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BiofuelsBreaking the Myth of 'Indestructible Energy'?

V. Shunmugam
Margin: The Journal of Applied Economic Research 2009 3: 173
DOI: 10.1177/097380100900300204

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 MarginThe Journal of Applied Economic Research 3 : 2 (2009): 173189
SAGE Publications Los Angeles/London/New Delhi/Singapore/Washington DC
DOI: 10.1177/097380100900300204

BiofuelsBreaking the Myth

of Indestructible Energy?
V. Shunmugam

With the pervasive use of oil-based energy in the global economy, even the slightest move-
ment in the price of crude oil reverberates across all economies and businesses. This paper
attempts to gauge the importance of the thrust on renewable energy against the backdrop
of the perils of untamed energy (mainly fossil fuel) use. It looks at the strengths and
weaknesses of various sources of renewable energy, with an emphasis on biofuels. Given
their renewable nature and environmental friendliness, do biofuels have the potential
to become the energy of the future or will it remain another form of energy? The paper
concludes that socio-political repercussions from the widespread use of biofuels would
warrant that the sector be driven by sound policy initiatives.

Keywords: Renewable Energy, Alternative Energy, Energy Security, Biofuels, Bioenergy,

Butanol, Biomass
JEL Classification: Q42, Q43, Q58

1. INTRODUCTION

Human existence has through history been dominated by the need and constant
quest for energy sources in the form of food and fuel or simple energy saving
tools and techniques. This paper focuses on various aspects of energy related
to changing requirements and the sustainability of the recent global thrust on
eco-friendly and renewable energy resources. The first section analyses how
global energy sources have evolved over centuries. The next section examines
the global scenario resulting from the excessive use of fossil energy, increased
supply concentration and price volatility of crude oil, likely surge in demand
for energy, the limitations of most renewable energy sources, and the way
forward in terms of alternative energy sources. Section three focuses on various

Shunmugam is Chief Economist at Multi-Commodity Exchange of India Limited, Mumbai;

e-mail: v.shunmugam@mcxindia.com
The views expressed in this paper are personal.

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174 MarginThe Journal of Applied Economic Research 3 : 2 (2009): 173189

renewable energy sources and their limitations. Finally the paper discusses the
renewed thrust on biofuels, the pressures this will place on land, and the need
to formulate appropriate policies at the global level.

2. CHANGING ENERGY NEEDS AND SOURCES

Firewood was the first known source of external energy, and even today is the
source of an estimated one-third of energy for many developing countries. Over
time, people progressed from fuel wood to other sources (Figure 1), such as the
gravitational flow of water. By the end of the Roman era, many waterwheel-
powered mills emerged, leading to rising productivity and falling dependence on
human and animal power. Naturally, areas with water resources became centres
of economic and industrial activity. Waterwheel-based energy was followed by
wind-based energy, in appropriate areas.

Figure 1 Consumption Trends from 1650 to 2000

Source: World Energy Outlook 2007, Energy Information Administration, Government

of US (http://www.eia.doe.gov/)

Waterwheels and windmills remained popular for a short period, as their

functioning was limited to areas or time periods when there was abundant
supply of water or wind currents. The development of wood and coal-fired steam
engines gained importance as the next major power source, and replaced the
geographically less-flexible water-powered mine pumps. Even though power
from flowing water remained the major energy source for manufacturing,
steam power was more flexible and economically efficient. Steam engines were
convenient to use and, as their development evolved, thermal energy from coal
began to increasingly be used for various purposes, transportation, milling, etc.
Steamships and locomotives powered by coal were faster and more powerful
than other modes of transportation.

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 Shunmugam BREAKING THE MYTH OF INDESTRUCTIBLE ENERGY 175

The drawbacks of coal as an energy source became apparent as energy needs

expanded: coal contributed to environmental pollution in industry-intensive
areas, and as industrial activity based on energy expanded, it was clearly an
inefficient source, because of the limited amounts of energy that could be
produced. Meanwhile, minerals and mineral oils had begun to emerge as an
important source of energy, and it was not long before oil replaced coal as the
main source of energy for transportation. Although coal still plays an important
role in electricity generation in many countries, its use for personal purposes
such as home-heating and transportation has almost become negligent because
of its limitations.
It was not until the chance discovery of petroleum that a new energy source for
transportation came into play. Coal gave way to the extensive use of petroleum
derivatives for domestic heating and transportation, although coal continues
to be used in power generation in areas where it is abundantly available and
where there is no other cheaper energy source.

