Developing world will be principal biofuel beneficiary

By Elliott Mannis, letter to Financial Times

Published: July 3 2006

Sir, Are all biofuels equal? It is a question we need to consider as we respond to the growing need to diversify energy supplies and reduce emissions through adopting renewable fuels. As your recent article on the possible pitfalls of tax incentives for biofuels points out ("Elusive cornucopia: why it will be hard to reap the benefits of biofuel", June 21), converting food crops into fuel may not necessarily offer the expected energy efficiencies and emissions reductions.

Given limited availability of arable land and relatively high agricultural production costs in Europe, we need to assess carefully how much cereal and vegetable oil production is worth diverting from food use to biofuel. If we have to boost production to meet food and fuel demand, what will be the impact of increased use of fossil fuel fertilisers?

Given the high prices of food crops, only large-scale refining with intensive energy use may deliver the economies of scale needed to produce cheap biofuel. Growing non-food crops suitable for burning to generate electricity may make more sense than growing more food crops to refine into fuels. Policy and fiscal incentives should encourage crops that can be produced sustainably and do not require greater carbon emissions and fossil fuel use to convert them into energy.

In the medium term, it is the developing world that should gain from such incentives. The most efficient sources of biofuel available grow in tropical regions: sugar cane for bioethanol; palm and jatropha for biodiesel. As a UK biodiesel producer, our strategy at D1 Oils is based on securing supplies of low-cost vegetable oils from developing countries. We are pioneering jatropha because it is an inedible oil that does not require arable land to produce economic yields. If we can increase production of inedible oils such as jatropha, and ensure that production of palm and soya can be increased sustainably, both the developed and developing world can have access to low-cost supplies of biodiesel with a positive energy balance.

In the long run, second-generation biofuels produced from agricultural waste will enable farmers in the developed world to compete more equally in energy crop production with their counterparts in Africa, India and south-east Asia. Until that time, tariff barriers and subsidy regimes should not deny the world access to the sustainable biofuels that only the developing world can produce competitively.

Elliott Mannis,
Chief Executive,
D1 Oils,
Middlesbrough TS2 1HG

Copyright The Financial Times Limited 2006

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