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The New York Times reports that the European Union is drafting trade duties on imported American biofuels to protect its own $10b biofuel industry. Even though both the US and the EU subsidize biofuels, European producers complain that American producers benefit from production subsidies in the US and retail subsidies in Europe. The EU has been investigating these claims, and tariffs of 44 euros per 220 lbs of imported biofuel could be put in place by this summer. Meanwhile American subsidies for corn ethanol production are set to expand indefinitely. We’ve argued that trade disputes could bring the bailout boom to a rapid close, but perhaps such a dispute will rid us of wasteful ethanol pork first.
11 Comments on “Europe Preparing Duties On US Biofuel...”
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There is a HUGE logical fallacy stated in the video, and almost every time biofuels come up in discussions which is the idea of “replacing” oil. The point is not to replace it, the point is to extend it.
I’m likely the biggest fan of Biofuels (I even make my own) on this site, but the idea of subsidizing it with tax dollars, or “controlling” it with tariffs just ticks me off. Why is it that farmers the world over are the greatest recipients of entitlements? Rice in Japan, Corn in the US, wheat in Argentina, everything in France.. enough already!
–chuck
Farmers enjoy subsidies because all of our countries seem to want food security. Desire for food security translates to the desire for food self-sufficiency. Economists can point out from history how food self-sufficiency harms more than it helps. But that goes against our gut feelings and so does not sell politically.
We see the same thing with energy security. People clamor for energy self-sufficiency. That’s not the best way to energy security. Energy interdependence and a free global market for energy give us the best security. But that’s not what we feel in our guts. So politically energy independence becomes policy.
Good points about ethanol, Chuck. We should not give up on biofuels, certainly. But with our current programs we and other countries are spending billions and distorting the price of food dramatically and getting nothing in return. Where is the sense in that?
I’m all for the environment and design and manage solar projects for a living… but this bio-fuel really escapes me.
We use 2 gallons of gasoline or diesel to make a gallon of ethanol, then we use one gallon of fuel oil to ship it to Europe. Oh, and we pay for that with our tax money. The only good use for bio-fuel would be if we used some biomass that grows on its own or is just waste material. Not corn that needs tons of fertilizer (made from natural gas and oil), pesticides and heavy machinery.
Photosynthesis really is great when you don’t have to do anything for it and can just walk around and pick up an apple from a tree and eat it. But if you want energy from it, it sucks. Only 0.01% efficiency from sunlight to sugar (+ agriculture related energy needed, tractor, fertilizer), then only 20-25% efficiency to burn it and produce electricity. Oh, plus transport, storage.. Makes an efficiency of almost nothing, If you include the tractors it is negative. If you have PV panels, they just produce electricity and have 15% efficiency… then I could charge batteries and drive a car. OK, there still are some things to overcome, but he problems are easier to solve than improving the efficiency of photosynthesis or the requirement to invest more energy in farming.
Not sure if solar will be the only solution, but it is more likely to be one (that actually produces energy) than corn ethanol. the only way to produce more bio-energy than you invest, is to do it like in the old days and use horses and manual labor. but with that there would not be enough food because in the old days there were 99 farmers for one non-farmer. Today we have 1 farmer for 99 non-farmers because we have (fossil) energy we invest in bio-products.
Actually, I just found the solution to all our problems… let the UAW people work on (non-fossil) farms. That would help our energy crisis, and would make them work. After all they are united workers, and workers should work for their money.
kaleun:
You don’t need plants to fix sunlight in C-C bonds.
kaleun
Just a correction. We do not use two gallons of fuel to make a gallon of ethanol. In fact, it is net positive. Source: http://www.ers.usda.gov/publications/aer721/
Another aspect of this that may be ‘behind the scenes’ is that Europe is concerned about the sustainability of bio-fuels.
For example, the demand for palm oil for biodiesel has had unexpected negative environmental effects.
http://www.theoildrum.com/node/2214
Shipping corn-based ethanol from the US to Europe seems scarcely any more energy-efficient.
(More on this soon…)
These are the same countries whining and threatening to go to the WTO due to “Buy American” clauses in our bailout/spending packages?
F Em. If they want the playing field level, then lets make it level. I’m sick of this double standard BS and I’m sick of the US always taking the free-trade-is-king unicorns and sunshine approach to everything.
Its ridiculous. Other countries use protectionist policies and then when the US even considers it they all start crying.
Give me a break.
@Jerome10:
Agreed. The US is supposed to have a completely open market to al comers, but the second we enact a minor trade barrier or subsidy, the world goes crazy. Time for reciprocal trade laws. Whatever their law is on importing our goods, we have the equal law on theirs.
@dwford
Beware the Law of Unintended Consequences.
In the early 1960s, Germany imposed an import tariff on US chickens.
In ‘retaliation’, the US imposed a 25% tariff on imported trucks.
This was inconsequential in the 1960s, but became a big deal as trucks from Toyota, Nissan, and Mazda (Ford Courier) became popular.
Remember the Subaru Brat (the first one) with the ‘jump seats’ in the bed? That was to dodge the tariff.
I remember one US automaker (Ford?) sued Nissan because Nissan was declaring the Pathfinder as a ‘passenger vehicle’ for import tariff purposes (See, it’s got a back seat…), but a ‘truck’ for safety/smog purposes (See, it’s built on the Hardbody truck chassis…).
I am not against a tariff system (to eliminate ‘free trade’ as a source of labor arbitrage), but we need to be careful how we implement such things.
@dwford
Except that you have it backwards. The US is the country with much worse tariffs on biofuels than Europe. Europe in this case is the one engaging in retaliation. Of course, in everyone’s mind, each action is always “retaliation” for something that the other did. It’s always “He started it!,” you know?
Not that it makes sense to throw rocks in your own harbor because your trade partner has done so.
Why can’t we admit that we made a mistake?
Corn based bio fuel may be slightly economically practical but sugar cane and now algae appear to be much more practical.
We tried corn for fuel, it worked, but not very well so lets stop the subsidies and move on.