act of 2007 (EISA), mandates an increasing blend of renewable products into our domestic fuel supply. The Renewable Fuel Standards (RFS) provisions require non-food based cellulosic biofuels to be increasingly introduced into commercial gasoline. Called “2nd generation”, cellulosic ethanol, unlike 1st generation corn-ethanol, is derived from wood chips, grasses, corn cobs and other biological material. The problem is the congressionally mandated product is simply nonexistent.

Industry discussions, analytical reviews, and organizational rationalizations toss out phrases such as immature technology, steep learning curve, and of course, more federal funding. The issue is complicated, yet, not complicated. Producing 1st generation ethanol is much simpler than taking a cellulosic material and transforming it into a viable fuel source suitable for commercial use. Of course, we all knew this going into the program. Unfortunately, after pouring billions of dollars into this boondoggle we have done nothing more than successfully proven cellulosic ethanol is not a practical endeavor.

Even more so, with one of only four cellulosic ethanol production plants possibly set to shut its doors, Abengoa, a Spain-based sustainable energy development company, has filed for creditor protection one day before Thanksgiving, and less than a week before the EPA is expected to release the blend levels of renewable fuels. After the U.S. taxpayers invested billions of dollars towards the building of a massive biofuel facility, not to mention the world’s largest solar farm and wind farms, the company is teetering like a giant, green energy Jenga tower.

Abengoa is an international, mega-corporation founded in 1941. Its near certain investment losses to taxpayers’ dwarfs those of the Solyndra fiasco. Aside from perks and discounts for federal land use, employment credits and special tax incentives a quick search discloses only some of the federal dollars pumped into Abengoa and yet we still have no 2nd stage biofuels to meet program goals.

  • $1.45 billion loan guarantee to Abengoa Solar, Inc. for construction and the start-up of solar energy plant in Solana, AZ — 2010
  • $1.2 billion loan guarantee to Mohave Solar, LLC. for the construction & start-up of Mohave Solar Project plant in San Bernardino County, CA. — 2011
  • $133.9 million loan guarantee for biofuel plant Hugoton, KS — Department of Energy – 2011
  • $97 million federal grant, Hugoton, KS — Department of Energy — 2011
  • $4.03 million in grants and federal contracts for 2015 alone

Beyond the amounts presented here, millions more U.S. dollars have rolled into Abengoa and its many subsidiaries. With its announcement in Spain yesterday and today being Thanksgiving, American stock values for the company have not yet reacted. The protection filing gives the company four months to find a solution before creditors can force a full bankruptcy. But, many employees of U.S.-based projects may still be unaware.

It is likely by the end of next week, Abengoa will be a household name. The failure of Abengoa, along with the failure of the Renewable Fuels Standard program, will hit jobs, stock values, the banks and the federal budget. All this, and we still have no cellulosic ethanol to meet the mandates of the Renewable Fuels Standard.

The Failure of U.S. Biofuels Program

Ending a relationship is never easy, even one with a proven history of broken promises, twisted logic, weak justifications and financial exploitation. Such is the bond between the American taxpayer and the domestic ethanol industry. In the beginning, statements of common goals sparked hopeful enthusiasm. Many eagerly supported the romantic notion of growing our way to energy independence and an American-led green-based movement towards world prosperity. But, alas, the thrill is gone, and the truth exposed. The once proud, almost pompous, biofuels sector is struggling for justification.

The affair began in 2007 with the Energy Independence and Security Act (EISA). Contained within the act is the Renewable Fuel Standard (RFS) provisions that sets forth incentives for the development of biofuels such as plant-based ethanol and biodiesel. At the time, Bush had committed to the goal of ending American’s addiction to fossil fuel. The original promise was a reduced dependency on Middle Eastern oil, cleaner air, a boon to agriculture and reduced fuel costs for consumers.

Unfortunately, ethanol has failed to live up to its promised benefits. Recent low prices at the pump have exposed its life-support dependency on the government. Although direct subsidies have expired, ethanol producers continue to benefit from other financial incentives and federal mandates. A study by the NARC Consulting Group calls the program an economic death-spiral and discloses its many flaws. Yet, industry groups rally for maintaining, even increasing, RFS percentages in the face of mounting evidence of the program’s failure. Still, in a recent rule change proposal, the EPA published a plan to amend the mandates.

