The UK's “irrational” use of biofuels will cost motorists an extra £460 million this year, increasing to £13 billion by 2020, a leading think tank claims.
A report by Chatham House says the growing reliance on sustainable liquid fuels will also increase food prices and threaten food security.
The report The Trouble with Biofuels: Costs and Consequences of Expanding Biofuel Use in the United Kingdom, says biofuel use in the UK is set to increase significantly despite continued sustainability concerns.
Author Rob Bailey says that biodiesel made from vegetable oil was worse for the climate than fossil fuels and biofuels in general are a more expensive source of energy than fossil fuels.
From this month EU law demands that 5% of the UK's transport fuel is biofuel. Since 2008, the UK has required fuel suppliers to add a growing proportion of sustainable materials into the petrol and diesel they supply.
These biofuels are mainly ethanol distilled from corn and biodiesel made from rapeseed, used cooking oil and tallow.
However, the report says current biofuel standards do not ensure biofuel use is sustainable because:
• Agricultural biofuel use increases the level and volatility of food prices, with detrimental impacts on the food security of low-income food-importing countries.
• Agricultural biofuel use also indirectly drives expansion of agriculture into areas of high carbon stock such as rainforest or peatland, resulting in indirect land-use change, the emissions from which may outweigh any greenhouse gas savings the biofuels are able to offer.
• Biodiesel from waste products such as used cooking oil or tallow offer the most favourable sustainability characteristics; however, the risk of indirect emissions increases at higher levels of use and may already be material.
• Neither indirect land-use change nor food security is addressed in UK sustainability criteria. In the absence of such safeguards, increasing biofuel consumption could have significant environmental and social consequences outside the United Kingdom. It is unclear whether such safeguards will be agreed at the EU level.
It adds that biofuels are not a cost-effective means to reduce emissions from road transport because they are an expensive way of reducing carbon emissions.
The report calculates the five per cent biofuel target is likely to cost UK motorists in the region of £460 million in the current financial year (2013/14).
And if the UK is to meet its EU obligations, the annual cost to UK motorists is likely to rise to around $2 billion (£1.3 billion) a year by 2020.
Biofuels are liquid fuels produced from biomass that can be substituted for either petrol or diesel for use in transport. The two principal biofuels are ethanol and biodiesel, or Fatty Acid Methyl Ester (FAME).
Ethanol is generally produced through a process of fermentation of carbohydrate or sugar crops such as corn, wheat, sugar cane and sugar beet, and can be blended with petrol. Biodiesel is produced through the esterification of fats. Feedstocks include edible oils such as rapeseed, palm and soybean oil, but also waste products such as used cooking oil (UCO) and tallow.
Rob Bailey, senior research fellow at Chatham House, said: “Biofuels increase costs and they are a very expensive way to reduce carbon emissions,"
“The EU biofuel mandates are also having hugely distorting effects in the marketplace. Because used cooking oil is regarded as one of the most sustainable types of biodiesel, the price for it has risen rapidly.
He says that once the indirect effects have been taken into account, biofuels made from vegetable oils actually result worldwide in more emissions than you would get from using diesel in the first place.
"Plus you are asking motorists to pay more for the fuel - it makes no sense, it is a completely irrational strategy."
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