In the last issue I mentioned that Canada was in the middle of an election at the federal level. I’m happy to tell you that Canadians from coast to coast to coast turned out to vote in large numbers. A new government has been elected with a majority of seats in the house. Finally. We have a new Prime Minister who is armed with a love of country and a commitment to all Canadians to do the right things. He will be stepping into the ring with the desire to fight to reduce our dependence on fossil fuels and kick-start Canada’s rightful position as one of the countries most dedicated to solving the on-going phenomenon called climate change.

Extreme and record-breaking storms, floods, heat waves, droughts, and related wildfires worldwide are undeniably and dramatically demonstrating the need for meaningful reductions in the generation of the carbon emissions that are augmenting these extremes. But the long-range outlook for achieving the reductions needed to avoid the climate catastrophe does not look promising – as long as carbon-based fuels remain the chief movers of commerce and of transportation in particular. Things won’t change as long as this pattern is being replicated throughout the fast-developing world.

Abundant stores of natural gas in both the U.S. and China have now been made accessible by breakthroughs in seismic imaging, horizontal drilling, and hydraulic fracturing. This has opened the opportunity to replace much dirtier coal as a major fuel for the generation of energy. The proviso is that any type of drilling for gas must be carefully regulated with regard to water contamination, carbon dioxide and methane emissions, and earthquake. Yet natural gas should be considered an interim solution only, since it is still a fossil fuel that emits about half as much greenhouse gas (GHG) as the burning of coal. A sustained glut of inexpensive natural gas could actually short circuit the prospects for new investments in wind and solar power. This would undermine the large-scale development of truly clean energy as well as efforts toward energy efficiency and conservation.

In its biennial Energy Technology Perspectives report released in July 2012, The International Energy Agency (IEA) described three possible, dramatically different trajectories for climate change. The gravest of these is a business-as-usual attitude in which the world will experience a temperature rise of at least six degrees Celsius above pre-industrial levels. Unfortunately this is our current trajectory. A second possible scenario would reflect some of the current pledges of governments for more robust climate policies by which temperatures would still increase by four degrees Celsius. Thirdly, most scientists agree that, to avoid the worst effects of climate change, it will be necessary to limit the temperature rise to two degrees Celsius by no later than 2017.

Paradoxically, there is currently a powerful drive in the Western Hemisphere, notably in the U.S., and Brazil to boost the output of fossil fuels. Under its last Federal government Canada was also looking to increase output from the tar sands. The process releases staggering amounts of carbon and has destroyed more than 300,000 ha of boreal forest – which is a vital sink for carbon pollution. Fortunately Canada’s newly-elected prime minister will be putting the brakes on the amount of oil being mined from the bitumen going forward, preferring instead to develop renewable sources of energy. To meet retrieval of fossil fuels, new high-tech methods have been introduced. These new methods are being used to extract previously identified reservoirs that were long considered unreachable because they were too far offshore, too deep in the ground, or too solidly encased in rock to be extracted profitably.

This brings me to another thought. I can’t remember the last time the use of corn for fuel crossed my mind but the practice still goes on with ever questionable results for the climate and negative impacts on the poorer people across the globe. There is no such thing as a ‘free market’ in energy. In the U.S., fossil fuels, together with corn ethanol, that currently get 88 percent of monies set aside have benefited from years of subsidies and supporting infrastructure.

They remain heavily subsidized to this day. The oil industry, in particular receives generous tax breaks at every stage of the processes of exploration and extraction. The fact of the matter is that the industry would be highly profitable even without tax incentives. By way of example, U.S. federal subsidies for energy (2002-2008) looked like this:

• Fossil fuels – USD72.5 billion including, USD70.2 billion for traditional fossil fuels and USD 2.3 billion for carbon capture and storage.
• Renewables – USD29.0 billion including, USD16.8 billion for corn ethanol and USD12.2 billion for traditional renewables.

It should be noted that the subsidy figures for corn ethanol ignore the negative effects not only on world hunger but also on climate change that result from the massive conversion of forests for the production of the gas as well as the amount of water needed to grow this thirsty, fertilizer-intensive crop.

According to Lester Brown of the Earth Policy Institute worldwide direct fossil fuel subsidies in 2010 amounted to roughly USD500 billion, one-quarter of this amount supporting production and the remainder supporting consumption. Humanity is thereby spending nearly USD1.4 billion per day to further destabilize the climate. Comparatively, renewable energy received just USD66 billion, one-third of which was spent on biofuels.

