Interest in the global potential of transport biofuels has grown immensely in recent years. Rising oil prices have stimulated demand for alternatives, and biofuels are the only short-term means on the supply side to reduce GHG emissions from transport. Energy and climate policy considerations are complemented by a third driver: biofuels are seen as a convenient way to keep the rich world's farmers in business at a time when there is pressure to reduce subsidies and producers are therefore more exposed to competition from developing countries.
Governments around the world, including the EU, US, China and India, have established ambitious targets for the future share of biofuels in their transport sectors. The EU requires all petrol and diesel to contain 2.5 per cent of biofuels (since April 2007), and has agreed on a binding ten per cent target for the share of biofuels in transport by 2020. However, concerns about environmental sustainability and the ways international biofuel markets are developing have put these agreements under strain (Euractiv, 2008).
Biofuels produced in temperate zones provide rather modest GHG emission reductions and savings in fossil energy use. This is the case for both 'biodiesel' (produced from oil crops such as rapeseed, sunflower or soybean) and 'bioethanol' (made from maize, sugar beet or cereals). The climate benefits of biofuels are not self-evident in all contexts, and net increases in fossil fuel use and CO2 emissions relative to using conventional road fuels can occur, for example where land use changes release carbon stored in soils and vegetation, or where there is particularly intensive use of fertilisers and other agrochemicals in feedstock production (Defra, 2008, pp. 96-112). One senior UK government scientist announced a few days before the EU 2.5 per cent requirement came into force that a policy that in effect increased emissions 'would obviously be insane' (Guardian, 2008b). There are additional environmental concerns around more intensive land use and associated chemical inputs, loss of biodiversity and water demand.
International trade in biofuels has also become controversial, with fuel suppliers apparently abusing subsidies available in the US in order to sell into European markets (Guardian, 2008a). Trade with developing countries has also become controversial. Compared to production in temperate regions, tropical crops such as sugarcane (for ethanol) and palm oil (for biodiesel) can provide far greater energy and climate benefits, and can be produced much more cost-effectively. There are concerns, however, about the environmental impact of associated land use changes. Palm oil plantations for biodiesel have already replaced large areas of rainforest in Southeast Asia, while the expected large increase in sugarcane cultivation in Brazil may also lead to losses of valuable wildlife habitats.
One of the most controversial questions is the impact of biofuel production on food production and prices. Exporting biofuels can be attractive to developing country governments as a source of foreign currency. In doing so, however, they may risk replacing food production or pushing up local food prices (by increasing demand for productive land and driving food production to marginal, less productive areas). Moreover, crops such as maize are also traded in international food markets. Stimulating demand through the creation of biofuel markets in rich countries will increase food costs and indirectly affect food security in the developing world.
The extent to which biofuel demand is responsible for the rising global food prices seen in 2007-8 is questionable, and has been overstated by the technology's opponents. In principle, small scale, locally owned biofuel production could provide significant benefits to rural communities in developing countries. However, as with export-oriented agriculture in the South, production appears more likely to become dominated by large multinational enterprises and, as a consequence, concerns about increased food insecurity appear well founded in practice.
Many of these potential drawbacks could be avoided or ameliorated by switching to so-called 'second generation' biofuels. Multinational biotechnology companies and governments in Europe and the US are investing heavily in R&D designed to achieve the technological breakthroughs that would make it possible to produce ethanol from lingo-cellulose. Wood, perennial grasses, crop residues, algae and ultimately even household waste could then be used for producing ethanol or biodiesel at a rate of productivity several times higher than using currently available technologies and feedstocks. Importantly, these second generation biofuel feedstocks would not compete so directly with food crops. Yet it is very uncertain when, if at all, second generation biofuels could become a viable option. The experience of developing first generation fuels may prove decisive, with perceived success or failure conditioning whether or not second generation biofuels are seen as necessary and politically acceptable.
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