3. GLOBAL SCENARIO AND ALTERNATIVE ENERGY SOURCES

The search for newer sources of energy has been fueled by various factors such
as a decline in the availability of an energy source due to its continued and
unsustainable exploitation, imminent threat to environment, limitations to
its use, and technological changes that promote newly available energy forms.
Various factors today propel the shift from petroleum-based energy. First,
although the price of gasoline is still moderate, it has been steadily increasing,
with growing supply disruptions which impact energy security worldwide.
Second, the increased volatility in global prices and concentration of supply,
leads to intensified threat to these supplies from geopolitical tensions. Third,
the phenomenal rise in the use of petroleum-based energy is steadily altering
atmospheric conditions, which could ultimately endanger life.
At the same time, dependence on the use of energy is unprecedented. Fossil
fuels, such as coal, oil, natural gas, etc., contribute as much as 85 per cent of
global energy needs.
Fossil fuels are fast running out, and it would reportedly take millions of
years to fully restore the quantum of fossil fuels that has been used up in a few
thousand years. Further, soaring energy prices and geopolitical events in the
oil-rich regions of the world have re-emphasised the need for alternative fuel
sources that enable countries to be self-sufficient in energy, and protect their
economies from market volatility.

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176 MarginThe Journal of Applied Economic Research 3 : 2 (2009): 173189

3.1 Looking Ahead

Experts disagree on how much petroleum is left and how long the stocks
will last, but agree that fewer new sources will be found, and that the price of
petroleum will increase steadily. While the world cannot replace its entire crude
oil consumption with renewable fuels, reducing dependence on crude oil is
becoming key to survival.
The International Energy Agency forecasts that fossil-fuel demand, trade
flows, and greenhouse-gas emissions would follow their current unsustainable
paths through to 2030 because of the absence of public policy and action
(International Energy 2006). The Outlook contains projections of biodiesel and
bioethanol supply up to 2030 for the main producing regions for the reference
scenario, in which no new policies are assumed, while it presents an alternative
policy scenario that takes into account policies currently under consideration.
In the alternative policy scenario, the package of policies and measures under
consideration will, if implemented, significantly reduce the rate of increase in
energy demand and hence, emissions. Importantly, the economic cost of these
policies would be outweighed by economic benefits that would accrue from
using and producing energy more efficiently. The report also forecasts that
demand for energy will increase by more than 25 per cent between 2006 and
2015. More than 70 per cent of the rise in demand over the projection period
(2030) will come from developing countries, with China alone accounting for
30 per cent, because of the shifting of energy demand.
Almost half the rise in global primary energy use is predicted to go into
generating electricity and one-fifth into meeting transportation needs, almost
entirely in the form of oil-based fuels (International Energy, 2006). In global oil
consumption, the share of transport demand, which is less price-elastic than
any other source of energy demand due to lack of an alternative cost-effective
energy source, is projected to increase significantly by 2030. As a result, oil
demand will likely become less responsive to movements in international
crude oil prices, and in fact prices will fluctuate more in response to short-
term shifts in demand and supply. The cushioning effect of subsidies to oil
consumers, that is, on their demand, contributes to the insensitivity of global
oil demand to changes in international prices. At present, subsidies on oil
products in non-Organization for Economic Cooperation and Development
(non OECD) countries are estimated at over $90 billion a year. Subsidies on all
forms of energy outside the OECD are estimated at over $250 billion a year, equal
to the average annual investment in the power sector required by those
countries.

