New study suggests demand for biofuel is increasing global food prices

Signal of change / New study suggests demand for biofuel is increasing global food prices

By Munur Munuroglu / 26 Oct 2017

According to a new study published by Cerulogy - a sustainable policy consultancy based in North America, demand for biofuel made with palm and rapeseed oil is resulting in an increase in global food prices. Initially popularised to curb the use of fossil fuels in the early 2000s, the EU introduced the EU biofuel directive in 2003, but later agreed to cap biofuel use at 7% in 2015 amidst growing concern for biofuel's link to deforestation and environmental degradation. 

So what?

The increased demand for biofuel is questionably causing more damage than fossil fuels, despite its aim of initially being introduced as a cleaner source of fuel. A report published by the Royal Academy of Engineering said some biofuels, such as diesel made from palm oil, have led to more emissions than those produced by the fossil fuels they were meant to replace; not to mention the larger environmental effects palm oil production is having in developing countries. Accessibility of food is becoming increasingly more difficult as a result of rising prices, biofuel production is also heavily linked to land grabbing, heavy pesticide use, and deforestation to make room for palm oil plantations. 

Not all biofuels compete with food for land: second-generation biofuels come from food crop by-products, such as bagasse from sugarcane, while the source for third-generation biofuels is algae. However, palm oil accounts for an estimated 12% of the feedstock used to produce biofuels within the EU, with 46% of the crop being imported into the EU being used for biodiesel in 2015. Reducing demand in Europe for food-based biofuels would relieve pressure off food commodity markets, create modest reductions in global food prices and poverty rates, ultimately resulting in net global welfare improvements. Palm oil production is in direct conflict with humanity's efforts to combat climate change, and is adding more fuel to the fire of global warming, as well as destroying biodiversity.

Greenpeace surveyed 14 global consumer goods manufacturers - including Ikea, Johnson&Johnson, PepsiCo and Unilever, which have all implemented 'no deforestation' policies, in search for a better understanding of the practical actions these companies are taking to combat deforestation in their supply chains. The results showed that the none of the companies were able to say with certainty that there is no deforestation within their supply chain and how much of the palm oil comes from suppliers that comply with their own sourcing standards policy. This illustrates the responsibility that companies have: not only in preventing deforestation, but eliminating the role they play in reducing global food prices. This is particularly the case in the developing countries where the palm oil used for their products is sourced, and where rises in food prices have the most impact.

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What might the implications of this be? What related signals of change have you seen?

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