Grab your coast apocalypse watchers, it is time for another trip down the rabbit hole. The subject of today's journey into the nth dimension of anti-logic: biofuels, or more specifically the government's Renewable Transport Fuel Obligation (RTFO).

Fans of that special form of gallows humour (is there any other kind anymore?) known as the law of unintended consequences will recognise the RTFO as the legislation which originally imposed a target that five per cent of UK fuels come from biofuels by 2010/11.

It was at that point that scientists and environmental groups pointed out that far from helping to reduce carbon emissions many biofuels were directly or indirectly responsible for increasing emissions by driving demand for agricultural land and as a result accelerating deforestation.

After commissioning its own independent review the government accepted these risks did indeed exist, but with billions of pounds of investments already made to help meet the RTFO target it decided it could not put the RTFO on hold until the issue of biofuels' carbon impact was resolved.

Instead it opted for a classic fudge, delaying the five per cent target until 2013/14, launching the independent Renewable Fuels Agency (RFA) to monitor the industry's performance, and rolling out new sustainability criteria that biofuel producers will eventually have to comply with in order to ensure they are not using carbon intensive energy crops grown on formerly forested land.

Yesterday, the RFA released its first annual report on biofuel producer's performance against the new beefed up RTFO. The verdict? Not good.

The government set three targets for biofuel producers to meet: that biofuels must deliver carbon savings of 40 per cent; that data on the origins of their biofuels must be provided in 50 per cent of cases; and that 30 per cent of biofuels must meet sustainability criteria.

The RFA reported that UK biofuels delivered carbon savings of 46 per cent against conventional fuels and that it received complete data for 64 per cent of biofuels, but it also revealed the target on sustainability was missed with only 20 per cent of biofuels qualifying as sustainable.

On the face of it this is already a pretty poor performance. Four fifths of biofuels used in the UK last year failed to meet the guidelines the government had designed to eradicate related deforestation and protect biodiversity. But dig into the figures and it gets worse, a lot worse.

The RFA report admits the stated carbon savings of 46 per cent are, if not quite meaningless, then not far short. The report states: "In 2008/09, 42 per cent of previous land-use was reported as "unknown", this was due to a lack of verifiable evidence gathered from supply chains. Emissions from any unknown land-use change are not taken into account in the carbon savings figure above and it is possible that some fraction of the unknown land-use change may have caused a significant release of stored carbon." In other words, "we do not know for sure these biofuels delivered an overall reduction in carbon emissions".

But this is just the tip of the iceberg, the gaps in the data provided by biofuel producers go on and on. For one per cent of biofuels the RFA was not even informed which feedstock was used to make the fuel, while the country of origin for 19 per cent of biofuels was unknown. You did read that right, in almost a fifth of cases the company importing or selling the biofuel in the UK had no idea where it came from.

Moreover, as previously mentioned 42 per cent of biofuels were produced using feedstocks grown on land where there is no information on what that land was previously used for - meaning there was no way of determining if the biofuel had been directly responsible for a huge release of carbon emissions through deforestation. And for 70 per cent of biofuels there was incomplete information on its performance against sustainability criteria.

In short, the UK is using biofuels in large quantities, despite the fact it has no way of knowing whether it is helping to alleviate global warming or making it worse. It is as if we decided to tackle obesity by forcing people to stop eating crisps and start eating flapjacks, but neglected to check if the flapjacks had fewer calories.

The RFA insists its monitoring is very much a work in progress and that it is making rapid progress. It argues that biofuel producers know they will soon face mandatory rules governing sustainability and are moving fast to improve their supplies of biofuels, adding that it is entirely feasible that a workable system can be developed that ensures we only use sustainable biofuels that deliver net reductions in carbon emissions.

But is it? Supply chains are notoriously difficult to monitor and it seems highly unlikely a system of auditing and inspection can ever prove where imported biofuels have come from and how they have been produced. Companies have proven time and time again that they can't or won't effectively tackle sweat-shop manufactured products, while regulators have similarly proven they can't track the illegal import and export of waste on any meaningful scale.

Moreover, there is no way that even an effective auditing system can ensure that sustainably produced biofuels do not indirectly contribute to deforestation somewhere along the line. The vast majority of land used for biofuels could be used food. If it is being used for biofuels and demand for food rises then farmers have to look elsewhere for land.

The scariest thing is that the RFA's chairman Professor Ed Gallagher is right, the RFA's report represents the "first time anywhere in the world that collated and verified information about the quantity of biofuels supplied, their direct effects and their sustainability has been published". The UK is doing far, far better than most and we still have no real handle on the carbon impact of our growing demand for biofuels.

The only type of biofuels that can deliver a guaranteed reduction in emissions are produced at a local level and use feedstocks made from waste or plants that have categorically been grown on land that is not and can not be used for food production.

Biofuel producers will rant and rave about the investments already made and the fact that stalling the market now will slow the development of those genuinely sustainable second generation biofuels. But for the vast majority of biofuels used today the environmental risks are simply too high and the data too incomplete. We need a moratorium on all biofuels that lack rock solid guarantees that they have been produced in a sustainable manner. Currently, that means almost all biofuels. Failure to impose such a ban could simply mean increasing carbon emissions in the name of cutting them - and, unintended consequence of not, that can't be good.