Biofuels and the Food Price Crisis: A Survey of the Issues

While the precise contribution of biofuels to surging food prices is difficult to know, policies promoting production of the current generation of biofuels are not achieving their stated objectives of increased energy independence or reduced greenhouse gas emissions. Reaching the congressionally mandated goal of blending 15 billion gallons of renewable fuels in gasoline by 2015 would consume roughly 40 percent of the corn crop (based on recent production levels) while replacing just 7 percent of current gasoline consumption. Moreover, while it has long been known that the net energy and greenhouse gas emission benefits of corn-based ethanol are relatively small because its production is energy-intensive, recent scientific studies suggest that the current generation of biofuels, including biodiesel made from palm oil, soybeans, and rapeseed, as well as corn-based ethanol, actually add to greenhouse gas emissions relative to petroleum-based fuels when land use changes are taken into account. That is, greenhouse gases are released when forests are cut down or grasslands cleared to plant biofuels, or food is planted on new acreage to replace crops diverted to fuel elsewhere. In sum, the food crisis adds urgency to the need to change these policies but does not change the basic fact that there is little justification for the current set of policies.