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Biofuels - a solution that will make the problem worse

By Nick Rose - posted Thursday, 22 November 2007

Far from being a dream green techno-fix to global warming and rising oil prices, conventional agro-fuels will likely push global temperatures beyond the tipping point and spark food riots, famine and instability across many regions of the world.

"We believe we should be using more green fuel in Australia… Today I’m announcing a strong plan to increase Australia’s biofuel production and to encourage more Australians to choose biofuels at the fuel pump…The Coalition’s biofuel plan is… good news for the environment because it reduces GHG emissions … "
Mark Vaile, Deputy Prime Minister, Coalition Campaign Launch, Brisbane, November 2007.

Slowly but surely the government- and industry-led campaign to establish mandatory targets for biofuels – or more accurately agro-fuels - production and consumption in Australia is gathering pace. The NSW government has set a target of 2 per cent of all liquid transport fuels to be sourced from ethanol by the end of this year, as part of a more ambitious target of 10 per cent by 2011. Victoria has set a target of 5 per cent by 2010, and at the recent Ethanol 2007 Conference in Melbourne, State Treasurer John Brumby "called on the industry and the Federal Government to support a concerted campaign to educate the public and raise awareness of the benefits of biofuels". The need to "educate" the public stems largely from the PR setback a few years ago produced by the story that ethanol could cause damage to engines.

Beyond these targets, there are visions of rich new fields of massive investment and opportunities for profit in agro-fuels. Professor John Mathews of Macquarie University’s Graduate School of Management has called for Australia to become a "biofuels superpower" within 10 years, on the basis of turning corn over to feedstock for agro-fuels, and massively expanding the growing of sugar cane and palm oil in the tropical north. He claims that with an investment of $7.5 billion over 10 years there could be built 60 advanced biorefineries, which would produce 6 billion litres of ethanol and 4.5 billion litres of biodiesel annually, supplying 20 per cent of domestic consumption and generating $10 billion per year, as well as creating 100,000 rural jobs. He expects the ALP to commit to a target of 10 per cent by 2012 during the current election campaign. The Federal Government’s current target of 350 million litres by 2010 represents only 1 per cent of domestic consumption.

The thrust to create a worldwide market for ethanol and biodiesel began after 2003 and has gained momentum in the last couple of years. Currently, liquid agro-fuels meet 1 per cent of global transport fuels requirements. The US and the EU have both set targets of 20 per cent of their domestic transport fuel coming from biofuels by 2017 (US, currently 2 per cent) and 2020 (EU, currently 4 per cent). For Europe to meet this target by itself it would need to plant 70 per cent of its existing farmland with agro-fuel crops; hence much of the production is slated for the developing world.

A key step in this process was the agreement reached between Brazil and the US in March 2007 to (a) establish ethanol as a world commodity, (b) share agro-fuel technology, and (c) encourage Central American and Caribbean countries to devote more of their territory to the growing of agro-fuels. Brazil is expected to construct a new ethanol refinery every month from now until 2013, when it will have more than 400 in the country. Its ambition is a 500 per cent expansion on its existing production, with the aim of meeting 10 per cent of global transport fuel demand by 2025.

With strong government incentives (for example tariffs, subsidies, tax offsets and targets), production of ethanol doubled between 2000 and 2005, and biodiesel production rose 60 per cent in the same period. China, Colombia, India, the Philippines and Thailand have all made major commitments to increase biofuel production. In 2005 the EU spent 3.7bn euros subsidising agro-fuels; yet the International Institute for Sustainable Development found that while it cost as much as 800 euros to avoid 1 tonne of CO2 emissions by making ethanol from sugar beet, that money could offset 160 tonnes of CO2 emissions via the Chicago Climate Exchange. A recently-published OECD report found that in the absence of major subsidies ‘most biofuels cannot compete on price with’ fossil fuel products ‘in most regions of the world. The US spends more than $7 billion per year subsidising ethanol production.


The major push for agro-fuels should be understood in terms of energy security and as a new arena for global investment opportunities by agri-business & other multinationals (Archer Daniels, Midland, Cargill, DaimlerChrysler, Dupont, Shell) as well as billionaire investors (Richard Branson, Bill Gates, Goldman Sachs, Morgan Stanley). Venture capitalists such as Indian-American Vinod Khosla, who is one of the main advocates of globalising biofuel production, speak of the ‘enormous earnings potential’ of ethanol. Venture capital investment in agro-fuels has increased 800 per cent over the past three years; significant research grants are going to academic institutions, such as BP’s grant of $500mn to the University of California, which is shaping much of the nature of public debate. The political promotion of agro-fuels is also a way of governments and politicians being seen to be "green" and "taking action" on climate change, without requiring any change at all in lifestyles or consumption patterns of Northern consumers.

Government subsidies, incentives and targets have created the global "biofuels boom". One of its primary impacts has been a steep rise in the price of basic food staples, some of which have more than doubled in the past twelve months and are predicted to increase further in coming years. This will impact upon every consumer, but most especially the poorest in the Global South who are dependent on basic grains for their subsistence. There have already been food riots in Mexico this year because of a four-fold local rise in the price of corn. Tens of millions of subsistence farmers will be displaced by the push to sow vast acreages of crops for agro-fuels; in the process, world hunger, which already blights the lives of 842 million people, is expected to affect 1.2 billion by 2025.

These developments prompted Jean Ziegler, the UN Special Rapporteur on the Right to Food, to describe the biofuel boom as, in effect, taking food from the mouths of the poor in order to put ethanol and biodiesel into the cars of consumers in the Global North. Mr Ziegler condemned this process in the strongest possible terms, as a "crime against humanity", and called for a five-year moratorium on planting more biofuel crops until second-generation technologies had been further developed. This is also the position taken by campaigning groups such as Biofuel Watch, which is endorsed by hundreds of organizations and individuals worldwide.

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About the Author

Nick Rose is the Coordinator of the Bellingen Community Gardens Association and is the National Coordinator of the Australian Food Sovereignty Alliance’.

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