European Commission selects bioeconomy as part of 'Lead Market Initiative'; welcomed by biotech industry

The European Commission recently presented its 'Lead Market Initiative for Europe' which is aimed at fostering the emergence of lead markets with high economic and societal value. On the basis of intense stakeholder consultations, six markets have been identified against a set of objective criteria: eHealth, protective textiles, sustainable construction, recycling, bio-based products and renewable energies.

These markets are seen as highly innovative, responding to customers’ needs, and having a strong technological and industrial base in Europe. They depend more than other markets on the creation of favourable framework conditions through public policy measures. For each market, a plan of actions for the next 3-5 years has been formulated. According to the Commission, European citizens will benefit both from the positive impact on growth and employment (the identified areas could represent three million jobs and €300 billion by 2020) and from the access to enhanced goods and services of high societal value.

The European biotech industry's umbrella organisation EuropaBio welcomes the communication particularly because it provides important support in the area of bio-based products, such as enzymes, biochemicals such as bio-based building-blocks or bioplastics, which will be produced together with bioenergy in future integrated "biorefineries". These renewable and biomass based products will replace fossil fuels (schematic: a tree of current and future bio-products from woody biomass, click to enlarge). By developing support policies and measures that will stimulate the demand for these products, this new policy will encourage innovation for bio-based products by transforming knowledge into new bioproducts and bioprocesses, the organisation says.

Over the last two years the biotech industry has supported the European Commission to work out a set of concrete steps to realise the vision of a Knowledge-Based Bio-Economy (KBBE), where biotechnology's new, clean, energy-efficient processes and innovative biobased products create a sustainable industrial base to ensure Europe's future prosperity. EuropaBio's "Industrial Biotechnology Policy Agenda for Europe" produced an outline of policy recommendations to develop a competitive KBBE in Europe, but recognized that in order for these recommendations to be implemented, political support was needed (previous post, see also the 'Plants for the Future' technology platform ).

We need to make sure that we develop a coherent, coordinated and comprehensive overall policy framework supporting the development of bio-based product markets. If policy makers get it right, bio-based products and biotechnology can be the key which unlocks the door to an environmental and economical sustainable future for Europe. The objectives of the Lisbon agenda are still within reach. - Johan Vanhemelrijck, Secretary General of EuropaBio

According to the biotech organisation, encouraging public procurement for bio-based products, stimulating the demand via standards, developing an information and communication campaign explaining the benefits of these products, and looking for specific financial support for the establishment of biorefinery pilot and demonstration plants will certainly stimulate the development, production and uptake of bio-based products in Europe:
energy :: sustainability :: biomass :: bioenergy :: biofuels :: bioproducts :: biotechnology :: green chemistry :: biorefinery :: bioeconomy :: EU ::

This Lead Market Initiative is the first step in the process of active political support and incentives that will help Europe reap the full benefits of the knowledge based bio-economy. We are pleased that the Commission has adopted an integrated approach bringing together all the major policy areas - such as research and innovation, environment, agriculture, industry, transport and energy - to develop a common action plan in this area. We encourage the Commission and the Member States to follow-up this Communication with concrete actions to provide full benefits and increased competitiveness for the European market. - Ian Hudson, President - DuPont Europe, Middle East & Africa and Chair of EuropaBio's Industrial Biotech Council.

The Commission describes bio-based products as innovative products made from renewable, biological raw materials such as plants and trees. The long term growth potential for bio-based products will depend on their capacity to substitute fossil-based products and to satisfy various end-used requirements at a competitive cost.

Europe is well placed in the markets for innovative bio-based products, building on a leading technological and industrial position, the executive body of the Union says. Perceived uncertainty about product properties and weak market transparency however hinder the fast take-up of products.

The Commission's action plan for this lead market integrates all necessary actions in a synchronised way to favour the innovation of the new products and services. The actions range from improving the implementation of the present targets for bio-based products over standardisation, labelling and certification to ensure the quality and consumer information on the new products to harnessing the purchases of public authorities to show the way to the future.

According to the Commission European citizens will greatly benefit from reduced dependency on fossil products and of reduced emission of pollutants, through the wider use of these bio-based products. In the medium term, additional capacity could also help to reduce prices of average goods.


