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The report finds that while biofuels will offset only a modest share of fossil energy use over the next decade, they will have much bigger impacts on agriculture and food security. The emergence of biofuels as a new and significant source of demand for some agricultural commodities – including maize, sugar, oilseeds and palm oil – contributes to higher prices for agricultural commodities in general, and for the resources used to produce them. For the majority of poor households who consume more food than they produce, higher prices can pose a serious threat to food security – especially in the short term. But it is important to keep in mind that biofuels are only one of many drivers of high food prices: weather-related production shortfalls in major exporting countries, low global cereal stocks, increasing fuel costs, the changing structure of demand associated with income growth, population growth and urbanization, operations on financial markets, short-term policy actions, exchange rate fluctuations and other factors also play a role. Given appropriate policies and investments, high prices can trigger a response in terms of increased agricultural production and employment, which could contribute to poverty alleviation and improved food security over the longer term.
The report also finds that the impact of biofuels on greenhouse gas emissions varies widely, depending on where and how the various feedstock crops are produced. In many cases, increased emissions from land-use change are likely to offset or even exceed the greenhouse gas savings obtained by replacing fossil fuels with biofuels, and impacts on water, soil and biodiversity are also a concern. Good agricultural practices and increased yields through technological developments and improved infrastructure can help reduce some of these adverse impacts. In the longer run, the emergence of second-generation biofuels may offer additional benefits.