Hopes are being pinned on bio-fuels as a way out of the agriculture crisis. Ethanol and bio-diesel, the hopeful say, will increase the demand for crops like wheat and canola enough to make farming profitable again. Farmers and governments have pinned so much hope on bio-fuels because the traditional things that used to be trotted out as reasons for hope have pretty much crashed and burned.
In Canada, the last two such hopes were the World Trade Organization and a Conservative government. Most farmers now realize the WTO will never bring prosperity, and the Conservative Harper government has shown little indication it will end the immediate cash crisis on farms by the only means possible: injecting more cash.
With the WTO and Tories counted out, farmers have turned to bio-fuels. But ethanol is still highly controversial. The jury remains out on whether ethanol really brings a net gain in energy. My latest reading says it likely does, but just barely. If you tried to build an energy economy solely on ethanol, you would get cold awfully fast.
Ethanol is weak, both as an environmental solution and as a potential fuel when the oil runs out. Ethanol is produced by burning a lot of fossil fuels in the form of farm and transport fuels, fertilizers and pesticides. If a farmer grew grain to produce ethanol, and burned ethanol fuel to grow grain, he would have invented perpetual motion, but would quickly starve to death since the net output would only be a trickle of ethanol fuel. As a way to minimize our dependence on polluting fossil fuels, ethanol also fails since it needs large amounts of polluting fossil fuels to produce it.
Despite this, I am not against the idea of producing ethanol. It will raise the demand for feed grains, and should therefore have a positive effect on prices. Since we can't survive producing crops for food, we may have to turn to producing crops for energy. There is also hope that farmers themselves will become the owners of ethanol plants. The theory is that these will be profitable, and farmers can be the ones to cash in. Ethanol plants may well be profitable, as are many of those now operating in the U.S., but they carry a high degree of risk. Present and future profitability is built on several factors:
- governments must mandate ethanol use;
- consumers must be willing to pay more for gasoline containing ethanol;
- tariffs have to be used to keep out really cheap ethanol produced from sugar cane;
- government mandates for ethanol use have to keep ahead of production or no one will buy the excess ethanol;
- the raw material--grain from farmers--has to be available very cheaply; and
- really big producers have to be prevented from driving little ones out of business when there is too much production capacity.
In the rush to adopt bio-fuels, another energy source that could improve the lot of farmers without the financial risks of ethanol is receiving little attention. This is wind power. Wind power produces electricity rather than liquid transportation fuel. Electricity is a versatile and extremely important energy source that can substitute for many other energy sources.
Wind energy has some major advantages. It can be generated by giant wind farms or small production units with a few turbines. Production is not affected by the price of the raw material, since air is still free. It is democratic: just as the rain falls on the just and unjust alike, the wind blows everywhere. Because the energy source is universal and free, no one can get a monopoly over it. The price of electricity is more stable than that of oil and gas. There are no troublesome by-products to deal with. The electricity produced is clean, unlike the electricity from coal. The pipeline to move electricity, the power grid, is everywhere. Long-term contracts can guarantee a profit since, once you cover capital costs, operating costs are very low.
The major drawback to wind power is that energy utilities don't want to buy it. As an executive at Sask Power told a friend of mine, "When I want another kilowatt of electricity, I throw in another shovel of coal. The cost of that coal is almost nothing. Why should I pay full price to you for your wind-generated electricity?"
Of course, the environmental damage that extra shovel of coal produces isn't borne by Sask Power. Nor is the cost of caring for the asthmatic child who breathes the coal fumes.
If ethanol is viable because the government mandates its use and reduces taxes on it, wind power could be made viable by forcing utilities to buy it at full value. Farmers could then benefit by getting into the wind energy business.
(Paul Beingessner is a consultant, writer, and third-generation prairie farmer. He raises sheep and cattle in Truax, Saskatchewan.)