Bloomberg slams U.S. energy law over corn ethanol

By Louis Charbonneau and Timothy Gardner

UNITED NATIONS (Reuters) - A new U.S. energy law will cause an increase in global food prices and lead to starvation deaths worldwide because it continues to promote corn ethanol, New York Mayor Michael Bloomberg said on Monday.

"People literally will starve to death in parts of the world, it always happens when food prices go up," Bloomberg told reporters after addressing a U.N. General Assembly debate on climate change.

The new U.S. law, which came into force late last year, increased fivefold the required amount of blending of biofuels like corn ethanol -- creating higher demand for the grain that will push up corn prices.

By 2022 some 15 billion gallons of the required 36 billion could come from corn ethanol, with the rest mandated to come from lower-carbon sources such as crop waste and switchgrass.

The new law favored corn ethanol by continuing to subsidize it while taxing sugar ethanol, Bloomberg said. This is because corn ethanol is mainly domestically produced while sugar ethanol is imported from Brazil and subject to import tariffs.

Bloomberg joined other critics of corn ethanol production in saying it was not a net producer of energy, unlike sugar ethanol. That is, corn ethanol does not yield more energy than it takes to produce, transport and use it.

Biofuels are seen by some people as a means of reducing greenhouse gas emissions and boosting energy security by providing an alternative to fossil fuels.

Richard Branson, the billionaire British entrepreneur and head of Virgin Group, agreed that sugar ethanol was preferable to corn-based biofuel. It would make more sense, he said, for the United States to grow food and let countries like Brazil use their land to produce sugar for biofuels.