25th April 2007

There are many unanswered questions regarding the future of the energy industry and any answers you are likely to receive depend largely on who you ask. Ask a vegetarian or environmental campaigner how much oil is used to raise a beef steer and they will probably quote a figure in excess of 280 gallons while some beef farmers claim the real figure is around 14 gallons.

Jeremy Rifkin also has an agenda – the clue is in the title of his book “The Hydrogen Economy” – and he believes it takes a sixth of a gallon of refined fossil fuel to bring a loaf of bread to your table. Most people do not jump into their Hummer and drive ten miles to an out of town shopping centre to pick up a single loaf of bread packaged in polythene. On the other hand not many people cycle to their local farm to collect organically, low tilled, grown wheat - which they then grind into flour by hand and bake in a bread maker powered by a wind turbine. If they did their loaf of bread would have taken a mere 0.003 gallons of fossil fuel to produce - assuming the farmer would need some mechanical assistance to maintain yields. This is around 360 loaves per gallon rather than just 6.

Once again somewhere between these two contrasting figures is the true energy cost of bread. A low till, organic, 10,000 acre farm that uses just 7 gallons of diesel to work each acre of land will need to dedicate 70 acres of land to grow enough switchgrass to provide feedstock for 70,000 gallons of ethanol. Another 6 acres is needed to provide the switchgrass to turn that feedstock into fuel. So the farm’s bread output would fall by just 190,000 loaves or three quarters of a percent. There would be a small increase in the price of bread due to a mismatch between supply and demand and, at the same time, farmers would see a lowering of input costs as they are ‘growing their own energy.’ There is the possibility that the farmer could grow switchgrass on land that was too poor for growing wheat – providing a net reduction in costs and no overall output penalty.

But this is the best case scenario based on exceedingly good yields from an organic farm - and the use of switchgrass that may, possibly, yield up to 1000 gallons of ethanol per acre and require only 7% of its own energy to convert. Start looking at ethanol from corn with a yield of less than 400 gallons per acre and a conversion overhead approaching 90% and we find ourselves moving towards Jeremy Rifkin’s end of the room.

Our rosy outlook for ethanol is also based on a low till organic farm, which may produce exceedingly good bread but is unlikely to feed the masses. Most large farms have reduced the fertility of their soil to the point where they are now dependent on artificial fertiliser. There is an energy cost for this fertilizer. In his book, “Twilight In The Desert” Matthew Simmons points out that the Saudi Arabian agrochemical industry is consuming 48,000 cu feet of gas just to produce a ton of ammonia based fertiliser.

These factors conspire to make the economics of bread production within an ethanol powered agricultural sector look a lot less attractive. Things are unlikely to improve as we approach peak oil and other industries place demands on the alternative energy sector. Even the downstream energy consumption required to bake, package and deliver a loaf of bread could push the price of a basic commodity, which is currently marketed by some food stores as a loss leader, beyond the reach of the consumer.

Some serious thought is already being given to the whole question of ethanol and the agricultural sector. Unless someone comes up with an answer then some of agenda driven claims of next generation energy advocates may start looking less far fetched. As Rifkin points out, consumers may have to make the choice between driving six miles or buying a loaf of bread.