Biofuels

Production

First-generation biofuels are ethanol produced from the fermentation of crop carbohydrates and biodiesel produced from a chemical reaction between edible oils and an alcohol. In temperate regions, the primary feedstock is grain for ethanol and oilseeds for biodiesel, and in tropical and subtropical regions, the primary feedstock is sugar for ethanol and palm oil for biodiesel. Low-ratio blends of 10% ethanol with gasoline (E10) and 20% biodiesel with diesel (B20) can power standard engines and are the typical commercial end use. High-ratio blends (E85 flex fuel and B100) require either modifications or special engines and are becoming more common.

Brazil was the first site of large-scale biofuel production, based on sugar-ethanol, which was established with strong state support in the face of the country's energy and foreign exchange crisis in the 1970s. As late as 2000, Brazil was the only major biofuel producer on a world scale. But in 2006, the United States overtook Brazil as the biggest producer, its biofuel boom spurred by extensive government subsidies and centered on corn-ethanol. By the end of the decade, roughly one quarter of the annual U.S. corn harvest went into ethanol, which was blended, mostly as E10, into one third of all gasoline pumped in the country. Led by the United States and Brazil, global biofuel production roughly quintupled between 2000 and 2009, with annual fuel ethanol production increasing from 17 to 73 billion liters and annual biodiesel production increasing from 1 to 15 billion liters.

Biofuel production is projected by the UN Food and Agriculture Organization to continue growing quickly. It is also expected to become more diversified as many countries have set ambitious targets for increasing the scale of biofuels in their energy supply. The extent of state subsidies in biofuels, particularly in the United States, has helped encourage investment and technological innovation by a range of transnational corporate interests, including those in grain and oilseed processing, agro-chemicals, automotive manufacturing, and oil and gas. But subsidies can only ever be part of the picture; there has to be more fundamental economic imperatives underlying them. In the case of biofuels, this hinges squarely on the looming scarcity of oil reserves, or peak oil.

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