Biohazard: barons of subsidy

US biofuels barons always have something up their sleeves whenever anyone mentions the “food versus fuel” conundrum. These days, “distillers’ grains” – a byproduct of ethanol production, unfit for human consumption but apparently fine for livestock – are presented as proof that the debate is a non-starter.

The political will to confront this nonsense wavered during the downturn. A recent report from a G20 working group, however, suggests that renewed food inflation has encouraged institutions to take a stand against a growing environmental and humanitarian travesty. The surprisingly blunt report from 10 agencies, including the World Bank, United Nations and International Monetary Fund, urges governments to cut subsidies to the biofuels industry.

A US government report calculated last year that taxpayers give $1.78 in subsidies to reduce gasoline use by one gallon through the use of biofuels, but even this underestimates the true cost. Since 2000, US ethanol output has risen 10-fold and corn has gone from less than $2 a bushel to nearly $8. A third of the US corn crop now goes to ethanol, which makes up a 10th of US retail petrol sales. Meanwhile, cereal, meat and other displaced crops have risen in price. What is more, for notionally “green” policies, the environmental damage from US and European Union biofuel quotas is considerable, ranging from fertiliser run-off to deforestation in countries exporting palm oil.

Whether it is oilseeds, sugar cane or corn repackaged as distillers’ grains, the amount of food being burnt is substantial. The industry’s bluff that this merely serves as a bridge to second-generation biofuels should finally be called: non-food alternatives are perpetually “a few years away”. The droughts and political instability of 2011 might finally have roused political elites to realise the folly of letting the poor go hungry while they subsidise richer citizens to send those calories through their tailpipes.

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