# Presentation: 769829

## Global Biofuels Developments & Limits to Expansion  8/21/07

**By Dr. Robert Wisner, University Professor of Economics and Coles Professor of International Agriculture **
**Iowa State University**
** ****Ames, Iowa, U.S.A.**
**For presentation at the Global Biofuels Conference, Minneapolis, MN, U.S.A. 8/21/07**

## Global Biofuels Developments

**Dramatic changes emerging in global Ag**** **
**Rapid expansion-- in U.S., Brazil, EU**
**About 90% of Global Ethanol -- from U.S., Brazil**
**EU leading in biodiesel use**
**Rapid growth of palm oil production for biodiesel**
***Major constraint: cropland availability***
**Global forces will determine size of industry**

## Grain-Oilseed Biofuels Only Partial Solution to Energy Challenges

**Need for other bioenergy related research:**
**New automotive technology **
**Other biofuels feedstocks – chemistry, handling, environmental**
**New incentives for fuel conservation**
**Other forms of renewable energy**
**Efficient biofuels infrastructure**

## Corn-ethanol only partial solution to energy challenges

**Other feedstocks needed**
**Municipal wastes**
**Animal agriculture wastes**
**Forest product wastes**
**New crops**
**New automotive technology**
**Hybrid gas/electric vehicles**
**New engine & vehicle designs**
**Hydrogen fuels & fuel cells**
**Diversification of energy sources**
**Incentives for increased mass transportation **
**Wind power use increasing****   **

## 41 countries encourage biofuelsMajor Countries with Ethanol Fuels

**U.S. **
**Brazil**
**Canada **
**China**
**EU-27**
**Thailand**
**Countries considering ethanol fuels**
**South Africa**
**Ukraine**
**Japan, others**

## Major Countries with Ethanol Fuels

**U.S. – ****likely production of 14-15 bil. gal. from corn in 3.5 to 5 years**
**Brazil current 5.34 bil gal. –89 new ethanol plants to be built, 2007-2011 (51 under construction)**
** ****2% biodiesel mandate by 2008 & 5% by 2013**
**China – 3 corn-based plants, emphasis shifting to other feedstocks (9 mil. T. maize **
**    ****for ethanol)**

## U.S. Corn-Ethanol Plant

**U.S. Corn-Ethanol Plant**

## Chinese Corn-Ethanol Plant

**Chinese Corn-Ethanol Plant**

## Major Countries with Ethanol Fuels, cont.

**EU-27 – ****5.75% of motor fuel to be renewable by 2010, 10% in 2020**
**Canada – ****5% ethanol mandate by 2010, 2% biodiesel by 2012**
**Thailand – ethanol from sugar, casava**
**Biodiesel– Competition for crop land**

## Slide 10

## USDA 07-08

**USDA 07-08**

## USE OF GRAINS IN BIOFUEL  

**World industrial grain use @ 229 m. tons in 2007-08   ****	****up 23% **
**Almost 107m. tons will be used to make ethanol -- ****	****50% above 2006-07**
** ****Ethanol production in the EU: smaller (1.6bn. litres ****	****in 2006) but growing rapidly**
**Source: World Grains Council**

## International Impacts

**U.S. ethanol plants **_**under construction**_** to use 58 mil. tons of corn (doubling use)**
**3.5 times the volume of Japan imports of U.S. corn**
**130% of 2006 EU corn crop**
**70% of global corn exports**
**Other countries are expanding ethanol & biodiesel**
**Strong negative impacts on animal ag.**
**Higher food costs ahead**
**Major risk-management challenges in Ag. **
**     ****& bioenergy **

## Pulls land away from food uses

**Pulls land away from food uses**

-     **(Growth 2007-12 = 147% of U.S. soybean oil exports)**
**       ****(Food demand for vegetable oil highly inelastic)**

## Capacity: 159% of 2006 Crop

**Capacity: 159% of 2006 Crop**

**    ****Iowa Corn Processing Plants, Current & Planned, 7/25/07**

**72 Potential Iowa Plants **
**11 Just across IA Borders**

## Slide 16

## Slide 17

## Total 11,693 mil. Bu.

**Total 11,693 mil. Bu.**

## Demand Curve for Ethanol

- Motor Fuel Use

- Octane Enhancement

- Renewable Fuel Standards/Oxygenation

**Price**

**Quantity**

- Source: Dr. Matthew Roberts, Ohio State University

**73-75% of gasoline @ E-85**

## 2007-08 U.S. corn supplies adequate to meet demand

**But at expense of:**
**15% decline in soybean planted area**
**28% decline in cotton area**
**11% decline in non-durum spring wheat**
**Declines in other minor crops**
**Soybean supplies to tighten substantially,            needing increased plantings in 2008**
**Cotton may need more planted area in 2008**
**More U.S. corn likely will be needed in 2009**

## Slide 21

## Slide 22

## A.

**A**.

## Will increased South American exports  more than offset U.S. decline?

**Will increased South American exports  more than offset U.S. decline?**

## Slide 25

## Argentines developing taste for grain-fed beef

**Argentines developing taste for grain-fed beef**

## (1.32 bil. Liters)

**(1.32 bil. Liters)**

## Add biodiesel

- Source: Dr. Terry Francel, American Farm Bureau Federation

## Differential lmpacts by livestock species

**Differential lmpacts by livestock species**

## Source of data: USDA, NASS

## Slide 31

## Slide 32

## Environmental Issuesfor Research: ethanol

**Impact on groundwater supplies**
**Long-term effects, mono-culture ag.**
**Allowable maximum removal of **
**    ****corn stover & grasses**
**Soil erosion impacts**
**Soil organic matter impacts**
**Diminished wildlife habitats**
**Water**** ****quality impacts from **
**    ****more fertilizer**

## Summary

**Rapid biofuels expansion to bring dramatic crop rotation changes, more monoculture**
**Large demand for crop-based fuel to dramatically impact global livestock**
**Maximum biofuels industry size determined by (1) crude oil & corn prices, (2) government mandates, & (3) ethanol price**
**Large risk-management challenges**
**Need for new feedstocks soon**

## What Could Change Prospects of Tightening Global Grain Supply?

**Accelerated corn yield increases**
***Biodiesel from algae?***
**Crude oil price collapse**
**Early break-through in economical cellulose conversion**
**U.S.Ethanol import tax removed – longer term impacts**
**U.S. $0.51 blending credit reduced or made variable**
**Declining global livestock feeding**

## Thanks  

***Thanks****** **** *

## ...and justice for all

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**Issued in furtherance of Cooperative Extension work, Acts of May 8 and June 30, 1914, in cooperation with the U.S. Department of Agriculture.   Jack M. Payne, director, Cooperative Extension Service, Iowa State University of Science and Technology, Ames, Iowa.**