The global fertiliser crisis

Although all the attention lately has been on food prices and the effect of their sharp rise for inflation, development and security, the rises seen on food have been as nothing compared to some of the increases seen on fertilisers over the same period.

A briefing by Andrew Dorward and Colin Poulton, published in June by the Future Agricultures consortium, gives chapter and verse.  Between May 2006 and May 2008, here’s what prices did for selected key foods and fertilisers:

Cotton – up 29%

Beverages – up 41%

Wheat – up 61%

Maize – up 108%

Rice – up 185%

Urea (a key nitrogen fertiliser) – up 160%

DAP (a major phosphate fertiliser) – up 318%

The underlying causes cover both sides of the supply / demand line.  On the demand side, there’s the basic fact that the need for fertilisers is soaring as a result of higher food prices and demand for crops as biofuels. 

On the supply side, energy costs are a huge factor (especially in the case of nitrogen fertilisers); some fertiliser exporters (like China) have imposed export controls; and in the background, there are capacity limits to increasing production, especially for phosphates – a point that has the peak oil crowd already thinking hard about the concept of peak phosphorus.

None of this, needless to say, is good news for farmers, who according to the paper find themselves hit twice: once on the affordability of fertilisers when purchasing them, and then again (given food / fertiliser price differentials) on their profitability when using them. 

Dorward and Poulton argue that in the short term, it’s still worth developing country governments’ while to subsidise fertiliser use, even if the rates of return are lower – and that donors need to step up fast with additional financing (a proposal that the World Bank signalled its openness to in its ten point plan on food).  Dorward, Poulton and the Bank all agree that the question of getting them to the right place – fast – is as important as the question of who picks up the bill.

In the longer term, the paper suggests, the focus needs to be on more integrated soil fertility management with greater use of organic materials [i.e. compost and manure] together with smarter use of inorganic fertilisers – an area of work that the big agricultural research institutes like CIMMYT are already focusing on heavily.  Moving towards more integrated soil fertility management already makes sense for reasons of environmental sustainability.  If fertiliser prices fail to fall in the longer term, these areas of research are also going to be one of the critical front lines in feeding 10 billion of us.

Burn Up

[youtube:http://www.youtube.com/watch?v=zY__KBYJjMM]

Freed from the nice-guy constraints of being Josh on the West Wing, Bradley Whitford was clearly having a grand old time as a Machieavellian oil industry lobbyist in Burn Up on BBC2 last week; Neve Campbell and Rupert Penry-Jones (from Spooks) completed the ensemble cast for a production that cost the BBC $15 million to make.  Watch it if you haven’t already – if you live in the UK, you’ve got until 10.29pm on Wednesday 30th July to stream or download both episodes via the BBC’s Iplayer (if you download, you then have 30 days to watch them).

It was a riot – above all because, notwithstanding that this was a political thriller, the scriptwriter (Simon Beaufoy of The Full Monty fame) had really done his homework on climate change and energy policy (a task in which he was helped by Joe Smith from Open University, who co-edited Do Good Lives Have to Cost the Earth? with Andrew Simms).

So we were treated to climate summits with delegates negotiating square bracketed text through the night as the US and OPEC countries raise flags to object to use of the word ‘mandatory’; China playing it both ways, cutting a deal with the EU for carbon sequestration before dropping them like a stone when the US offers free nuclear power instead (agonised British head of delegation: “the Chinese have stitched us up!”); and even – ta da! – the sight of climate negotiators agreeing a climate framework based on per capita convergence, with proper terminology and everything. 

However (spoiler alert: stop reading now if you plan to watch it), all of this then falls apart when ‘moderates’ in the US delegation (“Withdraw that proposal, Tuvalu, or kiss your AIDS funding goodbye”) are replaced by even nastier military-industrial-spook types, who – it later transpires – have a Secret Plan, the gist of which is that the US is deliberately allowing climate change to happen on the basis that if it will damage the US, it will really screw China.

As prospects for a global deal recede, oil company CEO Rupert Penry-Jones (who has had a Damascene conversion to the path of climate righteousness after watching an Eskimo set herself on fire in protest at global warming, and then seeing methane hydrate plumes catching fire in holes in the Arctic pack ice as positive feedbacks start to kick in) decides to start playing real hardball: so he leaks secret geological data from Saudi Arabia to environmentalists (and thence the media), which shows that – ta da ! – Peak Oil is upon us.  The film closes with snippets of media reporting of the massive economic crash that follows, and the prospect of something called the ‘third energy age’.

