Food cost link causes retreat on biofuel

By Fiona Harvey, Environment Correspondent
Published: July 7 2008 21:38

The British government signalled a retreat on its biofuels targets on Monday after the publication of a report showing the fuels contributed to rises in food prices.
A review by Ed Gallagher, former chief of the Environment Agency, which could have international ramifications, recommended that the government put the brakes on its biofuels policy.

The current target is to derive 2.5 per cent of the UK’s transport fuels from biofuels this year, doubling by 2010. But Prof Gallagher said this should be slowed down, with the 2.5 per cent target left in place but raised by 0.5 percentage points a year to 2013-14.
Ruth Kelly, secretary of state for transport, signalled that the government would concede: “I agree with Professor Gallagher that we should take a precautionary approach over the next few years, until we are clearer about their wider effects.”
She stopped short of accepting the report’s recommendations on a revision to the biofuels targets, but announced to MPs a consultation on lowering the targets.
The Gallagher report found that, although there was “probably” enough land to satisfy food and fuel demands to 2020, biofuels did make a small contribution to food price rises.
Prof Gallagher also recommended that the European Union lower its proposed target of deriving 10 per cent of transport fuel from biofuels by 2020.
He will brief EU officials on his findings in the next week. The EU is still debating and approving the European Commission’s renewable energy proposals.
Biofuels industry leaders said they were “concerned” at the government’s apparent backsliding, pointing out that the target, in the form of a renewable transport fuel obligation, only came into force this year, after it was proposed in 2005.
Copyright The Financial Times Limited 2008