In defense of biofuels

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EU Energy Commissioner Andris Piebalgs has a great new blog, and he’s wasted no time in taking on a controversial issue. Biofuels have taken a lot of hits lately, but Piebalgs says the relationship between them and food prices is overblown:

Biofuels, have become a scapegoat for recent commodity price increases that have other causes – poor harvests worldwide and growing food demand generated by increased standards of living in China and India. In Europe, we use less than 2 percent of our cereals production for biofuels, so they do not contribute significantly to higher food prices in the European context. Even if we reach our 10% biofuels target by 2020, the price impact will be small. Our modeling suggests that it will cause a 8 to 10% increase in rape seed prices and 3 to 6% increase in cereal prices. Increase in the price of the latest has very small influence on the cost of bread. It makes up around 4 per cent of the consumer price of a loaf.

Even if price food price distortions are minor, I’m still not convinced the biofuels are worth the trouble given that it’s not entirely clear whether they really do anything to reduce greenhouse emissions once land clearance is taken into account. Still, Piebalgs’ blog should be great opportunity to hear from an informed voice in the debate.