When it comes to renewables, the communication states that the European renewable energy sector has an annual turnover of €20 billion and provides jobs to 300.000 people while meeting approximately 8.5% of Europe's energy needs. The European Council in March 2007 set a binding target of a 20% share of EU energy consumption for renewable energy by 2020. But several problems remain:

• The external costs of energy use are not fully reflected in energy prices.

• Important learning curve effects which would lower prices in several technologies are exploited more slowly on account of present low levels of demand.

• The fragmentation of renewable energy support systems and the existence of administrative and market barriers mean that the potential of the internal market is not fully exploited.

The main elements of the renewable energy action plan are removing barriers to the integration of renewable energy sources in the EU energy system and simplifying authorisation procedures. A coordinated approach for standard setting and labelling on technologies as well as mobilising public and private financing are other measures to help reaching the 20% target by 2020.


EuropaBio's mission is to promote an innovative and dynamic biotechnology-based industry in Europe. EuropaBio, - the European Association for Bioindustries -, has 87 corporate and 8 associate members operating worldwide, 6 Bioregions and 25 national biotechnology associations representing some 1800 small and medium sized enterprises.

References:
European Commission, Enterprise and Industry, Innovation Policy: A Lead Market Initiative for Europe - January 2008.

European Commission, Research: Biosociety, the Knowledge-based Bio-Economy.

EuropaBio: Biotech industry welcomes European Commission's communication on European Lead Market Initiative - January 7, 2008.

Biopact: European biotech industry releases its policy on biofuels - August 18, 2007

Biopact: 'Plants for the Future' technology platform presents plan for European bioeconomy - July 02, 2007

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Tata's Nano could trigger an unstoppable biofuels revolution in the Global South

Will Tata's "people's car" and other ultra-affordable vehicles trigger a biofuels revolution in developing countries?

At Biopact, we're strongly in favor of a transition to electric transport because it would be more efficient and versatile than the 20th century era of the internal combustion engine. In an electric-powered future, the energy carrier would be supplied from a diverse range of renewables, possibly backed up by nuclear, and of course, by the most radical kind of climate fighting energy: bio-electricity yielding negative emissions. That is, electricity generated from biomass cogeneration plants coupled to carbon capture and storage (CCS). Of all energy systems, only this one succeeds in generating electricity while at the same time actively removing carbon dioxide from the atmosphere.

But let's be realistic: such a bright green future is decades away. Professor Jesse Ausubel from Rockefeller University’s Program for the Human Environment recently explored the temporal dimensions of such society-altering energy and transport transitions, in a highly interesting set of papers. He finds the timescales involved cover many decades and possibly even a century.

Still, it might be interesting to ask where this futuristic, all-electric mobility paradigm - possibly putting emphasis on mass transit systems - might emerge first. Somewhere in Silicon Valley, perhaps, or in resource-poor and heavily urbanised Japan. One thing is certain, though: it won't see the light in the developing world anywhere soon, no matter how appealing the concept of energy 'leapfrogging' might be on paper. The developing world will stick to the internal combustion engine for decades to come because it will remain by far the least expensive of all propulsion technologies.

Nano-revolution, biofuels revolution?
People in poorer countries - the "bottom of the pyramid" - aspire to enjoy a form of personal mobility, that is, to own and drive a normal family car. It remains the ultimate symbol of modernity and of membership of a kind of universal middle class. This explains the ever expanding trade of used cars that are shipped from Europe to Africa. This potentially huge market obviously also drives Tata's investment in the ultra-cheap Nano - the "people's car" some hail as a giant leap towards the democratisation of mobility, whereas others call it a potential (climate) disaster for the planet.

The Nano and similar hyper-affordable models currently under development by other manufacturers could expand oil demand much faster than expected. Peak Oil might arrive sooner because of this small car revolution. The numbers are quite staggering: according to rating agency CRISIL, Tata Nano’s launch and the price point it sets could by itself expand the Indian car market by a whopping 65%. At the significantly redefined threshold for car ownership in India, annual car sales have the potential to increase by 20% over the sales expected in 2007-08, it says. Another study by German research firm CSM World Wide shows the small car alone will propel the Tata to become the India's biggest light vehicle manufacturer by 2013. And then there are the large African, South East Asian and Latin American markets, all waiting for a seat aboard the Nano.

