Heightened political worries about climate change, energy security and soaring oil prices have triggered a race to produce the alternative fuel, made from sugars, cereals and vegetable oils, as rules are enforced stipulating the minimum amounts that must be blended with fossil fuels.
A key threat of high biofuel costs is a pump price hike. In the United States this year law-changes requiring greater blending sparked an ethanol shortage and cost surge which refiners passed on at the pump. Problems loom at the production end too. The difficulty for refiners is matching these targets without harming the environment through deforestation. "
As capacity explodes the expected forest clearance could release a surge of carbon dioxide into the atmosphere, environmental campaigners say. "Otherwise they'd be selling gasoline at an eye-watering loss,"
"the costs of an EU ethanol shortagewould be passed on to the consumer because retail markets are so tight,"
The hitch is that the explosion in capacity taps sources like Indonesia and Brazil, where new palm oil and sugar plantations could threaten rainforests.
Burning them would more than wipe out any climate change advantage. Malaysia is due to start selling a 5 percent palm oil-diesel blend at domestic pumps in October, while Indonesia -- which plans to open six million hectares to biofuel plantations -- has set a 10 percent biofuels target by 2010.
"We've seen the rate of deforestation in the Amazon," said leading environmental campaigner George Monbiot. "Who's to stop them from clearing land for palm oil? Who's going to blow the whistle?" It is a problem the oil industry says it is taking seriously. "It's very difficult for us to police and enforce compliance with national law," Messen said.
Better news on the way
"Such environmental problems could have a longer-term fix, from as early as 2010, as refiners research alternative biofuel feedstock, using for example the shrub Jatropha which can grow in semi-arid areas, or waste like straw and woodchips."
Reuters AlertNet -Source