Only thing is, it’s not entirely clear why Penry-Jones has abandoned his earlier view that to tell the world that the oil peak is already passed would be a Very Bad Idea on the basis that it would (a) cause economic Armageddon, (b) kill thousands if not millions and (c) cause World War Three.  I was sort of with Bradley Whitford’s evil lobbyist when he suggested that allowing the news to leak out ve-e-ery gradually might be a better approach.  Leaking the news of Peak Oil being already behind us also looks to me like as much of a recipe for tar sands, liquids from coal and all US corn going to biofuels as it does a recipe for solar, wind and the ‘third energy age’. 

But hey.  Top marks to the Beeb for definitely the edgiest (and most politically accurate) climate drama we’ve seen so far.  Eat your heart out, The Day After Tomorrow.

Obama: global emissions reduction of 80 per cent by 2050

It’s been his campaign’s policy since October last year, but in case you needed reassurance, here’s what Obama’s July 15 speech on foreign policy had to say about energy security (one of five national security priorities – the others being “ending the war in Iraq responsibly; finishing the fight against al Qaeda and the Taliban; securing all nuclear weapons and materials from terrorists and rogue states; … and rebuilding our alliances to meet the challenges of the 21st century”):

One of the most dangerous weapons in the world today is the price of oil. We ship nearly $700 million a day to unstable or hostile nations for their oil. It pays for terrorist bombs going off from Baghdad to Beirut. It funds petro-diplomacy in Caracas and radical madrasas from Karachi to Khartoum. It takes leverage away from America and shifts it to dictators.

This immediate danger is eclipsed only by the long-term threat from climate change, which will lead to devastating weather patterns, terrible storms, drought, and famine. That means people competing for food and water in the next fifty years in the very places that have known horrific violence in the last fifty: Africa, the Middle East, and South Asia. Most disastrously, that could mean destructive storms on our shores, and the disappearance of our coastline.

This is not just an economic issue or an environmental concern – this is a national security crisis. For the sake of our security – and for every American family that is paying the price at the pump – we must end this dependence on foreign oil. And as President, that’s exactly what I’ll do. Small steps and political gimmickry just won’t do. I’ll invest $150 billion over the next ten years to put America on the path to true energy security. This fund will fast track investments in a new green energy business sector that will end our addiction to oil and create up to 5 million jobs over the next two decades, and help secure the future of our country and our planet. We’ll invest in research and development of every form of alternative energy – solar, wind, and biofuels, as well as technologies that can make coal clean and nuclear power safe. And from the moment I take office, I will let it be known that the United States of America is ready to lead again.

Never again will we sit on the sidelines, or stand in the way of global action to tackle this global challenge. I will reach out to the leaders of the biggest carbon emitting nations and ask them to join a new Global Energy Forum that will lay the foundation for the next generation of climate protocols. We will also build an alliance of oil-importing nations and work together to reduce our demand, and to break the grip of OPEC on the global economy. We’ll set a goal of an 80% reduction in global emissions by 2050. And as we develop new forms of clean energy here at home, we will share our technology and our innovations with all the nations of the world.

It’s a much more progressive target than the G8 was able to come up with: at Hokkaido, the most leaders could manage was “at least 50%”.  It’s more in line with the IPCC, too, which says that to limit temperature increase to between 2.0 and 2.4 degrees C, the 2050 reduction needed is between 50 and 85 per cent: so assuming you want 2.0 rather than 2.4, and adding in the rate of sink failure as well, we should certainly be looking at closer to an 85 than a 50 per cent reduction by 2050 (see page 15 of this). 

And lest you wonder, yup, he’s talking about 80 per cent below 1990 levels, rather than the 2000 levels (which would be a lot less demanding).  Here’s his campaign’s full energy policy brief.

ElBaradei: we need a World Energy Agency

As a general rule of thumb, my starting assumption is that we need new multilateral agencies like we need a hole in the head.  But if there’s an exception to that rule, then energy has a pretty good claim to be it.  As I argue in Multilateralism for an Age of Scarcity, there is no multilateral agency with a mandate to look at all aspects of the issue:

The International Energy Agency is supposed to represent major consumer countries, but its 27 members are all OECD countries – hence leaving out key emerging economies including China and India.  Although the Organisation of the Petroleum Exporting Countries (OPEC) is generally thought of as the major body representing producer states, in fact well over half of the world’s oil is produced by non-OPEC countries. Yet the most fundamental incoherence on energy is the obvious one: that with consumer and producer states represented by two different institutions in two different cities, it is wholly unclear where any discussions about a comprehensive approach encompassing both producer and consumer interests would take place.

Now, IAEA head Mohamed ElBaradei has written a piece in the FT which starts from the same analysis, and goes on to argue that a new global energy organisation is indeed needed.  What would it do?

