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BIOFUELS: MORE BENEFITS THAN JUST ENERGY

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GENEVA, Jul 24 2007 (IPS) - Many economic, social, and environmental goals could be fulfilled by increased production, use, and international trade of biofuels, writes Supachai Panitchpakdi Secretary General of the United Nations Conference on Trade and Development (UNCTAD). The author writes in this analysis that biofuels could slow global warming and provide an opportunity for developing countries to diversify agricultural production, raise rural incomes, and improve the quality of life. They could also enhance energy security, reduce expenditures on imported fossil energy, and foster other technological developments. But it is also important to consider the possible economic and environmental impacts of biofuels, the compatibility of biofuels with existing fuel delivery infrastructures, and competing uses for arable land. For example, the amount and type of primary energy consumed in producing biofuels – and the related emissions of greenhouse gases – vary enormously. And as long as current technology is used, the fast-growing demand for biofuels will mean devoting an increasing amount of arable and pasture land to the production of energy crops, which implications for food security.

While biofuels have thus far displaced around 1 percent of the fossil fuels used in the transport sector, the International Energy Agency estimates that their share could reach 7 percent by 2030. New technologies now under development -and particularly those that use wood materials, such as ligno-cellulosic ethanol- could enable biofuels to play an even bigger role.

Economic, social, and environmental goals could be fulfilled by increased production, use, and international trade of biofuels, provided that this is backed up by the right strategy of resource allocation. Biofuels could slow the process of global warming, for example, and provide an opportunity for developing countries to diversify agricultural production, raise rural incomes, and improve the quality of life. They could also enhance energy security, reduce expenditures on imported fossil energy, and foster other technological developments.

Several developing countries endowed with the land to devote to energy crops production, a favourable climate to grow them, and a relative abundance of labour are already, or are considering becoming, biofuel producers. Before they do so, however, these countries will have to take some crucial decisions and answer some important questions. For example: Is biofuel production intended for transportation fuel security, or for broader energy replacement? What are the land requirements? What is the desirable level of technological sophistication?

These countries will also have to consider the possible economic and environmental impacts of biofuels, the compatibility of biofuels with existing fuel delivery infrastructures, and competing uses for arable land. For example, the amount and type of primary energy consumed in producing biofuels – and the related emissions of greenhouse gases – vary enormously. Powering refineries with coal has a much less beneficial environmental impact than powering them with sugarcane residues.

We also know that as long as current technology is used, the fast-growing demand for biofuels will mean devoting an increasing amount of arable and pasture land to the production of energy crops. This may have implications that require careful assessment, especially for food security. Before embarking on biofuels production, countries also have to identify the support measures needed to get the biofuel industry off the ground and flourishing; the most appropriate investment promotion measures; the type of regulatory framework likely to ensure job creation and rural development; export prospects and possible markets for biofuels; and existing trade flows, tariff regimes, and market access- and entry-related issues affecting international trade in biofuels.

UNCTAD’s BioFuels Initiative is intended to help developing countries answer these questions. For example, an UNCTAD team was recently in Guatemala to help the government formulate a national biofuels programme – one that addresses vital concerns related to food security, water availability, reliable and predictable access to export markets, and improved energy access, especially for rural and isolated communities. Similar country assessments will be undertaken in other regions, and an international expert advisory group has recently been set up to provide guidance on the Initiative.

According to UNCTAD studies (

As to biodiesels, however, there appears to be little international trade at present. Biodiesel feedstocks – the agricultural commodities used to produce biofuels – are traded internationally, and the processing of oil into biodiesel takes place in importing countries. This is unlike bioethanol, which is manufactured where its feedstocks are cultivated. One possible explanation is that until now, biodiesel has been produced almost exclusively in the EU, where incentives have created a market large enough for producers to exploit economies of scale. Additional logistical considerations may also play a role. The transport, storage, and other facilities that are used for trading crude edible oils can also be used for trading biodiesel feedstocks.

International trade in biofuels and related feedstocks may provide win-win opportunities for all countries. For importing countries, such trade is essential if they are to meet self-imposed blending targets. Indeed, several developed countries do not have enough land to grow large amounts of energy crops and have to import them. For exporting countries, especially small and medium-sized developing economies, export markets are necessary to get their industries off the ground. But biofuels face tariffs and non-tariff measures which can offset lower production costs in producing countries, pose significant barriers to international trade, and have negative repercussions on investments in the sector.

Moreover, export performance is often penalized by the graduation of successful exporting countries from preferential trade schemes. A more liberal trade regime would greatly contribute to the sustainable development goals that countries are pursuing. (END/COPYRIGHT IPS)

 
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