Practical applications of biofuels for the poor - Highlights from the International Conference on Biofuels (Day 2, part 2)

During the fourth session of the International Conference on Biofuels, Simon Trace, chief executive of the NGO Practical Action explained how biofuels can help the poor in very concrete ways, but also warned on circumstances under which they can be less beneficial and risky.

Practical Action is committed to helping the 'really poor' people in the developing world, that is those who live on less than a dollar a day, by using appropriate technologies. The organisation looks at designing concrete solutions for problems such as water and energy access, shelter, transport and food access. It does so by collaborating directly with the communities and by sticking to utilizing local resources, in short, it relies on a strictly bottom-up approach.

In his fascinating presentation, Simon Trace outlined three main reasons as to why the poor should be interested in biofuels: (1) they may offer technical solutions to improved energy access, (2) they may boost rural communities' incomes, and (3) they should be informed about the risks of large-scale projects, which may have negative impacts on their life-world.

Trace set out by stating that not all biofuels are equal, and that the energy and greenhouse gas balance of different fuels must be taken into account. When it comes to their potential to reduce carbon dioxide emissions, he made the following remark:

If one hectare of grassland is converted to sugar cane for ethanol, it may save 12 tonnes of carbon dioxide. But if that same hectare were to be afforested and the trees left to stand, it would save up to 20 tonnes of CO2.

Of course, this is a bit misleading, because trees don't offer a liquid fuel, which has many socio-economic benefits (mobility, transport of goods and persons, and its crucial role in local economies). Sugar cane based ethanol offers both: impressive CO2 reductions and a transport fuel. In short, the opportunity costs of different land-use options must be analysed in-depth.

Biofuels and energy access
Practical Action then presented a case for biofuels at the local level, in that they can help increase energy access for poor communities - both energy for household use (cooking, heating, cooling) as for transport (crucial in rural and remote communities, where fossil fuels are often extremely expensive or simply not available.)

Almost two billion people in the developing world have no access to modern energy and rely on primitive biomass resources. The sheer physical burden of collecting fuel wood is enormous. Trace stressed that this burden on the body is itself extremely energy inefficient - women and often children spend a lot of their (scarce) calories on walking and carrying raw energy from the gathering site to the home, where the primitive fuel is then burned in highly inefficient ways on open fires. An open fire wastes up to 90 per cent of the useful energy contained in wood or dung, and causes indoor air pollution, a major health burden in the developing world killing up to 1.5 million women and children per year.

But the economic burden is equally big: lack of access to modern energy prevents communities from running schools, hospitals, telecommunications and households in efficient ways - all these are crucial for local development and poverty alleviation.

Biofuels can contribute to solving these problems, in the following ways:
bioenergy :: biofuels :: energy :: sustainability :: biomass :: ethanol :: biodiesel :: biogas :: renewables :: poverty alleviation :: energy access :: rural development :: developing world ::

They can be produced locally, from local crops and in a small-scale, decentralised manner. This is most feasible for biodiesel production, the technology and start-up costs for which are less capital intensive than those for ethanol. In fact, in many instances, straight vegetable oils can be used in diesel engines without any adaptations (that is, in warm climates). The fuel can be used for power generation, for rural transport and for farm machinery, irrigation pumps, and so on.

Simon Trace explained that one of the major causes of poverty is isolation. Improving the access and mobility of the isolated poor paves the way for access to markets, services and opportunities. Practical Action has been running several projects with locally produced biodiesel in Peru, where the fuel is used by remote river communities to power their boats. Their only alternative is extremely expensive diesel fuel, which is often in short supply. The decentrally produced biodiesel is not only much cheaper, but supply chains and scales of the projects can be adapted to precise local needs.


Note that the Biopact is currently writing a project proposal on local biodiesel production in both Congos (Democratic Republic of Congo and the Republic of Congo) and the Central African Republic, where river transport is the true spine of the (informal) economies of these vast but sparsely populated countries. In the DRC alone, around 30 million people (50% of the total population) rely on river transport to move goods and people around on a daily basis. The rivers supply food and agricultural products for the 15 million other people who live in the country's largest cities. If fuel costs increase or fuel supplies are cut off, river transport collapses with dramatic consequences for all citizens. The situation is similar in the Republic of Congo and the CAR. Here too, locally produced biodiesel or straight vegetable oils are less expensive than petro-fuels, which are often simply not available at all. Biofuels can break the economic uncertainties and dependence that come with reliance on imported fossil fuels.

Simon Trace then briefly focused on the famous jatropha projects in Mali, where the Mali Folke Center has been cooperating with the UNCTAD and the UNDP to run local energy platforms. Jatropha biodiesel is used in Lister-Petter diesel generators for electricity production. Even though the technology is appropriate in the case of Malian communities, in other places alternatives like solar and micro-hydro might be more suitable and efficient, Trace thinks. (We doubt this, as solar comes at a cost 10 to 20 times higher than most bioenergy projects based on biogas or locally manufactured biodiesel; micro-hydro can be less costly but only works where conditions permit its application).

Better cooking stoves - which are under development by many organisations - as well as biogas made in anaerobic digesters that ferment local waste streams, offer great potential as well.