A scenario based on a very rapid expansion of the global car fleet and its effects on oil prices could have one immediate result: a massive and unstoppable rush into biofuels. Because the poor not only want to own their Nano, they want to drive it. Ultra-expensive gasoline simply won't be an option. However, the irony is that many of the Nano's target countries happen to have a very large biofuels potential. A considerable number of these nations can replace all petroleum imports by biofuels relatively easily (take Mozambique: it needs to devote less than 1% of its potential arable land to biofuels to meet all its current oil imports).

For the millions of new small car owners, biofuels - even with all their current drawbacks - would become the only acceptable alternative to unaffordable gasoline. The plant based fuels would be highly commercially attractive (they already are with oil near $100pb) and would be far cleaner than the only other fuel likely to be produced on a large scale, that is, coal-based liquid fuels. Coal-to-liquid fuels are known for their extremely high carbon emissions and comparatively high production costs:
energy :: sustainability :: ethanol :: biodiesel :: biomass :: bioenergy :: biofuels :: mobility :: democratisation :: modernity :: consumerism :: Peak Oil :: electricity ::

In short, the Nano-revolution could imply an equally large biofuels revolution in the Global South. The small vehicle might be far more efficient than any European, Japanese or American car - but it too happens to have an internal combustion engine. That is, it needs a liquid fuel (gaseous (bio)fuels would do too). In any case, an electric Nano that is equally affordable will not see the light for a long time.

Liquid fuels and energy services
This brings us to a topic that has caused some confusion amongst renewable energy advocates. Many apply criteria to measure the efficiency of biofuels against other renewables, without taking into account the actual services provided by a liquid fuel. Take Nobel laureate Dr Hartmut Michel, the 1998 Nobel Prize winner for chemistry, who was in Manila last week for a talk. He urged the Philippine government to invest in wind power as an alternative to biofuels because the photosynthetic efficiency of plants is quite low. But obviously, the Nobel knows that cars don't work on wind power; he also knows that wind has problems with its intermittency and requires reliable baseloads, currently provided by fossil fuels. Moreover, Dr Michel should have known that the Philippines is an infrastructure-poor country that won't see electric vehicles anywhere soon. Instead, modernity in the island nation comes in the form of the ICE and liquid fuels. Currently, wind power has absolutely nothing to do with sustainable transport.

Bioenergy experts and scientists more familiar with the future of mobility know that the concept of the "energy balance" and production efficiency of biofuels - to which Dr Michel refers - is in a sense useless, certainly when this metric is used to compare biofuels to other forms of renewable energy, like wind power. This is so because a liquid fuel has very specific properties that make it unique and uncomparable with electricity, which is merely an energy carrier.

Bioenergy expert Professor Bruce Dale from Michigan State University recently claimed that "Net energy analysis is simple and has great intuitive appeal, but it is also dead wrong and dangerously misleading – net energy must be eliminated from our discourse." Dale’s perspective was recently published in the first edition of Biofuels, Bioproducts and Biorefining, to make the debate on the nascent bioeconomy more scientific and rigorous.

The problem with net energy, says Dale, is that it makes an assumption that all sources of energy (oil, coal, gas, nuclear, wind, etc) have equal value. "This assumption is completely wrong – all energy sources are not equal – one unit of energy from petrol is much more useful than the same amount of energy in coal, and that makes petrol much more valuable," says Dale.

For evidence, he points to the markets, where a unit of energy from gas, petrol and electricity are worth 3.5, 5 and 12 times as much as a unit of energy from coal, respectively. The same logic holds true for liquid biofuels compared with electricity from wind.

"Clear thinking shows that we value the services that energy can perform, not the energy per se, so it would be better to compare fuels by the services that each provides... not on a straight energy basis, which is likely to be irrelevant and misleading," says Dale.

It is an important lesson for everyone interested in analysing the future of mobility, especially as it relates to the developing world, where people value actual energy services more than the mere theoretical efficiency of an energy source.

Image: Tata Nano unveiled at the New Delhi Auto Expo. Credit: AFP.

References:
The Economic Times (India): Tata Nano may expand market by 65%: CRISIL - January 12, 2008.

The Economic Times (India): Tata Nano: Mass hysteria leaves vendors beaming - January 12, 2008.

New York Times: Moving Billions of People on a Still-Green Planet? - January 11, 2008.

Inquirer: Rethink biofuel, says Nobel laureate - January 14, 2008.

