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OECD report: Govts need to scrap biofuel subsidies or else alternative energy sources will lead to surging food prices and destruction of natural habitats

Posted by gmarkets on 15 September, 2007

Governments need to scrap subsidies for biofuels because the rush to support alternative energy sources will lead to surging food prices and the potential destruction of natural habitats, the Organisation for Economic Co-operation and Development (OECD) warned, reported The Australian (12/9/2007, p.44).

Biofuels push to wreck markets, with little green benefit: The OECD said in a report to be discussed by ministers that politicians were rigging the market in favour of an untried technology that will have limited impact on climate change. “The current push to expand the use of biofuels is creating unsustainable tensions that will disrupt markets without generating significant environmental benefits,” said the authors of the study, a copy of which has been obtained by the Financial Times.

Taxpayers unlikely to be happy: The survey said biofuels would cut energy-related emissions by 3 per cent at most. This benefit would come at a huge cost, which would make them unpopular among taxpayers. The study, prepared for the OECD’s round table on sustainable development, is being discussed in Paris by ministers and representatives of a dozen governments, including the US. Also attending will be OECD secretary-general Angel Gurria, scientists, business representatives and non-governmental organisations.

EU biofuel target in spotlight: The survey questions the European Union’s plan to derive 10 per cent of transport fuel from plants by 2020. Only three kinds of biofuels are preferable to oil: Brazilian sugar, which converts easily to ethanol, by-products of paper-making and used vegetable oil. The EU said only biofuels that meet as yet undefined standards for sustainability will count towards its target to get a tenth of transport fuel from plants by 2020.

Call for global certification scheme: Tariff discrimination on sustainability grounds is illegal under World Trade Organisation rules and the authors call for a global certification scheme.

The Australian, 12/9/2007, p. 44

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