INVESTORS who have bet on alternative energy are probably wishing they hadn’t: they are being blamed for the global food crisis while some share prices are down by nearly 90%.

Egyptian president Hosni Mubarak told the UN food summit last week that biofuels were to blame for the riots and starvation in the developing world.

He said the use of farmland previously earmarked for food production to grow biofuel crops had created the shortfall.

Accusations of this kind have dealt a huge blow to the biofuels industry, which was riding high after being championed by governments as a way of reducing reliance on fossil fuels.

From last April, for example, all petrol and diesel sold at garages across Britain has contained at least 2.5% biofuel.

However, the government recently launched a probe into whether biofuels can provide a viable, renewable alternative and has promised to change its policy if the findings indicate biofuels will create more problems than they solve.

Mubarak, whose country has restricted rice exports to stem domestic food inflation, has called for an international “code of conduct” to govern biofuel production and for an end to the subsidies supporting the industry.

Biofuel stocks have been hammered as a result. Renewable Power & Light, the biodiesel firm, is now at 16p, down from a high of 125½p, while D1 Oils has plummeted from 285p last July to just 16Äp last week.

According to the UN, the rising price of agricultural commodities has caused the global cost of imported food to surge 26% in the past year.

Peter Hargreaves of adviser Hargreaves Lansdown said: “Quite often the land used has been reclaimed from forests where huge trees were absorbing CO2. The replacement crops will never absorb as much CO2 as those trees and clearance also creates massive amounts of the greenhouse gas.”

There are also reports of agricultural land being commandeered for biofuels, as well as indigenous people being forcibly moved from their homes and villages to make way for the crops.

Hargreaves added: “Biofuels are neither a viable nor an environmentally friendly solution to the world’s energy requirements. They only exist for political reasons, chiefly that America wants less dependence on the Middle East, and as a sop to the green lobby.”

However, some of the biggest members of the UN’s Food and Agriculture Organisation, including America, Canada and Brazil, are building big biofuel industries. Luis da Silva, Brazil’s president, claims that blaming biofuels for soaring food prices is an “oversimplification” that does not bear up to scrutiny.

Biofuel producers have also leapt to the defence of the industry. Abengoa Bioenergy, an ethanol producer, has taken out full-page advertisements in national papers rejecting the claim that bioethanol is the main cause of food price rises.

Meanwhile, researcher New Energy Finance has conducted a study indicating that the expansion of the biofuels sector since 2004 is responsible for a maximum of 8% out of the 168% rise in grain prices, and a maximum of 17% out of the 136% rise in food oil prices.

Michael Liebreich, its chairman, said: “Increased biofuels production has been a meaning-ful driver of food price inflation, but it is far from the dominant factor. Increases in input costs have played a much larger role, as have changes in consumption habits and increases in global population.”

Biofuel firms are not the only “green” energy production companies to run into opposition of late. Onshore wind farms are often unpopular with local residents due to the noise the turbines make – not to mention the way the huge structures blight the landscape.

A shortage of wind turbines and engineers has also pushed up the cost of large-scale offshore wind farms.

British Gas owner Centrica warned in April that the spiral-ling cost of a huge offshore wind farm project could make it uneconomic. Construction of the London Array wind farm, in which Eon owns a third, has been held up by Royal Dutch Shell’s decision to withdraw from the project because of rising costs.

Some companies are profiting from these problems, though. Ramco Energy, for example, recently announced the launch of a subsidiary called SeaEnergy Renewables designed to exploit the demand for offshore wind farms. Its shares jumped 8% as a result of the announcement.

Meanwhile, eco-energy supplier Green Energy UK has been investing in “new generation” wind turbines that operate silently. The company’s Doug Stewart said: “They are quiet, look great and produce good amounts of renewable power.”

Companies such as British Energy, which runs nuclear power stations, may also stand to benefit after Gordon Brown indicated last month that Britain’s use of nuclear power will need to be expanded.

Meanwhile, the Crown Estate, which owns most of the seabed off the coast of Britain, has pledged to provide land for up to 25GW of new offshore wind farm sites by 2020.

Rob Hastings of the Crown Estate said: “The government has committed to challenging carbon targets and wind energy is the only renewable technology that can deliver the required quantity by the required timescales.”

So, offshore wind power looks a more promising solution than biofuels – although there are no guarantees that offshore wind farms will not become equally unpopular in the next 12 years.

If you are keen to invest in “green” energy, it may therefore be more prudent to opt for an ethical fund, such as Jupiter Ecology or F&C Stewardship International, and leave the decisions up to a specialist fund manager.

Jupiter Ecology has lost 4.5% over the last 12 months, but has still gained 63.3% over the last three years, while the F&C scheme is down 2.1% over a year and up 25.8% over three.