Food vs fuel: Let free markets work

Co-warriors and peak oil theorists always knew biofuel is all about politics. But the unintended consequence of alternative energy is now making politicians wonder what biofuel is all about. The answers they offer will decide the future of ‘green’ fuels — whether made from maize, rapeseed, wheat, sugar cane or palm oil.

Politicians don’t mind talking green because conventional political wisdom holds that voters punish anyone who forces significant energy sacrifices on them. That is why biofuel is by no means running out of steam. The USA, Russia, and Brazil have just given a rousing thumbs-up to first-generation biofuel. In USA, a proposal in the latest energy bill would increase the ethanol mandate to 36 billion gallons by 2022 or quadruple the volume required under the Renewable Fuel Standard.
Russia will construct 30 new plants to produce biofuel, Prime Minister Viktor Zubkov has said. Russia aims to produce 2 million tonnes fuel ethanol from wheat annually, both for export and domestic consumption.

Brazil increased its mandatory biodiesel blend from 2% to 3% from July 1. The new B3 blend should increase demand to about 1.1 billion litres, significantly reducing the current over-capacity in the Brazilian biodiesel industry. But even brave politicians shudder at the epic unpopularity of hunger.

Food inflation is compelling public opinion, scientists and policy-makers to take a second look at first-generation biofuel. It is being increasingly acknowledged that crop-based biofuel cannot produce sufficient amounts of fuel to satisfy long-term consumer demand, and avoid controversial impacts, such as pushing up food prices and damaging the environment.

The food-vs-fuel argument shows no signs of going away. The latest contribution to this debate comes from Oil World, the global oilseed analyst. “A downward adjustment or a postponement of higher biofuel targets appears indispensable. If this does not happen, more social unrest due to escalating food prices is to be expected,” it asserts.

Economic Times