Bio-fuels are not just a waste of money and resources, they end up making world hunger far worse a problem
Hype about bio-fuels leads to hunger, not a cleaner Earth
Spectators at last month's Daytona 500 in Florida were handed green flags to wave in celebration of the news that the race's stock cars now use gasoline with 15 per cent corn-based ethanol. It was the start of a season-long television marketing campaign to sell the idea of bio-fuels.
On the surface, the self-proclaimed "greening of NASCAR" (National Association for Stock Car Auto Racing) is merely a transparent (and, one suspects, ill-fated) exercise in an environmental form of whitewashing for the sport - call it "greenwashing". But the partnership between a beloved American pastime and the bio-fuel lobby also marks the latest attempt to sway public opinion in favour of a truly irresponsible policy.
The United States spends about $6 billion a year on federal support for ethanol production through tax credits, tariffs, and other programmes. Thanks to this financial assistance, one-sixth of the world's corn supply is burned in American cars. That is enough corn to feed 350 million people for an entire year.
Support of rapid growth in bio-fuel production has contributed to disarray in food production. Indeed, as a result of official policy in the US and Europe, including aggressive production targets, bio-fuels consumed more than 6.5 per cent of global grain output and 8 per cent of the world's vegetable oil in 2010, up from 2 per cent of grain supplies and virtually no vegetable oil in 2004.
This year, after a particularly bad growing season, we see the results. Global food prices are the highest they have been since the United Nations started tracking them in 1990, pushed up largely by increases in the cost of corn. Despite the strides made recently against malnutrition, millions more will be undernourished than would have been the case in the absence of official support for bio-fuels.
We have been here before. In 2007 and 2008, the swift increase in bio-fuel production caused a food crisis that incited political instability and fuelled malnutrition. Developed countries did not learn. Since 2008, ethanol production has increased by 33 per cent.
Bio-fuels were initially championed by environmental campaigners as a silver bullet against global warming. They started to change their minds as a stream of research showed that bio-fuels from most food crops did not significantly reduce greenhouse gas emissions - and in many cases, caused forests to be destroyed to grow more food, creating more net carbon-dioxide emissions than fossil fuels.
Today, it is difficult to find a single environmentalist who still backs the policy. Even the former US vice president and Nobel laureate Al Gore - who once boasted of casting the deciding vote for ethanol support - calls the policy "a mistake". He now admits that he supported it because he "had a certain fondness for the [corn] farmers in the state of Iowa" - who, not coincidentally, were crucial to his presidential bid.
It is refreshing that Mr Gore has now changed his view in line with the evidence. But there is a wider lesson. A chorus of voices from the left and right argue against continued government support for bio-fuel. The problem, as Mr Gore has put it, is that "it's hard once such a programme is put in place to deal with the lobbies that keep it going".
Politicians can't stop such rent-seeking behaviour. What they can do is craft well-considered policies that maximise social welfare. Unfortunately, when it comes to policies marketed as reining in global warming, protecting the environment, or creating "green jobs", we have a tendency to make hasty decisions that don't pass the test.
Government support for bio-fuel is only one example of a knee-jerk "green" policy that creates opportunities for a self-interested group of businesses but does very little for the planet. Given the financial stakes, it is little wonder that alternative-energy companies, "green" investment firms, and bio-fuel producers are lobbying hard for more government largesse, and highlighting its supposed benefits for the environment, energy security, and even employment - none of which withstand scrutiny.
One group is already sold: US presidential contenders. In Iowa last month, potential Republican candidate Newt Gingrich derided "big-city attacks" on ethanol subsidies. An Obama administration official also declared recently that there is "no reason to take the foot off the gas" on bio-fuels, even amid the highest food prices the world has seen. In fact, there are millions of reasons - all of them suffering needlessly - to apply the brakes.
Bjørn Lomborg is the author of The Sceptical Environmentalist and Cool It and the director of the Copenhagen Consensus Centre
© Project Syndicate 2010