SINGAPORE: July 7, 2006

SINGAPORE - Royal Dutch Shell, the world's top marketer of biofuels, considers using food crops to make biofuels "morally inappropriate" as long as there are people in the world who are starving, an executive said on Thursday.

Eric G Holthusen, Fuels Technology Manager Asia/Pacific, said the company's research unit, Shell Global Solutions, has developed alternative fuels from renewable resources that use wood chips and plant waste rather than food crops that are typically used to make the fuels.

Holthusen said his company's participation in marketing biofuels extracted from food was driven by economics or legislation.

"If we have the choice today, then we will not use this route," Malaysia-based Holthusen said at a seminar in Singapore.

"We think morally it is inappropriate because what we are doing here is using food and turning it into fuel. If you look at Africa, there are still countries that have a lack of food, people are starving, and because we are more wealthy we use food and turn it into fuel. This is not what we would like to see. But sometimes economics force you to do it."

The world's top commercially produced biofuels are ethanol and biodiesel.

Ethanol, mostly used in the United States and Brazil, is produced from sugar cane and beets and can also be derived from grains such as corn and wheat. Biodiesel, used in Europe, is extracted from the continent's predominant oil crop, rapeseed, and can also be produced from palm and coconut.

Holthusen said Shell has been working on biofuels that can be extracted from plant waste and wood chips, but he did not say when the alternative biofuel might be commercially available.

"We are not resting. We are doing what everybody needs to do. We have worked over time on an alternative to get away from food, and this is what we call the second generation of biofuels," he said.

He said Shell, in partnership with Canadian biotech firm Iogen Corp., has developed "cellulose ethanol", which is made from the wood chips and non-food portion of renewable feedstocks such as cereal straws and corn stover, and can be blended with gasoline. Ethanol is typically extracted from sugarcane or grain.