The Environmental Protection Agency announced its biodiesel quota for next year on Friday, increasing the amount of plant-based fuel it will require refiners to blend into petroleum-based diesel from 1 billion gallons to 1.28 billion gallons.
The agency projects that its decision would raise the price of soybeans by three cents per pound next year (if all of the additional fuel is produced from soybeans). That would be $66 per metric ton, a major increase even over current record-high prices of around $600 per metric ton.
A $66 increase in the soybean price would be frustrating for many different people.
The American Petroleum Industry is suing the EPA, arguing that the agency overestimated the national production capacity for advanced biofuels such as biodiesel. At the same time, journalist and environmental activist Bill McKibben has called ethanol “the worst idea of all time.” Current biofuel policy encourages unsustainable farming while doing little to reduce greenhouse gas emissions.
McKibben and the API! I’d like to see them featured in a Chevron “We Agree” ad about how bad corn ethanol is for America.
Meanwhile, dozens of legislators have asked EPA administrator Lisa Jackson to adjust the agency’s ethanol requirements. They are concerned about the effects of high prices on dairymen, ranchers, grocers, and restaurateurs. José Graziano da Silva, the director-general of the United Nations Food and Agriculture Organization, wrote a Financial Times column about the risk of a global crisis in food prices triggered by the drought. He suggests that “an immediate, temporary suspension” of the EPA’s quota would “give some respite to the market.”
If president wins reelection, he might be able to win real climate legislation from Congress as part of major fiscal compromise. If that situation does arise, the drought is an ideal occasion for establishing a sensible biofuels policy for agriculture, energy, and the environment. High food prices are revealing some of the unintended consequences of ethanol, while the extreme heat is demonstrating that even in highly developed nations such as our own, agriculture will be vulnerable to a changing climate.