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 Shunmugam BREAKING THE MYTH OF INDESTRUCTIBLE ENERGY 177

Worldwide, most oil-importing economies were pitted against higher interest

rates due to inflationary pressures stemming from sectoral adjustments when
crude oil prices went up from $40 to $140, the level seen in July 2008. So, their
economic growth faced a stumbling block in the form of higher energy prices.
In this scenario, any acute supply disruptions could be very disrupting for
economies of developing countries that are in debt, throwing them further
into the debt trap.
On the other hand, global energy-related carbon-dioxide emissions are
estimated to rise by 55 per cent between 2004 and 2030, or at the rate of 1.7 per
cent a year. Emissions are forecast to touch 40 gigatons (Gt) in 2030, a rise of
14 Gt over the 2004 level. Power generation and coal energy are the main culprits
for this projected emission surge. Emissions are projected to grow slightly faster
than primary energy demand, reversing the trend of the past two-and-a-half
decades because of the increasing average carbon content of available sources
of energy.

3.2 The Way Forward for Energy Sources

Given the cascading effects of the global energy demand scenario, the world
must turn to alternative energy sources. An estimated 60 per cent of energy
demand would be met by renewable energy by 2070 (World Renewable Energy
Congress/Network 2009). In 1993, the World Solar Summit and World Bank had
allocated over $2 billion under the World Solar Decade 19952005 programme
to projects dealing with renewable energy and the environment. This clearly
demonstrates the importance of renewable energy as the new source of power
for our future. As a corollary, investment is expected to increase in developing
new technologies to enhance efficiency and the commercial attraction of renew-
able energy sources.
Alternative energy sources could be based on any renewable source such as
solar energy, wind energy, bioenergy, geothermal energy, hydropower, ocean
energy and biomass which have the added advantage of contributing less
towards environmental damage than fossil fuels. However, these sources have
limitations that make them more expensive or less efficient, and experiences so
far indicate that renewable sources will perhaps never supply enough energy
to meet global demand.
In the last 16 years, the average annual increase in the use of fossil fuels
(coal, oil and gas) in the UK has been 27PJ/year (Mobbs, 2008). Over the same
period, the average annual rise in all renewable energy sources has been 10PJ/
yeara ratio of 1 unit of new renewable energy to 2.7 units of new fossil fuels
(Mobbs 2008).

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4. AN ANALYSIS OF DIFFERENT RENEWABLE ENERGY SOURCES

4.1 Solar Energy

This is a non-polluting, constant source of energy, with applications being
typically limited to one location. Though its supply depends on the availability of
sunlight, it is environmentally beneficial as it causes no pollution. This ultimate
renewable energy source can be used to heat building spaces or water, or can
be converted to electricity using photovoltaics (solar cells). Although solar
panels and the associated equipment are expensive, many see a future with solar
panels on every rooftop. However, photovoltaic cells are considered inefficient
(between 15 per cent and 30 per cent), as the cost of electricity produced is
around 30 cent per kilowatt-hour. Also, the environmental impact of massive
solar installations on the fragile ecosystem of the desert is uncertain so far. This
technology is limited in nature and will ultimately hold a capacity similar to
that of wind power generation at best (Kane 2005a).

4.2 Wind Energy

Wind energy is a growing global source of energy, particularly suited to coastlines
and high-altitude areas that receive strong wind currents throughout the
year. High-tech windmills can be very efficient, and currently are beginning
to produce increasing amounts of energy in areas where wind currents are
reasonably strong and consistent.
In order to be efficient, wind turbines require average wind velocity of
13 m.p.h (21 km/hr) over the course of a year. Other problems associated with
these devices include high initial startup costs, noise, visual and environmental
pollution, and bird deaths. Energy storage is also a problem when wind is not
available. But there are also physical limitations to the contribution wind energy
can make to a centralised grid. The primary concern expressed in the Wind
Report 2004, of the German power corporation E.ON Netz, is that wind energys
intermittency currently requires 6080 per cent of traditional energy-generating
capacity on stand-by in case the wind forecast is wrong (Kane 2005b).

