UK's biofuel plans under spotlight as wheat prices soar

London: The soaring price of wheat has raised questions about the United Kingdom's commitment to biofuels as it attempts to wean itself from its dependence on oil.

A network of biorefineries that convert wheat and other crops into bioethanol that can then be blended with petrol are being developed as the United Kingdom looks to meet its EU renewable transport fuels obligations.

But the huge amounts of wheat that will be used in the process up to a fifth of the United Kingdom's current annual production within four years have prompted questions about where the crop will come from.

At the end of a week in which the wheat price hit a two-year high as Russia, the world's fourth largest producer, imposed an export ban for the second year running, there were fears that the domestic move to biofuels would lead to further rises in the cost of wheat. The result would be a significant rise in shopping bills.

Teething problems

Currently there is only one wheat biorefinery operating in the United Kingdom. Owned by a company called Ensus, the Tees-side plant, which cost almost £300 million (Dh1.7 billion) to build and was temporarily closed due to teething problems, will use some 1.2 tonnes of wheat a year when at full capacity.

But four more plants that could use wheat, at Immingham, Corby, Grimsby and Hull, are also in development.

According to the cereals and oilseeds division of the Agriculture and Horticulture Development Board, the three UK biofuel refineries that are expected to be fully operating by 2014 will require 3 million tonnes, one-fifth of the wheat produced in the United Kingdom.

The demand is expected to rise further as the United Kingdom tries to meet recently agreed EU biofuel targets.

The United Kingdom has recently signed up to a compulsory EU target that will see 10 per cent of its transport fuels come from renewable sources by the year 2020.

The "dash for wheat" could see large amounts of land converted to arable use both in the United Kingdom and abroad.

The World Bank, the OECD and the UK government's Gallagher report all identified biofuels as a significant factor in recent food price rises.

However, some reports suggest biofuels could actually help to "smooth out" the peaks and troughs associated with the wheat market by providing producers with more stable demand.

Concerns about the United Kingdom's wheat supply come at the end of a week in which the UN Food and Agriculture Organisation warned that world food prices have risen to their highest level in two years.