Biofuel Subsidies: Good, Bad or Just Wrong?

Biofuel subsidies have long been a contentious proposition.

Advocates state that they are fundamental to developing cleaner energy alternatives and that, long term, biofuels will create new revenue options for farmers.

Opponents believe that biofuels contribute significantly to world food shortages, raise prices, are detrimental to the interests of the world’s poor, and/or are in fact bad for the environment as poor farmers are converting forests into fields to grow crops.

Across many developing countries, new policies and procedures incentivize the production of crops that will be used for fuel, further compounding the problem of food shortages.

Between 2000-2007, the production of biofuels from crops that could have been used for food, increased by over 200%. Earlier this year, the World Food Program reported that there has been a 40% increase in the cost of food and asked for $755 million, to supplement its initial budget of $3.1 billion, in order to combat the increase in prices.

Industry experts state that over one billion people are now suffering from hunger worldwide. A report released earlier this year by the OECD revealed that biofuels have a minor impact on curbing the production of greenhouse gases and bolstering countries’ energy security. They do, however, have a significant impact on world crop prices.

Most recently, the UN’s Food and Agriculture Organization has joined the growing legion opposing biofuels.


Current policies must be “urgently reviewed in order to preserve the goal of world food security, protect poor farmers, promote broad-based rural development and ensure environmental sustainability,” writes Jacques Diouf, the executive director of the UN’s FAO.

Are biofuels an elitist mechanism that ultimately raises poverty and should be ended until a better solution can be conceived of? Or are rising food prices just a temporary set back, one that will be compensated for by future benefits?