*Winners and losers in huge biofuel industry
*Oil price will stabilise but small farmers at risk

But the UN urges governments to beware their human and environmental impacts, some of which could have irreversible consequences.

The report, which predicts winners and losers, will be studied carefully by the emerging multi-billion dollar a year biofuel industry which wants to provide as much as 25% of the world's energy within 20 years.

Global production of energy crops is doubling every few years, and 17 countries have so far committed themselves to growing the crops on a large scale.

Last year more than a third of the entire US maize crop went to ethanol for fuel, a 48% increase on 2005, and Brazil and China grew the crops on nearly 50m acres of land. The EU has said that 10% of all fuel must come from biofuels by 2020. Biofuels can be used in place of petrol and diesel and can play a part in reducing emissions from transport.

On the positive side, the UN says that the crops have the potential to reduce and stabilise the price of oil, which could be very beneficial to poor countries. But it acknowledges that forests are already being felled to provide the land to grow vast plantations of palm oil trees. Environment groups argue strongly that this is catastrophic for the climate, and potentially devastating for forest animals like orangutans in Indonesia.

The UN warns: "Where crops are grown for energy purposes the use of large scale cropping could lead to significant biodiversity loss, soil erosion, and nutrient leaching. Even varied crops could have negative impacts if they replace wild forests or grasslands."<P>But the survey's findings are mixed on whether the crops will benefit or penalise poor countries, where most of the crops are expected to be grown in future. One school of thought argues that they will take the best land, which will increase global food prices. This could benefit some farmers but penalise others and also increase the cost of emergency food aid.

"Expanded production [of biofuel crops] adds uncertainty. It could also increase the volatility of food prices with negative food security implications", says the report which was complied by UN-Energy.

"The benefits to farmers are not assured, and may come with increased costs. [Growing biofuel crops] can be especially harmful to farmers who do not own their own land, and to the rural and urban poor who are net buyers of food, as they could suffer from even greater pressure on already limited financial resources.

"At their worst, biofuel programmes can also result in a concentration of ownership that could drive the world's poorest farmers off their land and into deeper poverty," it says.

According to the report, the crops could transform the rural economy of rich and poor countries, attracting major new players and capital, but potentially leading to problems. "Large investments are already signalling the emergence of a new bio-economy, pointing to the possibility that still larger companies will enter the rural economy, putting the squeeze on farmers by controlling the price paid to producers and owning the rest of the value train," it says.

The report also says the crops are not guaranteed to reduce greenhouse gas emissions. Producing and using biofuels results in some reductions in emissions compared to petroleum fuels, it says, but this is provided there is no clearing of forest or peat that store centuries of carbon.

"More and more people are realising that there are serious environmental and food security issues involved in biofuels. Climate change is the most serious issue, but you cannot fight climate change by large scale deforestation," said Jan van Aken, of Greenpeace International in Amsterdam.

"Bioenergy provides us with an extraordinary opportunity to address climate change, energy security and rural development. [But] investments need to be planned carefully to avoid generating new environmental and social problems," said Achim Steiner, executive director of UN Environment programme yesterday.

Plant power

Biomass energy can be obtained from just about any plant or tree but is most commonly obtained from maize, soya beans, oil palms, sugar cane, sunflower and trees. The carbohydrates in the biomass, which are comprised of oxygen, carbon, and hydrogen, can be broken down into a variety of chemicals, some of which are useful fuels. At its simplest, plant matter is simply burned but much of the energy is wasted and it can cause pollution. So, the plant is either heated and refined to break down into gases, fermented and turned into grain alcohol or ethanol, or chemically converted to make into biodiesel.