Stocks in "fuel crops" have plunged following political controversy and negative analyst sentiment.
Biofuels might not represent a safe investment, the Times reports.
The "fuel crops" have been blamed for global food shortages by politicians and industry analysts, and some share prices of biofuel firms have dropped by large amounts as a result. Shares in Renewable Power & Light, for example, trade at 16p from a high of 125.5p, while D1 Oils have gone to 16p from 285p.
This follows the previous strong performances on stock exchanges of biofuel when it was a vogueish alternative energy. The sector was also boosted by a government decision last April, which required 2.5 per cent of the petrol and diesel mix sold at garages to be biofuel-derived.
However, concerns over the long-term viability of the crops as an energy source has more recently triggered a government inquiry into biofuels, which might recommend that production be scaled back. Biofuels were even criticised by world leaders at a recent UN conference, for taking up space which was previously used by food crops.
Peter Hargreaves of adviser Hargreaves Lansdown also said that biofuels' environmental credentials were not convincing. "Quite often the land used has been reclaimed from forests where huge trees were absorbing CO2," he commented. "The replacement crops will never absorb as much CO2 as those trees and clearance also creates massive amounts of the greenhouse gas."
