Britain says to slow introduction of biofuels

LONDON (Reuters) - The British government said on Monday it would slow the introduction of biofuels to address concerns that switching the use of land could exacerbate climate change and push up food prices.

The government accepted the conclusions of a report it commissioned from Ed Gallagher, chair of the Renewable Fuels Agency, which called for a more cautious approach until more evidence was available.

"The Gallagher report ... concludes that the introduction of biofuels should be slowed until policies are in place to direct biofuel production onto marginal or idle land, and that these are demonstrated to be effective," Transport Secretary Ruth Kelly told parliament.

"In short, the report concludes that the government should amend but not abandon its biofuel policy," she added. "I agree with these key findings."

Biofuels are mainly produced from food crops such as wheat, maize, sugar cane and vegetable oils and are seen as a way to cut greenhouse gas emissions that contribute to climate change.

Critics say diverting land from food crops to produce biofuels has helped push up global food prices and in some cases has led to the destruction of rain forests.

The European Union's proposal to get 10 percent of road transport fuels from renewable sources, such as biofuels, by 2020 has faced growing criticism.

"This review sends a stark message -- using food crops to fuel our cars risks making climate change worse and increasing food prices for the world's poorest people," said Doug Parr, chief scientist of environmental group Greenpeace.

"Gordon Brown must now follow one of the key recommendations of his own report and call for an end to the EU's hastily adopted and potentially damaging biofuel targets."

Clare Wenner, head of biofuels for the Renewable Energy Association, said the measures would create a difficult environment for biofuels investors.

"The slowdown is disappointing but when you couple that with yet more reviews, yet more conditions ... it makes the whole environment very difficult," she said. "My big fear is that investors in this country will walk."

The report coincided with a summit of the Group of Eight rich nations in Japan where food prices were high on the agenda.

NEW RESEARCH

"Over the last 12 months, new research has identified that land use change causes significant greenhouse gas emissions, sufficient in many cases to overcome the savings from biofuels for several years," Gallagher told Reuters in an interview.

"When we look at that research, we've concluded we need controls in place to make sure those adverse effects don't happen and we need a slow down in the anticipated rate of biofuels growth to get those controls in place."

The current requirement in Britain is that 2.5 percent of fuel supplied for road transport should be from renewable sources, rising to 5 percent in 2010/11, a rate of increase of 1.25 percent a year.

Gallagher recommended the rate of growth should slow to 0.5 percent a year, only rising to 5.0 percent in 2013/14, with further expansion only if biofuels are demonstrably sustainable.

The review said current policies, if left unchecked, could lead to higher food prices and increase poverty. In India, for example, it estimated an extra 10.7 million people would drop below the poverty line due to biofuels.

"Our view is in the short term it (the impact on food prices) is significant, in the long term not quite as significant," Gallagher said.

(Reporting by Katherine Baldwin and Nigel Hunt; Editing by Catherine Evans)