Bio Fuels and Climate Change

There is continuing concern about whether and to what extent bio fuels have a role to play in tackling climate change. The following story taken from the BBC website makes several important points:

Some oil representatives have told the government that they cannot meet the UK target of 5% biofuel on the forecourt by 2010 while also protecting wildlife. The EU recently announced plans to double the biofuel total by 2020. One government official told the BBC: "The policy is running ahead of the science; we have to be very careful that this doesn't all go badly wrong." The biofuel bonanza is being promoted by the car industry as a way of achieving cuts in greenhouse gas emissions. Biodiesel comes from plant oils, and ethanol from fermenting starchy or sugary plants. Experts agree it makes sense to maximise wood waste and to grow energy crops on land that is marginally productive for food. The problem is the scale of the enterprise. Many biologists warn there is simply not enough land on the planet to feed a growing number of people who are hungry for more protein, but also want to run cars on fuel from plants. Already President Bush's highly-subsidised drive to get fuel from the Prairies has triggered food riots in Mexico because it has pushed up the price of corn. The biofuels issue is particularly acute in Indonesia where the natural forests are being razed to make way for palm plantations to produce vegetable oil, soaps, shampoos, industrial substances - and now motor vehicle fuel too. The oil giants have promised they would obtain their palm oil from sustainable sources; but they define this as taking oil from plantations where forests were felled more than five years ago. Some oil industry experts are now admitting that this makes no sense, because it simply increases overall demand for palm oil.

At some point the marginal external costs of biofuels will rival those of more conventional sources of energy. What then did last November's Stern Review assume about the environmental costs of biofuels? As was pointed out in a recent paper by Robert Mendelsohn, the Stern Review ignores entirely the environmental costs of alternative energy sources and fails to account for the escalating costs of land that a major move into biofuels would entail. This is another reason why the Stern Review's recommendations are not to be relied upon.