Biodiesel is “bio”, because it is made from organic matter. Usually, oil-rich plants such as rapa and corn are grown and harvested. Their oil is combined with alcohol to make biodiesel. Because its production process is relatively fast, biodiesel is considered a renewable fuel.
Renewable fuels are good. As environmental awareness grows, the demand for renewable fuels, including biodiesel, increases. The Europeans, especially, have a voracious appetite for biodiesel. This is good, right? Biodiesel will help save the environment.
However, consider the ramifications of such skyrocketing demand. Since the Europeans took a liking to biodiesel, beautiful, vast forests in Indonesia have been cut down. Farmers fetch a very good price for their palm trees, as these trees contain palm oil, which is commonly used in biodiesel manufacture. Tempted by more profit, farmers cut down neighbouring trees, to increase their agricultural space.
Natural ecosystems are completely ruined. However, the environmental destruction aside, farmers previously growing food crops are switching to palm trees. Why grow rice when palm trees sell for five times more?
This idea of switching to a more profitable product is timeless and classic. Basic economic theory dictates that the supply of product A is influenced by the price of related product B. As the price of product B increases, producers of A become enamoured with the possibility of greater profit. Supply of A declines.
What happens when supply decreases? The item becomes valued, cherished. Its price consequently shoots through the roof. It is for this reason that gold and diamond are so expensive.
When farmers switch from food to palm trees, the supply of food decreases. Hence, the price of food increases. The increasing use of biodiesel and other biofuels have been linked to soaring food prices worldwide.
Let’s examine the ProAlcool program in Brazil. Since 1975, the Brazilian government has been encouraging the use of ethanol, a biofuel. Ethanol, like biodiesel, is also produced from certain crops, such as sugar cane. As incentives for ethanol production, the government gave tax breaks to farmers who grew sugar cane.
Evidently, many farmers switched from growing food to growing ethanol material. Who wouldn’t? Consequently, a food shortage developed. Food prices rose, and families starved.
In fact, the recent 2007-2008 food crisis has been strongly linked to biodiesel and ethanol production as well. The World Bank, a leading global financial institution, blames the food crisis on subsidies for biofuels. Its study also indicates that the increasing biofuel production has caused food prices to rise 70 to 75%.
A study by the Organization for Economic Co-operation and Development agreed that biofuels have led to an increase in food prices. However, the OECD believes the effect of biofuel on food prices is not as high as the World Bank claimed.
Taking these ideas into account, biodiesel production and use should still be encouraged. However, instead of using fresh oil from crops, why not use recycled frying oil? A busy fast food restaurant can have 20 gallons of oil leftover at the end of the night. The oil can be filtered and purified to make biodiesel.