By Elisabeth Rosenthal
Published: October 7, 2008
ROME: The United Nations food agency on Tuesday called for a review of biofuel subsides and policies, noting that they had contributed significantly to rising food prices and the hunger in poor countries.
With policies and subsidies to encourage biofuel production in place in much of the developed world, farmers now often find it more profitable to plants crops for fuel rather than for food, a shift that has helped lead to global food shortages.
Current policies should be "urgently reviewed in order to preserve the goal of world food security, protect poor farmers, promote broad-based rural development and ensure environmental sustainability," said a report released by the executive director of the UN Food and Agriculture Organization, Jacques Diouf, in Rome on Tuesday.
"The challenge is to reduce or manage the risks while sharing the opportunities more widely," he said.
In releasing the report, the UN joins other environmental groups and prominent international experts who have called for an end to - or at least a serious overhaul of - subsidies for biofuels, which are cleaner, plant-based fuels that can be substituted for oil and gas in some circumstances.
In a devastating assessment released this summer, the Organization for Economic Cooperation and Development concluded that government support of biofuel production in OECD countries was hugely expensive and "had a limited impact on reducing greenhouse gases and improving energy security." It did have "a significant impact on world crop prices," the report noted.
"National governments should cease to create new mandates for biofuels and investigate ways to phase them out," the report concluded.
Within the past eight years, as oil prices have risen and concerns about carbon emissions have grown, a number of countries including the United States and some in the European Union have put into place a variety of subsidies and incentives to jump start the fledgling biofuel industry.
As a result, the production of biofuels based on agricultural crops increased more than threefold from 2000 to 2007, the FAO said.
But studies in the past year have concluded that the rush to biofuels has had some disastrous if unintended consequences for both food security and the environment: less food available to eat in poor countries, skyrocketing global grain prices and a loss of precious forests as farmers create new fields to join in the biofuel boom.
Worse still, experts say, many plants take so much energy to convert into useable fuel that the total carbon emissions are greater than fossil fuels they replace, like oil or gas. The OECD reports said that only two food crops are "greener" than oil when considering the entire "lifecycle" of their production: used cooking oil and sugar cane from Brazil.
Sugar cane is far easier to convert to biofuel than corn or rapeseed, the crops generally grown for biofuel in Europe and the United States.
Already this year, the European Union has stepped back from its previous target of having 10 percent of Europe's transport fuel come from biofuel or other renewable fuels by 2020.
Last month, the European Parliament suggested that only 5 percent should come from renewable sources by 2015, and that a fifth should come from new alternatives "that do not compete with food production."
Currently, the vast majority of biofuel is derived from crops that could also be eaten or is grown on fields that could instead be used to grow food crops.
Newer second- or third-generation biofuels are made from weeds and crop waste, for example, and do not compete with food but "they are not as yet commercially available," the FAO report noted.
At the FAO on Tuesday, Diouf also stopped short of suggesting that the world should end biofuel subsidies. Rather, he said they should be revised to direct the benefit to developing nations. Groups such at the Clinton Global Initiative have suggested that struggling African countries were well poised to develop biofuel industries, by growing nonfood crops like jatropa, a weed.
Many countries say subsidies in the United States and Europe strongly favor home-grown crops. Critics have complained that the U.S. subsidy system, which favors corn-based ethanol, is unfair and damaging to the global environment because it makes it financially impossible to import cheaper and cleaner sugar-based fuel from Brazil.
"Opportunities for developing countries to take advantage of biofuel demand," Diouf said, "would be greatly advanced by the removal of the agricultural and biofuel subsidies and trade barriers that create an artificial market and currently benefit producers in OECD countries at the expense of producers in developing countries."