Demand for biofuels is increasing global food prices, says study

Source: By Tom Levitt, The Guardian • Posted: Thursday, September 21, 2017

A worker on an oil palm plantation in Riau province, Indonesia. The use of palm oil for biodiesel is on the rise.

A worker on an oil palm plantation in Riau province, Indonesia. The use of palm oil for biodiesel is on the rise. Photograph: Adek Berry/AFP/Getty Images

Demand for biofuels made from food crops, such as palm and rapeseed oil, has led to an increase in global food prices and needs to be curbed, according to a new analysis.

There has been a surge in the production of biofuels in Europe and the US since the early 2000s, backed by policies designed to cut use of fossil fuels, such as the first EU biofuel directive in 2003.

In the face of criticism about biofuels’ link to rising food prices and deforestation, the EU agreed to cap the use of food-based biofuels at 7% in 2015.

The EU is now debating whether to keep this at 7% after 2021 or cut it further, as a number of NGOs are calling for. Last week, the UK agreed to cap its use of food-based biofuels at 4% of UK road fuel next year, dropping to 2% by 2032.

The new analysis – commissioned by the NGOs BirdLife and Transport & Environment – backed those calling for an end to the use of food-based biofuels. If the EU cut use of them to zero, it concludes, then global vegetable oils, including palm oil, would be 8% cheaper and global cereal prices 0.6% cheaper by 2030.

While concluding that “only a fraction of the feedstock used for biofuel production would find its way to poor food consumers if biofuel mandates were cancelled tomorrow”, report author Dr Chris Malins from the consultancy Cerulogy said: “Reducing demand in Europe for food-based biofuels would take pressure off food commodity markets, resulting, in the short to medium term, in modest reductions in food prices and global poverty rates, and in net global welfare improvements.”

Vegetable oil is currently the main feedstock used to produce biofuels within the EU, with palm oil accounting for an estimated 12% of that total. Use of palm oil for biodiesel is also on the rise with 46% of the crop imported into the EU used for biodiesel in 2015.

The environmental benefit of using vegetable oils, such as palm and rapeseed oil to produce biodiesel, is also being questioned. A report published in July by The Royal Academy of Engineering said some biofuels, such as diesel made from food crops, have led to more emissions than those produced by the fossil fuels they were meant to replace.

Responding to the new analysis, WWF said it only supported biofuels that avoid these types of impacts such as those made from wastes or residues instead of crops. “But we would advocate for their use in hard-to-treat sectors, such as aviation, rather than road transport, which can be and is increasingly rapidly becoming electrified,” a spokesperson said.

The EU Commission declined to comment, but continues to dispute the impact of its biofuels policies on global food prices. In its most recent update report on its renewable energy policy it said: ‘Concerning food prices, it should be noted that between 2012 and 2015, prices of agricultural commodities decreased. In 2015, the price of vegetable oils reached its lowest level since 2005… Lower biofuel demand for vegetable oils was among the factors contributing to the fall in oils/fats prices.’

However, the UN Special Rapporteur on the right to food, Hilal Elver, said biofuels were “having a huge impact on accessibility of food because of price increase, especially in developing countries. Moreover, in developing countries biofuel production is connected with the land grabbing and heavy pesticides use”.