Friday, June 10, 2011

Financial Times: Report urges end to G20 biofuel subsidies



Financial Times FT.com
Report urges end to G20 biofuel subsidies
By Joshua Chaffin in Brussels

Government subsidies to promote the use of biofuels should be eliminated, a group of leading multinational organisations has concluded in a report outlining ways to reduce volatility in global food prices.
The report was prepared by 10 agencies, including the World Bank, the World Trade Organisation and the UN, and is to be delivered this month to agriculture ministers from the Group of 20, which commissioned it.

Many of those agencies have expressed concerns before about the consequences of biofuels, but the report stands out for the institutional heft of its authors and its blunt tone.
G20 governments, it states, should "remove provisions of current national policies that subsidise (or mandate) biofuels production or consumption".

Failing an outright removal, governments should at least develop contingency plans to shelve support schemes temporarily at times when food prices are high and supplies are scarce, it adds.
The report confirms a growing backlash against biofuels, which were once hailed as a saviour for fossil fuel-dependent economies but are now increasingly blamed for pushing up food prices by diverting corn and other crops from the dinner table to fuel tanks.

According to the report, biofuels consumed 20 per cent of sugar cane crops on average between 2007 and 2009, and 9 per cent of oilseeds. "It is not surprising that world market prices of these products (and their substitutes) are substantially higher than they would be if no biofuels were produced," it states, noting a growing correlation between crop prices and oil prices.

The findings may raise pressure on the European Union to revisit one of its policies, which mandates that 10 per cent of the bloc's transport fuel must come from renewable sources – chiefly biofuels – by 2020.

The EU's 27 member states have also showered billions of euros on producers of ethanol and biodiesel in the form of subsidies. The Global Subsidies Initiative, a non-profit group, estimated that the annual total for 2008 was more than €3bn. The US, Brazil, China and Australia have taken a similar approach.

Environmental groups and the biofuels industry are eagerly awaiting a forthcoming review from the European Commission, the EU's executive arm, of the indirect land-use effects of biofuels.
Although the fuels are supposed to produce fewer greenhouse gas emissions than traditional fossil fuels, several analysts have argued that they are often more polluting when one accounts for land that must be cleared and planted elsewhere to make up for the loss of food crops.


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Biofuels are a wide range of fuels which are in some way derived from biomass.

Your idea?