Page last updated at 00:56 GMT, Tuesday, 26 August 2008 01:56 UK

UK 'should end biofuel subsidies'

A palm oil plantation in Ivory Coast
Critics say increased biofuel production could lead to higher food prices

The government should stop funding biofuels and use the money to halt the destruction of rainforests and peatland instead, a think tank has said.

Policy Exchange said the switch would have a bigger impact on climate change because trees and peatland remove carbon dioxide from the atmosphere.

The government currently spends 550m annually on biofuel subsidies.

The Conservatives said biofuels "may be damaging the environment and endangering food security".

Under the Renewable Transport Fuel Obligation (RTFO), the government had said that by 2010, 5% of all UK ethanol and diesel should come from biological sources - primarily crops including corn, sugarcane and rapeseed.

But last month, Transport Secretary Ruth Kelly said the UK would slow its adoption of biofuels because there were "increasing questions" about them.

'Halve the costs'

The RTFO is designed to cut up to three million tonnes of CO2 emissions each year, but Policy Exchange said investing in the protection of peatland or rainforests could result in a "50 times greater amount of avoided emission".

The think tank said tropical deforestation contributed about 20% of all greenhouse gas emissions - similar to the amounts generated by the USA and China.

To be truly effective a global response is needed, but the UK has an opportunity to lead the way
Ben Caldecott, Policy Exchange

Ben Caldecott, editor of the report, said changing tack "would halve the total costs of tackling climate change".

"To be truly effective a global response is needed, but the UK has an opportunity to lead the way," he said.

"In the UK alone, biofuel subsidies cost 550m annually. In 2005, a similar investment in preventing deforestation and peatland destruction could have offset the equivalent of up to 37% of all UK CO2 emissions.

"In the UK we can dramatically increase funding for forest and peatland projects domestically and with key partners, especially in South-East Asia, as well as lobbying at an international level for the right global policies.

"All this can be done within our current budget, by ending wasteful and damaging biofuel subsidies."

Critics say encouraging biofuels could prompt farmers, especially in poorer countries, to abandon food production in favour of growing fuel crops.

This could lead to food shortages and higher food prices, as well as encouraging deforestation of areas to make way for biofuel crops.

'Hypocrisy crticism'

Last month, ministers said they would consult on delaying the RTFO's 5% target from 2010-11 to 2013-14.

But shadow environment secretary Peter Ainsworth said the government was still guilty of "staggering hypocrisy".

"While ministers are calling for the international community to look at the impact of biofuels, here in the UK, the government's policy means people are filling up their cars with biofuels that may be damaging the environment and endangering food security," he said.

"Time and again the government has been warned that their policy of targets without safeguards is madness.

"When will it admit it has got this wrong and bring in proper sustainability criteria for biofuels?"

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18 Jul 08 |  Americas
UK to slow expansion of biofuels
07 Jul 08 |  UK Politics

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