Are Biofuels a Sustainable Investment?

Various jurisdictions across North America and Europe have been mandating increased use of biofuels. In Canada the federal government is requiring 5% average renewable fuel content by 2010. By 2017 the U.S. wants to have 24% of fuel coming from crops.

Already farmers and agricultural producers have started to recognize increased economic gains as corn is up by 30% compared to where it was a couple years ago and land prices are escalating. Biofuel producers such as CR Fuels and BioStreet Canada have been able to access generous government subsidies to increase production.

Although biofuels have been packaged as a green solution some environmentalists have serious concerns. George Monbiot, the author of Heat, is leading the charge. The main concern with the use of biofuels is redirecting land from food production to fuel production and the impact on the world's food supply (particularly the poor).
In the recent article in the Guardian Monbiot points to rainforest destruction due to palm oil and soybean production for biofuels. The Globe and Mail reports that some farmers are foregoing crop rotation and conservation initiatives to take advantage of rising corn prices. With corn prices doubling from the beginning of last year and wheat prices reaching ten year highs the impact on biofuels is starting to impact poor consumers around the globe. Even more dangerously is that stockpiles of wheat and grain are at twenty-five year lows.

It is going to be difficult for biofuels to maintain their green cachet with prominent environmentalists calling for a moratorium. If corn and wheat prices continue to rise and subsidies are removed the industry may have a difficult time staying competitive. One answer supported by environmental groups such as the National Resources Defense Council is exploration of cellulosic biofuels. Cellulosic biofuels use the entire plant - cornstalks and corncobs, or even using waste byproducts of industrial processes such as tree bark to make fuel. If biofuels are going to be part of a sustainable solution in the mid to long term it will be by using waste products, not be redirecting food supplies to the gas tank.