This morning, The Royal Society unveiled a report on biofuels. The study, called Sustainable Biofuels: Prospects and Challenges, raised more questions than it answered. Indeed, the scientific panel responsible accepted that there would be no yes or no answers gleaned from its near-100 pages. However, its warning was very clear – current policies on biofuels are likely to damage the environment rather than protect it…

I went along to the report-launch press conference this morning, held in an extremely grand building overlooking The Mall. The usual suspects attended – national newspaper hacks, representatives of scientific journals – oh and a couple of representatives from eco pressure groups, resplendent in hemp clothing.

Of course, you know full well that I am not a supporter of biofuels. I think they are the Emperor’s New Clothes… so I was hoping that The Royal Society would agree with me, which to some extent, they did.

However, the panel wasn’t that categorical about it…

Right at the start of the conference, the working party’s chair Professor John Pickett said that none of the panel would be able to deliver yes and no answers. I found it disappointing that the venerable institution would not nail its colours to the mast, but I was generally happy with its conclusions.

More tofu, dear

One of the attendees, who appeared to take her sartorial tips from Lord Bath, was obsessed with GM crops being used to produce biofuels… but thankfully the chairman managed to tell her she was “off issue”. Indeed, I spotted her at the coffee reception beforehand - and her sandals, hippy hair and sixties-child demeanour made her stand out as a potential environ-mental. And, indeed she was…

The report concluded that biofuels COULD be incredibly beneficial if used in the right way… but that they risked failing to deliver significant reductions in greenhouse gases and that they were potentially damaging unless the government put the right policies in place.

The main conclusion concerned the Renewable Transport Food Obligation (RTFO).

The RTFO is the UK’s implementations of the EU Biofuels Directive. The Society said that the RTFO was lacking a vital part: it failed to deliver a greenhouse gas target. This meant that the legislation did not necessarily encourage the best greenhouse gas savings.

So, although we are required to have 5% of all fuel sold in Britain from renewable sources by 2010, it does not contain a target to reduce greenhouse gas emissions.

The Society argued that all the aspects of feedstock production need to be considered. That includes the use of fertilisers which give out nitrous oxides and the land used to grow the feedstock (have they cut down a rainforest?) This is an eminently sensible position and one the industry has chosen to ignore in the rush for profits.

The report also recommends that the RTFO is extended for 20 years to stimulate the long-term investment that is needed for the industry. If we didn’t, there is a risk that we would be “locked in” to using inefficient biofuels.

I cannot disagree with these points raised by The Society. However, it seems to me that we will never be able to produce environmentally undamaging biofuels on a large scale and fuel a soaring population at the same time.

I believe that the EU and the US will cut their targets eventually. This will be disastrous for the industry… this makes the sector far too risky an investment for me… The biofuels bubble has to burst – sooner or later… P.S. If you enjoyed this article then sign up for Smart Commodities UK. It’s dedicated to searching out the investment trends that could provide our biggest profit opportunities for the next decade…

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