ANALYSIS-New, "better" biofuels are no magic bullet

By Alister Doyle, Environment Correspondent

ROME, June 4 (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 Organisation 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 U.S. 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, criticising 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 litres 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 litres of biodiesel, up 11-fold since 2000.

Part of the backlash in Rome is because no one agrees how far biofuels are to blame for the food crisis. Biofuels now take up about 2 percent of the world's crop land.

Schafer said biofuels only accounted for 3 percent of recent price rises -- British charity Oxfam says 30 percent. The United Nations said biofuels accounted for 59 percent of the increase in global use of coarse grains and wheat from 2005-07.

With the uncertainties, there are few signs that countries are reconsidering biofuels. "It shouldn't," Schafer said when asked if the summit would mark a dimming of enthusiasm.

Under U.S. plans, about a quarter of the U.S. maize crop will go to ethanol production by 2022. The European Union is aiming for as much as 10 percent of road transport fuel to be biofuel by 2020.

Congo President Denis Sassou Nguesso said his country had large potential for growing extra sugarcane to produce ethanol. "Areas can be extended at will," he said. Nigeria also said it had large amounts of cassava that could be used for fuel.

Biofuels have failed to live up to the promise as renewable energy that will help slow climate change that could itself aggravate hunger with more heatwaves, droughts or rising seas.

Best is sugarcane ethanol in Brazil which reduces greenhouse gases, relative to fossil fuels, by 80-90 percent. U.S. ethanol from maize cuts emissions by just 10-30 percent, according to a U.N. factsheet at the summit.

Cutting down tropical rainforests is worst and can release more heat-trapping carbon stored in trees than is averted by biofuels grown on the cleared land.

Second generation biofuels "from wood, grasses and other sources could reduce emissions by as much as 90 percent, but are not yet commercially viable", it said.

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