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Food vs fuel: Ukraine war increases scrutiny on use of crops for energy

Soaring food prices caused by the war in Ukraine have increased the risk of famine, raising pressure on producers of low-carbon fuels derived from crops and sparking a “food versus biofuel” debate.

Before Russia’s invasion, global biofuel production was at a record high. In the US, the leading biofuels producer, 36 per cent of total corn production went into biofuels last year, while biodiesel accounted for 40 per cent of soyabean oil supplies.

But some food companies and policymakers are calling for an easing of mandates for blending biofuels into petrol and diesel to increase global grain and vegetable oil supplies.

“Now is not the time [for governments] to be encouraging the conversion of food crops to energy through artificial policy incentives or mandatory blending targets,” said the Washington-based International Food Policy Research Institute.

Between them, Russia and Ukraine produce nearly a fifth of the world’s corn and more than half its sunflower oil, but crop exports from the countries are at a fraction of prewar levels. Hundreds of millions of people are at risk of “hunger and destitution” because of food shortages caused by the war, the UN’s secretary-general warned last week.

The total amount of crops used annually for biofuels is equal to the calorie consumption of 1.9bn people, according to data firm Gro Intelligence, highlighting the volume of agricultural commodities that could be diverted from energy use if the food security crisis worsened.

Do biofuels cause problems in food markets?

Biofuels — ethanol made from corn and sugarcane and biodiesel made from vegetable oils including soyabean oil and palm oil — have been blended into motor fuel since the early 2000s to boost energy supplies and reduce the environmental impact of fossil fuels.

Biofuels were blamed in part for the last food crisis in 2007-08. Studies, including from the World Bank and IMF, suggested that the growth of biofuels contributed 20-50 per cent to the price increase of corn during the crisis. Their rising use was described as “a crime against humanity” by the UN’s then-food rights rapporteur.

But biofuel producers argue they have played a minimal role this time around. “Biofuels didn’t cause this crisis — either the price or the contraction in supply,” said James Cogan of Ethanol Europe, an industry lobby group.

High prices are not about demand but reflect “erratic trading conditions and high energy prices”, he added. Reducing biofuel production “wouldn’t materially ease the price crisis”.

Would limits on biofuels reduce world hunger?

A 50 per cent reduction in the grain used for biofuels in Europe and the US would compensate for all the lost exports of Ukrainian wheat, corn, barley and rye,…

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2022-06-11 23:02:00

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