An article in PNAS this week reports that biofuel production results in a positive net energy balance (NEB). Several reports have suggested that the inclusion of energy required to produce farm equipment results in negative NEBs. However, this study found no evidence of that claim. Ethanol, produced from corn grain, yields 25% more energy than required for production with most of the NEB accounting for the cogeneration of animal feed. Soybean-based biodiesel yields 93% more energy than required for production.

Environmental Impact

Environmental impacts due to biofuel production are also less than conventional fuel production. Overall, soybean-based biodiesel came out on top for lease environmental impact. This is due to fertilizer and pesticide use as well as total greenhouse gas emissions.

Fertilizer application and pesticides are applied in greater amounts for the production of corn than soybeans. Soybean biodiesel production requires 0.01N, .083 P, and .13 of pesticides (by weight) of that needed for corn ethanol production). The type of pesticides used in corn production is also more harmful than those pesticides used in soybean production.

Greenhouse gas emissions (GHGs) are less for both biofuels than conventional fossil fuels when evaluating production from agricultural lands currently in use. However, conversion of all corn and soybean production in the US to biofuel production would supply only 12% of gasoline demand and 6% of diesel demand. Converting land to meet more of the fuel demand through biofuels would reduce the benefit and possibly increase GHGs.

Environmental Economics

The article also discusses the economics of fossil fuel energy versus biofuel energy production. Current federal subsidies make the average cost competitive with subsidies of $0.20 per energy equivalent liter (EEL) for ethanol and $0.29 per EEL for biodiesel. With 2005 production of ethanol exceeding wholesale gasoline prices by $0.02 per EEL and biodiesel production exceeding diesel wholesale production by $0.09 per EEL, one wonders if the subsidies go too far. The fuel subsidy does not include federal crop subsidies that lower corn and soybean prices for biofuel producers. Half of the operating cost for ethanol production is due to corn prices.

Until an economic analysis can be performed that translates the benefits of reduced environmental impact due to biofuel production versus fossil fuel production, the appropriateness of the subsidy amounts is unknown. However, bringing the costs per EEL down below wholesale fuel prices creates a competitive market. If fuel prices continue to rise, demand for biofuels should increase.

All in all, an informative and timely article. While biofuels are not practical for complete replacement of fossil fuels, they are one tool that should be explored further. Additional investigations into the environmental and economic impact of switchgrass and reclaimed vegetable oil should follow to compare non-food based agriproducts as biofuels.