Reuters: Food price hikes fuel anti-ethanol moves in U.S

Reuters: Food price hikes fuel anti-ethanol moves in U.S.

By Carey Gillam

Less than four months ago, ethanol supporters were celebrating implementation of a Missouri law requiring gasoline sold throughout the state contain 10 percent ethanol. The law, passed in 2006, took effect January 1.

But now, in the face of growing criticism of the nation's ethanol-friendly policies, Missouri may be among the first to back away from ethanol supports.

Critics say federal subsidies and programs such as Missouri's, which encourage corn-based ethanol production, have

reduced corn stocks available for food and livestock feed and contributed to skyrocketing prices that are hurting consumers.

"There certainly are some questions on the ethanol issue that I believe we didn't delve into deep enough," said Neal St. Onge, a Republican Missouri state representative who chairs the house transportation committee.

St. Onge said the committee is studying a measure that would roll back the mandate and is still determining whether to push any action before the end of Missouri's legislative session next month.

The moves in Missouri come as Texas Gov. Rick Perry is asking the U.S. Environmental Protection Agency for a 50 percent waiver of the mandate for grain-based ethanol production.

Pilgrim's Pride Corp and Tyson Foods issued statements over the weekend supporting Perry's request, saying "unprecedented increases for corn and soybean meal" would add billions of dollars of cost to the food industry this year.

On the other side of the debate are the nation's corn growers, who have embraced federal and state incentives for corn-based ethanol production, planting a record corn crop last year.

Missouri Corn Growers Association Chief Executive Gary Marshall said ethanol production was only a small factor in food price increases, and the corporate oil industry was to blame for the scare tying ethanol production to rising food prices.

"It is a nice use of smoke and mirrors. The major oil companies see ethanol as a threat to their profits," Marshall said. "They can put as much oil money as they want to into this and create a big fight ... we're fighting it tooth and nail."

Last week, Agriculture Secretary Ed Schafer said about 25 percent of the nation's corn went into ethanol and said that the forces driving rising prices in corn and other commodities had more to do with high energy costs, increased consumption around the world and weather-related production problems.

He said aside from some small reductions in subsidies in a new farm bill, the administration was not planning to alter its support for ethanol production.

White House Press Secretary Dana Perino on Monday said biofuels was one of many different factors contributing to food crises around the world.

"While it might have some impact, it's not a huge impact. And it is something that we are all going to have to take into consideration as we move to economies that can run on alternative or renewable fuels," Perino said.

(Reporting by Carey Gillam; Editing by David Gregorio)

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Reuters: Russia says has no plans to cap carbon emissions

By Simon Shuster

Kyoto puts a cap on the average, annual greenhouse gas emissions from 2008-12 for some 37 industrialized countries, including Russia.

But former communist countries are well within their emissions targets, which are compared to 1990 levels, because their industries and carbon emissions subsequently collapsed after they struggled to adapt to free markets.

As a top energy producer and consumer, Russia welcomed the fact that Kyoto had not limited its carbon emissions and expected the same of any future climate deal, said Vsevolod Gavrilov, the official in charge of Russia's Kyoto obligations.

"Energy must not be a barrier to our comfort. Our emerging middle class... demands lots of energy and it is our job to ensure comfortable supply," he said.

"We don't plan to limit the use of fuel for our industries. We don't think this would be right," he said, referring to the current round of Kyoto.

Asked if Russia would resist capping the use of fossil fuels, which emit the planet-warming gas carbon dioxide when burned, under a new climate deal after 2012, he said:"In the foreseeable future, this will not be our model, no."

He pointed out that the United States had also declined to impose emissions caps.

But Russia welcomed investment from other industrialized countries to help it clean up its energy and industry, saying in this way it could prevent greenhouse gas emissions equivalent to 3 billion tons of carbon dioxide.

Under Kyoto, industrialized countries which are missing their emissions goals can pay for cuts elsewhere -- if that is cheaper -- getting carbon offsets in return.

OFFSET

Industrialized countries spent some 326 million euros last year buying such offsets from former communist countries, under Kyoto's Joint Implementation (JI) scheme.

A key way for Russia to profit from the planned 3 billion tons of emission reductions will be by trapping and processing natural gas, a by-product of oil production.

By 2012, Russia has called for 95 percent of its associated gas to be harnessed and sold, whereas more than 25 percent of it is currently flared, wasting 20 billion cubic meters of natural gas a year and releasing carbon dioxide into the atmosphere.

"Why is the flaring of gas so common? It's because of economic barriers to building infrastructure that will process it," said Mikhail Stavsky, vice president of Russia's largest oil firm, Rosneft.

With the help of trading in carbon offsets, Stavsky said that the profitability of such gas harnessing will roughly double, and the return on investment in the projects will come in 7 years, compared to 17 years without Kyoto.

Russia's gas export monopoly Gazprom will also use these mechanisms to harness the gas, said Alexander Ishkov, the head of its energy saving and environmental department.

"We are expecting to cut tens of millions of tons of carbon dioxide equivalent" by 2012, he said.

Out of the twelve emissions-reduction projects that have applied for JI approval, several are from companies at least partly owned by Gazprom, Oleg Pluzhnikov, Gavrilov's deputy at the Economy Ministry, told Reuters.

"They are keeping a low profile for now. But when they see it working, I think they will put their name behind it."

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