The conventional wisdom heading into the Group of 20 nations meeting in Paris seems to be that biofuels are responsible for rising food prices and food insecurity. As often is the case, the conventional wisdom is wrong, according to the Renewable Fuels Association.
Renewable fuels have been enduring a run of bad press, not only in the statements leading up to the G20 Summit next week (June 27) but also in the U.S. Senate, which voted by an overwhelming majority to end the 45-cent-per-gallonVEETC or blenders’ credit last Thursday (June 16).
Pro-biofuels groups like the Renewable Fuels Association and Growth Energy, a group that represents producers and other ethanol supporters through an office in Washington, have been complaining that blaming ethanol for high food prices is misplaced.
“It may be vogue for certain groups to blame biofuels for global hunger issues as though they didn’t exist before biofuel production, but that doesn’t mean eliminating biofuels policies will somehow put more food on the plates in developing nations,” said Geoff Cooper, Renewable Fuels Association vice president for research and analysis.
“Exorbitant oil prices, excessive speculation in commodities markets, recent weather events, and a host of other issues all play more significant roles in determining the price and availability of food than does biofuel production.”
Cooper and the RFA were particularly upset by a June 2 report from a group of international organizations that put much of the blame for volatile world food prices on the back of biofuel production and largely ignored the role of global oil prices and market speculation.
They are urging the G20 leaders to reject the report’s findings and request a revision that takes into account the available literature on the impact of biofuels on world food prices, the broader range of factors contributing to food price volatility, and comments from stakeholders.
Responding specifically to the June 2 report, Cooper said the analysis included in the report was “full of holes and contradictory to previous reports from some organizations within the group” submitting the report.
“Most glaringly, this report fails to recommend concrete steps that could be taken by G20 countries to combat the impact of higher energy costs on food price volatility,” Cooper wrote. “Remarkably, the report fails to properly address the impact of prices for oil and other energy sources on food price volatility.”
A Texas A&M study conducted during the last rise in world food prices in 2008 found, “The underlying force driving changes in the agricultural industry, along with the economy as a whole, is overall higher energy costs, evidenced by $100 per barrel oil.”
On the issue of market speculation, Cooper points to a World Bank report in 2010 that stated “…the effect of biofuels on food prices has not been as large as originally thought, but that the use of commodities by financial investors (the so-called 'financialization of commodities') may have been partly responsible for the 2007-08 spike.”
Finally, Cooper notes that recommendations to abandon biofuel productions are shortsighted and ignore the contributions that such technologies can offer. In May 2011, officials involved in the Global Bioenergy Partnership (which includes many of the organizations responsible for the June 2 report) said “modern bioenergy encompasses many technologies that have the potential to not only promote sustainable development, but also help meet two important needs in the developing world by enhancing food and energy security.”
“The report correctly recognizes that food price volatility has many complex and inter-related causes,” Cooper wrote. “However, the authors unfortunately focus disproportionately on biofuels and fall short in providing actionable recommendations to address many of these more serious factors.”
Spokesmen for Growth Energy, meanwhile, called the Senate’s June 16 vote a “missed opportunity.”
They said the Senate spent the better part of a week on an “amendment that is unconstitutional and going nowhere (because it originated in the Senate rather than the House), even while the news pours in that OPEC has hit a high-water mark of $1 trillion in revenues.
“The Senate missed an enormous opportunity to take real action on deficit reduction and energy policy when it failed to put oil subsidies and giveaways to the same test as ethanol,” said Tom Buis, Growth Energy CEO. “Instead, senators turned a blind eye to the hidden costs of oil and chose to waste time on an amendment that can be tossed out on a constitutional test.”