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Why Europe backpedals on biofuel targets

Ethanol and other biofuels are boosting food prices and greenhouse gases, says a new British report.

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A World Bank report leaked to a British newspaper last week estimated that biofuels were responsible for 75 percent of the recent spike in global food prices, which have risen more than 80 percent in the past three years.

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US Agriculture Secretary Edward Schafer said recently that biofuel production has pushed up global food prices by only 2 or 3 percent. and that biofuels had cut US consumption of oil by a million barrels a day.

World Bank President Robert Zoellick said at the G-8 meeting that both Europe and the US should look at reducing biofuel targets. The Bush administration has a target of cutting gasoline use by 20 percent by 2017, primarily by stepping up the use of ethanol.

And yet targets remain vital to give the nascent industry a stimulus to compete with Big Oil. Giles Clark, the editor of Biofuel Review, a newsletter in Britain, says that unless retailers are forced to supply certain quotas of the fuel, they won’t bother. “The oil majors have to be involved,” he says. “They have the forecourts [gas stations]. Why would they bother with biofuels unless there was some leverage? So there needs to be some encouragement.”

Plenty of EU officials remain convinced that biofuels should remain part of the mix. Michael Mann, EU agricultural spokesman, says that Europe could still hit its target “without major effects on food supplies,” and argues that biofuels have less of an impact on food prices than do failed harvests and burgeoning demand from a growing global population.

“The amount of corn the US is putting into ethanol does have an effect on the market,” he acknowledges. “But rice, for example, has seen the biggest increase in prices and it is not used for biofuels. Sugar is a biofuels crop – and its price has gone down.”

Mr. Mann dismisses arguments that some biofuel production can actually generate more greenhouse gases, saying that all EU biofuels must be at least 35 percent cleaner than fossil fuels to qualify as such.

Other experts argue that even if Europe retreated or paused in its “dash for biofuels,” the impact on global food prices would be minimal. Abdolreza Abbassian, an economist at the Food and Agriculture Organization (FAO) in Rome, says “Unless some heavyweight like the US shifts policy, we probably will not see dramatic changes.” He estimates that the US has switched 30 percent of its corn output into biofuels.

Experts say that the future of biofuels probably lies not in edible plants now being used, but in nonedible crops – the so-called second generation biofuels.

Giles Clark says these biofuels fall into two categories: those that use the nonfood parts of plants, like stems and straw. Others are nonedible plants such as algae and jatropha which, says Clark, “can be grown on marginal land that wouldn’t support food crops, is native to Africa, is not a food plant at all.”