Biofuel confusion: "Shockingly misinformed"

The publication today of two articles underlines the confusion surrounding biofuels and food prices.

In the first article biofuels get the blame for food shortages. Also, the use of "sweet" water also makes biofuels less palatable.

In the second article the chairman of GM dismiss the biofuel - food prices link.

Biofuels Won't Solve World Energy Problem - Shell [PlanetArk]

ROME - Biofuels will not solve the world's energy problem, the chief executive of Royal Dutch Shell said on Sunday, amid growing criticism of their environmental and social benefits.

The remarks follow protests in Brazil and Europe against fuels derived from food crops. Food shortages and rising costs have set off rioting and protests in countries including Haiti, Cameroon, Niger and Indonesia.

"The essential point of biofuels is over time they will play a role," Jeroen van der Veer, chief executive of Royal Dutch Shell, told reporters on the sidelines of the International Energy Forum.

"But there are high expectations what role they will play in the short term."

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But concern over meeting the biofuels targets has fuelled fears that sky-high food prices may rise even further if fertile arable land in Europe is turned over to growing "energy crops".

First-generation biofuels usually come from food crops such as wheat, maize, sugar or vegetable oils. They need energy-intensive inputs like fertiliser, which make it harder to cut emissions contributing to climate change.

Second-generation biofuels would use non-food products such as straw and waste lumber. So far, their production has been mostly experimental.

"Biofuels are all about how you develop them without unintended consequences. It is not only the competition with food, it is also the competition for sweet water in the world," Shell's Van der Veer said.

He GM chairman Rick Wagoner has other ideas.

GM chief hits at UN data on biofuel [FT]

Rick Wagoner, General Motors’ chairman and chief executive, has dismissed United Nations research that links biofuel production to rising food prices as “shockingly misinformed”.

The blunt assessment by the head of the world’s largest car company reinvigorates intense debate about ostensible social costs and environmental benefits of biofuels, a burgeoning industry some analysts say crowds out food production.

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“If you look at what’s causing higher [bio]fuel prices, the cost of corn is a very small part of that,” Mr Wagoner said at a trade show in China.

The UN’s Food and Agriculture Organisation has linked biofuels production – alongside factors such as crop failures and the falling dollar – to the spike in world food prices. The agency has ordered research on the subject in advance of a summit on world food security intended to take place in Rome from June 3-5.

But Mr Wagoner said: “Oil prices are a far bigger driver of higher food prices than ethanol.”

There is plenty of scope for economists to get in on the act to work out once and for all what the exact relationships are.

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