Leaked World Bank report says alternative energy usage has caused 75 per cent increase.
Last Modified: 04 Jul 2008 14:22 GMT
Biofuels have triggered a 75 per cent increase in world food prices, according to a leaked confidential report from the World Bank.
The report's author, a senior economist at the bank, said that contrary to claims by the United States government, increased demand from India and China had not been the cause of rising food prices.
"Rapid income growth in developing countries has not led to large increases in global grain consumption," the report said.
Rising food prices and the use of biofuels, which supporters claim are a greener alternative to using fossil fuel, will be discussed at a G8 summit in Japan next week.
The report estimated that compared with biofuels, higher energy and fertiliser prices had accounted for an increase of only 15 per cent in food prices.
The report said that droughts in Australia have also not had a significant impact on prices.
It highlighted Europe and the US as being the biggest proponents for the greater use of biofuels, and therefore of having the greatest effect.
All petrol and diesel in Britain has had to include a biofuels component of at least 2.5 per cent since April this year.
In response to the report, Bruegel, a Brussels-based economic think tank, also attacked the use of the fuels.
It said that biofuels fail to contribute to energy security, do not achieve cheap cuts in emissions of greenhouse gases and trigger higher food prices worldwide.
On Friday, the European Union said it would continue to push ahead with plans to see biofuels account for at least 10 per cent of energy used by the bloc's huge transport sector by 2020.
Michael Mann, an EU spokesman, said: "If you don't have targets, you don't make progress [in combating climate change]."
Friday's report said: "Without the increase in biofuels, global wheat and maize stocks would not have declined appreciably and price increases due to other factors would have been moderate."
It said that the drive for biofuels has distorted food markets by diverting grain away from food for fuel, encouraging farmers to set aside land for its production, and sparked financial speculation on grains.
But Brazil's transformation of sugar cane into fuel has not had such a dramatic impact, the report said.
Robert Bailey, biofuels policy adviser for the UK-based Oxfam charity, told Al Jazeera that the report sounded "perfectly credible".
"There's absolutely no evidence that these fuels are actually going to contribute to reducing the emissions from transport," he said.
"There's very little evidence to suggest that they're actually providing a credible alternative to oil – at best they can only be a marginal alternative - but there's huge evidence that they're causing deforestation overseas and driving up food prices with huge impacts upon poverty."
Last week, Oxfam estimated that biofuels were responsible for driving 30 million people across the world into poverty.
Bailey said: "But we're coming up against a lot resistance in rich countries [to get rid of biofuels] and I think the reason … for these policies isn't fear or security, or climate change, it's about covering continued avenues to support agricultural lobbies in rich countries."
Robert Vierhout, from the European bioethanol fuel association, disputed Oxfam's findings, saying there were undisputed environmental benefits to using the fuels and that they could be used "in a cost efficient way".
Al Jazeera and agencies