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Researchers: invasive bush biomass in Namibia has high energy production potential

Anti-biofuels groups often try to narrow the debate about bioenergy by pointing to regions where its production presents a risk of deforestation and biodiversity loss. This way, they have succeeded in presenting a false and static image of a much larger sector, potentially denying many poor farmers and communities elsewhere the opportunity to make a living. In reality, the vast bulk of biofuels and biomass produced in the future will result in exactly the opposite effects than those now dominating the debate: improved ecosystem conservation and greater biodiversity, mass poverty alleviation, energy security and energy access for the underserved, and large reductions in greenhouse gas emissions. Yet another example of this future comes from Namibia.

There, the VTT Technical Research Centre of Finland, Northern Europe's largest contract science organisation, has studied the profitability of using bush chips in electricity production, where biomass from invasive bushes has great energy production potential. We referred earlier to a tentative study exploring this option, but now science backs up the preliminary findings (previous post).

Namibia suffers from the overgrowth of rapidly growing, robust bush, which is disruptive to cattle raising, the country's poor farmers' primary source of livelihoods, and threatens the survival of other plant species. The phenomenon of bush encroachment in Namibian savannas is regarded as part of the desertification process since the increase in the extent and density of woody vegetation occurs at the expense of other desirable grasses and forbs, resulting in an alarming reduction in productivity. The following definition of bush encroachment was accepted by rangeland experts in Namibia during a brainstorming session of the National Programme to Combat Desertification (NAPCOD):

Bush encroachment is the invasion and/or thickening of aggressive undesired woody species, resulting in an imbalance of the grass:bush ratio, a decrease in biodiversity, a decrease in carrying capacity and concomitant economic losses.

VTT developed the production technology for the utilization of bush chips and looked at whether it can be applied in a cost-effective manner to tackle this environmental problem. Previous efforts to find ways of clearing the invader bush, such as massive herbicide spraying or burning campaigns, are hardly sustainable, cost-effective or environmentally friendly. Burning would result in large amounts of greenhouse gas emissions, whereas herbicides kill the ecosystem alltogether. Moreover, estimates show that it would cost up to N$5.2 billion (€534/US$714 million) to combat the infestation with these techniques. For a country like Namibia, this is a tall order. Individual, small farmers whose land is invaded say it is cheaper to buy a new farm than to try to eradicate the hardy bushes. (See the Bush Encroachment Research, Monitoring and Management project of the Ministry of the Environment).

VTT's trials with a mobile bush chipper, transforming the bulky biomass into chips that have a higher volumetric energy density. The biofuel is transported from the bush to a central briquetting plant.

According to the VTT, bioenergy could come to the rescue. It has been estimated that the overgrowth of bush greatly affects an area of about 10 million hectares in northern parts of central and eastern Namibia. There are between 1,000-10,000 bushes per hectare in this area. The amount of biomass per hectare ranges between 5-25 tonnes. The overgrowth of bush can be managed by thinning and leaving 200-300 of the largest bushes to grow on the savannah. An average quantity of biomass obtained by thinning is about 10 tonnes per hectare. The thinned bushes re-grow from their roots, and thinning can be repeated in 10-15 years. In other words, the area affected by the overgrowth of bush produces in total 125 million tonnes of biomass, i.e. 500 TWh. The total consumption of energy in Namibia was 12.6 TWh in 1999.

The overgrowth of bush is harmful to, for example, cattle raising, as the bush reduces the growth of grass and it is almost impossible to move in thick bush. The production of bioelectricity would contribute to Namibia’s energy self-sufficiency, which is currently low. Namibia imports most of its electricity from South Africa. There is a coal-fired power plant in the country’s capital, Windhoek, but it is used sporadically to supplement imported South African electricity. At the moment, the bush is used for firewood (about 1 million tonnes a year) and for charcoal production (0.3 million tonnes a year). Namibia also has one briquette factory, which produces about 6,000 tonnes of briquettes from bush chips.

