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Moving beyond 'food vs. fuel' means making better biomass profitable for farmers

Sasha Stashwick

Posted October 1, 2012

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Food prices are rising, exacerbated this summer by the worst U.S. drought since the 1930’s, which wrought havoc on corn crops across the Midwest. With 40% of U.S. corn production going to corn ethanol, calls to end biofuels mandates contained within the Renewable Fuels Standard (RFS) have mounted over concerns that crop-based biofuels create an untenable competition between our food and fuel needs, driving grain prices even higher.

While it’s tough to parse the exact impacts of biofuels mandates on corn—and, by extension, other grain prices—what’s clear is that in a complex global market for agricultural commodities, today’s biofuels make a bad situation worse.

The record food prices we seem on track to see over the next year are no isolated blip. Current events represent the third sharp increase in global grain prices in just half a decade. What we are seeing today are chronically tight agricultural commodity markets in which a growing global population, more meat consumption, and large and growing biofuels mandates each stake their claim to an ever larger share of a food supply strained by droughts and other extreme weather events around the world.

It’s critical that we move beyond corn ethanol and other food-based biofuels. More than ever, we need biofuels made from feedstocks that don’t take from our food supply and can be grown on lands not suitable for food production. Furthermore, these biofuels need to deliver on the promise of environmental benefits, including carbon emissions reductions and valuable ecosystem services that protect our soils, waters, and habitats.

While the bulk of biofuels that we see in the market today comes from corn, the goal of the RFS is overwhelmingly to encourage the development of these next-generation biofuels. Of the 36 billion gallons required under the RFS by 2022, 21 billion gallons are supposed to be so-called advanced biofuels that provide at least a 50% reduction in GHG emissions compared to gasoline. And of these 21 billion gallons, at least 16 billion are supposed to be cellulosic biofuels—made from non-food feestocks like crop residues, dedicated energy crops, and perennial grasses—and deliver at least a 60% emissions reduction.

But the RFS alone will not be enough to get us to the biofuels we need. To get those better biofuels, we will need tools outside the RFS to encourage farmers to grow better biomass.

At NRDC, we have proposed a Greener Biofuels Tax Credit, which would reward biofuel refineries  for choosing environmentally preferable feedstocks—wastes, sustainably harvested cover crops, or perennial  energy crops like switchgrass and willow—that require  little land disturbance, fertilizer, or irrigation to grow, and  so reduce carbon emissions. It would also reward refineries for purchasing biomass from farmers who actively manage their acres to reduce tillage, improve soil health, and minimize erosion and pollution runoff.

But making even a modest dent in our fossil fuel consumption will require significant biomass production, placing demands on land with consequences for farm income, food and feed production, and ecosystem services. To be economically sustainable, biomass must yield an income that exceeds a farmer’s costs of production, including foregone returns from alternative uses of land. If market prices, based solely on the energy content of different biomass feedstocks, are insufficient to make their production economically viable, government subsidies may be required while the industry develops.

A study sponsored by NRDC examined the profitability of growing energy crops in different U.S. regions, estimating the minimum or “breakeven” price a farmer in Illinois, Michigan, and Oklahoma would require to switch from the state’s most profitable cropping system to producing one of five biomass crops: corn stover, miscanthus, switchgrass, native prairie grasses, and poplar. Together with the market price of biomass, breakeven prices were used to determine the extent to which farmers in these states would need to be subsidized to produce biomass, both on marginal land and cropland.

Results show that energy crop production is significantly cheaper on marginal land than on cropland, suggesting that farmers are likelier to grow biomass on marginal lands, avoiding competition with food or feed production. If we want to see energy crops grown on cropland for environmental reasons—for example, to reduce soil erosion and nitrogen leaching and increase biodiversity—then subsidies would be required. At a biomass price of $50 per dry ton (DT), shown with a yellow line in the graph below, a farmer would need $12-$19 per DT in subsidies to grow a high yielding perennial like miscanthus when production costs are low, and $23-$52 per DT when they are high. Considerable subsidies ($19-$34 per DT) would be required to induce farmers to grow mixed grasses, even on marginal land and with low production costs. 

GBTC graph.png

For a full summary of results, see our new fact sheet here.

We can’t go on with business as usual without consequences for food prices—the most serious of which will be borne disproportionally by the most vulnerable communities in the world, which spend the greatest share of their incomes on food. But our cars, ships, airplanes, school buses, construction and farm equipment will all likely demand liquid fuels for years to come. That means we also can’t give up on the potential of a low-carbon and broadly sustainable liquid fuel alternative to oil. To get there will require understanding how to make sustainable biomass production economically sustainable for our farmers. 

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Brian GilbertsonOct 1 2012 04:46 PM

Biofuels need to be stopped. I'm not suggesting slowly phasing out biodiesel or ethanol. I'm talking about an abrupt cease and desist.

There is a major factor in EROEI that never hits the equations. That is: energy required to maintain the lives of employees. People must drive to work (spend energy), heat their homes (spend energy) use electricity in their homes (spend energy) and all of this must be financed by their employer (the ethanol producer). When factoring this into the equation, ethanol drains resources faster than it produces them, at shocking rates.

When looking at the small picture, the big picture becomes clear: If biofuel was an energy creating venture, producers of biofuels would run their equipment using biofuels and sell off the overflow.

Because we spend more fossil fuel energy than we have returned by biofuel production, only fossil fuels can maintain the production of biofuels. This leads to more dependence on foreign oil, not less.

Crop subsidies hide this scam from consumers. If the subsidies were taken away, it would become clear to everyone that we are wasting valuable resources on a dream of sustainable energy.

What would happen to ethanol producers if we forced a mandate upon them that demanded that they only use biofuels to run their operations, and took the crop subsidies away?

The result would be this: The scam is over. EROEI would collapse the biofuel industry. And America would have fossil fuel and monetary resources available to invest into real solutions such as wind, solar and geothermal.

The farmland wasted on corn could instead grow useful material such as cotton. This would add wealth to our economy instead of reduce it.

The impact that ending the biofuel hoax would have on the job market would be the fault of the government for starting this waste in the first place. But by freeing up crop space for cotton, we could replace distilleries with textile plants. Imagine having the freedom to buy a pair of pants that wasn't made in China!

JT SAMOct 1 2012 08:38 PM

@Brian-Biofuels are the only reason that farmers for the first time in nearly 40 years are recieving parity for their crops. Without biofuels corn would be $2 which would bankrupt every midwest farmer prospering today. Im afraid you have no sence of todays economy or ethanols energy ratio which is somewhere aroud a 57%-60% energy positive in its entire life cycle and that is from various pier reviewed studies including INL, ORNL, The Noble Foundation, ISU, KSU, Abengoa bioenergy, and several others. You are very misinformed my friend. learn a thing or two about parity before putting down the American farmer.

David RaymondOct 2 2012 04:28 AM

There is no shortage of land to both feed the world and produce biofuels that are truly energy and carbon efficient. There is a lack of coherent understanding about the true LCAs ( Life Cycle Analysis) of many farm crops. It is big business that rules the roost and dictates policy, to uncaring politicians who listen to them, not independents or scientists. LOCAL fuel and LOCAL food production is key, generating sustainable employment and an economic model that can work for rural communities, and start educating and benefitting the impoverished in our world. The surpluses can be exported to cities. Biomass and most renewables are only MICRO sources of energy. For the MACRO needs, you need nuclear. Forget oil and coal. Leave them where they are. But no one will listen..Exxon and cohorts rule the world.

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