A document prepared for the G20 governments by the World Bank, the World Trade Organization and eight other international agencies says that governments should stop subsidies for biofuels, according to reports this week. (The report is here.)

From Reuters:

Governments should scrap policies to support biofuels because they are forcing up global food prices, according to a report by 10 international agencies including the World Bank and World Trade Organization.. . .

"If oil prices are high and a crop's value in the energy market exceeds that in the food market, crops will be diverted to the production of biofuels, which will increase the price of food," said the report.

The report bolsters a movement to stop or reduce ethanol subsidies in the United States and elsewhere. While the ethanol industry disputes the impact of biofuels on food prices, citing economic analyses, other studies have questioned the benefits of biofuels, saying that in addition to driving up food prices, they could increase greenhouse gas emissions and contribute to water shortages.

Here are some details from the report:

During the 2007-2009 period biofuels accounted for a significant share of global use of several crops - 20% for sugar cane, 9% for vegetable oil and coarse grains and 4% for sugar beet. Projections encompass a broad range of possible effects but all suggest that biofuel production will exert considerable upward pressure on prices in the future. For example, according to one study international prices for wheat,coarse grains, oilseeds and vegetable oil could be increased by 8%, 13%, 7% and 35% respectively. Moreover, as long as governments impose mandates (obligations to blend fixed proportions of biofuels with fossil fuels, or binding targets for shares of biofuels in energy use), biofuel production will aggravate the price inelasticity of demand that contributes to volatility in agricultural prices.

Electric vehicles and plug-in hybrids have been enjoying the limelight recently as leading candidates for the energy efficient cars of the future, but a car powered by an internal combustion engine just rolled away with the top prize in the Automotive X-Prize. This contest has seen teams race vehicles that achieve the at least the equivalent of 100 miles per gallon of gasoline (MPGe) (under prescribed driving conditions), and that pass U.S. emissions and safety standards.

On Thursday, the Edison2 team won the $5 million prize in the "mainstream" vehicle class, which required the car to transport four passengers and to have at least a 200-mile range. The team's car achieved 102 MPGe. The mile-per-gallon equivalent figure is a way to compare the efficiency of cars that use different kinds of fuels or energy sources, in a competition that included cars powered by natural gas, ethanol, gasoline, diesel, and energy stored in batteries. It's calculated by determining how far the car travelled and how much energy it consumed relative to the energy content of a gallon of gasoline.

The team's design formula was simple: make the car extremely light and aerodynamic, so that it can be powered by a small 250 cc, single-piston motorcycle engine. The winning car weighed 376 kilograms (830 pounds) and had a coefficient of drag of 0.15, far less than the Prius, which with a coefficient of drag of 0.25 is one of the best on the road today. Innovations included an aerodynamic body design like a diamond (rather than the rectangle base sedans have) that's supposed to deflect other vehicles in the case of an accident, and lightweight wheels that project out from the sides of the car and serve to absorb impact in an accident.

Edison2's winning vehicle.

The team started out expecting to design a hybrid car that could capture energy from braking using batteries and an electric motor. But it decided that the weight of the batteries and motor simply weren't worth it.

While achieving 100 MPGe is a challenge, it's not surprising that it was possible with a car that's less than a third of the weight of a Prius. And if the car is to help make a dent in fuel consumption a lot of people will have to buy it. To address this, the prize was designed to ensure that the cars would have good performance: the winner had to win a race, not just achieve a certain mile-per-gallon figure. But the Edison2 car certainly looks strange and it doesn't have much space inside it. Especially in the United States, where gas prices remain relatively inexpensive, it's hard to imagine the masses rushing out to buy it.

Winners in two "alternative" categories were also announced on Thursday. In these categories the vehicles only needed to seat two people and have a 100 mile range. In the alternative vehicle class for tandem vehicles (where people sit one behind the other), the winning car was looks like a motorcycle with an aerodynamic enclosure for the passengers. During the award ceremony, it was announced that the vehicle achieved the equivalent of 187.6 miles per gallon, using batteries and an electric motor--a separate press release put the figure at 205 MPGe.

The winner of alternative class with passengers sitting side-by-side was Li-ion Motors, with a battery-powered car that looks like some sort of a green vegetable (but which President Obama's science advisor John Holdren thought was quite good looking) and gets the equivalent of 187 mpg.

The MPGe figures for these battery powered vehicles are a little misleading, because they do not take into account the energy lost when the electricity is generated and transmitted. In the United States, the vehicles will do a good job offsetting oil consumption, since electricity isn't generated using petroleum here. But if the power comes from a coal plant, it's possible that the Edison2's ethanol vehicle could result in fewer carbon dioxide emissions--especially if the ethanol comes from cellulosic sources such as grasses and corn stalks.

Fossil fuels are the backbone of economies worldwide, so governments spend a lot to support them. A new report from Bloomberg New Energy Finance says altogether governments spent between $43 anf $46 billion on renewable energy and biofuels last year, not including indirect support, such as subsidies to corn farmers that help ethanol production. Direct subsidies of fossil fuels came to $557 billion, the report says.

This disparity raises the question--if the report is right and fossil fuels require so much backing, can they compete with renewables without government support? After all, some renewables--such as sugarcane based biofuels and some wind farms--can already compete with fossil fuels. Without the huge government subsidies for fossil fuels, wouldn't they be eclipsed by renewables?

The answer, for now, is no. So far renewables just can't provide enough fuel and power to displace fossil fuels. The infrastructure to make and distribute them isn't adequate, and many renewables have shortcomings that can make them difficult to work with--solar panels, for example, only generate electricity when the sun is out. If the fossil fuel subsidies disappear, gasoline and electricity prices will increase. That will help renewables compete, and increase in scale, but it will take years--likely decades--for them to reach levels high enough to replace all fossil fuels.