The VTT actually trialed bush chip production for its study to look at its commercial viability. The tests were carried out on a farm owned by the CCF (Cheetah Conservation Fund). The farm is 36,000 hectares in size and is located in the area where bush growth is a problem, i.e. about 200 km north of Windhoek. Chips for the briquette factory owned by the CCF are produced on the farm:
energy :: sustainability :: biomass :: bioenergy :: biofuels :: bio-electricity :: biomass briquettes :: supply chain :: invasive species :: biodiversity :: conservation :: energy security :: poverty alleviation :: Namibia ::

In the CCF chip production process, the bushes are cut by axe. After cutting, the bushes are carried to the side of the skid road. The skid roads are 50 metres apart. The bushes are placed in piles by the skid road, where they are dried to 15-20% moisture content. In Namibian weather conditions, it takes two to three weeks of drying for the bush to achieve this moisture content. When the bush is sufficiently dry, it is chipped in a drum chipper. The chipper blows the chips straight into a tractor trailer, which takes them to the briquette factory 40 km away. Two trailers equipped with tipping gear are attached to the tractor.

The cutting trials were carried out on one-hectare test plots. Thirteen plots were used for the study. After thinning, 200-250 bushes remained in the cutting area. The average yield in the test plots was 7 tonnes per hectare. In the cutting tests, the productivity of the various work stages was measured in tonnes per time unit. The productivity of cutting was 0.25 ha (1.7 tons) and of transport 0.30 ha (2.0 tons) per worker per day. The productivity of chipping was 20.1 tonnes per day and of road transport 10.5 tonnes per day, when the transportation distance was 50 km.

The bioplant of 5 MW under review uses 32,000 tonnes of chips per year at a moisture content of 20%. To produce this amount using the existing production chain requires 198 men, in addition to the machines. The production cost of the chips, calculated for a transport distance of 30 km, is €5.1/MWh. Chipping costs are the largest individual cost item.

Costs reduced by 15%
VTT also improved the efficiency of the chip production chain. Based on machinery tests, it was proposed that the chain be fully mechanised. In the mechanised chain, bushes are cut with a small tractor equipped with a rotating cutting head. The bushes are moved by a small tractor equipped with a grapple. The chipping is done by a drum chipper equipped with a feeder, and a tractor-trailer combination is used for road transport due to the short distance. According to VTT, the new mechanised chain could reduce the cutting costs by about 15%, in comparison with the chain used at the moment. If a 50 MW electricity plant uses 32,000 tonnes of chips (at a 20% moisture content) per year, 32 workers are needed for the production.

Electricity production in separate 10 MW and 20 MW plants is profitable if the investor investing in the plant receives 35% investment aid and €15 per tonne of carbon dioxide in emissions trading. According to the study, a 20 MW plant would repay itself in seven years and a 10 MW plant in 10 years. In the study, the price of electricity was €40/MWh. A 5 MW plant is too small, which is why the repayment period for it using the values provided above, is 16 years. The plants could be located in northern Namibia where the largest biomass resources are located.

There is a coal-fired power plant with four boilers in Windhoek. In the project, the conversion of one of these to biomass was considered. The boiler’s capacity using biomass would be 20 MW, which is somewhat less than when coal is used. The conversion of the boiler to biomass would be profitable even without aid. Electricity production costs would be €35.6/ MWh. Most of the costs would be incurred by fuel (€27/MWh). The capital cost would be €5.5/MWh. The investment would repay itself in seven years.

VTT Technical Research Centre of Finland is the biggest contract research organisation in Northern Europe. VTT provides high-end technology solutions and innovation services. From its wide knowledge base, VTT can combine different technologies, create new innovations and a substantial range of world class technologies and applied research services thus improving its clients' competitiveness and competence. Through its international scientific and technology network, VTT can produce information, upgrade technology knowledge, create business intelligence and value added to its stakeholders. VTT is a non-profit-making research organisation.

Images: studying the bush biomass supply chain in the field. Credit: VTT.

References:
Leinonen, A. Wood chip production technology and costs for fuel in Namibia. Espoo 2007. VTT Tiedotteita – Research Notes 2417. 66 p. +app. 21 p.

VTT: VTT studied the profitability of electricity production with bush chips in Namibia - January 14, 2008.

AlphaGalileo: Bush biomass has high energy production potential - January 14, 2008.

Biopact: Namibia to use invasive shrubs for bioenergy, to meet all power needs - April 02, 2007

Ministry of Environment and Tourism: Bush Encroachment - Report on Phase 1 of the Bush Encroachment Research, Monitoring and Management Project.

The Namibian (via AllAfrica): Namibia: N$5.2 Billion Needed for Bush Clearing - March 12, 2007.

