Bio-Foolishness

Wall Street Journal Europe
Monday, April 21, 2008

Poverty, famine and violence are among the supposed products of global warming in the future. Yet these calamities are with us today thanks to a key element of "green" policy, biofuels. This feel-good measure is becoming a real-world disaster.

The prices of wheat and rice this year will have doubled since 2004, according to World Bank projections. Soybeans, sugar, soybean oil and corn are expected to be 56% to 79% costlier than in 2004. The bulk of the increases have come in the past year and can be attributed to the West's push to turn these crops into fossil-fuel replacements like ethanol. Food prices will likely remain overinflated until at least 2015, the Bank says.

The result of these rising prices is that 100 million people could slip back into poverty, erasing seven years' worth of gains, Bank President Robert Zoellick warned earlier this month. Food inflation and shortages have sparked riots from Egypt to the Philippines, and six people were killed in Haiti alone during nine days of related unrest there this month.

Soaring oil prices have made it more expensive to transport food products, though the World Bank estimates this and costlier fertilizer account for only 15% of the rise in food prices. Improved eating habits in developing nations are also increasing demand for grains – both for human consumption and to feed livestock, since rapid economic growth in places like China means more people have enough money to buy meat. But the Bank notes that "almost all" of the increased growing of one of the key crops, corn, "went for biofuels production in the U.S."

It's no coincidence that the U.S. and the EU, which are leading the biofuel charge, both have powerful ag lobbies that see this latest eco-craze as a new way to milk taxpayers. U.S. and EU promotion of biofuels represent a trifecta of bad regulation: arbitrary production targets to juice demand, subsidies that encourage inefficient use of crops as fuel rather than food, and tariffs that stifle foreign competition. If only Third World consumers had the same influence as rich-world farmers.

The link between biofuel mandates and food shortages has become so clear that the European Environment Agency this month recommended that Brussels drop its target of getting 10% of its fuel for road transportation from crops and biomass by 2020. But so far, EU policy makers aren't budging. The only movement from Environment Commissioner Stavros Dimas has been to make a tautological call for "sustainability criteria" for this supposedly "sustainable" policy.

The U.S. isn't any better. As these columns noted in February, the White House and Congress had scarcely mandated 36 billion gallons of biofuel production by 2022 – five times 2006 levels – when scientific studies debunking the environmental benefits of ethanol, et al. began piling up. So far, there's no sign of any serious rethink going on in Washington.

Meanwhile, the United Nations is playing its usual head-in-the-sand role. A report issued Tuesday at a Unesco conference in Paris suggests that greater reliance on organic farming – not biotechnology – is the key to stabilizing food supplies. In truth, using plants that are genetically modified to consume less water and produce greater yields, among other benefits, is probably the best chance we have of filling the food gap in the short and medium term. But eco-radicals have been making unscientific objections to "frankenfoods" for a long time now. It's hardly surprising that the specter of famine wouldn't change their minds.

Biofuel advocates say a "second generation" of plant-based power that doesn't compete with food production for cropland will be ready by 2020. Maybe so. But even if these predictions are right, can we really afford a 12-year transition to those new fuels, given the upheaval that is already under way?

One of the dangers of the global warming "consensus" is that policy makers, once committed to a certain plan of action, will be unable to change course. Admitting that biofuels are a special-interest scam would risk denting the enviro-industrial complex that is driving so much other policy these days. Just look at the continued push for a carbon cap-and-trade system in the U.S. While in theory this is a market-based mechanism for reducing carbon emissions, Europe's experience shows that in practice it's a way for certain companies to profit at the expense of others, with no discernible effect on the environment.

Green-dreaming central planners think they can radically alter the global economy with only minimal side effects. Unfortunately, as the food shortages world-wide are showing, this untruth is just too convenient for them to give it up easily.