Is bio-fuel a boon or bane? That is the million dollar question haunting the world's environmentalists and governments now.

Several non-governmental organisations (NGOs) working in various countries have expressed apprehensions over the increased stress given by nations for the use of bio-fuels.

The United States and Brazil are two nations which have given utmost priority to bio-fuels to rein in global warming. However, these efforts have drawn flak from certain quarters like Grain, a charity organisation which says its research shows the rush for bio-fuels is causing much more environmental and social damage than previously realised.

Bio-fuels from crops are being heavily promoted by the US and Europe as a welcome solution to climate change. Their emissions are much lower than from fossil fuels. The other side of the story is that the shift to bio-fuels is causing a shortage of food for poor nations.

A report from Grain pointed out recent warnings from the UN's Food and Agriculture Organisation (FAO) that basic food prices for poor countries are being pushed up by competition for land from bio-fuels.

Governments across the world and bio-fuel firms in developing countries are collaborating to push hundreds of thousands of indigenous people and peasant communities off their land. In India, the government is planning to plant 14 million hectares of land with jatropha.

Brazil has 120 million hectares that could be cultivated with agro-fuel crops; and bio-fuel companies are saying 379 million hectares being available in 15 African countries.

Effectively, if the trend continues, bio-fuels may cause starvation in poor and developing nations. Take the case of India, the country is now struggling to rein in edible oil prices which have gone up and hit record highs in the recent months. India is one of the largest producers of edible oil. But, it uses up all it produces and imports edible oil from other countries like Indonesia.

India's poor heavily depend on palm oil imported from Indonesia and Malaysia. Palm oil is comparatively the cheapest edible oil available in global market. Indonesia now supplies around 70 per cent of India's demand for crude palm oil while the balance is imported from Malaysia. Malaysia and Indonesia produce 80 per cent of the world's palm oil output. India imports over 5 million tonnes of edible oil annually.

So, any change in the palm oil sector of Indonesia or Malaysia will affect India's poor. Because, a small rise in palm oil prices in these countries will affect India's imports and eventually the price of edible oil in India.

And that is happening now. Spurred by government subsidies, energy companies became so enthusiastic in Malaysia and Indonesia that they designed generators that ran exclusively on oil, which in theory would be cleaner than fossil fuels like coal because it is derived from plants.

But last year, when scientists studied practices at palm plantations in Indonesia and Malaysia, this green fairy tale began to look more like an environmental nightmare.

Rising demand for palm oil in Europe brought about the clearing of huge tracts of Southeast Asian rainforest and the overuse of chemical fertiliser there.

Worse still, the scientists said, space for the expanding palm plantations was often created by draining and burning peat land, which sent huge amounts of carbon emissions into the atmosphere.

Considering these emissions, Indonesia had quickly become the world's third-leading producer of carbon emissions that scientists believe are responsible for global warming, ranked after the United States and China. Again, increased use of palm oil for bio-fuels will, in the near future, cause a shortage of supply in the global market. That will cause a price rise of the commodity. India will then be at the receiving end.

In the United States and Brazil, bio-fuel ethanol (made from corn in the United States and sugar in Brazil) used to power vehicles made to run on gasoline. In Europe it is mostly local rapeseed and sunflower oil, used to make diesel fuel.

In a small number of instances, plant oil is used in place of diesel fuel, without further refinement. But as many European countries push for more green energy, they are increasingly importing plant oils from the tropics, since there is simply not enough plant matter for fuel production at home.

It takes so much supply to keep ethanol production going that the price of corn -- and those of other food staples -- is shooting up around the world. To stop this trend, and prevent even more people from going hungry, it is felt among researchers that the US should conserve more and diversify ethanol's production inputs.

There were 110 ethanol refineries in operation in the United States at the end of 2006, according to the Renewable Fuels Association. Many were being expanded, and another 73 were under construction. When these projects are completed, by the end of 2008, the United States' ethanol production capacity will reach an estimated 11.4 billion gallons per year.

In 2005, global ethanol production was 9.66 billion gallons, of which Brazil produced 45.2 per cent (from sugar cane) and the United States 44.5 percent (from corn).

The industry's growth has meant that a larger and larger share of corn production is being used to feed the huge mills that produce ethanol. According to some estimates, ethanol plants will burn up to half of US domestic corn supplies within a few years. Ethanol demand will bring 2007 inventories of corn to their lowest levels since 1995 (a drought year), even though 2006 yielded the third-largest corn crop on record.