Food Security and Renewable Diesel*
If you look AFTER you leap, you might not like where you land.
*Reposted for new subscribers.
I didn’t plan my newsletter to be mainly about food security, but like last week, today’s topic has got me to ruminating about how precarious our future is if we are constantly investing in things that our food supply and ecosystem in America cannot support.
Activist investors have been beating up on oil companies to improve their “green credentials” and some oil companies are trying to satisfy these demands while still maintaining their profitability. Marathon Petroleum has partnered with ADM to secure soybean oil to feed one of their California refineries to produce renewable diesel. Other refiners are scrambling to secure their own feedstock for their own production of the supposedly low carbon fuel. Progressive Farmer has an article outlining the ramifications of the exploding demand created by this situation: Here
Renewable diesel burns like regular diesel. Early renewable diesel refineries utilized used cooking oil and animal fat waste products for feedstocks. But with so many new renewable diesel refineries being converted, the refineries are forced to source refined vegetable oil - mostly soybean oil as their feedstocks. In other words, these new refineries will not be recycling waste - they will be putting increasing demand on crop acres. The rush to build out refineries for this “carbon neutral” fuel is spurred by government subsidies: $1 per gallon federal subsidy plus 83-86 cents per gallon from California’s low-carbon fuel standard. As you can imagine $1.83 per gallon goes a long way toward making the refining of soybean oil into diesel profitable for these refiners!
There is one huge fly in the ointment, however: we don’t have enough feedstocks. They are projecting renewable diesel production to increase from 3 BILLION gallons in 2023 to 6.1 BILLION gallons by 2030.
Even though it is estimated that $2.8 Billion will be invested over the next 3 years to expand our capacity to crush soybeans to produce the precious oil, that will merely add 300 million bushels of capacity. That is less than 1/10th of the 3.6 BILLION bushels of capacity that must be added!
Most concerning to me is the acreage predicted be needed. For me this is the bottom line: they say we immediately need to add 12 million acres and within 3-4 years that need will grow to 55-60 million more soybean acres than we are producing now!
I’m sorry but those acres don’t exist in the US. One of the respondents in the article said adding 55 million acres of soybeans would wipe out all the wheat and corn acres in the US. I don’t agree with that statement, but it would definitely overwhelmingly diminish corn and wheat acres. Remember, this is not just something under consideration - the construction of a lot of this renewable diesel capacity is already underway.
Agriculturalists in the US will instinctively know that these estimated increases in acres cannot possibly be met. The problem is that those driving the energy transition don’t know that - yet.
“Reality is what you run into when you’re wrong.” (Dallas Willard)
Let’s consider for a moment what this means:
All food products made from corn, wheat, and vegetable oils will be scarcer and increase substantially in cost. (If you think food inflation is bad now, just wait a few years).
All meat and milk products that rely on grains for feed will be impacted. (On the other hand, we will be drowning in soybean meal).
Can we find 55 million acres for soybeans without resorting to deforestation or other degradation of ecosystems in marginal lands? Will we import more soybeans from South America and will this aggravate the destruction of the Amazon jungle?
In light of the massive piles of soybean meal, we will need to expand export facilities and grow export markets for the product. This is not necessarily a bad thing, but we haven’t even started to prepare for this.
The building of the refineries and the crushing capacity has already begun. How can we turn back now?
Oh, by the way, the article says that now the airline industry has begun clamoring for sustainable aviation fuel!!!!! Ugh!
Remember, ecology is science; environmentalism is an ideology. Many times they are in opposition to one another. I just don’t know if our ecosystem can handle what the environmentalists are unleashing here.