Thursday, 13 September 2007

Bellies vs. Fuel Tanks, Part 2

Has it been a year already?

In August 2006, I wrote a short post on the coming conflict between using corn, soya, and other crops to produce biofuels, and using them as food.

A few months later, environmental groups began campaigning actively around this issue. Now, in the face of rising grain prices in the U.S. and other countries, Governments have gotten in on the act.

Earlier this week, the Financial Times reported on the front page that the Organisation for Economic Co-operation and Development is criticising subsidies for biofuels made from food crops. The OECD is concerned that these measures are distorting the market and leading to food price inflation, without achieving significant greenhouse gas emissions savings. One credible study that I've seen estimates that we would need to use 60% of the planet's cultivable land to completely replace the petrol used in today's vehicles. This would, of course, never happen, so they're right in that regard.

What's more, food commodity prices are set at the margin, meaning that very small changes in supply and demand affect prices throughout the market. So even a small shift to biofuels is likely to cause price swings. So these changes are not unexpected. In fact, they generate healthy discussion by forcing us to confront how much we value these competing uses for food crops.

It's not too surprising that political leaders would sit up and pay attention to this issue now. Voters tend to complain a bit when the price of fuel rises, but things can get really ugly when the price of bread skyrockets.

Current-generation biofuels were never going to solve the problem of climate change by themselves. What is more likely is a portfolio of partial solutions. These include current-generation biofuels where they are economically feasible, vehicle fuel-efficiency improvements, so-called "second generation" biofuels made from agricultural waste products, public transport and town planning measures to encourage people to use their cars less, and perhaps increased use of electric and hydrogen-powered vehicles.

(Carbon Clear home)