4.3 Geothermal Energy

Geothermal heat sources can also be used to generate electricity. In certain
regions, raw steam emerges from vents which can be directed onto turbine
blades to generate electricity. In other places very hot water emerges which can
then be provided with additional heat to achieve the same result. In areas where

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 Shunmugam BREAKING THE MYTH OF INDESTRUCTIBLE ENERGY 179

no steam or hot water emerges, the injection of fluid deep into the hot bedrock
would produce scalding hot fluid which can then be passed through pipes that
turn water into steam. Geothermal resources provide directly used heat capacity
of 12,000 MW and electric power generating capacity of over 8,000 MW in
over 30 countries. Geothermal energy is used widely in Iceland, where extensive
volcanism makes natural steam sources common. The geysers, in California,
currently remain the worlds largest producer of renewable geothermal power.
Geothermal energy also meets a significant portion of electric power demand in
many developing nations. For example, it provides 27 per cent of the Philippines
total electrical generation.
The biggest limitation of this source is that there are relatively few places with
magma close enough to the earths crust to create the conditions for generating
electricity in an economical way.

4.4 Hydropower
This is produced by water falling from a height onto the blades of a turbine,
but can be generated only in areas with major rivers. Other problems include
the risk of drought, the environmental impacts of dams and turbines, and high
up-front costs.

4.5 Nuclear Fusion

Theoretically, nuclear fusion is an infinite source of renewable energy. But it is
essentially the same energy that powers the sun, and developing such a source
requires working with extreme temperatures. Even if the technical problems
can be overcome, the geopolitical sensitivity of nuclear energy remains the
biggest retarding factor.

4.6 Biomass
Biomass (human and animal bi-products) has been used as a fuel in automobiles
and homes for several years. Wood can also be converted to liquid form, but
energy recovery is low. Biomass, such as corn, soybeans and sugarcane can be
converted to alcohol or ethanol, which can subsequently be used as fuel.
Ethanol, methanol, butanol and biodiesel are biofuels that can be produced
from biomass (biodiesel can be produced from vegetable oils or animal fat).
Biomass can also be used to generate electricity. Burning biomass as a sup-
plement with coal can help reduce the use of this non-renewable resource.
Biomass can also be turned directly into gas by application of heat or by natural

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decay. Some landfills are set up to produce natural gas, which is then tapped
and used for heating or to produce electricity, although the process of burning
produces pollution.
One problem with this source is that the process of converting raw material
to finished product is, as many experts claim, energy negative. It takes 71 per
cent more energy to convert corn to ethanol than can be obtained from the
end product (Youngquist 1998). E85, which is a blend of 85 per cent ethanol
and 15 per cent gasoline, gets approximately 25 per cent fewer miles per tank
than undiluted gasoline. Besides, using food stocks for fuel depletes the supply
of food for consumption.1

5. BIOFUELS: AT CENTRE STAGE

Biofuels as an alternate source of energy have gained immense popularity

globally, as they are perceived to be a clean alternative energy source which
can be developed inexpensively, through improved technology. They have a
further advantage over conventional fuels which require an extremely long
process of restoration, in that they can be obtained in a matter of days, and in
all three states of mattersolid, liquid and gas. Biofuels being plant-based do
not emit sulphur or carbon dioxide and are thus a non-toxic, non-polluting,
bio-degradable and environmentally friendly fuel.2
It is an ideal source for highly polluted cities attempting to reduce toxic
fumes. Although stability of the international crude markets and a stable sup-
ply of energy are essential for sustainable development, the use of biofuels in
transportation and services can contribute to improving energy security by
diversifying supply sources into environmentally friendly, renewable sources.
Plants that produce biofuels also sequestrate a certain amount of carbon dioxide
from the atmosphere as part of their growth process.
The resource base or feedstock of biofuels is diverse but fall into four main
groups:

Cereals, grains, sugar crops and other starches can easily be fermented to
produce ethanol, which can be used undiluted or blended with petrol;

1
If every single truck in the US is to be powered with biodiesel, the entire nations surface has
to be covered with crops dedicated to the generation of fuel (Renewables Part 3-Second Energy
Finance ForumsWall Street, 2005).
2
Biodiesel Technologies, Kolkata, India (http://www.biodieseltechnologiesindia.com).

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 Shunmugam BREAKING THE MYTH OF INDESTRUCTIBLE ENERGY 181

Cellulosic materials such as grass, trees and different types of waste pro-
ducts and residuals from crops, wood processing, and municipal solid
wastes can also be converted into alcohol or synthesis gas, but these pro-
cesses are much more complex;
Oil-seed crops (for example, rapeseed, soybean and sunflower) can be
converted into methyl-esters, which can substitute normal fossil diesel,
and can be used pure or blended; and
Organic waste materials such as fish waste (used in Norway), marine and
animal oil, can be converted into biodiesel. Mature and organic household
wastes might also be converted into biogas.

