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Summaries of Analyses in 2008 of Biofuels Policies by International and European Technical Agencies

Summaries of Analyses in 2008 of Biofuels Policies by International and European Technical Agencies

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Between January and November 2008, international institutions, national technical agencies, and major international scientific organizations released ten major reviews of biofuel policies. This brief summarizes their conclusions.
Between January and November 2008, international institutions, national technical agencies, and major international scientific organizations released ten major reviews of biofuel policies. This brief summarizes their conclusions.

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Published by: German Marshall Fund of the United States on Sep 23, 2010
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Summary: Since January 2008,international institutions, national technical agencies, and major
international scientic organizations
have released ten major reviews of 
biofuel policies. This brief summariz
-es their conclusions, which include:
World land use competitionmeans liquid biofuels are onlycapable of making a limitedcontribution to world energysupplies and greenhouse gasreductions.
Direct and indirect land use changedue to biofuels has a high potential to eliminate or greatly reduce theirgreenhouse gas benefits.
Biofuels have contributed signi-
 cantly to crop price increases andfood insecurity in the last few years.
Relying on biofuels grown ondedicated land is
mainly likely to spur biofuel production andcreate rural jobs outside of Europe where production of feedstocks is cheaper.
Biomass is more efciently used
for energy and greenhousegas reductions in electricityproduction than biofuels.
Large biofuel mandates shouldbe reconsidered.
Economic Policy Program
Since January 2008, international and Euro-pean technical institutions have released tenmajor reviews o biouels policies. Withinthe European Union governance structure,the European Economic and SocialCommittee, the Joint Research Committeeo the European Commission, and theScience Advisory Board o the EuropeanEnvironment Agency have released reportsor opinions. International reports havecome rom the UN Food and AgricultureOrganization, the World Bank, theOrganisation or Economic Developmentand Co-operation (OECD), and the Inter-national Energy Agency. National technicalreviews have come rom the NetherlandsEnvironmental Assessment Agency, theU.K.’s Renewable Fuels Agency (the “Galla-gher Report”), and the British Royal Society.This brie summarizes the conclusions o these ten reports, ocusing in particular ontheir ndings o environmental advantagesand disadvantages, land use eects, andeconomics. Although the reports do notentirely overlap, they show a high level o agreement and repeatedly oer the ollow-ing ndings:
World land use competition meansliquid biouels are only capable o making a limited contribution toworld energy supplies and greenhousegas reductions. The most potentially optimistic view presented in the tenreports, which is presented by theInternational Energy Agency, orecastsliquid biouels primarily as a long-termenergy source or airplanes, ships andheavy trucks i major increases in worldagricultural yields ree up hundreds o millions o hectares o agricultural land.
Mandates and subsidies to producebiouels are signicantly more expensivemethods than other methods o reducinggreenhouse gas emissions and use o ossil uels even i greenhouse gascalculations ignore land use change. 
I developed careully, biouels holdout promise or economic developmentin the developing world, with particularbenets as a replacement or existingenergy uses o wood.
Direct and indirect land use changesdue to biouels have high potential toeliminate or greatly reduce greenhousegas benets. Estimates o indirect landuse change need to be incorporatedinto greenhouse gas accounting to gainan accurate understanding o the greenhouse gas benets o biouels. Usingwastes, residues, and degraded landprovide the best opportunities orenvironmentally sustainable biouels.
Summaries of Analyses in 2008 of BiofuelsPolicies by International and EuropeanTechnical Agencies
by Tim Searchinger, Transatlantic Fellow, The German Marshall Fundof the United States
1744 R Street NWWashington, DC 20009T 1 202 745 3950F 1 202 265 1662E ino@gmus.org
Tim Searchinger (tsearchi@princeton.edu) is also a research scholar and lecturer at Princeton University.
Economic Policy Program
Biouels have contributed signicantly to crop price increasesand ood insecurity in the last ew years and will continue tocause higher crop prices, but the magnitude o impacts will besmaller in the uture as markets adjust.
