Is biofuel a sustainable substitute for oil, and are investors ready for it?
This is the year biofuels become a fact of life—by law. From the beginning of April, under the Renewable Transport Fuels Obligation (RTFO), suppliers of petrol and diesel must ensure that 2.5 per cent of the total volume is derived from renewable energy sources. This means that we will be putting more agricultural crops into our fuel tanks—and quite possibly fewer into our mouths.
There was a time when biofuels were seen as a magic bullet: a self-replenishing way of reducing the greenhouse gases that our cars belch out. But their stock has fallen rapidly. A white paper published by Tim Yeo's Environmental Audit Committee in January concluded that greenhouse gas emissions could be more easily reduced by "planting forests and restoring habitats". Other critics claim some feedstocks (such as maize, the prime source of US ethanol) consume almost as much energy to produce as the final fuel provides. There are also concerns that farmers are switching from food to fuel crops in developing countries where starvation is already a problem. And there are worries that biofuel demand for feedstocks is pushing up food prices.
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