Government caution over biofuels

But Transport Secretary Ruth Kelly said the Gallagher review into biofuels did not recommend a moratorium on the fuels, which are sourced from organic materials such as sugar beet and palm oil.

She was speaking following the publication of the Gallagher review which looked at the indirect effects of biofuel production such as land use change and pushing up food prices.

The review called for biofuels to be introduced more slowly than planned until controls are in place to prevent higher food prices and land being switched from forests or agriculture to growing fuels.

The study into indirect effects of biofuels warned current policies may cause greenhouse gas emissions rather than savings - for example if forests were cleared for crop plantations. It also found biodiversity would be reduced.

Increasing demand for biofuels is also contributing to rising food prices, notably oil seeds which could see a spike of 75% by 2020 under the worst case scenarios, and increasing poverty.

Current policies could push up grain prices in the EU by 15%, sugar by 7% and oil seed by 50%, while in other parts of the world millions more people could be pushed into poverty.

The review estimates that an extra 10.7 million people in India could find themselves in poverty, while countries such as Kenya, Malawi and Bangladesh could see hundreds of thousands affected by the food price rises caused by biofuels.

But Professor Ed Gallagher, chairman of the Renewable Fuels Agency, said the figures did not take into account the impact of climate change on poor people if biofuels weren't introduced, the boosts they could provide to rural economies or the fluctuating oil price.

The review recommends that biofuel production should target idle and marginal land, and the use of so-called second generation biofuels - which use waste parts of plants for energy to avoid land use change and reduce competition with food production.