Currently, biofuels account for about 1 per cent of the total global energy
consumed (International Energy, 2006). If their consumption were to increase,
the US, the EU, and the Brazil, already the largest producers and consumers
of biofuels, would account for most of the increase. Ethanol is expected to
contribute most to the rise in the use of biofuels worldwide, as its production
costs are expected to fall faster than that of biodiesel. The share of biofuels in
transport-fuel use remains, by far, highest in Brazil, the worlds lowest-cost
producer of ethanol. With an estimated 175 million inhabitants, it has the
largest population in Latin America and the fifth largest in the world. Brazils
economy is the largest and most energy-intensive economy in Latin America.
Its primary energy mix is dominated by oil, hydropower and other renewable
energy sources, especially biomass.

5.1 Renewed Thrust on Biofuels

The euphoria surrounding biofuels is based on the following perceptions:
biofuels are apparently carbon-neutral (carbon emitted when biofuels are
burned is offset by an equal amount of carbon absorbed by plants); they are
renewable; and plants producing biofuels can be cultivated in many different
environments. The truth is far more complex, and each biofuel, being different
from the other, requires different treatment based on its individual merits,
demerits and prospects of sustainability.
Based on their different characteristics and complexity of production, bio-
fuels are classified into four types: first-generation, second-generation, third-
generation and fourth-generation (see Table 1).
Brazilian sugarcane is one of the most efficient and competitive first-generation
biofuels today and has become a major biofuel feedstock sold at market prices. In
the US, the production of maize for biofuel continues to be expensive, so it fails
to match the competitiveness of its fossil fuel counterpart. Second-generation

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Table 1 Classification of Biofuels

Nomenclature Remarks
First-Generation Derived from vegetable fats, starch and
sugar, which in turn are derived from
food crops. Also derived from animal
fats. Examples are biogas, biodiesel, and
vegetable oil.
Second- Generation Derived from waste biomass, thus making
it a more balanced option than first-
generation biofuels. Different kinds of
alcohols and diesel generated from wood
fall into this category.
Third-Generation Derived from algae, which are farmed on
a large scale for creating these biofuels.
Algae fuels are very environmentally
friendly as they easily decompose without
harming the soil.
Fourth- Generation Derived by a technique in which micro-
organisms are raised to work with carbon
dioxide to generate fuel.
Source: Royal Society (2008) Sustainable Biofuels: Prospects and Challenges, 2008. Policy
Document 01/08.

cellulosic technologies show potential, but despite continuous efforts have not
yet become commercially viable. An emerging third-generation source of biofuel
is algae, but its large-scale production could adversely affect marine life.
The most discussed first-generation biofuelsbioethanol and biobutanol
can be produced by biological, chemical and thermal processes. Properties
such as higher energy density and ease of blending with conventional fuels
make biobutanol more attractive than bioethanol (British Petroleum & DuPont
2007).
Bioethanol can be obtained by biological fermentation, thermal gasification
followed by ethanol synthesis, and thermal gasification followed by biological
fermentationfrom all forms of feedstock. While sugars and starches are
typically produced through a biological process which is a well established and
mature technology, production of ethanol from lignocellulose is less established,
although many alternatives are being tested to identify their feasibility and
economic viability, and to establish priorities for further research. Studies show
that efficiencies and costs in the long run may be similar to those of sugarcane-
produced ethanol fuel chains (Sims et al. 2006).