The statutory requirement to blend government-supported biofuels with free-market fuels is market manipulation. If the value of ethanol and other biofuels were legitimate, forced consumption, through the RFS, would not be necessary. Congress should end this failed relationship and costly experiment. Let the free market drive innovation and job development. Below, are but a few of the adverse effects of the RFS:

  • disruptive to agriculture markets
  • increases food costs
  • rife with fraud
  • lacks self-sustainability
  • burdens Taxpayers
  • environmental damage
  • violates free-market principles

Governor Walker to Eliminate Unnecessary Renewable Energy Funding

The governor of Wisconsin, Scott Walker, is planning to eliminate the funding to the University of Wisconsin-Madison renewable energy research center.

Cutting state government funding of renewable energy is generally a good idea for several reasons. First, government involvement and interference in a market, in this case the energy market, leads to unnecessary problems and inefficiencies within that market. Second, if now is the right time to push renewable energy, then the private sector would be the one that is already funding these projects, not the state government. Finally, this is the taxpayer’s money that we are talking about here. Did a majority of Wisconsinites vote in favor of millions on renewable energy research?

In the future, when the private sector indicates which and when renewable energies are needed, we can then take another look at the university’s research center:

The research program, founded in 2009, is charged with developing technologies to convert wood chips, corn stalks and native grasses to homegrown sources of power. Along with wind, solar and hydroelectric power, bioenergy is seen as a long-term option to reduce the state’s reliance on coal, oil and natural gas.

Until that time, we will have little need to reduce our need on coal, oil and natural gas. There is an abundance of those resources out there and new technologies and findings are ever increasing that abundance.

GMO Apples: Coming to a Store Near You in 2017

A new strain of genetically modified apples that don’t bruise or brown when cut have been approved for planting and sale in the U.S., according to the Department of Agriculture. After evaluation, the Department of Agriculture has said that the apples are “unlikely to pose a plant pest risk or to have a significant impact on the human environment.”

The apples, which will be marketed as “Arctic Granny and Arctic Golden,” could hit shelves as early as 2017. The new fruits were designed to reduce food waste and expand the sliced fruit market, and are the latest in a new crop development trend: using genetic engineering to up customer appeal, rather than farmer benefits.

NCPA research has already outlined the benefits of biotech crops for combating global hunger. By targeting genetic modifications at consumers rather than just producers, genetically modified crops can gain a larger foothold in the market ― and move closer towards widespread public acceptance.

While GMOs have a fairly large presence in U.S. markets, they continue to struggle abroad. Heavy restrictions, lengthy authorization and risk assessment processes, and split public opinion all inhibit the progress of GMOs in other nations. Perhaps making modifications that benefit consumers will soothe both public and government concerns, and encourage nations to ease restrictions on GMOs and other forms of biotechnology.

The Future of Biotechnology in Farming

There is a great deal of controversy over genetically modified crops; some countries have banned their growth entirely, while others have placed strict regulatory restrictions on production. As the world’s population continues to grow (it is projected to reach 9.1 billion by 2050), global food production will have to increase by 70 percent in order to meet demand.

Scientists have discovered ways to improve crops by manipulating plant DNA, creating a product that better resists insects and stands up to herbicides, allowing farmers to grow crops using fewer pesticides. For example, biotechnology company Monsanto created a crop known as Bollgard Bt cotton — a strain of cotton injected with the Bacillus thuringinesis bacterium which produces its own insecticide, reducing the need for additional pesticide. The product was introduced in India in 2002, and its benefits became evident:

  • Yields improved with the use of Bt cotton. One particular cotton farm increased its yield by 7,625.7 pounds per hectare while simultaneously reducing costs by $143.32 per hectare (due to decreased use of pesticides).
  • With more money in their pockets, Indian farmers have been able to upgrade their machinery, advancing the country’s agricultural economy.

Brazil is currently experimenting with biotechnology and sugarcane. While Brazil produces 588 million tons of sugarcane per year (half the world’s output), it could double that production; half of its potential crop is currently lost to pests, weeds and drought.

Biotechnology offers the potential to combat world hunger by greatly increasing crop yields and producing hardier plants that can withstand pests, drought and more. But because many countries do not allow the production or importation of biotech crops, the ability of these crops to feed the globe is limited.

Congressional Hearing on Biotechnology

The Subcommittee on Horticulture, Research, Biotechnology and Foreign Agriculture called a hearing to discuss the societal benefits of biotechnology and study the perception of it in domestic and international culture.

