If a Nebraska farmer plants corn instead of soybeans, does a Malaysian civil servant really get a pay rise? Do Chinese families really pay more for their milk? Does beer really cost more at the Oktoberfest? Yes, yes and yes — and what links them all is surprisingly simple. Calls from Washington for subsidies to increase US production of biofuels by up to 700 per cent in the next 30 years have persuaded American farmers to devote 12 million more acres to ethanol-yielding corn this year than last. That decision has meant a commensurate fall in the global supply of soybeans and wheat, boosting world prices of vegetable oils, livestock feed and food grains. The repercussions are already being felt from Munich to Kuala Lumpur.

Politicians have demanded vastly increased use of ethanol as a transport fuel in the EU as well as the US. In purely environmental terms this could create more problems than it solves. But there will be undoubted benefits in terms of energy security and carbon emissions from road traffic. Most importantly, the rapid response of the farming, energy and auto industries when offered adequate incentives gives hope that their critics’ forecasts of an energy-starved environmental doomsday may yet prove pessimistic.

Henry Ford first urged his customers and government to switch to ethanol from petrol nearly a century ago. It was not until the 1970s that a leading economy — Brazil’s — made that switch, and it did so solely to end its dependency on imported oil. The impetus for a new surge in ethanol production in 2007 derives from its claim to be both carbon-neutral and renewable. These claims are not groundless. The virtue of biofuels is simple: any crop that can be converted into ethanol will produce exactly the same amount of carbon when that ethanol is burnt as it “fixed”, or absorbed, from the atmosphere while growing. And that ethanol is renewable annually, just like the corn or sugarcane from which it is produced. This is a distinct improvement on the geological timescale over which all fossil fuels were laid down, even if, in practice, responsible biofuel growers must rest their land periodically.

Yet biofuels are no energy panacaea. Their supposedly neutral carbon equation is unbalanced when anything with a higher carbon-fixing capacity — such as rainforest — is cut down to make way for them, or for the palm and rape seed oil plantations spreading across parts of Indonesia and West Africa to make up for North American cuts in soybean oil supply. The equation is unbalanced further by the process of pulping and distilling biofuel crops. Critics of the process used in the US, where 114 refineries are in operation and 80 more are being built, claim that more energy goes into producing a gallon of ethanol than it gives out in an internal combustion engine.

Of more immediate importance, when biofuels compete for the world’s finite stock of arable land, they edge out food. The results, as we report today, already range from reduced portions in Japanese packets of cheese-flavoured snacks to “tortilla riots” in Mexico.

The response to accelerating global energy demand must be as varied as the ripple effect of the Midwest’s renewed love affair with corn. Biofuels will play a part, but the heavy lifting must be done by technology harnessed to the goal of efficiency. The only power adequate to the needs of the 21st century is brainpower.