The high price of fossil fuels, environmental concerns, and geopolitical instability in some major oil-producing nations have spurred intense interest in the United States in alternative fuels, especially from renewable energy sources.
While popular with environmental activists, wind and solar power, because of their costs and unreliability, are not expected to grow significantly, even with massive subsidies.
Nuclear power is still viewed with suspicion, even though other countries, including France, supply a majority of their energy needs from nuclear plants.
Crop-based fuel production, especially corn ethanol, has been the main focus of interest, with government subsidies and mandates stimulating demand. Cellulosic ethanol produced from crop wastes has been heralded as the alternative fuel of the future, but it is yet to be produced in other than experimental production facilities. More recently, Brazil’s example of producing ethanol from sugar cane has been presented as a model for the United States to follow.
There are significant trade-offs, however, involved in the massive expansion of the production of corn and other crops for fuel. Chief among these would be a shift of major amounts of the world’s food supply to fuel use when significant elements of the human population remains ill-fed.
Even without ethanol, the world is facing a clash between food and forests. Food and feed demands on farmlands will more than double by 2050. Unfortunately, the American public does not yet understand the massive land requirements of U.S. corn ethanol nor the unique conditions that have allowed sugar cane ethanol to make a modest energy contribution in Brazil.
The United States might well have to clear an additional 50 million acres of forest—or more—to produce economically significant amounts of liquid transport fuels. Despite the legend of past U.S farm surpluses, the only large reservoir of underused cropland in America is about 30 million acres of land—too dry for corn—enrolled in the Conservation Reserve. Ethanol mandates may force the local loss of many wildlife species, and perhaps trigger some species extinctions. Soil erosion will increase radically as large quantities of low-quality land are put into fuel crops on steep slopes and in drought-prone regions.
The market is already responding to the high price of oil, as investors flock to alternative fuels, including investments in cellulosic ethanol research and development. Those developments are healthy, if markets are allowed to discover the winners and losers in future alternative energy sources without government intervention through subsidies and fuel mandates, and with a clear assessment of the trade-offs that may be involved.