Biofuels offer major opportunities to fight both poverty and climate change, but caution urged - report

A very basic report by the International Institute for Environment and Development (IIED), entitled "International trade in biofuels: Good for development? And good for environment?" [*.pdf] provides a summary introduction to the issues involved in large-scale biofuel production in the developing world.

For readers of the Biopact, the issues covered by the report have been discussed here before and more in depth. For a broader look at the topics in question, we also refer to the "Biofuels Manifesto" written by prof. John Mathews.

Massive opportunity for social and economic development
Annie Dufey, author of the IIED report, writes: "The global biofuels market offers important opportunities to bring together the economic, environmental and social agendas both in developing countries and globally. [...] However, a lack of coherence and coordination between the stakeholders and policy agendas involved at the interface between biofuels, trade and sustainable development could lead to biofuels providing a solution to one specific problem while simultaneously creating several others. It is therefore increasingly urgent to map a path for the global biofuels industry that supports sustainable development. Analysis is needed to integrate the above issues and to deliver concrete and timely recommendations to policy makers that will drive the sustainable development results of this new market." The Biopact is an organisation working towards these much needed analyses.

"Biofuels can help tackle climate change and improve livelihoods in developing countries, as well as provide a source of economic growth and energy," says Dufey. "But to achieve this, all players in the sector urgently need to be aware of the trade-offs and take steps to address them." "The novelty of biofuels, the vast array of issues involved and the lack of knowledge to tackle many of them, together with diverging political and business interests mean that consensus is elusive," she adds. "It is therefore increasingly urgent to map a path for the global biofuels industry that supports sustainable development."

The report says that industrialised countries need to analyse the ways their domestic policies surrounding biofuel production and trade are affecting developing nations, where due to their privileged natural conditions, the greatest growth in energy-crop production is set to take place.

Trade barriers
Dufey goes on to argue that international trade barriers, especially tariffs and subsidies, need to be relaxed to enable the developing world to reap the benefits of the emerging biofuels trade, while certification schemes need to be established to take account of the environmental and social conditions in such countries. Both the US and the EU currently have a whole set of (trade) barriers in place, ranging from import tariffs to hefty subsidies amounting to billions of dollars/euros.

According to the author, current trade regimes are not fit for encouraging synergies and sorting out trade-offs. She says that any benefits from biofuels trade could be undermined if the sector continues to expand without improved policies and international coordination.

"There is no multilateral agreement on whether biofuels are industrial or agricultural goods. Nor is there a specific forum for international discussions on how to deal with biofuel trade," says Dufey. "This lack of coherence and coordination could lead to biofuels solving one specific problem but simultaneously creating several others."

Certification, but not dominated by the West
"We need certification schemes that label biofuels according to environmental and social conditions prevailing in the producing countries, and that do not undermine small-scale producers," says Dufey.

Several schemes are being developed but if governments and institutions in industrialised nations dominate them, they risk not taking account of developing countries' social and environmental priorities. "Moreover, if these schemes are poorly coordinated or entail a unfair distribution of costs and benefits, they could be detrimental to international trade and place a significant burden on small producers," adds Dufey:
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Sustainability and environmental impacts
Dufey notes poor working conditions associated with the cultivation of some energy crops, and says that large-scale biofuel production could well have environmental consequences as native ecosystems are replaced by crops such as oil palm.

"The cultivation of energy crops may also trigger – or exacerbate – several of the environmental problems associated with agricultural commodity production such as deforestation, monocropping, water usage, land degradation and water pollution. Of these, the expansion of the agricultural frontier is a key concern, and especially the impacts this may have on tropical forests, savannahs and biodiversity," she writes. "Forests have been cleared for palm oil production in countries such as Indonesia and Malaysia. If the increased demand for biofuel were met by expansion of soy production, this would imply further environmental pressure in the sensitive drier savannah areas of north-central Brazil (the cerrado) and in the Amazon forests... Development benefits could also be lost if the choice of crop leads to competition for water resources or for land used to grow food crops."

While these are concerns, Dufey notes that are potential environmental upsides to biofuels beyond reduced emissions of greenhouse gases. Bioenergy crops can be planted to highly degraded lands, promoting land restoration by improving soils and anchoring against soil erosion.

"Crops such as Jatropha, due to their fast growth, drought resistant nature and soil-improving properties, have the potential to extend the land base available for agricultural activities and to create new markets for farmers in marginal areas – as well as providing local biofuels through simple processing plants," she adds.

The report was written in advance of the discussions at a major international conference on renewable energy taking place in Brussels on 29-31 January as part of the European Union's 'Sustainable Energy Week'. Biofuels will be at the center of this European Renewable Energy Policy Conference which will be opened by Al Gore and attended by 650 delegates. Speakers include Klaus Töpfer, former head of the UN Environment Programme; UK foreign minister Margaret Beckett; and senior figures from Brazil, China and India.