Biofuels can make up no more than 5 per cent of petrol or diesel consumption in the US and the European Union without causing environmental damage, according to a report from Bank Sarasin, the Swiss bank.

The report examined the risk that producing biofuels would leave less fertile land to devote to food production, so raising the price of staple foods, and of the danger that increasing biodiesel production in areas such as south-east Asia might lead to the cutting down of rainforest, with dire environmental consequences. Biofuels are vehicle fuels derived from plants such as sugar cane or soya that produce fewer greenhouse gas emissions than fossil fuels.Fiona Harvey, London