Report maps obstacles on the road to sustainable biofuels sector

A promising form of renewable energy could create major opportunities for developing nations to alleviate poverty and help to mitigate climate change, but could equally cause more problems than it solves, warns a report published today.

News, 26 January 2007

The report, by the International Institute for Environment and Development, maps obstacles on the road to sustainable development of biofuels — liquid fuels produced from oily or starchy 'energy crops' such as sugarcane, corn, soybeans oil palms and jatropha trees.

Biofuels will be at the centre of discussions at a major international conference on renewable energy taking place in Brussels on 29-31 January as part of the European Union's 'Sustainable Energy Week'.

The European Renewable Energy Policy Conference will be opened by Al Gore and attended by 650 delegates. Speakers include Klaus Töpfer, former head of the UN Environment Programme; UK foreign minister Margaret Beckett; and senior figures from Brazil, China and India.

The new report calls for international trade barriers, especially subsidies, to be relaxed to enable developing countries to reap the benefits of the biofuels trade, and for certification schemes to take account of the real environmental and social conditions in such countries.

Biofuels have been promoted as a means of creating jobs and wealth in developing nations, while cutting greenhouse gas emissions in the industrialised world, where demand for biofuels is set to skyrocket to meet ambitious targets.

But according to the report's author, Annie Dufey, current trade regimes are not fit for encouraging synergies and sorting out trade-offs. She says that any benefits from biofuels trade could be undermined if the sector continues to expand without improved policies and international coordination.

"There is no multilateral agreement on whether biofuels are industrial or agricultural goods. Nor is there a specific forum for international discussions on how to deal with biofuel trade," says Dufey. "This lack of coherence and coordination could lead to biofuels solving one specific problem but simultaneously creating several others."

Dufey points out that small-scale farmers in developing nations might find themselves squeezed out of a fair share of the biofuel sector's profits by a handful of large Western companies dominating international markets.

Other factors — from the choice of energy crop to the method and location of biofuel production — could also be problematic. Developing nations therefore need to carefully identify options those that are most suitable for the achievement of their sustainable development goals.

"In addition to the current high oil prices, the rapid development of biofuels has largely been driven by the promise of reduced greenhouse gas emissions, yet environmental benefits could be lost if the sector’s expansion leads to further deforestation," says Dufey. "Development benefits could also be lost if the choice of crop leads to competition for water resources or for land used to grow food crops."

"We need certification schemes that label biofuels according to environmental and social conditions prevailing in the producing countries, and that do not undermine small-scale producers," says Dufey.

Several schemes are being developed but if governments and institutions in industrialised nations dominate them, they risk not taking account of developing countries' social and environmental priorities.

"Moreover, if these schemes are poorly coordinated or entail a unfair distribution of costs and benefits, they could be detrimental to international trade and place a significant burden on small producers," says Dufey.

The report says that industrialised countries need to analyse the ways their domestic policies surrounding biofuel production and trade are affecting developing nations, where due to their privileged natural conditions, the greatest growth in energy-crop production is set to take place.

"Biofuels can help tackle climate change and improve livelihoods in developing countries, as well as provide a source of economic growth and energy," says Dufey. "But to achieve this, all players in the sector urgently need to be aware of the trade-offs and take steps to address them."

"The novelty of biofuels, the vast array of issues involved and the lack of knowledge to tackle many of them, together with diverging political and business interests mean that consensus is elusive," she adds. "It is therefore increasingly urgent to map a path for the global biofuels industry that supports sustainable development."