Some things just seem too good to be true, don't they? Letters which promise that you could be a millionaire (just call this number at £3 per minute for 20 minutes to find out if you're a winner). Or those e-mails from a "dear friend" (you've never met) promising a no-lose investment deal if you can just transfer £1000 to them immediately. Or biofuels: a seemingly magical energy solution to help us cut emissions and deal with climate change, which will not only be cheaper than fossil fuels but renewable too.

If this sounds too good to be true then that's because it is.

New research out today shows that by 2020, the biofuel content in petrol could add £2 billion to UK motorists' petrol bills, produce an extra 13 million tonnes of greenhouse gases every year and have disastrous consequences for poor people in developing countries.

Biofuels are a liquid or gaseous fuel mainly produced from various types of agricultural crops. Here in the UK biofuels make up around 4% of the petrol we buy. The Department for Transport is to consult later this year on whether to raise this to 10% by 2020. The fuel industry would need a huge supply of biofuels to meet that target. And because most biofuels come from plants, vast amounts of land are required so that the biofuels can be produced on an industrial scale. And that has big implications for the people who live on that land.

Investors have discovered that massive areas of fertile land can be purchased relatively cheaply in many developing countries. Initially it seemed as though using biofuels released less carbon than fossil fuels and European policymakers enthusiastically grabbed onto biofuels as part of the solution to the impending climate catastrophe. It looked like the promise of biofuels would prevent politicians from having to tell voters what they don't want to hear: that preventing climate chaos requires everyone to reduce our consumption, as well as some serious investment in genuinely sustainable forms of renewable energy for transport such as improving public transport and developing cleaner cars. Given the economic situation across Europe, that's a message that no politician wants to promote.

There are three main problems with the biofuels dream. The first is that the science is now telling us that biofuels actually emit more, rather than less, carbon into the atmosphere - a fairly major problem given that cutting carbon was the original motivation. Secondly, the new report released today by ActionAid and Friends of the Earth shows that the financial cost to car owners is likely to be significant. By 2020, if we increased biofuels to 10%, UK motorists would be paying up to £2 billion per year extra for their petrol. That's not going to be very popular with voters.

Thirdly but, in my view, most importantly, industrial production of biofuels causes more people in poor countries to go hungry and lose their land, and thus flies in the face of UK development commitments - not to mention basic moral standards. I am writing this blog from Tanzania where, on Friday I met some villagers from Kisarawe, which is a three-hour drive north west of Dar es Salaam. The villagers have been affected by a massive landgrab by a British company called Sun Biofuels, as has been documented by the Observer. In 2008 the company secured a lease for 8000 hectares of land (which is the equivalent of almost 11,000 full-sized football pitches) to grow a biofuel crop called jatropha.

Sun Biofuels had originally promised the villagers that, in return for their land, they would get full and fair compensation and a range of social services including wells, schools and clinics. That was in 2006 and, to date, only a fraction of the compensation owed has been paid and few if any of the social services have been provided. The company also told local people that there would be up to 1,000 jobs for villagers on the plantation. However, when (like many biofuel companies before it), Sun Biofuels went into administration in August 2011, the company fired almost all of its local workers.

Having lost their jobs and the land they've relied on for generations, the people of Kisarawe cannot afford to eat as much and are hungry more often. The impacts of biofuels will also be felt globally: if the 2020 targets remain on track, food prices could rise by an extra 76% and 600 million extra people could be hungry. In Kisarawe, parents can no longer afford to send their children to school or buy medicine when they're sick. One of the villagers told me that he felt like this was "the new colonialism" because foreign companies are taking the land of poor people so that we in the West can continue with unsustainable habits. It's a mess, and it's all down to the biofuels 'gold rush'.

On Wednesday in the House of Commons, Shadow International Development Minister Rushanara Ali MP challenged International Development Minister Stephen O'Brien MP over his previous support for Sun Biofuels, despite the way they have treated citizens of developing countries.

The forthcoming government consultation coupled with an upcoming EU review of biofuels gives the government an ideal escape route from the road to biofuels ruin. For the sake of the Kisarawe villagers, the environment and car drivers everywhere, let's hope that they take it. This is most definitely a good time to make a U-turn.

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