“complement, not replace, bodies already active in the energy field … bring a vital inter-governmental perspective to bear on issues that cannot be left to market forces alone, such as the development of new energy technology, the role of nuclear power and renewables, and innovative solutions for reducing pollution and greenhouse gas emissions”;

“provide authoritative assessments of global energy demand and supply and bring under one roof energy data that are now dispersed and incomplete … speed the transfer of appropriate energy technology to poor countries and give them objective advice on an optimal energy mix that is safe, secure and environmentally sound”;

“develop a global mechanism to ensure energy supplies in crises and emergencies, and help countries run their energy services and even do it for them temporarily after a war or natural disaster … co-ordinate and fund research and development, especially for energy-poor countries whose needs are often overlooked by commercial R&D.”

He concludes, “the need for joint action to develop long-term solutions to the looming energy crisis is now undeniable. It is difficult to see how this can be done without an expert multinational body, underpinned perhaps by a global energy convention, with the authority to develop policies and practices to benefit rich and poor countries alike, equitably and fairly”.

So what to make of this call?  A few thoughts.

First, I can’t see much in the first two paragraphs that isn’t already done by the IEA – with the possible exception of advising poor countries on their energy mix, which agencies including UNDP and the Bank already cover.  True, most publicly available data on oil reserves is pretty suspect; but this new agency wouldn’t obviate that problem (which stems from internal machinations within OPEC). 

The interesting element here is the idea of a global mechanism to ensure energy supplies in crises and emergencies (what could the head of the IAEA be thinking of?).  When I was drafting Multilateralism for an Age of Scarcity, this seemed to me one of the real gaps in current multilateral capacities – both for dealing with short term spikes (attack on Iran leads to $200 oil) and long term stresses (peak oil).  In those conditions, a regime for sharing access to what supplies there are will be essential for reducing the risk of competition and friction, and for providing (at least a degree of) predictability, to reduce wild market swings as much as can be.

What I think is missing from ElBaradei’s proposal is a proper account of where food fits in.  There are plenty of major reasons why food prices and energy prices are ever more closely in synch: biofuels, input costs (especially fertiliser), and the fuel used to cultivate land, harvest crops, process, refrigerate, ship and distribute them.  If energy costs keep going up over the long term (as looks likely, recent sharp falls notwithstanding), then food prices will do the same – making it more important than ever to effect a far more integrated international approach.

Gordon opens up a new front on food prices

Gordon Brown’s blunt call on Brits to stop wasting food marks an interesting moment in the food prices debate. 

So far, policymakers have concentrated almost entirely on the supply side – specifically, with the need to increase food production by 50 per cent by 2030, in line with World Bank demand forecasts.  (I worry that too much focus on the overall quantum of food produced risks obscuring the equally fundamental issue of who has access to it – but let’s leave that aside for now.)

What Brown’s emphasis on waste does is to give the demand side of the equation equal billing – a position it’s deserved all along, but hasn’t received from policymakers, presumably due to anxieties about implying that consumers may have to change behaviour. 

The issue of food waste is a massive issue in its own right – the UK wastes 4 million tonnes of food a year, and the forthcoming Prime Minister’s Strategy Unit report on food says that up to 40 per cent of food harvested in developing countries can be lost before it’s consumed.  But its long term significance may be as a bridgehead for opening up a broader front on demand reduction: as the food equivalent of energy efficiency, if you like. 

Another of the battles in that front will be over biofuels – a major new source of demand for crops. The leak last week of an internal World Bank document showed just how significant biofuels have been: it argued that biofuels have been responsible for as much as 75% of food price increases – way more than the 30% previously estimated by the International Food Policy Research Institute.  (The Bank’s 75% figure isn’t new – it’s been kicking around their HQ for at least three months – but its release now will definitely increase pressure on the US to reduce subsidies for corn-based ethanol.)

But what I think’s most significant of all about Brown’s new tack is that it makes him the first head of government to talk clearly about the elephant in the room with food prices: the fact that our diet in developed countries has a direct effect on the food security of poor people in developing countries.  Waste may be the first stop – but the train line we’re on leads directly to the question of how much meat and dairy products we can consume without impinging on others’ fair shares.

Japan’s G8: a week to go

So, with a week to go until Japan’s G8 in Hokkaido, how are things looking?  If you want the comprehensive answer, you should head straight for Jenilee Geubert’s excellent dossier on the website of the University of Toronto’s G8 research group – but here are a few highlights.

First, climate change.  A draft communique seen by Dow Jones suggests there are four options on the table: a 50% emissions reduction by 2050 [from what year’s level isn’t specified]; an unspecified percentage cut by 2050; a 50% cut by 2051 or later; or a more than 50% cut by 2051 or later. 