In conclusion, when it comes to local energy access, the poor can definitely benefit from biofuels. But each community and its particular environment call for a thorough analysis of which technologies are most suitable - biofuels are only one of the many options, with others being wind, solar and micro-hydro.

The scale of the problem of the lack of energy access in the South is however gigantic (1.7 to 2 billion people are affected). If we want to solve the problem in 10 years time, we need to reach 475,000 people each single day, for ten years in a row...

Income generation
According to Trace, another major advantage of biofuels is their potential to generate income for the poor. This can be accomplished in different ways: (1) by involving rural communities in feedstock production, (2) by employment creation in the sector by large agribusiness, and (3) by redistributing the income or the savings generated on a national level to the poor; states can benefit from lower petroleum import bills when locally produced biofuels are used instead of diesel and gasoline; or they can acquire revenues from biofuel exports; this money can be spent on social services (health, education), on poverty alleviation programs or on infrastructure works that benefit the poor (e.g. rural roads).

Feedstock production
Experience with cash crops such as coffee, tea or cocoa shows that incomes only reach the poor when they acquire some part of ownership in the production chain. This can be achieved when farmers and workers organise in cooperatives or other forms of association. Smallholder production is not allways efficient, and so good extension services must be in place to make sure smallholders can survive and participate in the sector by applying the latest and most efficient farming techniques.

Large scale projects and jobs
Trace said large-scale production of biofuels can benefit local communities because they often offer many jobs - biofuel production is relatively labor intensive. But the logic of agribusiness is to be as efficient as possible, and, depending on the feedstock (perennial or annual), the threat of mechanisation always looms. Moreover, for crops such as sugar cane, much of the generated labor is seasonal. But all in all, large agribusiness must not be diabolised as such when it generates local employment and jobs that offer more perspectives than mere subsistence farming.

Redistributing national savings
When a state decides to produce biofuels to lessen its dependence on imported petroleum, it is of course crucial that the biofuel in question has a clear margin of competitiveness; in other words, it must be consistently and considerably less costly to produce than diesel or gasoline. Currently only Brazil (for ethanol) and Malaysia and Indonesia (biodiesel) can produce below fossil fuel prices (with oil at over US$ 35/40, sugar cane ethanol in Brazil is competitive; with oil at over US$60, palm based biodiesel is feasible).

However, when a national government saves on replacing petroleum by biofuels, then it is not very likely that these savings ever reach the poorest. The benefits are supposed to trickle down to them via social services (health, education), poverty alleviation programs or infrastructure works (rural roads, etc...). But Trace, citing a study by the New Economics Foundation, showed that in many developing countries, of each 100 dollars spent by governments, less than 1 dollar reaches the 10% poorest.

In short, the argument that the state can save money with biofuels and that this may benefit the most vulnerable in society, is theoretically correct, but only strong governance and appropriate policies can ensure that this theoretical potential is actually made tangible. Redistributive policies are difficult to implement in the highly developed world, so it is not to be expected that they will work easily in the lesser developed countries.

Potential negative effects of biofuels on the poor
But biofuels are no panacea, far from it. Simon Trace told the Conference there are several potential disadvantages and risks of biofuels in the developing world.

First of all, the effects of large scale production which does not involve rural households, on food prices must be understood and analysed more thoroughly. Farmers may benefit from increased food prices (and over 70 per cent of sub-Saharan Africa's population consists of farmers), but the urban poor (an ever growing group of people) will have no means do defend themselves against this. These uncertainties must be addressed in assessments of large biofuel projects and mitigated by appropriate policies.

Further, market forces may push interesting biofuel feedstocks that may benefit small farmers and may help restore the environment (such as Jatropha curcas) out of the market, in favor of monocultures that bring few jobs.

Third, there is a serious problem with land tenure in the South. Small farmers often do not formally own the land they work on, and land grabs coming from outside and above (from top-down decisions and powerful companies) may push people off their land. Strong land reform and formal land ownership rules must be implemented. The West must help developing countries with crafting such policies.

Fourth, some biofuel crops contribute to climate change instead of reducing carbon dioxide emissions. Obviously, when forests are cleared for energy crops, the biofuels derived from them are not 'green'.

However, in the debate following Trace's presentation, a representative from Malaysia raised the taboo subject of palm trees and their role in the carbon cycle. He stressed that rainforests sequester less carbon than palm trees, and there is some science backing this up. But obviously, the argument is quite absurd, because rainforests are biodiversity hotspots and offer many additional ecoservices. The value of rainforests for mankind is priceless.

Policies crucial
To conclude, Simon Trace stressed the crucial role of policy frameworks. Biofuels can have many advantages - reduced GHG emissions, increased energy security - but in the end, it depends on us to make sure we also realise their potential to benefit the poor.

Policies decide whether the savings on imported fuel costs are redistributed in a fair way; land tenure policies decide whether the poor become owners of their own land and of their productive activities; and policies decide whether biofuels are produced in a socially and environmentally sustainable way.

Jonas Van Den Berg & Laurens Rademakers, Biopact, 2007, cc.

References:
Simon Trace's presentation should be online at the Conference website soon or at the website of Practical Action.