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 Shunmugam BREAKING THE MYTH OF INDESTRUCTIBLE ENERGY 183

In June 2006, British Petroleum and DuPont announced their intention

to develop, produce, and market a next generation of biofuels to help meet
increasing global demand for renewable transportation fuels. They had
been working together since 2003 to develop advanced biofuels (including
biobutanol) with properties that can help overcome the limitations of exist-
ing biofuels.
Butanol is a 4-carbon alcohol. Other chemicals in the alcohol family include
methanol (1-carbon), ethanol (2-carbon) and propanol (3-carbon). Currently,
butanol is produced from petroleum sources, but between the early 1900s and
the 1950s it was manufactured from corn and molasses through fermentation
that also produced acetone and ethanol.
Butanol is used primarily as an industrial solvent. In 2006, the global market
was about 350 million gallons per year of which the US market accounted for
about 220 million gallons, at an average cost for $34 a gallon.3 Butanol can be
a replacement for gasoline as a fuel without major engine modifications and
could also be shipped through existing fuel pipelines. Thus, some automotive
industry experts publicly advocate for butanol, which they believe can become
a real player in the world of energy alternatives.
Butanol has high energy content (110,000 Btu per gallon compared to 84,000
Btu per gallon for ethanol; gasoline has about 115,000 Btu per gallon).4 Butanol
is six times less evaporative than ethanol and 13.5 times less evaporative than
gasoline, making it safer to use (Sklar 2006). The lack of technological advance
in biobutanol production produced low yields and low concentrations of
biobutanol compared to bioethanol. The historical method of producing fuel
through biomass used bacteria to produce acetone, butanol and ethanol with
a yield ratio of 6:3:1 of butanol, acetone and ethanol. This means that for each
bushel of corn one would produce 1.3 gallons of butanol, 0.7 gallons of acetone,
and 0.13 gallons of ethanol. In comparison, the yeast fermentation process
produces 2.5 gallons of ethanol from each bushel of corn making this process
a much more cost effective alternative (Danigole 2007).
However, the major issue facing the development of bio sources of energy
is the trade-off of using land to produce food versus fuel. A large number of
studies around the world suggest that rising food demand that competes with
biofuels for the existing arable and pasture lands will constrain the potential for
biofuels production based on current technology; and if demand for biofuels

3
US-based Renewable Energy World. http://www.reneablenergyworld.com/rea/news/
story?id=45946-53K
4
ButylFuel, LLC, 2009. http://www.butanol.com (accessed 8 February 2009).

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is allowed to grow unregulated, the trend will widen the gap between the haves
and have-nots.

5.2 Food or Fuel?

Farmers have always produced crops for three major purposes: food, feed and
fiber. Since nearly everything edible can be converted into automotive fuel,
policymakers and planners globally are looking for measures to deal with this
trade-off.
An estimated 14 million hectares of land is currently used globally for biofuel
production, which is about 1 per cent of the worlds current supply of arable
land. Early ethanol plants were energy-intensive which raised concerns about
whether the ethanol being produced was worth the energy going into making
it. However, both agricultural producers and ethanol processors have made
great efficiency gains in recent years.
Nearly all recent studies of corn-based ethanols energy balance conclude that
for every unit of energy that goes into growing corn and turning it into ethanol,
we get back about one-third to nearly two-thirds more energy as automotive
fuel. However, it has other advantages including its low contribution to global
warming through lower emissions.
Pesticides and fertilisers used for corn production raise serious environmental
concerns, and this makes the use of ethanol production from cellulosic feedstock
even more urgent. The stronger the demand for ethanol, the sooner the world
will move to commercial production of cellulosic ethanol, which is expected to
have a much more favourable energy balance than corn ethanol.5
There are two key indicators in evaluating crops for production of biofuels:
fuel yield per acre and net energy yield of the biofuel (after deducting energy
used in production and refining). For ethanol, the top yield per acre is 714
gallons from sugar beet in France and 662 gallons for sugarcane in Brazil
(Table 2). US corn comes in last after French wheat among the crops analysed,
with an estimated output of 354 gallons per acre, approximately half the yields
of beet and cane.
Among the sources of biodiesel, palm oil is the most efficient source of
bioenergy in terms of its total fuel yield, but it raises environmental concerns:
expanding its production would compete with rain forest land and diversion of
the existing production would remove that much available for food purposes.
Food supply and demand have so far been primarily influenced by agricultural
and export policies, and the politics of food supply among nations, and not

5
Biodiesel is measured by experts to have a net energy gain of 220 per cent.

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 Shunmugam BREAKING THE MYTH OF INDESTRUCTIBLE ENERGY 185

