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Reining in Estimates on the Biofuel Economy

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Iowa State University economist David Swenson has spent twenty years monitoring the biofuel industry in the United States. During his presentation at Tuesday’s Food, Fuel, and Society conference, Swenson argued for more conservative estimates on the potential jobs created from biofuels.

A study released last year by BIO, the biotechnology industry organization, estimated the number of jobs that will be created in the coming years. Brent Erickson, executive vice president of BIO’s Industrial and Environmental Section concluded from the report, “Increasing advanced biofuel production to a modest target of 45 billion gallons by 2030, which can be achieved by maintaining the same pace of technology development, could create more than 400,000 jobs within the industry and 1.9 million new jobs throughout the economy. Further, it could provide an economic boost of $300 billion.”

Kentucky is a fringe member of the major corn-production belt, but that hasn’t kept it from signing on with biofuels. In 2008, Kentucky Governor Steve Beshear released his Energy Plan, which sets a goal of meeting 25 percent of the state’s energy needs through “reductions through energy efficiency and conservation and through the use of renewable resources.” As part of that, the administration added a Division of Biofuels. A task force within the agency estimated Kentucky’s biofuel industry alone could create, “as many as 10,000 permanent jobs.”

But Swenson says no way. Swenson studied Iowa’s projected jobs from corn ethanol,  and examined potential job creation from biofuel production in New York. Swenson said the Iowa Renewable Fuels Association projected in 2006 that over 42,000 jobs would come directly and indirectly from ethanol. Swenson calculated the impact on his own and came up with a number a tenth that size, 4,500.  He credited the discrepancy to fuzzy math. The IRFA original estimate included many jobs in agriculture, which already exist, and which would not be “new” per se.

For New York, Swenson examined crop-based and forestry-based biofuel production. He projected 3,891 total jobs in that state. Then, he took the concept nationwide. Swenson explained, “The current advanced ethanol mandate calls for 8 billion gallons by 2016.” Using a formula based on the New York study, Swenson calculated 87,932 jobs would be created from biofuels in the United States.

Swenson said the reason that millions of jobs won’t be created like some claim is that biofuel technology is a “highly automated and highly efficient production system that will use as little labor to make as much fuel as possible when and if it evolves.” Note the “if.” Swenson is skeptical. He said that in the time he’s watched the industry, scientists have repeatedly promised that technology is on the horizon, yet he feels that horizon never gets closer. In a post on Tuesday, I quoted Patrick Westhoff of the Food and Agricultural Policy Research Institute at the University of Missouri. Westhoff also sat on the panel, and he said that biofuel technology depends on oil. “Things that don’t make economic sense at $80/barrel oil may look a lot more attractive if oil prices increase sharply,” he said.

Reducing the biofuels debate to one or two issues doesn’t do it justice, as panelists at the Food, Fuel, and Society conference stressed. But Americans are thinking about their energy supply in a way that they haven’t in the past. And that’s generating more than fumes.

Add your voice; what interests you about the biofuels debate?

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Written by Angela Hatton

October 14, 2010 at 1:11 pm

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