21 Mar, 2013
UNCTAD Meet Bids to Balance Benefits of Biofuels Boom, Address Looming Issues
Geneva, Switzerland, (19 March 2013) – Complex developments in the field of biofuel policy – and how developing countries can participate in this growing energy market while sufficiently taking account of related issues such as food security and technological progress – were the subject of debate by experts at a meeting on 19 March.
The meeting, titled Trends in Global Biofuels Markets: Sustainability Policy and Trade, was organized jointly by UNCTAD, the International Centre for Trade and Sustainable Development (ICTSD), and the Stockholm Environment Institute (SEI).
Biofuels currently offer the only cost-competitive alternative to fossil fuels in the transport sector, due in particular to their compatibility with existing vehicles and energy infrastructure. Nevertheless, their use, efforts to support them based on environmental concerns, fluctuating prices in international agricultural markets, and complex policies related to energy have created a confusing picture for governments trying to set astute strategies for energy, agriculture, food security and economic growth.
The meeting was staged to review recent trends in order to help in the development of coherent and coordinated policies both nationally and internationally. In a joint statement, the sponsoring organizations said that the meeting would be “a bid to improve policy coherence in this particularly complex field, and to bring together the separate discussions taking place both in national capitals and in various parts of the international governance architecture.”
The aim was to identify constructive proposals on how to reconcile expanded use of biofuels with such issues as food security and environmental sustainability, while at the same time allowing technological progress to take place in a manner that enables developing countries, if they wish, to participate in the growing biofuels energy market.
Among the complexities of the matter, said the sponsoring agencies, were “persistent distortions in international markets for agricultural commodities and complex policies for energy-related products and services.” They added that “in the European Union, proposals are on the table to revisit renewable fuel legislation, while in the United States, high feed prices have spurred debate over blending mandates”, which designate the percentage of biofuels to be mixed with petroleum.
They also noted that “it is important that new policies and rules lead to improved environmental outcomes, in particular in the area of greenhouse gas emissions as countries strive to intensify action against climate change. However, policymakers also need to ensure that producers in other countries are not unfairly disadvantaged by changes in policy frameworks. In particular, it must be noted that developing countries have the ethical right to pursue biofuels programmes that address their economic priorities, facilitate exploitation of their comparative advantages, and contribute to rural development.”
Participating in the meeting were government officials, energy experts, development economists, representatives of the private sector, and representatives of environmental organizations.
Further details about the event were not made available. However, the following concept paper and programme listing the speakers was made available to the media. This issue is going to trigger debate long into the future.
Concept note
Rationale of the event
Biofuels currently offer the only cost-competitive alternative to fossil fuels in the transport sector, due especially to compatibility with existing infrastructure. As the biofuels move from national and regional markets to a global commodity, impacts arising from biofuels demand are no longer easily confined or allocated to the country where they are consumed.
The growth in biofuels trade has occurred in the context of persistent distortions in international markets for agricultural commodities and complex policies that for energy-related products and services. The uptake of biofuels has also happened within a context of weak global governance for environmental public goods, and most notably for climate change.
The emerging global biofuels markets have also revealed the complex linkages associated with land resource management and policies in a global economy, which can lead to unforeseen cross-sector and cross-scale impacts. Thus, in order to reduce risks that have been linked to the global expansion in biofuels especially land use change and CO2 emissions, but also food security and affordability – a number of policy instruments have been adopted or are being discussed, such as sustainability certification, a greater push for energy efficiency, as well as limitations on the usage of biofuels produced from crops with dual usage as food and fuel.
In the EU, proposals are on the table to revisit renewable fuel legislation, while in the US high feed prices have spurred debate over blending mandates. It is important that new policies and rules lead to improved environmental outcomes, in particular in the area of greenhouse gas emissions as countries strive to intensify action against climate change. However, policy- makers also need to ensure that producers in other countries are not unfairly disadvantaged by changes in policy frameworks.
In particular, it must be noted that developing countries have the ethical right to pursue biofuels programmes that address their economic priorities, facilitate exploitation of their comparative advantages and contribute to rural development. Developing countries do not have obligations to reduce GHG emissions, although it will be nevertheless in their interest to choose biofuels with lower GHG emissions and developed countries can and should encourage them to do so, or even require them to do so in the case of export markets.
Technological improvements which reduce risks bound to the expansion of biofuels are desirable by all countries. However, limitations on the markets for current-generation biofuels might be detrimental to producers in developing countries which seek development opportunities in the production, usage and trade of sustainably-produced biofuels. Furthermore, as policy proposals tend to steer the market towards advanced technologies (e.g. cellulosic ethanol or fisher-tropsch liquids), there is a risk of a growing technological gap between current and potential competitors in this market. Governments around the world need to consider how different policy approaches could affect access to energy and to technology, especially for the smaller developing countries that can benefit from first generation biofuels, whereas a major shift in emphasis to second generation biofuels might reduce these countries again to the role of raw materials exporters.
Jointly organized by ICTSD, UNCTAD and SEI, this event aims to bring together experts, countries and other interested parties to discuss recent developments in global biofuels markets, especially those concerning sustainability and trade. The event shall also discuss the proposed changes in the EU policy for the sector, which plans to limit the participation of biofuels produced from food crops to a maximum of 5% of the initial goal of 10% renewable energy in European transport by 2020. Some food crops, particularly the oil-based crops, are estimated to increase GHG emissions through indirect land use change.
Expected outcomes
UNCTAD, ICTSD and SEI have collaborated to organize this meeting in a bid to improve policy coherence in this particularly complex field, and to bring together the separate discussions taking place both in national capitals and in various parts of the international governance architecture.
The meeting seeks to bring different perspectives on recent development trends in biofuels markets, including those of countries with established biofuel industries, as well as prospective producers and consumers in developed, developing and least developed countries. In special, the event seeks to raise constructive views and proposals on how to reconcile biofuels expansion with food security, and environmental sustainability objectives, while at the same time allowing for technological progress to take place in a manner that does not exclude developing countries from this growing market.
The meeting included the following presentations and speakers, but details were not made public.
Moderator: Henrique PACINI, United Nations Conference on Trade and Development (UNCTAD)Intra-industry biofuels trade: how environmental legislation affects resource use and greenhouse gas emissions – Seth MEYER, UN Food and Agriculture Organisation (FAO)Alternative mechanisms for EU biofuels sustainability: bilateral agreements for building institutional capacity – Francis X JOHNSON, Stockholm Environment Institute
Biofuel policies in the US and globally: food price effects and sustainability – Prof. Harry DE GORTER, Cornell University
Moderator: Malena SELL, International Centre for Trade and Sustainable Development (ICTSD)
Discussants: Kalanithi NESARETNAM, Representative of Malaysia to the EU; Géraldine KUTAS, Brazilian Sugarcane Industry Association (UNICA), Guilherme KFOURI, Platts
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