The Gallagher Review: False Solutions to a Real Problem
Last month, Oxfam GB launched an emergency appeal for East Africa. Oxfam’s last call for emergency help for the region was in 2006, and there have been countless others before, precipitated by drought, conflict or, like now, both. But this time, something is different. There is food on shelves, but people can’t afford it. The World Food Programme, hamstrung by high food prices, is scrambling around for supplies and funding where it can.
There are various factors behind the vertiginous climb in world food prices — poor harvests, high oil prices, low dollars, growing economies. With the exception of biofuels, however, few, if any, are within the hands of Western policymakers.
The widely respected International Food Policy Research Institute estimates that biofuels explain about 30 percent of the global food price crisis, a number echoed by the IMF. By including indirect effects, such as biofuels’ impact on cereal reserves, the World Bank puts it at 70-75%. All three institutions are unanimous in fingering biofuels as, if not the armed robber, then at least the getaway driver in a crisis that has already dragged over 100 million people into poverty and last year cost developing countries over US$ 300 billion.
Most people in rich countries that produce and consume biofuels do not realize that they are funding this unfolding catastrophe. In fact, they pay twice: first as taxpayers, by bankrolling the absurd smorgasbord of tax breaks and subsidies that keep rich countries’ bloated biofuel industries afloat; and second, as consumers, by paying more at the checkout for their groceries, and very often more at the pump for their fuel. Last year rich countries spent in the region of US$ 15 billion supporting biofuels. But the heaviest costs are borne by the poor, who spend over half of their incomes on food and are now having to make the kinds of choices that we in the rich world only contemplate in our worst nightmares.
No policy costing this much can be justified, least of all when the purported benefits for the environment and energy security are illusory.
Individually, politicians say that biofuels must be re-examined in light of the food crisis. But collectivel, at international conferences (like the recent G8 Summit and UN High Level Conference in Rome), they hide behind watered-down joint-statements calling for more research and international standards. Then, safe in the knowledge that they can always keep calling for more research and that international standards are a decade or more away, they continue to ramp-up production.
A perfect example is the UK. In response to the growing evidence that biofuels drive-up food prices and trigger land-use change, the UK government announced a review of biofuels in February. The resultant Gallagher Review, produced by the Renewable Fuel Agency (responsible for the UK’s biofuel programme — no conflict of interest there then!) was published last month. It is a classic fudge. It finds, correctly, that the biofuel programmes of the UK and EU do not address impacts on food prices and land-use change, and therefore will contribute to increasing global poverty and carbon emissions. But incredibly, it recommends that the subsidies and blending mandates underpinning these policies should not be scrapped, nor even frozen at current levels because “upon the balance of evidence … this would reduce the capacity of the industry to respond to the challenges of transforming its supply chain and investing in advanced technologies”.
How Gallagher reached this conclusion remains unclear, as the report provides no data on how much taxpayers’ money companies need to ‘transform’ their supply chains — apparently industry thinks it is quite a lot. And the suggestion that ‘advanced’ biofuels come through subsidisation of current biofuels is complete nonsense — so-called second-generation biofuels, especially renewable substitutes for biodiesel, use completely different production pathways. Existing subsidies simply increase the risk of technological lock-in.
So what does Gallagher recommend instead of scrapping subsidies? That’s right, more research and new standards.
Gallagher’s standards would direct biofuel production to ‘idle’ and ‘marginal’ lands, in theory thereby minimising competition with food and associated displacement effects. But this raises a whole host of unanswered questions. How will it work internationally, particularly within the WTO, where it is notoriously difficult for members to differentiate among products on the basis of how they were produced? And what exactly is ‘marginal land’? In Oxfam’s experience, it is usually land being used by the most vulnerable members of societies — women, minorities or indigenous populations.
The Review’s starting position is that, done right, the current generation of biofuels are desirable. But they are not — even if Gallagher’s ideas can be developed in time to avert a humanitarian and ecological catastrophe, it won’t stop biofuels becoming a colossal waste of money.
This is all academic though, as there is little chance that any such standards will achieve international endorsement any time soon. The European Commission has repeatedly refused to countenance any safeguards to deal with the indirect effects of using arable lands in the North to produce biofuels, while the industry howls whenever anyone mentions regulation.
In the meantime, Northern governments will wring their hands over the continuing food crisis, and make promises of aid that are a derisory fraction of what they spend each year on biofuel support. And everyone can nod sagely about the need for more research and standards, then carry on increasing subsidies and blending rates as if nothing is the matter.