World cooling on biofuel solution to climate change

Once a golden promise in the fight against climate change, biofuels are fast losing their lustre as high demand for essential crops drives land clearing and pushes up the price of food.

Biofuels made from food crops such as corn, sugar, soybeans and oil palm burn cleaner than fossil fuels, but experts say high demand is sending ripples through the world economy, and could be doing the environment more harm than good.
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Meanwhile, in Jakarta’s side streets, it’s not only cooking oil that is becoming more expensive. Record global corn prices mean high prices for livestock feed, making protein sources such as eggs — and Gosal’s family’s twice-monthly meat — an increasingly rare luxury.

Siegfried Falk, an analyst with German-based consultancy Oil World, said that despite the hype, palm oil only makes up between 10 and 20 percent of biodiesel used in the European Union, the largest market for the fuel.

Most European biodiesel comes from rapeseed oil which is less efficient to produce but is protected by tax incentives, Falk said.

Despite this, he said, palm oil prices are rising as investors react to high oil prices by bidding up palm oil futures as a possible alternative.

“A lot of people in the market are hoping that (expensive fossil fuel) creates substantial demand in palm oil, and oils in general,” Falk said.

AFP