From: Business Daily - 10/10/2008
Calls to scrap biofuel targets to lower food prices are mounting with both the UN’s food agency and global businesses including Unilever urging governments this week to rethink their policies.
The UN Food and Agriculture Organisation (FAO) said in a report this week that the rush to biofuels had done more harm, pushing up food prices, than it has good by reducing greenhouse gases.
At the same time, the Commonwealth Business Council (CBC), the business arm of the group of 53 Commonwealth countries, called on member states finance ministers meeting in St Lucia to drop mandatory targets for biofuels.
Diversion of crops to producing biofuels, as well as rising demand for food in emerging economies, has put major pressure on stocks, pushing food prices to their highest level since the 1970s.
The effects are being felt around the world, including in Kenya, which imports rice and wheat.
FAO expects the global costs of importing food to increase 26 per cent this year to $1,035 billion.
Current targets set by the US, Europe and other governments, to boost biofuel production would increase maize prices by 26 per cent within the next decade, according to the International Food Policy Research Institute.
“Moving away from biofuels quotas is a simple step we can take to help alleviate high food prices,” said Dr Mohan Kaul, director general of the CBC.
The group wants the UK and India in particular to scrap their biofuel targets. In the UK, biofuels must make up 2.5 per cent of transport fuel since April, increasing to 5 per cent by 2010.
India agreed last month to meet 20 per cent of its diesel demand from fuel derived from plants by 2017. If these countries agreed to remove their targets, they could provide a powerful example to the rest of the world, said Dr Kaul.
The goal is ambitious. Though the UK is said to be reviewing its target, the EU has recently re-confirmed its 10 per cent quota for biofuels in petrol and diesel by 2020 while the US, which uses more than a third of its corn crop for biofuel and the world’s leading producer, has shown no sign of rethinking its targets.
Sentiment against biofuels is increasing however with recent studies suggesting that some are not as good for the environment as once thought. Crops like corn or sugar are renewable but more fuel is needed to grow and process them into fuel.
In some cases, forest is cleared to grow new crops, releasing more unwanted carbon dioxide into the air.
“In many cases, increased emissions from land-use change are likely to offset or even exceed the greenhouse gas savings obtained,” FAO said in its report.
With multinational Unilever and other CBC members such as steel group Arcelor Mittal now also taking a stand against biofuels, policy makers may come under more pressure to review targets.
Unilever wants the focus to shift to second and third generation biofuels, or those that use non-food crops such as jatropha or algae, rather than the first generation biofuels made with maize or sugar.