  • While media may display biotechnology in a different light, both republicans and democrats agreed that biotechnology was our future, and must remain relevant.
  • Democrats responded that by increasing yields, we can decrease the amount of land and water used to grow crops. This would in turn lower our carbon emissions.
  • Under the guise of trying to inform the public about biotechnology, it ends up being misinformation. Which is why labeling cannot take place.
  • A survey was done to ask consumers whether they enjoyed Biotech chicken which was resistant to diseases, or chicken fed antibiotics to counteract diseases — 85% said that they preferred Biotech chicken.
  • Corporations must begin to learn how to spread goodwill amongst its consumers. As of right now, Monsanto and the other corporations are doing a horrible job.
  • In order to inform the public better, a line of communication must be open between consumers and producers. Farmers understand the key benefits biotechnology has to offer, but consumers have not jumped on board yet.
  • One witness stated that increasing pressure on organics will actually put her out of business. Rising grain prices that are organic only cost more than twice the amount that biotech farming does.
  • A study was recently done that found the risk associated between conventionally farmed produce and biotech produce was exactly the same.
  • The reason that biotechnology is receiving such a bad name is because activists are misinformed and continue to spread lies about it.

An All-of-the-Above* Energy Policy

Policymakers frequently tout their support for an all-of-the-above approach to energy generation, yet somehow nuclear energy largely seems to disappear from that conversation in any meaningful way. And many environmentalists — who castigate coal, insisting that we need clean, renewable energy — flatly ignore nuclear power, despite its zero carbon dioxide emissions. Instead, they hold up wind and solar and biofuels — none of which are ready for primetime — as the solution to our nation’s energy problems. Yet, nuclear power is one clean energy source that actually has the ability to provide affordable, reliable energy on a large-scale basis.

Knowing just how much sense nuclear energy makes, it is frustrating to listen to conversations and debates over energy generation that either flatly ignore nuclear power or dismiss it as unsafe. (For some articles that debunk some of the myths and fears surrounding nuclear power, see here and here.) Cutting down on carbon emissions is apparently the premier goal of many unless doing so would mean using nuclear power – something actually effective and affordable.

But last week, Forbes ran an interesting piece by former EPA Administrator Carol Browner. Browner was Administrator of the EPA under President Clinton and served as director of President Obama’s Office of Energy and Climate Change Policy.

Her commentary immediately addressed that frustrating contradiction that exists among many who oppose nuclear energy:

“I used to be anti-nuclear.  But, several years ago I had to reevaluate my thinking because if you agree with the world’s leading climate scientists that global warming is real and must be addressed immediately then you cannot simply oppose clean, low-carbon energy sources.”

Browner notes that “[e]xisting nuclear power plants…emit virtually no carbon pollution and are among the cleanest sources of electricity available.”

If climate change activists are serious in their belief that man is responsible for global warming, then you would expect more of them to rally behind nuclear as an energy source. Unfortunately, an “all-of-the-above” approach sounds nice, but it’s often just a catchphrase that doesn’t necessarily represent a comprehensive energy policy.

(And of course, nuclear power isn’t the only casualty of the “all-of-the-above” refrain: President Obama claims an all-of-the-above approach to energy, yet apparently that does not include support for coal power or the Keystone XL pipeline…)

Fair and Equal Energy, GOP Proposes Ending All Tax Breaks

Senator Mike Lee (R-UT) recently proposed new legislation that would end all $16 billion dollars in subsidies on energy, restoring a free market energy sector.

Ordinarily, when legislation such as this is mentioned it is directed at the renewable sector only, allowing oil companies to retain the billions they receive. However, this bill will end all oil and gas subsidies as well, allowing competition to return to the sector. Now the government will be unable to pick winners and losers in the market.

60 years of energy

Source: “60 Years Of Energy Incentives,” Management Information Services for the Nuclear Energy Institute

Credit: Alyson Hurt/NPR

Since 1950, the U.S. government has provided and astonishing $837 billion for energy development, over half of that being oil and natural gas. However, his bill also reduces taxes for these companies which could prove balanced out in the long run.

This is not the first time something like this has been tried. In 2012, Congressman Mike Pompeo of Kansas attempted the same plan and ultimately was referred to the House Subcommittee on Energy and Power. Senator Mike Lee has quite a few more tricks up his sleeve as he currently has 34 sponsors on the bill. He does have opposition however in that many senate democrats and republicans want to extend biofuel subsidies for at least one more year. In order to have a truly effective bill, all government assistance has to be cut.

While renewables were once viewed as the future of U.S. energy, the recent oil and gas boom has taken over the economy. In 5 years alone, oil production on state and private lands has soared an astonishing 61 percent, and natural gas production has risen 33 percent.

Government Subsides Help Distort Science

A $500,000 study released this past Sunday in the peer-reviewed journal, Nature Climate Change, detailed how corn-based biofuels release seven percent more greenhouse gases in the initial five-year time frame compared with conventional gasoline. The study which was paid for by the federal government found that regardless of how much corn residue is taken off the field, the process contributes to global warming.

