Biofuels were once hailed as the eco-friendly solution to cutting transport pollution. But they've quickly become the bogeyman, blamed alongside poor harvests, an Australian drought and higher demand from India and China for soaring wheat prices and the subsequent hike in food prices. So why is the clamour to increase production of the green fuel causing so much consternation - and if biofuels aren't the answer, what is?

In the UK, biofuel production from crops such as wheat, corn rape and maize is still in its infancy. But under Europe-wide plans to slash carbon emission, the government has committed to substituting 3% of transport fuels to biofuels by 2008/9, rising to 10% by 2020. A number of UK biofuel plants are now in the pipeline including a joint venture between BP, Associated British Foods and DuPont in Saltend, Hull, which is expected to go live in 2009.

As British farms begin to switch crops, concerns are mounting about the impact the fledgling industry will have on UK food crops - in the US, 10% of last year's corn crop went to bioethanol plants. There is also scepticism over the real benefits derived from biofuels, with reports last week that rapeseed biofuel actually contributes more to global warming than fossil fuels.

The Organisation for Economic Cooperation and Development (OECD) warns that the rush to support, and subsidise, alternative energy sources will lead to another surge in prices. "The push to expand the use of biofuels is creating unsustainable tensions that will disrupt markets without creating environmental benefits," says a spokesman. "Governments should be investigating ways to phase out new mandates for biofuels."

They should also stop encouraging farmers to switch crops, says Premier Foods' chief executive Robert Schofield, who earlier this year warned that as long as governments subsidised the growing of crops for fuel, there would be an "environment tax on food".

Even Friends of the Earth is unconvinced. "Biofuels are not the solution to climate change," says Adrian Bebb, FoE's biofuels campaigner. "Land is limited and most of it is already used for agriculture. Biofuel production will be in direct competition with food production. It is a waste of money because the benefits are negligible."

Advocates dismiss such concerns. "Wheat price rises have characterised the market for years," says Malcolm Shepherd, MD of bioethanol developer Green Spirit Fuels. "We had two hikes before 1996, which were not caused by bioethanol. Biofuel usage is tiny - only a few million tonnes in Europe."

Chemical company BASF boasts that a kernel of corn can provide 48 miles worth of fuel in its latest ad and claims "it is possible to improve corn supplies for ethanol production without reducing the crops intended for the kitchen table".

Whether that's the case or not, the big question is: will farmers jump on the bandwagon? There are certainly plenty of incentives. In Europe, they qualify for an extra €45 per hectare through the Energy Crop Premium Scheme if they commit to biofuel, although there has been a reluctance among some to sign up because they have to commit to a buyer at the time of planting. If they do sign up, it will only be a matter of time before biofuel production really takes off. That means that in the short term at least, the price of commodity crops such as wheat is likely to continue to rise.

"Everyone hopes wheat prices will drop by next year's harvest but no-one can predict the future," says Martin Savage, trade policy manager at the National Association of British and Irish Millers. "It's too early to predict how successful biofuels will be, but at the moment it is not an attractive investment." nHas it really made a difference?

3.5 million tonnes was the estimated cereal production in Europe for biofuels in 2006. The total EU cereal production was 222 million tonnes. In the US, 45 million tonnes of corn was grown for bioethanol out of 338 million tonnes in total