The Wall Street Journal reports on the ways in which biofuels can harm the environment:
President Obama observed in Florida on Tuesday that his “clean energy economy” will require “mobilization” on the order of fighting World War II, building the interstate highway system and going to the moon. Of course, the only “mobilization” going on at the moment is on behalf of ethanol, whose many political dispensations the biofuels lobby is finding new ways to preserve even as the evidence of its destructiveness piles up.
The latest embarrassment arrives via the peer-reviewed journal Science, not known for its right-wing inclinations. A new paper calls attention to what the authors (led by Princeton’s Tim Searchinger) call “a critical accounting error” in the way carbon emissions from biofuels are measured in climate-change programs world-wide.
Though you won’t hear it from the biofuels lobby, ethanol actually generates the same amount of greenhouse gas as fossil fuels, or more, per unit of energy. But this was still supposed to be better than coal or oil because ethanol’s CO2 is “recycled.” Since plants absorb and store carbon that is already in the atmosphere, burning them as fuel would create no new emissions, whereas fossil fuels release CO2 that has been buried for millions of years.
With everything supposedly balancing out, the cap-and-trade programs run by the United Nations and European Union—and maybe soon the U.S.—treat biofuels as carbon-neutral. The Science study argues that this is a false economy, because it doesn’t consider changes in land use. If mature forests are cleared to make room for biofuel-growing farms, then the carbon that would otherwise accumulate in those forests ought to be counted on ethanol’s balance sheet as well.
Cap-and-trade programs exacerbate the problem because developed countries (where emissions are putatively capped) get credit for reductions from ethanol—despite the fact that their biofuels are generally grown in developing countries (where emissions aren’t capped). So if Malaysians burn down a rain forest to grow palm oil that ends up in German biodiesel, Malaysia doesn’t count the land-use emissions and Germany doesn’t count the tail-pipe emissions.
Given these incentives, the authors cite a study showing that by 2050, “based solely on economic considerations, bioenergy could displace 59% of the world’s natural forest cover. . . . The reason: When bioenergy from any biomass is counted as carbon neutral, economics favor large-scale land conversion for bioenergy regardless of the actual net emissions.” In other words, not only is cap and trade self-defeating on its own terms but it also risks creating a genuine ecological disaster.
Of course, government initiatives to promote ethanol are (allegedly) undertaken to promote the common good, without regards to market demand or profits. If this is the case, how can biofuels have such potentially destructive consequences?
The above article is an excellent illustration of why market forces and profitability should not be ignored in considering questions of societal well-being. To understand why economic considerations are so important to the “common good”, we must “pierce the monetary veil”. Money is merely a medium. The fact that a man must produce in order to trade has not changed since money replaced the barter system. Economist Walter Williams explains it best:
Say that you hire me to mow your lawn and afterwards you pay me $30. What I have earned might be thought of as certificates of performance, i.e. proof that I served you. With these certificates of performance in hand, I visit my grocer and demand 3 pounds of steak and a six-pack of beer that my fellow man produced. In effect, the grocer asks, “Williams, you’re demanding that your fellow man, as ranchers and brewers, serve you; what did you do in turn to serve your fellow man?” I say, “I mowed my fellow man’s lawn.” The grocer says, “Prove it!” That’s when I hand over my certificates of performance — the $30.
People typically tend to think of economics in terms of money. Money is, essentially, nothing. The root of all economics is production and trade. Transactions between producers and consumers (everyone is, in actuality, both) occur because of the profit motive. Unfortunately, the term “profit”, when used in relation to corporations, is usually employed with a negative connotation. But let’s define “profit”. Investopedia defines profit as:
A financial benefit that is realized when the amount of revenue gained from a business activity exceeds the expenses, costs and taxes needed to sustain the activity.
A question that every person who criticizes a business’s quest for profits should ask himself whether or not his personal goal is to earn only what he needs to survive on a day-to-day basis, with nothing left over to invest in his future. Any sane individual of course wants to earn wages exceeding his basic needs. Society, as a whole, must produce in excess of its basic needs or it will become stagnant. Only be earning profits can an individual, a business, or a society invest in its future and improve the quality of its existence.
When politicians pay no heed to market forces and fail to consider the profitability of any program (be it private or government in nature), they are denying reality. Destruction by stagnation is the inevitable result.