Table 2 Ethanol and Biodiesel Yield

Fuel Crop Fuel Yield (in Gallons) Yield per Acre

Ethanol
Sugar beet (France) 714
Sugarcane (Brazil) 662
Cassava (Nigeria) 410
Sweet Sorghum (India) 374
Corn (U.S.) 354
Wheat (France) 277
Biodiesel
Oil palm 508
Coconut 230
Rapeseed 102
Peanut 90
Sunflower 82
Soybean 56
Source: Brown 2006.
Note: Crop yields can vary widely. Ethanol yields given are from optimal growing
regions. Biodiesel yield estimates are conservative. The energy content of ethanol is
about 67 per cent that of gasoline. The energy content of biodiesel is about 90 per cent
that of petroleum diesel.

by crops grown for fuel. Given that three-quarters of the corn produced in
the US is used to feed animals, there is no excess of land currently devoted to
corn production that could be further converted into production of crops for
biofuel.
The limits imposed on producing biofuels from crops means that in the long
run, other sources must be commercially exploited. Biodiesel is being produced
from waste oils, and ethanol will soon be produced from cellulosic materials
such as switch grass and wood waste from forest-thinning. Other means of
producing biofuels are being researched and developed, including seaweed to
produce feedstock for biodiesel.

5.3 Need for a Holistic-Futuristic Approach

Till recently biofuels were being touted as the foolproof solution to the energy
problem, but the disadvantages of its large-scale adoption have begun to emerge.
Biofuels are attracting criticism for various reasons, most prominent being
the fallout on already low levels of world food stocks. Analysts have begun to
debate the usefulness of first-generation biofuels because their unregulated
production may lead to food crises affecting vulnerable population in the

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developing countries. The contention being that food production deserves

higher priority than fuel in the farming of land, that developing biofuels
requires acres of farm land and large amounts of water, thus encroaching upon
the natural habitat of plants and animals. Again, while supporters of biofuels
claim that blending bioethanol with traditional fuels would not only reduce
carbon dioxide emissions and the dependence of a vast majority of countries
on fuel imports, and create jobs, particularly in the hard-pressed agricultural
and forestry sectors, the fact remains that the current production processes are
not for sustained purpose.
Thus, the vastly complex domain of biofuels warrants large investments in
agriculture and intense research, which in turn call for policies at the highest
levels globally that take into account the interests of all stakeholders. In other
words, unless production of biofuel is supported by appropriate policies and
economic instruments, there is the risk of slipping into a trap of inefficient
biofuel supply chains that could have dangerous effects on society and the
environment. Policy measures may include direct incentives for investment
in the most efficient biofuels and a drive towards developing and using new
technologies to address the issues in the sector.

5.4 Adopting the Right Policy

Most studies suggest that renewable energy resources are the appropriate next
step to ensure energy security and environmental safety. The absence of efficient
policy instruments to provide appropriate market signals to balance food/feed/
fuel use of competing sources of biofuel, could lead to social, political and trade
conflict among user groups and nations.
There are formidable hurdles to the adoption and implementation of policy
measures, worldwide for promoting renewable energy use. In practice, it will take
considerable political will to implement policies, as many are bound to encounter
resistance from vested interests. Politicians need to spell out clearly the benefits
of proposed measures to the economy and to society, to influence interest groups
and avoid potential conflicts. In most countries, people are becoming aware of
the issues in energy security and environmental advantages of shifting to more
appropriate sources of energy, and this needs to be reinforced.
Urgent policy action is needed by stakeholder countries. Each year of delay
in implementing appropriate policies has disproportionately larger effects on
emission levels and the energy security of net crude oil-importing nations. Even
maintaining the current levels of global carbon-dioxide emissions requires much
tougher policy stands. In practice, technological breakthroughs that funda-
mentally change production and consumption of energy are required.

