Should We be Concerned about Competition between Food and Fuel?

This policy brief analyzes the impact of biofuel consumption mandates in the United States and the European Union on global food commodity prices, examining the 'food versus fuel' debate and proposing mechanisms to mitigate price volatility.

• There is significant disagreement among intergovernmental organizations regarding the extent to which biofuels contributed to food price increases between 2006 and 2008. Estimates range from as low as 5–16 per cent (OECD) to as high as 70–75 per cent (World Bank).
• The United States and the European Union are the dominant drivers of global biofuel demand, together accounting for 62 per cent of global consumption. Both regions have shifted toward consumption mandates—such as the US Renewable Fuel Standard (RFS) and the EU Renewable Energy Directive (RED)—as the primary policy tool to support the industry due to the high fiscal costs of subsidies.
• Biofuel mandates often rely on feedstocks that are staple food crops, including corn, wheat, soybeans, sugarbeets, and canola. Modeling suggests these mandates will continue to drive up prices; for example, one study projected that the RED and RFS would increase oilseed prices by 19 per cent and cereal prices by 5 per cent by 2020.
• The rapid increase in global biofuel production—growing from 0.19 million to 1.1 million barrels per day between 2000 and 2009—may have reduced the elasticity of global food markets. This makes markets less able to withstand production shortfalls or demand spikes, thereby exacerbating price volatility.
• Conflict between energy and agricultural markets is intensified by the rigidity of consumption targets. While agricultural supply has a natural time lag for production and harvesting, biofuel mandates are often fixed and non-responsive to fluctuations in feedstock prices or production levels.
• To mitigate negative impacts on food prices, the brief recommends reducing the rigidity of mandates by adjusting targets downward during forecasted food supply shortfalls. It also suggests implementing robust reporting requirements, noting that Article 17 of the RED already allows the European Commission to propose corrective action if biofuel production significantly impacts food prices.

APA

Charles, C. (2012). Should We be Concerned about Competition between Food and Fuel? International Institute for Sustainable Development. https://www.iisd.org/gsi/sites/default/files/pb13_foodfuel.pdf

Chicago

Charles, Chris. Should We be Concerned about Competition between Food and Fuel? International Institute for Sustainable Development, 2012. https://www.iisd.org/gsi/sites/default/files/pb13_foodfuel.pdf.

Wikipedia

{{cite report |last1=Charles |first1=Chris |title=Should We be Concerned about Competition between Food and Fuel? |publisher=International Institute for Sustainable Development |date=April 2012 |url=https://www.iisd.org/gsi/sites/default/files/pb13_foodfuel.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{charles2012should, author = {Charles, Chris}, title = {{Should We be Concerned about Competition between Food and Fuel?}}, institution = {International Institute for Sustainable Development}, year = {2012}, month = apr, url = {https://www.iisd.org/gsi/sites/default/files/pb13_foodfuel.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }