From: Reuters
Published January 14, 2008 09:25 AM

OECD wary on biofuel policies

By Tamora Vidaillet

PARIS (Reuters) - Governments may be getting a clearer picture of the shortcomings of current biofuel policies but the likelihood they can remedy any wrongs looks far from certain, a senior OECD official said on Monday.

Loek Boonekamp, a division head in the OECD's Agro-food Trade and Markets Division, singled out price-supporting trade barriers, erected by Europe and the United States, as one example of "wasteful" and "distorting" steps taken to date.

But even governments aware of policy weaknesses would find it very hard to backtrack on such supportive policies in the face of powerful lobby groups.

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"I'm not very optimistic that because we say that the policies are bad and wasteful that governments will go away and do something else," he told the Reuters Global Agriculture and Biofuel Summit in Paris.

"Support policies generate vested interests...once these vested interests are there and these support policies are well entrenched, it is incredibly difficult to get rid of this," he said.

Governments need to free up trade conditions for biofuels and the ingredients used to make them to ensure production on a global scale makes more economic sense, he said.

SECOND GENERATION

They should also spend less public funds on supporting the development of traditional biofuels, made of grain, oilseed and beets, because they contribute to lofty food prices and have adverse impact on the environment.

"It might be better use, once everything is said and done, of government funds to stimulate the research and development of second generation technologies," he said.

Second generation biofuels involve the breakdown of non-edible crops and even municipal waste by enzymes to create liquid motor fuel.

That would be better than investing in first generation technology which soon could be out of date, he said.

It was not a given that second generation biofuels would be a force to be reckoned with in the next 10 years, he said, adding that what was needed was to find more rapid and less expensive ways to break down the enzymes.

Debate also needed to focus more on the demand side of the energy picture than on looking to biofuels as a solution, with the OECD believing bigger gains could be secured at lower cost through other means.

Greater efforts to develop fuel efficient cars and the introduction of an energy tax on all fuels would do more to address imbalances on energy markets than by mandating the use of biofuels in transportation, he said.

In September, the OECD published a report suggesting that biofuels had far fewer environmental and economic benefits than many people think.

Titled "Biofuels: Is the cure worse than the disease?," the report called into question the extent to which biofuels can increase the security of energy supplies and pointed to their role in pushing up food prices.

(Additional reporting by Sybille de La Hamaide; editing by Michael Roddy)

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