Fighting Climate Change: Cures worse than the disease?
By Lykke E. Andersen*, La Paz, 28 April 2008.

The Intergovernmental Panel on Climate Change and Al Gore jointly won the 2007 Nobel Peace Prize "for their efforts to build up and disseminate greater knowledge about man-made climate change, and to lay the foundations for the measures that are needed to counteract such change".

I am sure these enourmous efforts were done with the best of intentions, but I am not so sure they are contributing to World Peace. Certainly, a lot of wasteful and harmful policies are being implemented under the guise of fighting climate change.

One of the worst policies is probably the multi-billion dollar subsidies to turn food crops into so-called “green fuel” (ethanol and bio-diesel). Not only do these programmes cost about a hundred times more than the average carbon sequestration project (1), but they also contribute to increasing the prices of basic food crops, the high prices of which are currently causing food riots in many poor countries (see recent articles in The Economist: Food and the poor: The new face of hunger; Food: The silent tsunami; Famine, farm prices and aid: Food for thought).

Since both demand and supply of food crops is very inelastic, even small shocks to either demand or supply can cause big changes in food prices. And the sudden increase in the demand for crops for the production of bio-fuel is no small shock.

Global ethanol production reached 20 million tonnes in 2006 and is growing at double or triple digit rates. Bio-diesel production in the European Union alone increased from 4.9 million tonnes in 2006 to 10.3 million tonnes in 2007. As countries struggle to reach the legislated targets for bio-fuel consumption, they convert hundreds of millions of tonnes of food crops (wheat, rye, barley, sugar beat, maize, rapeseed, and others) into fuel each year. New Zealand is even turning cows milk into bio-fuel, and France is considering whether it is more profitable to turn grapes into fuel instead of wine. The price of beer in Germany increased by about 40% in 2007 as farmers dedicate barley to fuel instead of beer production (2).

Developing countries are not obliged to meet bio-fuel targets, but are encouraged by the high prices to clear forest and produce crops for bio-fuels. Even Africa, which is more plagued by hunger than any other continent, is turning crops into bio-fuel. South Africa, Malawi, Swaziland, Zimbabwe, Ethiopia, Kenya, Tanzania and Mozambique are all commercial bio-fuel producers, and bio-fuel projects are also under way in Burkina Faso and Madagascar (2).