IIED Links:

Related Links:

Biofuels are products that can be processed into liquid fuels for transport or heating purposes. Bioethanol and biodiesel are the most common types of biofuel. Bioethanol is produced from agricultural products such as sugarcane, corn, beet, wheat, sorghum. Biodiesel is made from oil- or tree-seeds such as rapeseed, sunflower, soy, palm, coconut or jatropha.

In recent years there has been renewed global interest in biofuels as an alternative to fossil fuels, and a rapid expansion of biofuels markets. Their reduced carbon emissions compared to conventional fuels and their positive impacts on rural development, together with the current high oil prices, are key elements behind their market development.

Biofuel technologies are already well developed and available in many countries. Many governments have begun introducing policies to increase the proportion of biofuels within their energy portfolio. Worldwide production of biofuels is expected to quadruple in the next twenty years, by then accounting for about 10 percent of global motor fuel.

Only a small proportion of biofuel production currently enters international markets as the bulk of production is consumed domestically.  But international trade in biofuels is expanding very rapidly, as many countries do not have the domestic capacity to supply their internal markets and other countries are expanding their biofuels production to fill the gap. 

Rationale

Preliminary research conducted by IIED reveals that, at present, little is known about the links between biofuels production, trade and sustainable development. And little research has been conducted on the wider implications of biofuels trade for sustainable development.

International trade will play a key crucial role in determining the impacts of biofuels on sustainable development. Trade in biofuels could yield important development opportunities since the most efficient producing countries are developing countries and the main international consumers are likely to be industrialised countries. However, under the current trading conditions, trade benefits would not accrue as there are several issues preventing developing countries from reaping the benefits of biofuels trade. Key issues that need to be understood include:

• The risk of protectionism undermining developing countries’ competitiveness,  leading to poor efficiency and environmental and social outcomes
• Biofuels market power structures leading to unfair distribution of the benefits along the trade chain
• Competition between food and fuel
• Export-led biofuels’ impacts on sustainable development

The objective of our work in this area is to explore and provide evidence on the key issues involved in the interface between biofuels, trade and sustainable development.

Focus

We aim to analyse a comprehensive range of sustainable development impacts and to identify the similarities and differences that emerge depending on the exporting country, type of biofuel/energy crop or importing market.

We have begun work with partners on case studies of two key biofuel-exporting countries.

• Partners in Pakistan are carrying out a case study of sugarcane-based bioethanol in Pakistan. Pakistan is the second largest bioethanol exporter to the EU after Brazil.

• Partners in Ecuador are carrying out a case study of palm oil- based biodiesel in Ecuador, which is one of the largest exporters of biodiesel to the US. 

We will shortly begin working with patners in South Africa on bioethanol.

Partners and Donors

UK Department for International Developmet (DFID)

Dutch Ministry of Foreign Affairs (DGIS)

Sustainable Development Policy Institute (SDPI), Pakistan

Publications

Biofuels production, trade and sustainable development: emerging issues

Producción y comercio de biocombustibles y desarrollo sustentable: los grandes temas
Annie Dufey, IIED, 2006

International trade in biofuels: Good for development? And good for environment?

Annie Dufey, IIED, 2007

Further Information

For further information on this project please contact Annie Dufey.

Copyright © 2005 International Institute for Environment and Development.
All rights reserved.
3 Endsleigh Street, London WC1H 0DD, email: info@iied.org.
tel: +44 (0) 20 7388 2117, fax: +44 (0) 20 7388 2826.
UK Registered charity no. 800066.

Contact the Web Developer | Legal Notice