Something Stinks with Biofuels
Of the 64 countries that I travelled through back in my wandering days, two remain deeply ingrained in my sensory memory due to the distinct smells they left with me.
The first striking experience occurred when I arrived in Brazil back in 1984 as a wide-eyed exchange student straight out of boarding school. It came from all the cars at the airport which were emitting a strong smell of ethanol, reminding me of the smell of the old Claremont speedway on a Friday night.
Brazil had mandated the use of ethanol as an alternative to expensive imported petroleum a decade earlier, and now the country was powered by sugarcane.
There is another smell I distinctly recall from my time in Brazil: the smell of burning wood as the country went up in flames to clear and burn millions of hectares to produce biofuel to keep the countries wheels turning.
The other memory of a country that overwhelmed my senses was India, which I first visited in 1986, back then it had a population of 800 million. When I got off the plane I vividly recall the mixed smell of human and cow excrement, along with a strange odor of burning dung.
Little did I know at the time, the country was in desperate need of 100 million toilets additionally it needed a lot of fences. the Hindu religion allowed 5 million cows to roam freely on the city streets, contributing to a distinctive odour that is hard to forget.
Since then, you will be pleased to know that India has indeed added 100 million toilets. However, the country's population has grown by 600 million to 1.4 billion so they need 100million more.
Both Brazil and India had distinct aromas as a direct result of their respective government policies. Brazil, governed by a military dictatorship was clueless about economics had responded to the 1973 oil crisis by embracing the simplistic solution of swapping imported oil for homegrown ethanol in a policy of national self-sufficiency.
This hair branded scheme led to the highest fuel prices in the world and wiped out an area the size of Western Australia in the subsequent push to grow enough soy and ethanol to produce biofuels to fuel the country.
India, with its food self-sufficiency policies and a voting system relying on subsidiing hundreds of millions of small farmers, restricted the introduction of foreign fertilizers and technology. It encouraged the use of biofuel (cow dung) as cooking fuel and human dung as fertilizer for the farmers' farms (the Greens fantasy of organic nirvana).
The end result was a country held back in pre-agricultural and industrial revolution poverty, lacking a modern, efficient farming system tuned to the market.
Each country defied the first rule of Adam Smith's economics, which is to grow rich by opening up to competition and focusing on comparative advantage, not by government picking winners or pandering to rent-seeking losers.
This is why Australia is now on its own road to poverty, with our federal government deluding itself that we can shut down our coal and gas and become a renewable energy superpower simply because we have a bit of sun and wind and the capacity to produce excess grain to make biofuels.
None of these policy dreams is possible without going down the Brazil/India route of government pulling levers to mandate the production of renewables to generate supply and creating artificial demand by removing fossil fuels.
Unfortunately, intervention in the market is already resulting in rising household electricity prices and the proliferation of wind farms across the landscape.
To add to that is all the excitement about green hydrogen, which is a dream of the elites that live in Twiggyland. The economics, physics, and chemistry of moving something equivalent to liquid TNT around the country should have killed off this dream years ago.
AT the very least WorkSafe should drop their investigations into rocks and waterfalls and focus instead on the risk of hydrogen on our roads.
Wind and solar are great if you build a complete backup system of nuclear or hydro, but the Greens will see us all burn in hell before they allow that to happen. As for biofuels, many countries, including Australia, have been down this road before, and it has ended in tears.
You may have recently read that BP is working with a company called IFM and GrainCorp to spend up to $1 billion turning the former Kwinana oil refinery into a renewable fuels plant to supply the aviation, agriculture, and mining industries with biofuels.
Sounds good until you read the small print about their plan, which involves steering farmers towards crops suitable for biofuel and the government mandating its use in industry, including agriculture.
Steering farmers! That’s a big red flag. What about letting the market do the work?
This worries me as one of the companies involved, IFM, is a large super fund with close ties to the government, managing more than $200 billion. They are now claiming that Australia has a comparative advantage over other countries due to its farming capability and land availability to produce vast amounts of biofuels. But they quietly skip the bit about the need for a local market to be created by government taxing petrol, diesel, and avgas out of the economy.
This reminds me of the Brazilians who with help from industry elites convinced the government that they had the same comparative advantage with sugarcane and ethanol back in the 1970s. But once up and running they quickly found that they had to tax the punters into using it by imposing the highest fuel excise taxes in the world.
Powering cars, trucks, and planes with grain and burning wood to make electricity might seem like a way to lessen dependence on fossil fuels and keep the climate catastrophists happy, but it is doomed to fail.
Just consider this basic fact: currently, roughly three-quarters of the world’s vegetated land is already being used to meet people’s need for food and forest products, and that demand is expected to rise by 70% or more by 2050 under the various national climate change policies already in existence. While photosynthesis may do a great job of converting the sun’s rays into food, it is hopeless at generating high-density energy.
In simple terms, it takes a lot of land and water to yield a small amount of fuel from plants.
Just 10% of the world’s liquid transportation fuel in the year 2050 would require nearly 30% of all the energy in a year’s worth of crops the world produces today. Or to meet 20% of the world’s total annual energy demand by 2050 would require an amount of plants equal to all the world’s current crop harvests, plant residues, timber, and grass consumed by livestock – a true non-starter.
Now this is music to the ears of farmers, as the more demand for grain, the merrier.
It's not our problem if the world starves. We feed the rich not the poor.
What I do worry about, which the Green Left doesn’t, are the unforeseen consequences of manipulating markets.
When the Brazillian government started down the biofuels route their farmers were all for it, that is until the public reaction at the bowser had the government racing to force an increase in supply, by mandating that farmers grew only biofuel crops at the expense of exported grain. At the same time large parts of the Amazon were opened up to increase the nations arable acres but the infrastructure was not build to move grain around the country. It was a disaster for farmers with gluts of grain smashing local prices.
In the end no one was happy which is probably why the military dictatorship decided to retreat to the barracks in 1985 and leave the economy to the newly elected politicians. As for the Indian farmers they found that while they too initially liked being on the subsidy drip from government they soon found that what the govee givith, they taketh, just as quickly.
Their government moved to shut grain exports to ensure the domestic market was supplied at a discount, smashing the price as they could not access the global market.
In both countries the policies reeked of the rancid smell of governments thinking they new better than the market. Hopefully we are smarter than that.
Plus..
MILLIONAIRE FACTORY: Who is making big profits from Australian “not for profit” Industry Super Funds
steveblizard / January 5, 2024
While Industry Fund Millionaires are living high, some Industry Fund Members have been forced to live in tents.
IFM Investors senior exec Kyle Mangini splashes into Noosa for $13.5m
Bonnie Campbell Luxury property reporter
Jan 5, 2024 – AUSTRALIAN FINANCIAL REVIEW
IFM Investors senior executive Kyle Mangini and his wife Amanda have emerged as the buyers of Azure, one of Sunshine Beach’s most striking contemporary holiday homes, paying a non-beachfront record of $13.5 million for the designer property known as Azure.
The American-born global head of infrastructure at the Australian fund titan purchased the home in November, but recently updated property documents reveal the Melbourne-based couple are the new owners, after it settled in a company name linked to Ms Mangini.
