February 28, 2008 - Biofuels in Costa Rica

---- Guest contributor: Rick ----

When we first decided to move to Costa Rica, I knew I didn't want to just sit by a pool with a piña colada in my hand – I would need something to do. One idea was to develop a biofuel business that refined vegetable oils just enough for use in Costa Rica’s cars, trucks and buses. Refining vegetable oils to export standards for Europe or the US would be difficult and expensive, but Costa Ricans’ vehicles are usually older, and so I assumed the standards for internal use would be looser than for export. I dreamed of taking over a banana plantation closed by blight and replacing banana trees with oil palms, or converting a factory that refined vegetable oil for human consumption into a biofuel refinery. Well, it was such a good idea that some Europeans with deep pockets and greater expertise were already all over it, with the Costa Rican government interested as well. So my idea for a mom-and-pop operation probably would not fly. Still, Costa Rica is jumping on the biofuel bandwagon with both feet.

The Costa Rican government plans to convert the national refinery to produce gasoline that is 10% ethanol and diesel fuel that is 20% palm oil, and make these levels of biofuels mandatory in Costa Rica by 2010. Starting this October, gasoline will include 7.5% ethanol, with 5% palm oil in diesel, and subsequent increases each year following. Clearly, these levels were chosen to meet the standards of the Kyoto protocol, which, if I remember correctly, requires a 10% reduction in production of CO_2. Even if car ownership continues to increase, the diesel with 20% palm oil will give Costa Rica some slack. These biofuel levels should be compatible with existing cars; actually, with a warm climate to prevent coagulation and the relatively advanced age of most vehicles here, most Costa Ricans could probably tolerate up to 50% palm oil in their diesel with no added maintenance costs.

The Costa Rican government is to invest $484 million in new agricultural production and new refineries, these to be located in areas that suffer from high unemployment. I assume that the private concerns I mentioned will make additional investments as well. The ethanol will come from 10,000 additional hectares of sugar cane and 4000 additional hectares of yuca; palm oil production will add 3500 hectares to the current 3000 hectares devoted to fuel. These crops are smart choices; sugar cane is a perennial crop, so no fuel is wasted in plowing and replanting. Corn-based ethanol, by contrast, requires so much oil for plowing and fertilizer that its energy content barely exceeds that of the oil input. Likewise, oil palm is an efficient perennial crop, producing nearly five times as much fuel per hectare as its nearest competitor. Besides their direct investment, the Costa Rican government will also give consumers some tax relief; the tributo único will be removed from the portion of fuels that are biofuels (that is, 10% of gasoline and 20% of diesel). Consumers will probably find biofuels less expensive than oil, now at $100/barrel, and home-grown fuel will benefit the national economy instead of shipping money overseas.

The government’s plan has a lot going for it. It grows fuel crops efficiently, boosts employment for Ticos, saves consumers money, and decreases the country’s dependence on the crazy people who inevitably seem to live on top of oil deposits (and yes, I’m including Texas and L.A.). The only problem with the plan is the transition to high biofuel production. In Costa Rica, any unpaved land has something growing on it – wild grass or forest or some other cultivated crop – and that something will contain carbon – all plants do. The process of clearing the old vegetation (by burning, composting or whatever) will create a big plume of CO₂ that will take many years of reduced oil consumption to make up for. If the vegetation to be replaced had to go anyway, for example blighted banana trees, then yes, by all means, why not switch to biofuel. Likewise, palm oil is unhealthy to eat, so it’s best to convert all production to biofuel use. But otherwise, converting land to biofuel production could well be a wash or even worse as far as CO₂. Recent analyses of US efforts to plant corn for ethanol show that more CO₂ will be produced than by doing nothing, a depressing prospect.

Since biofuels are at best a temporary stopgap measure, one wonders if Costa Rica would not be better off investing the $484 million in more efficient (or even electric) vehicles, or improving bus service so fewer people will use cars. Taking the bus is at present three times more efficient in its use of oil, according to another recent La Nación article, and wayyyy cheaper than driving. Riding the bus also reduces traffic jams – that makes everyone else on the road more efficient, too. Still, I understand, there are times when you just want a car for convenience. For those of us who don't have one yet, here’s another tidbit to ponder: Costa Rica has abolished import taxes on all-electric cars, and they've been cut in half on hybrid cars. Import taxes on regular cars can be as high as 100%! Hmmm, could an electric car dealership be in our future?

La nación.com references:

Gasolina tendra 10% y diesel 20% de biocombustibles

Biofuels may promote not slow global warming report

Electric cars tax free