"Better" biofuels are no magic bullet

By Alister Doyle, Environment Correspondent - Analysis

ROME (Reuters) - With biofuels under fire for stoking food prices, many leaders at a U.N. summit in Rome are pinning hopes on emerging technologies based on plant waste rather than crops to fight global warming.

Yet commercial production of such biofuels, for instance using woody cellulose, grasses or algae, is years away and so scant comfort for up to 1 billion people threatened by hunger partly caused by a biofuel "grain drain".

"Second-generation biofuels are not expected to be produced on a commercial basis" in the next decade, according to a report by the U.N.'s Food and Agriculture Organization and the Organization for Economic Cooperation and Development.

Even so, better biofuels are a mantra for many leaders at the 151-nation June 3-5 summit. French President Nicolas Sarkozy said developing them should be an "absolute priority".

And the summit is considering a draft declaration that would urge more research into non-food biofuel crops, such as jatropha trees, and "second-generation technologies ... which are focused on cellulose from stalks and leaves rather than food sources".

Such new fuels would shift away from crops such as corn, wheat, maize, soya, palm oil or sugar, blamed for driving up food prices alongside factors such as a rising human population, changing diets, high oil prices and bad weather.

"For these new technologies to be commercially viable it will take more than five years, but less than 10," said Agriculture Secretary Ed Schafer, more optimistic than the FAO and the OECD report.

He said he had visited a plant in Florida trying to generate fuel from orange peel. "The process is pretty extensive to get little yield."

Schafer said he doubted there could be a "positive agreement" on biofuels at the meeting, marred by wrangling about the best way to promote such renewable fuels to sharpen efforts to slow global warming blamed on fossil fuels.

HUNGRY

"I doubt that anyone would go hungry to fill up their car's fuel tank," Brazilian President Luiz Inacio Lula da Silva told the summit, criticizing U.S. policies of ethanol from maize.

The summit draft urges more research and better standards for biofuels, and reassessment of subsidies and tariffs.

Yet new biofuels could have extra drawbacks of their own -- such as the high costs and disruption of trucking low-cost straw or woodchips to processing plants.

Among companies researching second generation biofuels are Canada's Iogen, backed by Royal Dutch Shell (RDSa.L) and Goldman Sachs Group (GS.N) and U.S. Verenium (VRNM.O).

The world produced 52 billion liters of ethanol in 2007, mostly in the United States and Brazil, three times the level in 2000, according to U.N. data. It produced 10 billion liters of biodiesel, up 11-fold since 2000.