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 Shunmugam BREAKING THE MYTH OF INDESTRUCTIBLE ENERGY 187

While alternatives like biofuels appear to be the solution, emphasis on biofuels

could divert land from food cultivation, when populations are increasing.
Wasteland cultivation is one solution, but this is only possible in areas that are
accessible, which can grow oil-rich plants such as jatropha, but not crops like
sugarcane and corn which are major sources for ethanol production.
Several countries have introduced policies to promote the development of
liquid biofuels. High and volatile petroleum prices, increased awareness of fossil
fuels contribution to global climate change and the desire to promote economic
revitalisation in rural areas are the most commonly expressed reasons underlying
these policies (Food and Agriculture Organisation 2007). Secure access to energy
supplies is a longstanding concern in many countries. Strong demand from
rapidly growing developing countriesespecially China and Indiais adding
to concerns over future energy prices and supplies. Bioenergy is seen as one
means of diversifying sources of energy supply and reducing dependence on
exports. Liquid biofuels represent the main alternative source that can supply the
transport sector, which is presently overwhelmingly dependent on oil, without
more radical changes to current transport technologies and policies. The second
important factor driving bioenergy policies is the increasing concern about
human-induced climate change.
Currently, ethanol production from sugarcane and sugar beet has the highest
yield, with sugarcane-based production in Brazil topping the list in terms of
biofuel output per hectare, followed closely by India. Yields per hectare are
somewhat lower for maize (see Table 3). The Indian government is promoting
the development of an ethanol industry based on sugarcane. It has proposed
blending mandates of 510 per cent for ethanol and 20 per cent for biodiesel.
Production of ethanol in India is set to grow to 3.6 billion litres, while consump-
tion is projected to reach 3.2 billion litres by 2017 (Gonsalves 2006).

6. CONCLUSION

As technology and the extraction of fossil fuels become increasingly costlier,

and climate change makes the use of coal untenable, renewable energy sources
will be the only long-term option, and will also mean lower energy prices and
increased energy security to the vulnerable population in the long run.
Theoretically, renewable energy is an easily available, low-cost (or no cost),
environmentally friendly, alternative and sustainable form of energy. How-
ever, renewable technologies are still relatively expensive, requiring high up-
front investments which will be offset by free fuel only in the very long run.

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Table 3 Biofuel Yields from Different Feedstocks and Countries

Global/ Conversion
National Crop Yield Efficiency Biofuel Yield
Crop Estimates Biofuel (tonnes/ha) (litres/tonne) (litres/ha)
Sugar beet Global Ethanol 46.0 110 5,060
Sugar cane Global Ethanol 65.0 70 4,550
Cassava Global Ethanol 12.0 180 2,070
Maize Global Ethanol 4.9 400 1,960
Rice Global Ethanol 4.2 430 1,806
Wheat Global Ethanol 2.8 340 952
Sorghum Global Ethanol 1.3 380 494
Sugar cane Brazil Ethanol 73.5 74.5 5,476
Sugar cane India Ethanol 60.7 74.5 4,522
Oil palm Malaysia Biodiesel 20.6 230 4,736
Oil palm Indonesia Biodiesel 17.8 230 4,092
Maize USA Ethanol 9.4 399 3,751
Maize China Ethanol 5.0 399 1,995
Cassava Brazil Ethanol 13.6 137 1,863
Cassava Nigeria Ethanol 10.8 137 1480
Soybean USA Biodiesel 2.7 205 552
Soybean Brazil Biodiesel 2.4 205 491
Sources: Rajagopal and Zilberman(2007) for global data; Naylor et al. (2007) for
national data.

Each form of renewable energy has its own limitations and environmental
hazards. Significantly, renewable technology relies on energy sources that are
dispersed and hard to collect (for example, wind and solar). Energy based on
renewable sources will thus require an entirely new approach if it is to support
large populations. The silver lining in a world headed for energy deficiency is
that it has woken up to the urgency for alternative sources of energy.
Biofuels, currently positioned as the most appropriate alternative, are clearly
traversing crossroads, bringing them into direct conflict with food crops
(security) and biodiversity, especially in fast-growing economies dependent
on agricultural production such as India and China. How these economies
cope with challenges stemming from the drive to exploit biofuels would largely
depend on how quickly and efficiently their policymakers strike a balance be-
tween energy and food use. Considering the limited availability of land, the pace
of technological development in food crops and the energy balance in biofuels,
unless modern technologies offer solutions through improved productivity or
increased energy, biofuels could remain a transient source of energy, superseded
by some other source of energy or effective energy-recycling methodology that
follows the principle of indestructible energy.

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 Shunmugam BREAKING THE MYTH OF INDESTRUCTIBLE ENERGY 189

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