New Era (Windhoek) (via AllAfrica): There's Power in the Bush - April 2, 2007.

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Indonesia increases biofuel target to 10 percent by 2010

Indonesia plans to substitute around 10 percent of its fossil fuel transport consumption with biofuel products by 2010, a senior government official told the Reuters Global Agriculture and Biofuels Summit. The resource-rich tropical nation has been pushing the use of biofuels made from various resources such as palm oil, sugar cane and cassava to cut the use of costly petroleum products.

The move is meant, amongst other aims, to ease burden of hefty subsidies on petroleum products without raising the price of subsidized fuel sold on domestic market. Fuel riots are common in Indonesia and without intervention increasing oil prices leading to higher fuel prices at the pump are likely to lead to social unrest.

"We can't increase prices of subsidized fuel as it will hurt consumers. But we may be able to cut consumption and replace it with biofuel," said Evita Legowo, secretary at the National Biofuel Development Team.

Biofuels are also seen by Indonesia as a way to alleviate rural poverty and to generate employment, as some 2.5 million jobs are expected to develop in the sector (earlier post).

By 2010, biofuel products are expected to account for 3.8 billion liters of total petroleum consumption for transportation at estimated 34.75 billion. The country plans to inject a total of US$ 12.4 billion over the coming 3 years (earlier post).

Indonesia is Asia Pacific's only OPEC member but it is one of the smallest producers in terms of production and relies on fuel imports as it has failed to tap new oilfields fast enough.

The country has to spend billions of dollars on oil subsidies and importing oil products.

For that, the government plans to increase bioethanol blend in gasoline to 5 percent by 2010 from 3 percent, using cassava and cane molasses - a thick syrup residue produced from sugar cane during the sugar extraction process - as feedstock.

Production capacity for bioethanol using both cassava and cane molasses is expected to reach 3.77 billion per year, from 135 million per year by the end of December 2007, data from the biofuel team showed:
energy :: sustainability :: ethanol :: biodiesel :: biomass :: bioenergy :: biofuels :: energy security :: fuel subsidies :: Indonesia ::

As for biodiesel, Legowo said the government may keep the biodiesel blend in diesel oil at 2.5 percent due to soaring palm oil prices while trying to boost output of jatropha, a non-edible oil that grows in arid land and needs little care.

"Biodiesel blend will stay at 2.5 percent ... maybe less because we are still waiting for jatropha that we planted last year," Legowo said.

Indonesian state-owned oil firm Pertamina which retails biodiesel at home, has cut the biodiesel blend in diesel fuel to 2.5 percent as rising palm oil prices and lack of incentives cut margins.

Malaysian crude palm oil futures hit a record on Monday with the benchmark March contract KPOH8 ending at 3,414 ringgit a tonne after hitting 3,420 ringgit, surpassing a high of 3,280 ringgit reached on Friday.

Palm oil prices, up nearly 12 percent since the start of the year, were also supported by prospects of Malaysia introducing palm oil-blended diesel at home this year and Indonesia's plans to double biodiesel production.

There are also plans for 12 special biofuel zones by 2010 where investors could develop an integrated biofuel industry, if approved by the government, said Legowo.

Indonesia is developing other raw materials to ensure feedstock supplies for biodiesel and biofuel production. It plans to plant 5.25 million hectares of unused land with palm oil, jatropha, sugar cane and cassava by 2010 (map: likely distribution and potential of first generation biofuel resources in Indonesia by 2030, kt = kilotonnes; click to enlarge).

By that time, biofuel products will account for 2 percent of the country's total energy mix of 5.29 billion.

With its 245 million inhabitants Indonesia is the world's fourth most populous country. It wants to revitalise its agricultural sector and increase its energy security by investing massively in bioenergy.

The Indonesian government has so far invested US$1.42 billion in the sector, with more than 67 projects for the production of liquid biofuels signed so far, and with 114 biomass power plants under construction across the archipelago (earlier post).

References:
Tomoyasu Hirano, "Biofuel Resources in Asia" [*.pdf], presentation for the International Biofuel Conference 2007, New Energy & Industrial Technology Development Organisation (NEDO, Japan), February 2, 2007

Reuters: Indonesia to switch 10 pct petroleum to biofuel - January 14, 2008.

