Daniel Howden: Brazil's experience testifies to the downside of this energy revolution

The apostles of biofuels would have us believe that the congested streets of Sao Paulo offer a glimpse of a better future. There, traffic jams are made of flex-fuel cars that run off a growing menu of bio and fossil fuel mixtures and all filling stations offer "alcohol" and "gas" at the pump.

It was the city that George Bush visited last year to unveil a package of incentives to developing nations designed to spur the creation of a cartel of biofuel producers soon dubbed the "Opec for ethanol".

Biofuels are almost irresistible to politicians ruled by concerns over energy security and eager to look busy on climate change without calling on voters to change their consumption habits.

Brazil is the model to which the EU, the US and the UK have looked in deciding to mandate minimum percentages of biofuels into our fuel mix. So the dark side to this revolution is, instructive as it reveals the limits that so-called green fuels can usefully play in filling the developed world's fuel tank.

The real story of ethanol in Brazil is one of energy security, not climate-change mitigation. The original boom came after the oil crisis of 1973 spurred the military dictatorship to lessen the country's reliance on foreign imports of fossil fuels. The generals poured public subsidies and incentives into the sugar industry to produce ethanol in much the way the West is now doing.

Unlike the US, where government money has thrown billions of dollars into the pointless pursuit of converting corn into ethanol – a process that releases more CO2 per gallon than simply burning conventional fuels – Brazil's tropical climate allows it to source alcohol from its sugar crop. The process is as carbon efficient as any in the world, with even the distilleries run on a biofuel called bagasse, itself a by-product of sugar cane.

Now touted as a next-generation energy giant with an eager eye on emerging export markets, Brazil's biofuel industry has also been linked with air and water pollution on an epic scale, deforestation in the Amazon and Atlantic rainforests, and the wholesale destruction of Latin America's unique savannah land.

The consequences of the modest reduction in transport emissions in Brazil's crowded cities can be traced in the gigantic geometrical scars of soy plantations that cut into the Amazon rainforest and the choking black clouds from burning cane fields that engulf the capital for weeks every year.

The net effect on climate-change emissions is negative. Despite modest levels of industrialisation across Latin America's largest nation, Brazil has risen through the ranks to become the world's fourth leading producer of greenhouse gases. That explosion of carbon into the atmosphere has been driven by rampant deforestation, a phenomenon that now directly tracks the rising price of agricultural commodities.

As the prices for the raw plant materials made into biofuels have spiked in the past 18 months, rates of deforestation have broken all records. Just as the world is waking up to the threat of climate change, perverse incentives are being put in place that drive an assault on the planet's lungs.

Fabio Feldman, a leading Brazilian environmentalist and former member of Congress who helped to pass the law mandating a 23 per cent mix of ethanol to be added to all petroleum supplies in the country, is now concerned by the legacy of that decision. "Some cane plantations are the size of European states – these vast monocultures have replaced important ecosystems," he said.

The same arguments now made over the fallow agricultural land in Africa, Asia and Europe that can grow us fuel instead of food have been well-rehearsed in Brazil. Unfortunately, they are spurious. To save us from difficult decisions about our consumption, we are told that a transition is possible in which we grow the fuel we need, rather than drill for it. The reason this sounds too good to be true is because it is.