Costly biofuel support offers few benefits - OECD

Public support for biofuels is costly and has little impact in cutting greenhouse gas emissions so governments would do better promoting lower energy consumption to fight climate change, the OECD said.

Governments should also boost the so-called second generation biofuels that do not use food crops, the Organisation for Economic Cooperation and Development added.

The study comes as the latest blow to biofuels, made from grains, oilseeds and sugar, which were once hailed for providing a clean alternative to fossil fuels but are now blamed for a surge in food prices.

Governments are increasingly doubtful about whether biofuels were as "green" as they claim to be when taking account of the total energy needed to produce them and the environmental impact of intensive farming and increased land use.

The OECD said that if Brazil's ethanol produced from sugar cane cuts greenhouse gas emissions by around 80 per cent, biofuels from other feedstocks in the US, the EU or Canada tend to have a far lower environmental benefit.

Biodiesel from vegetable oil cuts greenhouse emissions by around 40 to 55 per cent.Ethanol from corn, which is mostly produced in the US, generally cuts them by less than 30 per cent.

The United States and Brazil are the largest producers of ethanol with 48 per cent and 31 per cent of global output in 2007, while the European Union produced about 60 per cent of the global output of biodiesel, the Paris-based organisation OECD said.

It stressed that support policies including tax incentives, blending targets and trade restrictions to protect domestic output in the main producing countries such as the EU, US and Canada would total $25 billion a year for a reduction of less than 1 per cent of emissions from transport in 2015.

At the same time they cause high environmental risks, particularly in Latin America and Africa.

The OECD and the United Nation's FAO food agency said in a joint report at the end of May that global production of biofuels would more than double over the next decade, boosted by high government support, helping agriculture prices to flare up.

Rather than promoting biofuels, governments should spend their money on projects that consume less energy, the OECD said.