The Financial Times reports that 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. It has and sparked 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.
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 1.9 billion people, according to data firm Gro Intelligence.
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.
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, according to the World Resources Institute, a Washington think-tank.
Biofuel sector executives said the amount of wheat used for biofuels was negligible — about 2 per cent of the total crop, according to industry association UFOP.
The industry is a significant producer of animal feed since the process of turning grains into ethanol creates protein and fat by-products that are fed to chickens, cows and pigs.
In the EU, Belgium and Germany are considering easing biofuel blending mandates to address food security.
The International Energy Agency cut its biofuels growth forecast for this year by 20 per cent, forecasting global demand to increase 5 per cent from 2021 to 8.5bn litres.
In the US, where cheaper corn-based ethanol is the main biofuel, Washington has tried to tamp down rising gasoline prices by allowing the higher blending level, normally cut during the summer months because of polluting concerns, to temporarily continue.
But government incentives for biodiesel and the decline in global exports from Ukraine have added to competition for soyabean oil, squeezing supplies for US food groups.
While China has warned ethanol producers that it will “strictly control processing of fuel ethanol from corn”, India is pushing ahead with targets to raise blending quotas. Prices for sugar, the country’s main bioethanol feedstock, have increased less than other crops.
Although co-ordinated action on food security has moved swiftly up the agenda, there has been little debate on limits to biofuels at an international level.
