Tuesday, 28 May 2013


Biofuels were suppose to save us and the planet from a combination of global warming and an over reliance on fossil fuels. The problem is that many biofuels are reliant on monoculture cropping and industrial agricultural systems, massive fertilizer inputs, large quantities of water and huge amounts of oil. One result of this is that biofuels may end up accelerating global warming by leading to the destruction of forests and other natural ecosystems when land is cleared for the cultivation of biofuel crops.

Another result is that biofuels end up in the developing world competing with food for land, increasing food prices and hunger. The biofuels industry is also supported by a number of different policies in both the USA, Brazil and the EU including various tax subsidies, trade barriers, government grants and loans. We need to bring to an end policies that directly support the production of environmentally harmful biofuels, and make room for sustainable energy alternatives and more environmentally friendly and socially responsible biofuels.

A recent report by Chatham House says the growing reliance on sustainable liquid fuels will also increase food prices . Basically biodiesel made from vegetable oil is worse for the climate than fossil fuels. The report noted that the UK’s use of biofuels is “irrational” and will cost UK motorists around £460 million over the next 12 months. The EU plan (underwritten by law) is for biofuels to make up 5% of the UK's transport fuel as of 15th April. The UK (since 2008) has required fuel suppliers to add a growing proportion of sustainable materials into the petrol and diesel they supply.

Many of these biofuels are distilled from ethanol which is sourced  from corn and biodiesel made from rapeseed, used cooking oil and tallow. Chatham House research suggests that reaching the 5% level will result in UK motorists having to pay around an extra £460 million pounds a year because of the higher cost of fuel at the pump and from filling up more often as biofuels have a lower energy content. The report states that if the UK is to meet its obligations to EU energy targets the cost to motorists is likely to rise to £1.3 billion pounds per annum by 2020.

The problem with the EU biofuel mandates are that they have huge distorting effects in the marketplace. As a result of used cooking oil being regarded as one of the most sustainable types of biodiesel, the price paid for it has soured. By the end of 2012 used cooking oil was more expensive than refined palm oil. Another concern is that taking EU land out of production to grow rapeseed oil in particular will end up creating more climate problems than it solves.

The more fuel of this type that is put into cars the bigger the deficit created in the edible oils market. This had resulted in increased imports of palm oil from Indonesia, which is often produced on illegally deforested land. As the UK reaches its 5% of liquid fuels target, the government faces some tough decisions on how to move forward as it may end up facing a tripling of the costs for motorists by 2020.

The UK Westminster government may prefer to try and get do a deal with Brussels on the impacts of indirect costs which might restrict what exactly counts as biofuel. There are problems with this, especially when it comes to reaching an agreement with those EU countries which have powerful agricultural sectors who rake in the cash from the current biofuels arrangements.

Outside of Europe there are other consequences with the acquisition of land by multi nationals for development or to acquire resources at the expense of local people. This is bound to be a touchy subject especially when little medium to long term sustainable benefit is delivered to the indigenous inhabitants. What's happening now in Africa is subtly different, there is a race going on between multinational companies on one hand and the emerging economic giant of the Peoples Republic of China on the other hand to acquire land, not so much for the minerals (although that is a factor) but to acquire the ability to grow food.

An interesting report (produced by the Oakland Institute) has noted that Hedge funds are now getting involved in acquiring land in Africa to produce food and biofuels, which will all boost their profits.  The report notes that foreign firms and hedge funds) have been quietly purchasing large chunks of land in Africa, often without any proper contracts and that this activity has led to the displacement of millions of small farmers, who are losing out as multinational firms try to secure their hold of the global food markets. Food production is often sacrificed to make space for cash crops for export, including flowers and biofuels, which fetch a tidy profit.

Since 2009 foreign firms the report noted that have acquired land equivalent to the size of France (nearly 60 million hectares) from questionable but lucrative deals with a combination of gullible traditional leaders or corrupt government officials in Ethiopia, Tanzania, South Sudan, Sierra Leone, Mali and Mozambique. I have no doubt that the foreign firms make many promises of progress, development and jobs to local communities, but they don't necessarily come close to delivering on the promises.

Investors benefit with a wide range of incentives written into their contracts from unlimited water rights to tax waivers, but, are clearly not there to help feed starving Africans. Sounds familiar doesn't it - not that much of step from the old days of the WDA throwing wads of cash of foreign investors, who got all sorts of benefits (grants and incentives), promised much (I seem to recall the magic figure of 6,000 jobs kept cropping up in the 1980's, 1990s and early 2000's) yet in the end never quite delivered all that was promised.

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