This is an excerpt from EERE Network News, a weekly electronic newsletter.

June 18, 2008

More Studies Say Biofuels Have a Minor Impact on Food Costs

A new report from New Energy Finance concludes that biofuels are responsible for at most 8% out of the 168% rise in grain prices since 2004, and for at most 17% out of the 136% rise in global food prices. As a proportion of the total rise in prices, biofuels can take the blame for less than 5% of the rise in grain prices and at most 12.5% of the rise in global food prices. The report concludes that population growth placed the greatest pressure on grain prices, and that growth was not matched by increases in yields. The increasing price of fossil fuels also caused 35.2% of the increase in grain prices. See the New Energy Finance press release (PDF 16 KB). Download Adobe Reader.

Meanwhile, DOE and the U.S. Department of Agriculture estimate that the United States would use an additional 7.2 billion gallons of gasoline in 2008 if there were no biofuels available. Ethanol production alone has moderated U.S. gasoline prices by an estimated 20-35 cents per gallon, saving a typical U.S. household as much as $300 per year. In addition, the price of food commodities has a limited impact on retail grocery costs in the United States, so ethanol and biodiesel consumption account for only about 3%-5% of the increase in U.S. retail grocery prices over the past year and a half. These statistics were included in a letter sent to Senator Jeff Bingaman by Energy Secretary Samuel Bodman and Agriculture Secretary Edward Schafer. See the DOE fact sheet and the full letter (PDF 922 KB).

Alexander Karsner, the head of DOE's Office of Energy Efficiency and Renewable Energy (EERE), recently seconded that conclusion, while also noting the benefits of ethanol production. In testimony on June 12 before the Senate Committee on Energy and Natural Resources, Assistant Secretary Karsner reported that corn ethanol delivers 25% more energy than the fossil energy used to produce it, while resulting in 20% lower greenhouse gas emissions than gasoline. He also noted that more efficient ethanol biorefineries fueled with biomass resources can cut life-cycle greenhouse gas emissions by up to 52% relative to gasoline. The next generation of ethanol, produced from "cellulosic" non-edible plants and trees, will reduce life-cycle greenhouse gas emissions by 86% relative to gasoline. See a summary of Assistant Secretary Karsner's testimony on the EERE Web site, and see the full testimony on the committee's Web site.

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