Biopact: Indonesian state power company to run 114 power plants on biofuels -
December 02, 2006

Biopact: Indonesia's $12.4bn biofuels plan inaugurated today; CNOOC to invest $5.5bn - January 09, 2007

Biopact: Indonesia's biofuel program to bring 2.5 million jobs in three years time - September 09, 2006

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OECD calls biofuel tariffs "wasteful" and "destorting"; calls for open markets

Governments may be getting a clearer picture of the shortcomings of current biofuel policies but the likelihood they can remedy any wrongs looks far from certain, a senior OECD official said on Monday.

Loek Boonekamp, a division head in the OECD's Agro-food Trade and Markets Division, singled out price-supporting trade barriers, erected by Europe and the United States, as one example of "wasteful" and "distorting" steps taken to date.

But even governments aware of policy weaknesses would find it very hard to backtrack on such supportive policies in the face of powerful lobby groups.

"I'm not very optimistic that because we say that the policies are bad and wasteful that governments will go away and do something else," he told the Reuters Global Agriculture and Biofuel Summit in Paris.

"Support policies generate vested interests...once these vested interests are there and these support policies are well entrenched, it is incredibly difficult to get rid of this," he said.

Governments need to free up trade conditions for biofuels and ingredients used to create them to ensure production on a global scale makes more economic sense, he said:
energy :: sustainability :: ethanol :: biodiesel :: biomass :: bioenergy :: biofuels :: tariff :: subsidies :: trade :: OECD ::

In September, the OECD published a report suggesting that biofuels had far fewer environmental and economic benefits than many people think.

Another barrier to fair trade in biofuels would be the sustainability criteria the EU is likely to impose on the fuels. The wealthy West protects its agriculture already with subsidies and trade barriers, making it difficult for poorer farmers to compete. Imposing strict sustainability criteria would be a non-tariff barrier to trade, making the situation worse.

Earlier, two trade and subsidy experts presented a paper to the OECD in which they call subsidies and tariffs damaging and counter-productive. They called for an abandonment of the rules, but warned that this might not happen soon.

References:
Guardian: OECD not optimistic on sound biofuel policies - January 14, 2008.

Reuters: Global agriculture and biofuels summit - January 14 - 15.

Biopact: Paper warns against subsidies for inefficient biofuels in the North, calls for liberalisation of market - major boost to idea of 'Biopact' - September 11, 2007

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EU biofuels sustainability criteria "imperialist", could be illegal under the WTO

Under pressure from some NGOs in Europe, Environment Commissioner Stavros Dimas has said the Union might impose social and environmental sustainability criteria on imported biofuels. In an ideal world, there should be no problem with such rules - we all want our products to be produced in a sustainable way.

But in a market and modernity driven world, such criteria would constitute a series of 'non-tariff barriers' to trade that could be illegal under the WTO. Arguably, they would also be a form of 'green imperialism' and discriminate against poor countries who have a large technical potential to produce these fuels. If the EU wants poor countries to operate in what it describes as a 'sustainable manner', it should be willing to pay the extra cost. Or it should exclude its own biofuels, which are grown on land that once used to be forest. Else, developing countries should simply sell their biofuels to rapidly growing economies like China and India, which don't impose such discriminatory criteria because they understand that they form barriers to development.

What is more, for years NGOs in Europe have been campaigning and demanding that poor farmers in the South be granted more access to EU markets (which are protected by lavish agricultural subsidies and tariffs), and now that such a historic opportunity emerges because of biofuels, these very NGOs are against it. This is bizarre, to say the least.

But let us look at why proposed sustainability criteria could be socially and historically unjust. Regrettably, very few products in our global economy are regulated for sustainability: goods made in China with energy from coal, are neither socially nor environmentally 'sustainable', but they are massively imported into the EU; China has benefited greatly from this manufacturing boom as have European consumers (at least from a purely economic, consumerist perspective). Likewise, petroleum pumped up in Venezuela or Canada's tarsands is very environmentally destructive, but brings in large profits. The oil is imported with no questions asked. The same can be said for thousands and thousands of products.

Suddenly, for biofuels the EU is willing to make an exception. The reason? Biofuels signal a gradual shift in the geopolitics of energy from the wealthy North to the Global South, and would allow developing countries to exploit their natural comparative advantages to their benefit - something the West is uncomfortable with. Luckily for the poor countries of this world - the majority of who stand to benefit from trading biofuels because they have a large capacity to produce them - such criteria will be fought over at the WTO and could be deemed 'illegal' under the current trade rules.