Relying on biouels grown on dedicated land will mainly spur biouel production and create rural jobs outside o Europe where production o eedstock is cheaper. Otherrenewable uels and the use o biomass rom crop residueswill generate greater development benets in Europe.
Biomass saves more energy and greenhouse gases i used orelectricity production rather than biouels.
Large biouel mandates, including the 10 percent mandateproposed by the European Commission, should be reconsidered.
European Economic and Social Committee
The Use o Energy rom Renewable Resources (August 28, 2008)
The goal o the European Commission’s proposed directive torequire 20 percent renewable energy by 2020 is strategically and po-litically appropriate and technically and economically easible, but itis compromised by the agrouel requirement. The uture o privatecars lies not with agrouels but with electric traction powered by renewable energy, which is much more land ecient. Because o land competition, relying on biouels means that as oil prices rise,the cost o agrouels will rise as well.Expansion o agrouels on arable land will also release carbon dioxideand nitrous oxide and “will in the end be detrimental to climate protec-tion.” The 10 percent transport uel target would reduce greenhouse gasemissions in Europe, even without counting land use change, by only 1percent, which is “out o all proportion to the costs and associated risks”and represents “an extreme misallocation o resources.”Use o European biomass rom such sources as manure and woodchips or electricity produces ar cheaper greenhouse gas reduc-tions. The biouel policy would avor imports rom outside theEuropean Union because agrouel production there is cheaper,and as a result creates “hardly any new jobs” in Europe. By con-trast, other renewable uel strategies, including use o residuals,would build jobs within the European Union. Sustainability crite-ria lack social elements, environmental criteria are inadequate, andthe belie that these criteria would work to protect high carbonareas like rainorests in peatlands is “illusory.
European Commission Joint Research Committee
Biouels in the European Context: Facts and Uncertainties(May 2008)
Using biomass or electricity saves nearly twice as many greenhousegases as using biomass or liquid uel, and those reductions aremuch cheaper. Converting biouels has low energy eciency.Indirect land use change needs to be actored into an analysis o greenhouse gas benets rom biouels. Uncertainties regarding indi-rect land use change mean it is impossible to say whether the impacto biouels on net greenhouse gases is positive. Most indirect land usechange will occur outside o Europe, and emissions rom peatlandsare particularly large. As a whole, it is reasonable to estimate that 12percent o rape biodiesel will be replaced by palm on peatlands. Forevery liter o European rapeseed oil diverted to biodiesel, i only 2.4percent o that rapeseed oil is replaced by palm oil grown on peat-lands, the emissions rom the oxidizing peat cancel out the benetsrom biodiesel indenitely, and that is not the worst case. Certi-cation schemes can help reduce environmental eects but cannotprevent indirect land use change.Emission rates rom nitrous oxide in producing biouels are alsocritical but uncertain. Inputs into agricultural production outsideo the European Union are also uncertain. Each o these uncertainactors by itsel also has the potential to “negate GHG savings romthe 10 percent biouel target.”Benets rom uel security are overstated. I second-generation bio-uels do not make signicant contributions, imported biouels willdirectly supply more than hal o European ethanol and 80 percento biodiesel. Because European vegetable oil production will notkeep pace with ood demand alone, virtually all biodiesel will comerom abroad indirectly.The net employment eects o European biouel production areneutral or close to neutral because the increased employment romEuropean biouels is negated by the adverse employment eects o the taxes needed to pay or them.One cannot be sure that the net eect o biouel production is in-creased uel security because ethanol could simply increase gasolineexports rom European reners, and biouels could divert biomassaway rom stationary burners.
Viewing all costs and benets, despite uncertainty, “It is obvious thatthe cost disadvantage o biouels is so great . . . that even in the best o cases, they exceed the value o external benets that can be achieved.”
