37signals refers to a New Scientist article claiming that requirements to decrease carbon emissions are driving an increase in demand for biofuels, which is driving increased soya and palm oil consumption, which is causing massive rain forest destruction in south-east Asia and the Amazon.
My first thought reading this was to wonder about the amount of soy in my diet, and whether that was contributing to the problem as well. This article agrees that soya is the number one cause of deforestation right now, "directly and indirectly". However, it appears that much of the soy is actually grown to feed cattle. So, I have to wonder how much of the blame really lies with the biofuels. If the cattle demand didn't already exist, then there's no guarantee that these farmers would be in the soya business at all.
Much of this also appears to be caused by corruption, graft and lawlessness in Brazil, bankrolled by loans and capital from around the world. This makes it very hard to make our own ethical decisions --- whatever market signal we have the power to send doesn't really matter, as laws are rewritten to create signals and incentives in other directions.
It also means it is inappropriate to blame biofuel for this. Given the interests involved, it seems very likely that if the land were not being deforested for this purpose, the laws and loans would be arranged to make another destructive use profitable for the same interests.
My conclusion after a bit of searching and reading is that the New Scientist article is blatantly incomplete. The word "cattle" is not even mentioned in the article, even though a brief web search shows that feeding cattle is recognized by dozens if not hundreds of sources as a major, even the major, contributor to soy demand, and specifically soy demand from Brazilian farms.
The fact that the article takes such a steep angle without acknowledging other causes makes me doubt its conclusions. It seems to line up the facts with the preconceived goal of discrediting an effort at green energy and the Kyoto protocol, rather than honestly assembling a theory from the evidence. I wouldn't blame this on biofuel without some more substantial research.
Still, I do feel like I should do some more research about where the soy I eat comes from. I wasn't aware at all that soy was such a problem.