Food prices dim biofuel glow

Studies debunking the environmental benefits of ethanol have made little impression in China, which is betting on biofuels as the green answer to coal and oil to help clear its increasingly smog-filled skies.

But economic realities of surging food prices and global inflation are beginning to disturb the ethanol dream. Prices for cassava and other non-grain feedstock promoted in China as a safe alternative to the conversion of precious corn into ethanol fuel are quickly rising.
Producers say they need more government subsidies to keep their projects going. Given government control on fuel prices, doubts are growing as to whether the expensive production of

cleaner fuels can ever be made profitable.

“The government controls all fuel prices – whether oil or ethanol – but with the prices for feedstock going through the roof we are all suffering losses,” Li Jiangdong, a salesperson at Jilin Fuel Ethanol Ltd, one of the four largest state-mandated bio-ethanol producers, told China Times this week.

In Guangxi, an impoverished southwestern province where ethanol is commercially produced from cassava instead of from grain, officials this month said they were replacing traditional petrol and diesel oil with biofuel. The locality plans to phase out fossil fuels entirely by the end of the month, expanding the scope of a pilot scheme currently running in nine other provinces.

But what should have been a cause for environmental victory got little resonance among a public worried about galloping inflation and surging food prices. Consumer prices in March increased 8.3% while food prices have risen by 21% since last year. The rising price of corn, the primary source for ethanol production, has had a knock-on effect on all other staples.

Asia Times