Investing in biofuels could potentially have a detrimental effect on the environment, according to Co-operative Insurance.

Sam Lacey, analyst at Co-operative Insurance, said biofuels appeal to investors due to many governments having set ambitious targets to increase production. However, the downside is that even though the fuels themselves may be environmentally friendly, the volume of land required to facilitate their production would be a problem.

According to Co-operative insurance, the area of land required to grow biofuels is so large that it could cause environmental problems, such as deforestation, if not managed correctly.

Lacey said: “Initiatives by airlines and public transport companies to run vehicles on biofuels may appear eco friendly, but could not currently be rolled out sustainably on a large scale. Co-operative Insurance recommends that companies take a cautious approach to biofuels and support the development of robust sustainability standards before rolling out biofuels to their fleets.”