Just weeks after India’s biofuel policy appeared in December, commerce and industry minister Anand Sharma denounced the diversion of foodgrain to biofuels at the World Economic Forum in Davos. India wants 20% biofuel content in vehicle fuel by 2017, but turning cheap food into expensive fuel pushes up food prices and damages the environment.
A leaked World Bank paper on the 2007-08 food crisis said US and European Union (EU) biofuel contributed at least 70% to the price rise—against 3% admitted by the US department of agriculture. The World Bank’s Food Price Index doubled between 2006 and 2008. India’s food inflation is high, at around 16%. But despite a backlash in 2008, biofuels are still in favour.
Biofuel subsidies are about political pandering, not cutting greenhouse gases.
Biofuels from crops such as maize, sugar and palm oil have more than tripled since 2000. The US and the EU have set themselves ambitious targets: an increase from the current 9 billion litres to 15 billion litres of ethanol by 2012 for the US, and 5.75% of transport fuel by the end of 2010 for the EU.
By 2022, US subsidies will have totalled $400 billion, according to Friends of the Earth. The EU is no better, with around €3.7 billion ($5.2 billion) in 2007. India’s new national biofuel policy promises subsidies but offers no figures yet.
On top of wasted taxes and higher food prices, many biofuels make little environmental sense: Production can release more emissions than it avoids. Nobel Prize-winning chemist Paul J. Crutzen estimates: “For rapeseed biodiesel, which accounts for about 80% of the biofuel production in Europe, the relative warming due to N2O (nitrous oxide) emissions is estimated at 1-1.7 times larger than the quasi-cooling effect due to saved fossil CO2 (carbon dioxide) emissions. For corn bioethanol, dominant in the US, the figure is 0.9-1.5.”
Nor do all biofuels save energy. Some varieties require as much to grow, transport and process as they release when burnt.
So the Centre is promoting the oil-rich jatropha bush, aiming for 11 million hectares by next year, and to increase the area for all biofuel crops by 30%. It says it will only use non-food crops from non-agricultural land, but the Indian environmental research group Ashoka Trust for Research in Ecology and the Environment says jatropha is already taking over farmland.
There is reason to worry. Though the United Nations Food and Agriculture Organization does not foresee another “concurrence of so many factors” that caused the food crisis, prices are taking a long time to fall (rice is 100% and maize 50% more than their 2003-06 world averages). Worse, the number of hungry people recently topped one billion—a frightening increase in both the absolute number and the percentage, reversing decades of progress.
If biofuel were about the environment, the US would not impose tariffs on environment-friendly ethanol from South America and the Caribbean. Likewise, new EU tariffs are clearly aimed at US producers who send 95% of their biofuel exports to Europe.
There is the additional threat that natural habitats will be ploughed up to take advantage of biofuel subsidies. The diversion of existing US cropland to biofuels has shifted soyabean production to South America and Indonesia, encouraging deforestation there.
Powerful farming lobbies in the US and the EU militate for biofuel subsidies. Like India, both claim a future in “second-generation” biofuels from plant cellulose or waste, but this nascent industry has yet to deliver value for money.
Commerce minister Sharma evoked Indira Gandhi’s “poverty is the biggest polluter”. Indeed, hand-outs to farm and green lobbies will not cut poverty or pollution, nor stop climate change: It is time to end them.
Caroline Boin is a project director at International Policy Network, a London-based think tank. Comments are welcome at email@example.com