If you’re wondering where the magical figure of 50% comes from, it’s from the IPCC estimate of what it’ll take to limit average temperature rises to between 2.0 and 2.4 Celsius – though note that (a) the IPCC says 50 to 85%, and (b) that this is before the [rapid] rate of sink failure is taken into account.  So 50% by 2050 is already too low. 

Fukuda has said that the G8 will not aim to set medium term targets.  Tony Blair’s big new report says it must.  So does Avaaz.  The US says a 25-40% cut by 2020 is “frankly not do-able“. The US is meanwhile extolling the benefits of its Major Economies Meeting, but last week’s MEM in South Korea didn’t go so great.

Next: energy.  Oil’s just flown past $143 on the back of geopolitical tensions, so all the signs are that the issue will be charged when leaders gather next week.  Fukuda wants to see more oil production, but after Saudi Arabia’s pledge of only 200,000 more barrels a day last week, it’s hard to see much sign of it – and even harder to detect any sign of join-up between Fukuda’s calls for OPEC to open the tap up a bit more, and Japan’s stated goal of something called a “Cool Earth“.

Meanwhile, biofuels might conceivably also come up, as Fukuda’s not a fan (“it is a fact that the production of bioethanol in some cases compete with food production”) – though Japan will want to avoid putting its American buddies on the spot.  For its part, the US will point to IEA data that shows that biofuels have become crucial for meeting marginal oil demand (want to know how much non-OPEC oil supply growth is from biofuels this year? 63 per cent.)

And then there’s food. Sir John Holmes’s UN task force will be presenting its final report at the Summit.  Leaders will probably pledge to do everything they can to increase food production and increase investment in agriculture – which is a good idea, though it does still leave the small fact that enough food is produced for everyone to eat today, but there are still 850-950 million undernourished people.  Increasing yields isn’t the whole story.

One thing the G8 leaders could do is issue a strong statement of intent on the Doha trade round – and perhaps, if they want to be really relevant, taking security of supply issues into account at the same time.  More generally, World Bank President Bob Zoellick’s ten point plan on food prices will doubtless be referred back to as a good and brief overview of the challenges – worth having another look at that ahead of the summit.

All in all, the three scarcity issues of climate, energy and food will dominate centre stage at Tokayo.  It’s welcome that the G8 is focusing on them, but unclear that G8 leaders know what kinds of deal they should be agreeing on them – or how to get there.  And G8 leaders also appear not to have figured out yet that scarcity issues are uniquely integrated, while the multilateral response to them is anything but.  More on that over the course of this week…

Great public relations disasters of our time

A few weeks back, I wrote a post about Abengoa – a biofuels company which has been taking out full page ads in the FT and elsewhere, arguing that biofuels are nothing to do with rising food prices (an argument that calls to mind the image of Lt. Frank Drebbin in The Naked Gun, standing before an exploding fireworks factory and calling through a loudhailer “Move on! There is nothing to see here!”).  As I said at the time, Abengoa’s ad campaign was pure cornwash.

So it’s with great satisfaction that I pass on news of the following letter in the Financial Times today:

Sir, in an advertisement in the FT on June 18, Abengoa Bioenergy stated that “Bioethanol is currently the only real alternative for eliminating our addiction to oil”, citing our report “Greenhouse Gas Emissions from Transport in the EU25 (2004)” as one of two sources to justify that claim.

It is impossible for a reader of our report to reach the conclusion Abengoa draws. It does not even mention biofuels or bioethanol. If the company is genuinely interested in “supported evidence”, as it claims, it must know that T&E’s view on biofuels bears no resemblance to its own. T&E has consistently warned against volume targets for biofuels at European Union level since at least 2004, when we published our report “Sense and Sustainability”. We believe Europe should set an environmental target to cut greenhouse gas emissions from the production of all transport fuels, not a biofuels quantity target that gives a boost to the fuels Abengoa produces regardless of their environmental performance.

Running Europe’s fleet of heavy, gas-guzzling cars on biofuels rather than petrol is no cure. If Europe truly wants to end its addiction to oil, it should start by making cars twice as fuel-efficient as they are today.

Abengoa has misused our name and research in an advertisement claiming to separate “manipulation” from “evidence”. That is reprehensible. As an environmental group, our main capital is our reputation and credibility, which we will defend.

Jos Dings,
Director,
European Federation for Transport and Environment (T&E),
B-1000 Brussels, Belgium

Wow.  What a truly monumental PR cock-up by Abengoa.  They probably retain the same PR firm as the PRC.