John Mathews is Professor of Strategy at the Macquarie Graduate School of Management at Macquarie University, Sydney.
To take a more balanced view of biofuels production, we need first to get some of the myths out of the way.
No 1 - biofuels are behind the rise in food prices. While many factors affect high food prices, it is the subsidised conversion of US corn crops to ethanol that's the concern. This issue came to stand for biofuels production globally. But Brazilian ethanol is produced from sugar cane - and world sugar prices have no discernible effect on food prices in food-riot countries.
No 2 - biofuels cause deforestation. Parts of Malaysia and Indonesia are cutting down tropical rainforest for palm oil plantations, but ethanol from sugar cane grown in Brazil involves no deforestation at all.
No 3 - biofuels actually increase greenhouse gas emissions. Production in the agriculture belt in Europe and the US involves such heavy use of fossil fuels (fertilisers, transport, and biorefining) that any greenhouse gas reduction is minimal, or negative. Add to this some land use changes in South East Asia, such as drying of peat bogs, that release greenhouse gas emissions dwarfing anything saved by burning biofuels in the North, and you have the case against biofuels, period. Again, the bad practices of the North, and of some in the South, are allowed to stand for all.
No 4 - growing biofuels takes food out of the mouths of starving Africans. Africa is a bread-and-energy basket waiting to happen - held back by perverse Western policies that include blocking access to agricultural markets of the North. Reversing these policies would make all the difference between peasants scratching for a living and reaping high yields from abundant crops. African starvation is a product of agricultural low yields and the failure of a Green Revolution - now starting, finally, to get under way.
The key to dispelling these and other myths is to distinguish between biofuels grown in the North with minimal benefits and those grown responsibly and sustainably in the South, where the benefits are huge. Brazil, for example, produces ethanol from tropical sugar cane where the energy created is 8.3 times the energy input along the value chain.
To promote beneficial biofuel production in the South, and eliminate the non-beneficial production of biofuels in the North (as well as the cases of bad practice in the South) two key issues need to be resolved: countries of the North need to open their markets to imports instead of trying to be self-sufficient and the South needs to guarantee sustainable and responsible production.
These two elements would make for a powerful solution to the present impasse. It would amount to a global trade agreement on responsible biofuels production called a "Biopact".
A case of regulated trade, the Biopact would replace open-slather biofuels production, with a phased and responsible shift to production taking place where it has most potential to offer greenhouse gas benefits, offering both a solution to the current Doha impasse in world trade talks, and a huge fillip to responsible industrial development in the South.