Thai PM strikes at UN, World Bank for bashing biofuels, sparing oil producing nations, for role in food price rises

In Thailand, Prime Minister Samak Sundaravej said the World Bank and the United Nations are criticizing biofuels exporting nations for driving up food prices, but not saying a word about the role of oil exporting nations in driving up both food and energy costs. “Let me ask the World Bank whether they used to ask oil exporting countries before pointing their fingers and blaming us that we have to use rice fields to grow biofuel crops. They have unreasonably continued to inflate oil prices even though the oil supply is not running out yet.” Oil prices, which are up more than 150 percent since 2005, are estimated to have three times more impact on food prices than increases in grain prices.

Last week, a group of Finance ministers at World Bank and International Monetary Fund meetings exchanged sharp words over biofuels as food riots continue to erupt in Egypt, Cameroon, Ivory Coast, Senegal and Ethiopia, and troops are guarding food stocks in Pakistan and Thailand. “It’s a crime against humanity that food should be diverted to biofuels,” said India’s finance minister, Palaniappan Chidambaram, while the chairman of the White House Council on Environmental Quality said biofuels are only a part of the food price equation.

The Thai Agriculture and Cooperatives Ministry is promoting sugarcane production for ethanol in a the cadmium-contaminated Mae Sot district of Tak, where food crops have been banned for health safety reasons. The Mae Sot Clean Energy plant, a joint venture between Padaeng Industry, Thai Oil and Petrogreen, will be completed in 2008 to produce sugarcane ethanol in the district.

Earlier this month, Thai Energy Minister Piyasvasti Amranand said that biofuels sales would increase in 2008 to $469 million from $157 million in 2007. He said that the cost of oil imports have fallen 10% as a result of biofuel usage and a stronger currency, adding that gasoline would be replaced by E10 and E20 blends by 2012.

Thai biofuel demand has increased more than 100 percent for 2007; the spur in biofuels sales comes not only from the introduction on E20, but also the implementation of a B2 mandate. Demand is so brisk that major oil traders may be required to establish mandatory strategic reserves of ethanol and biodiesel in addition to conventional fossil fuels.

Biofuel distributor Bangchak said that it had voluntarily set up a reserve of 790,000 gallons of ethanol and 378,000 gallons of biodiesel.

To coordinate these disparate developments, last week the Thai government announced the establishment of a new, national biofuels organization, which will include members of the government, industry, and private citizens. The Energy Ministry began coordination talks with the Commerce and Agriculture ministries, as well as representatives of universities, farmers, car makers and oil retailers. A 21-member panel will supervise policy while a 13-member panel will supervise management of biofuels development from field to wheels. $3 million in palm oil taxes will be used to support the committees.

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