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Mike Waters' Blog: 4 August 2008 - The costs and benefits of biofuels

Date: 04 August 2008

Mike Waters is senior insight & consultancy manager at Arval, the leading vehicle leasing and fleet management company.

It is interesting to see that the price of waste cooking oil has rocketed due to demand for homemade biodiesel.

This rise in value has even led to a spate of thefts of waste oil drums from outside pubs and restaurants. So with rising fuel prices, demand for biofuels are growing. The big question is: are the benefits worth the long term costs?

LPG provides an example of a fuel that we had high hopes for but that fell into disrepute because the Government's focus switched to renewable fuels. With credible concerns coming to the fore around use of biofuels there is increasing debate around its viability as a long term alternative to petrol and diesel.

A proportion of the fuel we currently put into our cars is made up of biofuels, although the Government is now questioning whether it should extend its own target for mixing 5% biofuel into petrol and diesel by 2010. Some welcome substance was brought to the biofuel debate recently through the publication of the Gallagher Review into the indirect effects of biofuels.

The key findings from the review highlighted that biofuels do contribute to rising food prices and the greenhouse gas savings from their use are lower than was previously thought. A combination which sounds like a nail in the coffin for growth in the use of the fuel.

However, it's not all doom and gloom as the recommendations on the back of this are much more positive. Professor Gallagher explains there is sufficient land available for the growth in biofuels and a sustainable industry is possible, without adverse effects on food production. But only if the right stocks are used, the production processes and in particular use of fertilisers are right, co-products are utilised and suitable land is used.

He maintains that for this to happen, international agreements and regulations are needed to police the market alongside the need for incentives to influence the way that biofuels are produced.

There is little doubt that biofuels will play a part in the fuel solution, probably alongside hydrogen, electric and hybrids. But to do so without causing adverse effects, production will need to be tightly monitored and controlled on an international level.

For the near future, with Professor Gallagher calling for a slowdown in the production of biofuels while further research is conducted, their impact might not be as great as was expected this time last year.