Brown has cautioned that global demands on the earth’s natural systems are exceeding their sustainable regenerative capacity by an estimated 30 percent. The need to develop a realistic, working relationship between our economy and the natural environment is vital particularly when the world is expected to add another three billion people by the middle of the twenty-first century.

A stark example of this mismatch can be seen in the conflict between our expanding use of crops for fuel and the needs of humanity for food. Edible crops such as corn, cassava, rapeseed, and sugarcane are raised in the less developed countries explicitly for use as fuel. China, Europe, India, Indonesia, and Thailand are striving to meet strict biofuel targets. We must not forget this is only one of the reasons for the surge in prices of food that has recently proven so devastating in impoverished nations. Other factors include the relentless growth of world population, extreme weather events like floods and drought, a jump in meat and dairy consumption associated with rising affluence, and heavy market speculation in commodities, in particular grain and petroleum. But aggravating all of these factors is the production of crops for energy, which almost invariably competes with the production of food.¹

The world’s leading exporter of grain is by far the U.S. And because the conversion of grain into ethanol has been mandated by the federal government in its Renewable Fuel Standard, an investment frenzy has developed around biofuels. The net result was a boost in grain prices well above historic levels – in a world that no longer has excess cropland to play with. It has also resulted in extreme hunger and hardship in the developing world. People in low-income, grain importing countries are taking a real beating.

Lester Brown has noted this irony:

The grain required to fill an SUV’s 25-gallon (U.S.) tank with ethanol just once will feed one person for a whole year… [There is] an emerging competition between the owners of the world’s 910 million automobiles and the 2 billion poorest people… The average income of the

world’s auto owners is roughly $30,000 a year. The poorest people can earn on average less than $2,000 per year. The market says: “Let’s fuel cars.”²

By July 2012, the hottest month in the U.S. since record keeping began in 1895, the devastating effects of severe heat waves and drought on harvest had made it evident that it is neither sensible nor safe to build an energy sector that is even partially based on water- and weather-dependent crops. With the nation’s worst drought in over fifty years, much of the corn crop was lost forcing government predictions on the corn yield to the lowest point since 1995.

This is where I take one side of a fork in the road and talk about some financial heavyweights and what their take is on corn ethanol and biofuels in general. Although he professes great concern about climate change, the Gates Foundation had at least USD1.2 billion invested in just two oil giants – BP and ExxonMobil as of the end of 2013.

Gates’s approach to the climate crisis is to develop a silver-bullet techno-fix in the future, without stopping to consider viable – if economically challenging – responses to the here and now. He is calling on governments to massively increase spending on R&D with the view to uncover ‘energy miracles.’ By miracles he means nuclear reactors the types of which have yet to be invented. He also wants to see machines that can suck the carbon out of the atmosphere. Mr. Gates has already sunk some of his own money into various schemes to block the sun and his name is listed on several hurricane suppression patents.³

Entrepreneur Richard Branson’s success is built partly on the fact that he controls all major operating aspects of each of his businesses. He asked himself why pay the oil giants to power his airplanes and trains when his labs could invent its own transport fuel. If it worked, the gambit would turn him into an environmental hero. Virgin Fuels was born and later became the Virgin Green Fund.

Branson launched into his new enterprise by investing in various agrofuel businesses including a very large bet of roughly $130 million on corn ethanol. Virgin also attached its name to several biofuel pilot projects including one that could derive jet fuel from eucalyptus trees and another from fermented gas waste. In spite of his ambition, he readily admits that the miracle green fuel he was hoping for hasn’t been invented yet. The other side of the coin is that thanks to the influx of fracked oil and gas, biofuels are taking a back seat. Another thorn in Branson’s side is that it’s all but impossible to sell the airline industry as being green.

Out of sight, out of mind it may be. What started as an encouraging idea seems to be quietly hamstringing many parts of the world. This should be very worrying to all and sundry who wish to one day get on top of climate change.
 

¹ Roxanne Warren, “A Market to Match Ecological Truths,” Rail and the City. MIT Press (2014):
² Ibid
³ Naomi Klein, “No Messiahs,” This Changes Everything: Capitalism vs The Climate. Toronto, Knopf Canada (2014):