Energy expert: Times changing in agriculture
URBANA – These are signs of the times:
– Australia has banned incandescent light bulbs beginning in 2009.
– Wal-Mart builds new stores with skylights and inside fluorescent lights with sensors to switch them off when daylight can light the stores. Wal-Mart also installs closed refrigeration with LED lights and motion detectors to turn them on only when customers approach.
– The U.S. House of Representatives calls for automakers to increase fuel efficiency to at least 35 miles per gallon by 2020 and for the addition of 36 billion gallons of biofuels to the U.S. fuel supply by 2022, 15 billion from corn-based ethanol.
"We're living through the most fundamental changes in American and global agriculture," said Wallace Tyner, a Purdue University energy policy specialist who spoke recently to University of Illinois ACES faculty members about prospects for biofuels and policy.
"In the future, our agriculture prices will be tied to oil," Tyner said. "Policy has to take into consideration this new relationship between the agriculture and energy markets. We need to do more work on federal policy while spending money on research. That will be really important for agriculture in the future."
He said there will be room in the fuel market for a lot of different sources, noting projected continued increases in demand for energy.
"According to the National Petroleum Council, all sources will play a role including biomass," Tyner said. "By 2030, fossil fuels will still be a major energy source. Biofuels will not be a major player but they'll be important. Nuclear will make a comeback. It's a carbon-neutral source. We'll have to have it to meet greenhouse gas regulations."
Tyner said current policies won't get the U.S. to some stated goals, like the production of 36 billion gallons of ethanol by 2022.
"Corn ethanol production will peak at 15 billion bushels," he said, noting that supply and demand constraints, including the rising cost of food and other products made from corn, will keep a lid on that market.
And with current economic scenarios, making ethanol from cellulose just doesn't justify the investment, Tyner said. He said oil would have to be priced at $103 to $126 per barrel to make cellulosic ethanol economics work.
"If we have a recession, oil could be $10 a barrel tomorrow," he said. "It's too risky to invest in cellulosic technology. We're investing billions in research, but it's still a risky investment."
Tyner said if Washington sticks with current policies subsidizing ethanol 51 cents a gallon, that action will prop up corn prices although it won't solve greenhouse gas or supply problems.
"If we stay with the same system, I can easily see $5 to $6 corn," he said. "If we have a short crop, $5 corn will seem like a real bargain."
Robert Thompson, sponsor of the Len Gardner-endowed lecture, said Tyner 's perspective of the relationship between energy and farm policy is valuable when both issues are making headlines.
Congress is trying to forge long-term farm and energy policies and United Nations representatives are wrestling with rules to succeed the Kyoto Protocol, which expires in 2012.
The United States is the only industrialized country that has refused to sign the original Kyoto agreement requiring countries to get greenhouse gas emissions under control.
"What are the really important policy questions?" Thompson said.
"There's all the debate about corn-based ethanol, has it reached its peak, are we going to continue down that path?"
He said Tyner's thoughts about the increasingly close ties between the energy markets and farm market made him evaluate his own thoughts on those subjects.
"He's forced me to confront those ties and think about if I've given that connection enough priority," Thompson said.
"I'm going to focus on that more than I have in the past."