But administration officials who have devoted more than a billion dollars of taxpayer funds as well as the biofuel industry disagree. DuPont claims that the ethanol it will produce will be 100 percent better than gasoline in terms of greenhouse gas emissions. The Environmental Protection Agency (EPA) says the study “does not provide useful information relevant to the life cycle greenhouse gas emissions from corn stover ethanol”.

But there are reasons to doubt DuPont and the EPA. DuPont is getting billions in subsidies to produce biofuels. Federal subsidies help its stock price; the company would be foolish if it did not defend biofuels. Meanwhile an Associated Press investigation last year found that the EPA’s analysis of corn-based ethanol failed to accurately predict the environmental consequences. California regulators earlier declared that corn ethanol would not reduce global warming and may in fact make it worse. Other federal studies have reached the same conclusion. David Tillman, a researcher at the University of Minnesota who has researched biofuels emissions from the farm to the tailpipe, says the recent study is the best he has seen on the issue.

This controversy highlights several problems. Despite claims to the contrary, politics seem to play a part at the EPA. The EPA could have simply released a statement that research in this area is still developing and it is sticking with its initial conclusion that biofuels improve the environment. By issuing such a strong rebuke, it seems the organization is not open to new information. Real scientists know new discoveries come along all the time. Scientists do not offer blanket statements, but politicians do.

Further, no matter how well intentioned, subsidies distort the market. Reducing carbon emissions is a good goal, but when government picks a winner everybody else loses. We do not know if there is a better solution that corn-based ethanol. We do not know if the EPA is investing in real science or attaching itself to its preferred winner. The EPA’s role should be to judge the best solution the private sector develops. When the EPA provides subsidies to one technology over another, taxpayer money and possibly scientific integrity are lost forever.

Global “Clean” Energy Expenditures are Down (and Respect for Economic Realities are Up) in 2013

It is refreshing to see that environmentalists and liberal governments are beginning to recognize the economic realities they face when manipulating energy markets to promote clean, renewable energy sources. For example, a recent Time Magazine article investigates why total public and private funding of “clean power” from the global renewable energy industry fell 14% in 2013. This amounts to a decline of 23% since the peak of such spending occurred in 2011. The data cited came from a study from the Frankfurt School-UNEP and Bloomberg New Energy Finance.

This study points out that Europe decreased its spending on clean, renewable energy sources by 44% while the U.S. decreased it is spending by 10%. These reductions were found to largely arise from three economic realities:

  • The declining costs of producing “clean” energy.
  • The significant reduction in public subsidies.
  • Increased competition from renewable but “unclean” biofuels power sources.

Economic Reality #1: Subsidizing an activity can drive down the unit cost of production by creating economies of scale. For example, the average cost for installing a voltaic solar cell in the U.S. declined 60% in the last few years. Indeed, despite the reductions in total spending in 2013, global clean energy capacity in 2013 (from renewable energy sources other than existing hydroelectric power sources) had remained the same as it was in 2012. However…

Economic Reality #2: Public sector funding sources are scarce. As Europe is slowly recovering from the recent global recession, the central governments of these countries are finding it very difficult to justify costly public investments in clean energy subsidies when other popular social programs compete for survival in an environment of shrinking public sector budgets. In fact, Spain and Bulgaria made their subsidy cuts retroactive, shuttering their clean energy industries, despite the falling unit costs of providing clean energy. Further…

Economic Reality #3: Every choice has an opportunity cost that cannot be avoided.  Clean power is defined as coming from renewable, sustainable fuel sources that create very low or no pollution or greenhouse gas emissions. Environmental scientists are beginning to realize that subsidized biofuel production:

  • Pushes up global food prices, because the fuel is grown with water sources and lands that could be used for growing food, which increases food prices and makes biofuels less “sustainable”.
  • Increases water pollution levels from pesticides and insecticides, making biofuels “unclean.” Indeed, an article in the magazine Scientific American notes that, “U.N. Intergovernmental Panel on Climate Change has for the first time acknowledged the risks of uncontrolled biofuels development.”

We seem to be living in a world where national governments are intent on accelerating our adoption of clean energy sources along a time line not supported by private energy markets. At least it is refreshing to see that both governments and environmentalists are slowly (if only involuntarily) admitting to economic reality: the true scarcity of valuable resources in our world creates real and unavoidable influences on the efficacy of government policies designed to accelerate clean energy industry development. We cannot simply wave the magic wand of “hope” to force the hand of the market in a manner that ignores such economic realities.