Biofuels: Unintended Consequences

As the New York Times reported yesterday, the Netherlands' use of palm oil for biofuel has left a rancid taste in the mouths of some who promoted the idea:

Spurred by government subsidies, energy companies became so enthusiastic that they designed generators that ran exclusively on the oil, which in theory would be cleaner than fossil fuels like coal because it is derived from plants.But last year, when scientists studied practices at palm plantations in Indonesia and Malaysia, this green fairy tale began to look more like an environmental nightmare.
Rising demand for palm oil in Europe brought about the clearing of huge tracts of Southeast Asian rainforest and the overuse of chemical fertilizer there.
Worse still, the scientists said, space for the expanding palm plantations was often created by draining and burning peatland, which sent huge amounts of carbon emissions into the atmosphere.
Considering these emissions, Indonesia had quickly become the world’s third-leading producer of carbon emissions that scientists believe are responsible for global warming, ranked after the United States and China, according to a study released in December by researchers from Wetlands International and Delft Hydraulics, both in the Netherlands.

The news media have been full of examples of actual or potential unintended consequences of subsidized biofuels. Biofuel crops are contributing to higher farm income in many instances--another important clue that further public subsidies may not be needed and may not be in the public interest.