Jatropha is not a miracle crop as popularly believed, requiring high inputs of labor and agrochemicals, good rainfall, and high quality agricultural land to perform to expectations. ©Center For International Forestry Research/Jeff Walker

This article was originally published in the September-October 2013 issue of Bioenergy Insight.

Much of the initial optimism about the contribution of biofuels to energy security, climate change mitigation and rural development has given way to skepticism about its economic viability and bad publicity about related land grabbing and environmental destruction.

Within a highly polarized discourse of “for” and “against”, the debate has shown little nuance and has been rife with poorly qualified assumptions. With the biofuel sector still in its infancy, do these assumptions really hold up to further scrutiny or are biofuels being prematurely dismissed?

Evidence to date seems to suggest that the interactions between the biofuel economy and forests, food production, and the rights of the rural poor are decidedly complex and should not be overgeneralized and oversimplified. Rather than dismissing biofuels outright, more attention should be placed on developing appropriate mechanisms for leveraging the sector’s developmental potential, while mitigating its potential costs.

THE CONTEXT OF FIRST-GENERATION BIO-FUEL DEVELOPMENT

In response to changing global conditions, several countries established consumption and production targets for biofuels as part of a wider shift toward greater incorporation of renewable energy sources into the energy mix and the promotion of a low-carbon economy. Large markets such as those in the European Union, United States, and Brazil currently mandate biofuel blends.

To ensure that blended biofuels meet environmental objectives in the European Union and the United States, they must meet strict sustainability criteria. However, critics contend that these measures are inadequate to protect against the full range of potentially adverse effects of such policies. For example, by stimulating demand for so-called flex-crops (e.g. crops that can be used for multiple purposes, including food), it is argued that this can divert food crops for energy consumption, threatening food self-sufficiency and price stability.

Additionally, many argue that when indirect land use changes (iLUC) are accounted for, many biofuels will not meet the greenhouse gas (GHG) reduction targets, which typically only consider direct land use changes. As a response to this criticism, the European Union in 2013 imposed new measures, including a limit on the amount of food-based biofuels that can be used and additional criteria pertaining to GHG emitted from iLUC.

Moreover, many countries are also starting to question the economic viability of biofuels, as low oil prices often require substantial subsidies to ensure that biofuel producers do not target more profitable food markets instead, amid a vigorous expansion of demand in the food markets.

BIOFUELS ONLY ADD TO EXISTING PRESSURES ON FORESTS

These concerns, though, should be seen in perspective. Although total biofuel production grew more than tenfold between 2000 and 2010, only 9 percent of vegetable oils produced globally are used to make biofuels.

In many countries, ethanol is produced largely from leftover molasses and not from cane juice, which is usually reserved for sugar production. Therefore, the relationship between biofuels and undesirable types of land-use changes such as deforestation is often not direct and not in proportion to pressures from other end-markets. The latter are driven strongly by demand for their food uses and increasing meat consumption in emerging economies such as India and China.

Considering, therefore, the limited use of key crops for biofuel production, the debate about the impacts is largely in the realm of projection. Moreover, although important analytical efforts have been undertaken so far, estimating iLUC effects on forest conversion is difficult to establish in practice and still requires substantial methodological refinement. Additionally, research suggests that GHG emissions generated from land conversion for biofuel feedstocks may take decades or even centuries to reverse. To date, however, the precise environmental footprint of biofuels remains unclear.

SOCIAL AND ECONOMIC IMPACTS OF BIOFUELS

The local socio-economic impact of biofuel feedstock cultivation is extremely variable and often depends on which feedstock and the magnitude and nature of displaced land uses. For example, large plantations generate new employment and income opportunities and offer smallholders the possibility to participate in global commodity markets through contract farming schemes.

On the other hand, many plantations tend to displace local systems of production in areas where property rights are not sufficiently secure, exacerbating local income and food insecurity and disrupting traditional social relations.  Ascribing these effects, like the environmental effects, to a specific end-market is difficult.

Although the European Union and the United States have adopted comparatively strict environmental sustainability requirements, social criteria are largely absent. The European Commission, for example, argued that “the inclusion of social criteria raises technical issues, administrative issues and issues connected with international law (and therefore) it is not recommended to include social criteria in the sustainability scheme”.

The underlying argument for exclusion rests on the assumption that social impacts cannot be easily attributed to a specific biofuel consignment and, therefore, any interference could constitute a breach of World Trade Organization (WTO) rules. This highlights the political and legal complexities of introducing social guidelines in trade-related commodities.

As a result of the reluctance of regulating extra-territorial social issues, an imbalance threatens to be created where stringent environmental criteria will compel producers to seek out lands of lesser environmental significance, which are more likely to contain other socio-economically valuable land uses.

DIFFERENT PATHWAYS ARE POSSIBLE BUT NOT ALL EQUALLY FEASIBLE

Under current conditions, there clearly remain unanswered questions about the sustainability of biofuels and difficult trade-offs between policy options. However, new pathways being explored could alleviate these uncertainties and dilemmas. Underfirst-generation (1G) technologies, emissions from land use change dominate pathway emissions, if such emissions take place, while the lowest emission pathways use wood and agricultural residues as feedstock.

The latter require, however, second-generation (2G) conversion technologies which remain too expensive. 2G biofuels are derived not from food crops like 1G, but from woody crops, agricultural residues, waste and crops such as switch grass. This could reduce food-versus-fuel competition and in many cases will not displace socio-economically significant land uses.

However, while 2G biofuels may contribute to reducing GHG emissions, they may still place some pressures on forests. Moreover, 2G biofuels are currently not cost-competitive due to the high costs of converting woody, non-edible products into fuel. While not offering simple solutions, with short-term technological advances, 2G biofuels may over time serve to ameliorate some of the environmental and social risks associated with 1G biofuel development.

A COMPLEX PUZZLE FOR IMPROVING LAND USE GOVERNANCE

The technical, political, and economic complexities of developing a viable and truly sustainable biofuel economy reveals the interconnectedness of global social and environmental issues, the instability of international commodity markets, and in particular the need for improved governance of land and forests across diverse scales.

One of the first needs in this regard is to connect in a more effective way public and corporate governance initiatives, and the second to link local realities to global processes, as a way to progress toward building more inclusive multi-stakeholder and multi-scale governance.

Despite the emphasis on policies in consumer societies like the EU and the US, some producer countries are starting to play an important role, as evidenced, for example, by the progress made in Brazil to improve land management laws and enhance policy incentives to reduce deforestation in the Amazon.

Unfortunately, in many cases, the national governance systems in producer countries are ill-equipped to deal effectively with the pressures from markets and influential investor groups, and to deal with issues that require adopting complex land use management reforms and expensive incentive structures. These deficiencies could potentially be compensated by good corporate governance, with some private actors self-regulating through voluntary certification systems.

Greater complementarities need to be explored to strengthen the synergies between the public and private sector, as well as to ensure that global processes support simultaneously sustainable and inclusive local development.