UN Food Summit

Lula da Silva's claim that the link between biofuels and fuel prices does not stand up is obviously rubbish. He's right that the causes of food inflation are complex but the link with biofuel is clear: while Washington suggests biofuel production is responsible for about 3% of the increase: other estimates put it as high as 30-60%.

In general, biofuels are not considered to be the prime cause of food inflation and it is right not to focus the whole debate on this single factor. However, the biofuel 'experiment' is at best a red herring, at worst a catalyst for further environmental destruction. Let's be clear: first, it has a role in causing food inflation; second, the subsidising of biodiesel is an encouragement to increase carbon emissions.

The subsidies given to the production of biofuels is greater than the cost of production of petrol or diesel. So the shift to biofuels is very expensive: for OECD members this amounts to about $15bn but only delivers 3% of liquid transport fuel. To counter future supply shortages of oil, some countries are proposing to derive 30% from biofuels, at a cost of $150bn.

Is this money well spent? Of course not!

Biofuels have very little impact on carbon emissions (13-18%). Fundamentally, the vast investment into biofuels through subsidies and tariffs - Brazilian ethanol faces tariffs of 50% in the EU - could be spent on more effective ways of reducing carbon emissions.

Of course, the whole story is not about carbon emissions either: there is a growing shortage of easily available energy. By framing the problem in this way, the response is to find alternative energy supply. There are many parties interested in maintaining the status quo: the agricultural lobby is doing very nicely from the boost to crop prices; while oil producers are enjoying the high price of oil, especially relative to the dollar.

Just a thought.
Lord Goring