But let's delve into the essence of the problem: the way in which modernity has worked in the West, and whether developing countries are entitled to go through a similar process.

NGOs have rightly pointed out some environmental problems associated with biofuels. Let's take the worst case: deforestation in Indonesia and Malaysia. Forests are logged, after which oil palm companies move in to plant a crop that yields a very high amount of oil. This industry has benefited these countries more than any other agricultural sector. Palm oil exports are now one of Malaysia's highest profit-generating sectors, after petroleum, and have lifted hundreds of thousands of people out of dire poverty. However, biodiesel made from this resource has been smartly marketed by some NGOs in Europe as 'deforestation diesel'. They want a ban on the fuel (and if it were up to them, on palm oil in general).

Obviously, palm oil producing countries - and many African countries will emerge as participants in this growing industry - will call this demand 'imperialist': Europeans are dictating others once again how to develop. NGOs, consumers and governments from the wealthy West indeed forget to mention that their own hegemonic position - their might to speak about such global environmental issues - is entirely based on the fact that they live in wealthy, post-industrial cultures where consumers are rich enough to embrace green sensitivities and lifestyles.

However, this luxurious and powerful position is the result of centuries of modernisation and industrialisation. The single greatest environmental transformation that enabled this modernity to emerge in Europe and North America, was massive deforestation. The US has 4% of its original forest cover left, the rest was destroyed to fuel the industrial revolution, well into the 20th century (map, click to enlarge). A similar history has occured in Europe. Deforestation allowed for large scale agriculture to feed rapidly growing populations, it allowed for urbanisation and for the growth of extensive transport infrastructures - all key to modernity. Only very recently, after these many decennia of industrialisation and wealth creation, forest cover in Europe and the US began to increase again gradually (earlier post).

The wealthy West now wants to deny poor countries the opportunity to go through this same process. It would indeed be great if developing countries were to 'leapfrog' the West and skip, for example, the deforestation-modernisation phase to enter into a highly efficient, post-industrial era at once. But this is of course totally illusory, because it would be extremely costly:
energy :: sustainability :: ethanol :: biodiesel :: biomass :: bioenergy :: biofuels :: non-tariff barriers :: deforestation :: modernity :: development :: trade :: WTO :: EU ::

And this is the crux of the matter: the wealthy West, including its NGOs, are not willing to pay for sustainable development in the South. They are all too willing to 'teach' ('dictate') these countries that they should avoid the dirty, destructive development pathway that allowed their own modernity. But putting up the cash to effectively allow poor countries to modernise without environmental side-effects, is too much to ask.

The simple fact is that such a post-modern development pathway would cost billions, if not trillions (compare with the wealth created in Europe and the US during its long industrialisation and modernisation phase). No politician in Europe or America will ask his citizens to give up a large portion of their wealth to pay up. It is much easier to simply impose sustainability criteria, and claim they are in the interest of these poor countries.

Developing countries should be allowed to produce biofuels the way they want. Countries that want to import biofuels only when they are produced in a manner they define as 'socially' and 'environmentally' 'sustainable', should pay for this extra service.

If the EU were to impose discriminatory sustainability criteria, it should at least contain a historic reference to its own agricultural sector, which is using land that used to be forest before the onslaught of the Industrial Revolution. Developing countries like India and China asked for a similar reference in Bali: the wealthy West carries a massive historical burden when it comes to greenhouse gas emissions - a cap on CO2 in poor countries would be discriminatory.

But it is unlikely that the poorest countries will be able to resist the imperialist biofuels dictates of European NGOs and governments. Perhaps, their only chance to benefit from their natural comparative advantages is to sell to other developing countries, like China and India, where fuel demand is growing rapidly. Maybe a Biopact based on South-South relations might be more realistic than one based on North-South relations.

Map: deforestation in the US as a result of the Industrial Revolution. Credit: Gary Ritchison, Department of Biological Sciences, Eastern Kentucky University, Human Population History.


Jonas Van Den Berg, CC, Biopact 2008.

Biopact: Global forest cover increasing; poverty main cause of deforestation - study - November 14, 2006

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