UN Food and Agricultural Organization
Status and Projections:
Biouels today provide roughly 1 percent o total transport uel, and .2 to .3 percent o total world energy, whileusing 1 percent o world cropland. Existing policies as o 2007would drive biouel production to 3.3 percent o transport uel in2015 and 5.9 percent in 2030, which would use 14.5 percent o ara-ble land in Europe, 9.2 percent in the United States and Canada and3.8 percent worldwide. Europe would also import large volumeso biouels, particularly biodiesel rom palm oil made in Malaysia,which is cheaper to produce there than in Europe. (Indonesia willexpand biodiesel production or domestic markets)
Greenhouse Gases:
“Some biouels may, under certain conditions,help reduce greenhouse gas emissions,” but land use change is a “key determining actor,” and or “many locations, emissions rom land-use change –whether direct or indirect—are likely to exceed, or atleast oset, much o the greenhouse gas savings obtained by usingbiouels or transport.”
Energy Security:
Liquid biouels can be expected “to displace ossiluels or transport to only a very limited extent” because o the landrequired and because “expanding biouel production quickly bidsup the price o agricultural eedstocks and makes them uncompeti-tive against petroleum-based uels.” I ethanol production used 25percent o the seven major ood crops potentially available, it wouldsupply 14 percent o gasoline, while even a “very modest contribu-tion o biouels to overall energy supply may yet have a strong impacton agriculture.I government policies pushed biouels to provide5.8 percent o world transport uel in 2030, that would require 52.8million hectares o world cropland. However, countries with a “largenatural-resource base” may be able to develop an economically viablebiouel sector, and eedstocks that use “wood, tall grasses and orestry and crop residues” would increase the uel potential.
Food Security:
Many actors have contributed to rising ood prices,including steadily declining cereal stocks since 1995, poor yields inAustralia and Canada, and high oil prices, but the growth o biouelsconsumed more than hal o all cereal growth between 2005 and 2007and was a signicant actor. Although commodity prices will retreatdue to increased production, “demand or biouels is likely to continueits infuence on prices well into the uture.Food import bills o leastdeveloped countries rose by 33 percent or cereals and 67 percentor vegetable oil rom 2006 to 2007 although domestic policies havebuered some part o the eect o the increases on consumers. Thevast share o poor are net ood buyers not sellers —in 12 summarizedcountries, buyers average 75 percent overall — and ood or the pooresthouseholds accounts or at least hal and oten more o total spending.In the long run, some o these adverse eects in rural areas may beoset because higher crop prices can trigger higher wages and gen-erate multiplier eects rom arm production increases. In the ab-sence o trade barriers, biouel production in developing countriescould also provide benets i it adds to but does not displace oodproduction. Greater competition or land could also lead to dis-placement o small armers, so strong policy and legal protectionsare necessary or biouels to have the potential to help the poor.
Development Opportunities:
Biouel production provides develop-ment opportunities or countries with abundant natural resources,but the opportunities depend upon the elimination o trade-distorting subsidies.
“There is an urgent need to review . . . biouels policies[in OECD countries],” which “have not been eective in achievingenergy security and climate-change mitigation.” “Sustainability criteria and relative certication can help insure environmentalsustainability, although they cannot directly address the eects o land-use change resulting rom an increased scale o production.”Reducing subsidies and mandates will “allow time or improvedtechnologies and yield increases to become eective,” and “expen-ditures on biouels would be much better directed towards researchand development . . . rather than towards subsidies linked to pro-duction and consumption.”
International Energy Agency
Energy Technology Perspectives (September 2008) Note: This report is a broad review o possible energy alternativesto reduce greenhouse gas emissions by 2050, o which one chapter discusses energy rom biomass.
Biomass today provides roughly 10 percent o world energy o which traditional uses o rewood or heating and cooking makeup two thirds. The report develops two scenarios o greenhouse gasreductions, one required to achieve current levels o emissions in2050 at a cost o up to $50 per ton o CO2 saved. The second, “blue”scenario, would reduce current emissions by 50 percent and would re-quire expenditures up to $200 per ton (and potentially higher i tech-nology does not evolve). In the blue scenario, biomass would rise to23 percent o total world primary energy. That would make biomass
Economic Policy Program

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