What makes more sense, burning virgin vegetable oil in car engines, or burning it in power stations? The answer is neither. In both cases you are snatching food from people's mouths.

But Andrew Mercer, chief executive of Blue-NG, the company which owns the UK's first power station running on vegetable oil, appears to believe that he is doing the world a favour.

In arguing the case for his grotesque trade, Mercer begins by maligning the Green party. He contends that "The Green party toured the country this summer during the European elections campaign in a bus fuelled by UK-sourced rapeseed biodiesel". Because this is a less efficient use of virgin rapeseed oil than burning it in power stations, he is greener than the Greens (or so he says). That someone else has allegedly done something even more damaging is hardly a persuasive justification. But is it true?

I spoke to the Green party this morning, and discovered that Mercer had left out a crucial piece of information. The biodiesel used in its bus was made from waste cooking oil, not virgin oil. As I've been arguing since I first started attacking the practice of feeding cars rather than people, used cooking oil is currently the only sustainable feedstock for biofuel: once it is unfit for human consumption it can only be dumped or burned. It makes sense to burn it in place of fossil fuels. The Green party has now published a response in the comment thread and is requesting a correction.

Burning virgin vegetable oil is an entirely different matter. In doing so, you are directly commissioning farmers to do one of two things: divert cropland which would otherwise have been used to grow food, or break land which would otherwise have been left fallow. In either case you are harming people or the environment.

Mercer says: "There are millions of hectares of land lying idle across the EU". Another way of putting it is that there are millions of hectares currently supporting wildlife and storing carbon. If farmers bring them back into production to fuel power stations like his, there would be dire consequences for wildflowers, butterflies, songbirds and other wildlife. Were it a choice between preserving this wildlife and feeding the hungry, I could understand the need for a pay-off. But the only reason that it's commercially viable to burn virgin vegetable oil in power stations in this country is that the government is perversely offering a massive subsidy. It gives generators two renewable obligation certificates for every megawatt hour of electricity they produce, which is twice as much as you get for onshore wind. I refuse to accept that the EU's wildlife must be sacrificed for what looks like a grant-harvesting operation.

As two papers published last year in Science show (here and here), the carbon released by ploughing idle farmland to grow biofuels takes many years to repay. If we're to have a high chance of preventing climate breakdown, the major cuts must be made today, so this policy makes no sense at all.

When you consider the other greenhouse gases produced by growing crops it looks even dafter. The Nobel laureate Paul Crutzen has estimated that emissions of nitrous oxide – a greenhouse gas arising from the use of nitrogen fertilisers – wipe out all the carbon savings biofuels produce (pdf), even before you take the changes in land use into account. It's significant that Andrew Mercer talks only about CO2. Even then he doesn't say how he has produced his figures – I strongly suspect that he doesn't take land use change into account. Were he obliged to consider all greenhouse gases from all sources, I suspect he would discover that burning virgin vegetable oil is far more polluting than burning fossil fuel.

Mercer then contends that oilseed rape is roughly the same price as it was 10 years ago. This isn't true either, as you can see from the IMF figures reproduced here. In October 1999, oilseed rape cost $398/tonne. Last month the average price was $857. Prices this year have consistently been about twice those of prices ten years ago. The idea that oilseed rape is just a "break crop" is risible. It is a major international commodity, grown because it makes money.

The notion that you can draw any conclusions about commodity trends from a single year's production in one small country is equally daft. It's as stupid as saying, for example, that a cold snap in the United Kingdom shows that global warming isn't happening. And no one would be dumb enough to do that, would they?

The reality is that whenever there's a global shortfall in rape production, as there was last year, palm oil helps to fill the gap. Compare this graph of palm oil prices to this one of rape oil prices and you'll see that the price trends are almost identical.

So while Mercer boasts that he is not burning palm oil in his power station, whenever his trade helps to cause a shortfall in rapeseed stocks, the result is likely to be an increase in the sales of palm oil. Growing rapeseed to burn is crazy, growing oil palm to fill the gaps is madness on a different scale altogether, in view of the massive impacts on climate, indigenous people and wildlife when the forests of Indonesia and Malaysia are cleared to plant it.

Like Biofuelwatch and other green groups, I will keep putting pressure on the government to drop its perverse subsidies. I'm offering Andrew Mercer a £10 bet that if we succeed, Blue-NG will stop burning virgin vegetable oils. This is what happened in the Netherlands: as soon as the Dutch government stopped paying companies to make electricity from food, the business ground to a halt. Let's bring this obscene, subsidised trade to an end here too.

Monbiot.com