21/04/2008 (National Geographic) - The biofuels boom is causing a spike in food prices worldwide, hitting developing countries particularly hard, experts say.
Ahead of Earth Day, major oil producers and consumers blamed biofuels for the current global food crisis at the International Energy Forum today in Rome, the AFP news service reported.
That's because agricultural land on which food crops used to be grown is increasingly being converted for biofuel crop production.
Many experts have also become concerned about biofuels' questionable green credentials.
However, some in the industry argue that there are biofuel crops that don't require agricultural land.
As former chairperson of one of the world's largest oil companies, Lord Ronald Oxburgh has staked his future on this form of alternative energy.
Oxburgh stresses that jatropha—a hardy plant from which his company, D1 Oils, extracts oil to make biodiesel—will not compete with food for land, nutrients, or water.
"Biofuels are getting a bad name because people are using food crops to produce them," said Oxburgh, who served as the part-time, nonexecutive chairperson of Royal Dutch/Shell from 2004 to 2005.
"But jatropha grows on marginal or degraded land where not much else will really grow."
High oil prices and concerns about global warming have fueled demand for renewable energy sources such as biofuels, which can be made from almost anything that grows.
One form of biofuel, biodiesel, is commonly made from palm oil and can be used to power diesel-engine vehicles.
Native ecosystems in places such as Brazil and Indonesia are increasingly being cleared for palm oil plantations and other biofuel crops.
A recent study found that growing crops to make biofuels may actually accelerate global warming, because clearing forests or grasslands gives off substantial amounts of carbon dioxide, the primary greenhouse gas that fuels climate change.
Jatropha curcas, one of 175 different plants, shrubs, and trees in the Jatropha family, produces seeds containing up to 40 percent oil.
When the seeds are crushed and processed, the resulting oil can be used in a standard diesel engine, while the residue can be used as an organic fertilizer or be burnt for power generation.
The advantage of drought-resistant jatropha is that it can be grown primarily on nonagricultural or marginal land in Africa and India, Oxburgh said.
D1 Oils has already planted about 500,000 acres (200,000 hectares) of jatropha in these regions.
For instance the plant grows along the rail line between Mumbai and Delhi in India, and the train itself runs on 15 to 20 percent biodiesel.
The company plans to expand that area to about 2.5 million acres (1 million hectares) within three to four years.
"We're reforesting areas which were really barren and where the local people had a difficulty making a living before," Oxburgh said, adding that the company expects its first supplies of jatropha oil to be produced later this year.
Other Asian countries, such as Cambodia, may soon become jatropa producers.
A Japanese company recently signed a memorandum of understanding with the Cambodian government to invest U.S. $800 million in growing the crop in that Southeast Asian country, according to Teak Seng, head of WWF Cambodia.
The investment firm Goldman Sachs cited J. curcas as one of the best candidates for future biodiesel production, according to the Wall Street Journal.
Yet many unknowns remain about its future as a commercial crop.
For one, jatropha has yet to be properly domesticated, so its productivity is variable.
"Although we don't know of any major pests and diseases yet, I'm sure they will emerge," Oxburgh said.
Its long-term impact on soil quality and the environment is also not clear. And then there are concerns about naturally occurring toxins within its nuts, seeds, and leaves.
Joachim von Braun is director general of the International Food Policy Research Institute in Washington, D.C.
Biofuel expansion could create an additional source of income for small-scale farmers and the poverty-stricken in developing countries, he said.
"The opportunities are with small farmers who have the capacity to produce sufficient quantities of biofuels and other products in environments where there is land and water available, and where the local food production would not be adversely affected," he said.
"Reducing energy dependency in remote rural areas is a realistic vision for biofuels and a real opportunity."
But the switch from food to fuel production in Europe and North America is partly causing food prices to rocket, and that is taking a heavy toll on the world's poor, he added.
Global food prices rose 37 percent in 2007, according to UN's Food and Agriculture Organization.
"We estimate that one-third of [the rise in food prices] is because of biofuels," von Braun said.
(Related news: "Warming May Cause Crop Failures, Food Shortages by 2030" [January 31, 2008].)
In the United States, much of the biofuel ethanol that is made from heavily processed corn is blended with gasoline.
A 2007 law mandates that U.S. refineries produce at least 36 billion gallons of ethanol by 2022. U.S. farmers receive large government subsidies to switch from growing corn for food to producing ethanol, which burns cleaner than gasoline—though it is not as energy efficient.
Subsidizing biofuel production in Europe and North America is risky, many economists warn, because of the effect that rapidly increasing production will have on food prices and the global poor in particular.
Ford Runge is director of the Center for International Food and Agricultural Policy at the University of Minnesota in St. Paul.
"Poor people may spend 80 to 90 percent of their household income on food," he said.
"Poverty and hunger are closely intertwined, so an increase in food prices hits hardest on poor people."
Runge co-authored a 2003 study showing that the number of hungry and malnourished people will decrease from more than 800 million to 625 million by 2025.
But by taking into account biofuels and other factors, he now predicts the number of hungry and malnourished will instead climb to 1.2 billion in 17 years.