Friday, October 19, 2012

Burning food?

Small scale biofuel (Jatropha) production in Zambia

If the EU commission really cared about the poor and the hungry in developing countries, it should be concerned with the effects of its own agriculture and trade policies on these people, rather than engaging in fruitless discussions over biofuel competing with food.
“BRUSSELS, Oct 17 (Reuters) - New EU rules to limit how much food can be made into biofuels are "not perfect" and make it harder to achieve overall goals on switching to low carbon energy, European Commissioners said on Wednesday. But they insisted the proposals sent out the right signal to the biofuel industry, which would have to move on to new-generation fuels that do not compete with demand for food.”
If the EU commission really cared about the low carbon economy, it should be more concerned with the 95% of the fuel that is fossil than the 5% that is renewable. Or as a matter of fact, it should be concerned with a transportation system built around the private car. Cars and petrol are the culprits – not biofuel. Actions to reduce car traffic and total fuel use is much more important that the application of sustainability criteria on the 5% that should be biofuel. 

And if the EU commission really cared about the poor and the hungry in developing countries, it should be concerned with the effects of its own agriculture and trade policies on these people, rather than engaging in fruitless discussions over bio fuel competing with food. Why single out biofuel? What about the liquor, wine and tobacco cultivation? What about cotton? We can wear nylon instead. What about all land that is used of golf courses or hobby horses? In Sweden we use more than half a million hectare to feed our hobby horses. What about feed stuff? The EU commission seems to forget that most biofuel production also produces highly valuable animal feed stuff, so the net land use for biofuel is not as big as it looks like. 

The EU commission seems to have no understanding of how global food and agriculture markets work. From the perspective of farmers, the food sector has been a buyer’s market for most of the time. Increased food prices and more alternative uses for farmland is a boon for farmers. It is also in general positive for rural areas, and for those living in the rural areas. Most hungry people in the world live in rural areas and even those that are net buyers of food (e.g. agriculture workers and small farmers) will in most cases benefit from increased incomes in the area as it means more employment, more demand for services, better infrastructure. Admittedly, higher prices, are a problem for the poor in the slums of the mega cities. But there is not a very strong link between biofuel and higher food prices. The price hikes the last five years are more strongly linked to increased oil price than anything else. See more in Why oil price and grain price follow each other.
If the biofuel production of the US, the EU and Brazil would cease, there would be a massive fall in global agriculture prices. For a short while, poor people in the slums would get cheaper food. But within a few years, masses of farmers in both developed and developing countries would have been forced off the land and in developing countries, most would become dirt poor. They and the people working for them would be worse off than today, and more hungry.

Having said that, there are many issues to discuss around biofuel:
Like the rest of the agriculture sector, biofuels too are subject to large political interventions. Globally, biofuels received some US$ 11–12 billion in subsidies in 2006 (FAO 2008). During 2006/2007, one-fifth of the maize yield in the United States was used for biofuels, stimulated by heavy subsidies, and still the amount only corresponded to some 3% of petrol consumption (World Bank 2007). A report for Friends of the Earth states:
 [A] realistic bioenergy potential on cropland and grazing land in the year 2050 may be around 70–100 EJ/yr,[1] with the lower number being environmentally considerably more favourable than the higher one. For comparison, we note that the global technical use of primary energy is currently around 550 EJ/yr (fossil energy use around 450 EJ/yr). This means that the bioenergy potential from cropland and grazing land is in the order of magnitude of 15–22% of current fossil energy use. (Erb et al. 2009: 25)
 The results of the report Agriculture as Provider of Both Food and Fuel, Kersti Johansson, Karin Liljequist, Lars Ohlander, Kjell Aleklett are more or less the same. This shows that biofuels present a very limited possibility for reducing society’s dependency on oil. This doesn’t have to be an argument against biofuels by itself, rather an argument for the need to totally redesign transport systems. This also means that we have to address the growth in transportation as the main problem (for those saying that electric cars are the solution, read this).

One disturbing aspect is that a lot of biofuel production has a bad energy ratio; some examples even show ratios below 1, implying that the production of biofuel uses more energy than the energy content of the fuel itself, something that is obviously only possible to achieve with massive political distortion. For grain-based biofuels, the energy ratio in a number of cases studied ranged from 0.7 to 2.8.[2] The energy ratio of biofuels from lignocellulose is normally higher as is the energy efficiency of sugar cane ethanol.

The biggest problem with biofuel is the potential competition with other land use, as increased biofuel production is likely to either take place in now-low-on-production, but highly biodiverse, rangelands or expand into ‘virgin’[3] lands, such as wetlands and primary and secondary forests. Biofuel is also often grown in monoculture, uses a lot of agrochemicals and can be the reason for ”land-grabbing”. But none of these apply for all forms of biofuel, and can’t be used as an argument against biofuel as such. Small scale biogas made from manure and other waste fuels the cooking of many million of people around the globe. Several hundred million animals provide power to pull farm implements and transport goods all over the globe – their fuel is all from agriculture lands. 

Read More:
Biofuel in many shapes, about biofuel for the local market in Zambia
BBC had a very interesting article about biofuels in Germany
Energy and agriculture about the general questions about energy in agriculture
Financial times on the EU proposal
The Guardian

[1]            Here ‘EJ’ stands for Exa Joule; 1 EJ=1018 J.
[2]            This also means that if you want to replace 100 EJ of oil with biofuel, you might need 200 EJ of biofuel, because 100 EJ will be lost in the process of making biofuels if the ratio is 2. 
[3]            I put virgin in quotation marks to indicate that there is no such thing. All landscapes today, with the exception of land under the glaciers, are influenced by human activity.


  1. Hi Gunnar,

    I agree with most of what you write here, but you shouldn't read too much into the EU's actions to try to tighten sustainability requirements on biofuels. To use an agricultural metaphor, this is all about closing the barn door once the horse has bolted.

    The EU, like most other economies that have embraced biofuels, saw what they perceived as the upside -- higher prices for crop farmers, more domestic energy production, new industries for rural areas, perceived GHG benefits -- long before they acknowledged the many downsides that you describe.

    The problem is, their embrace involved first tax breaks and then regulations mandating their use, thus locking in a market for biofuels. Once the downsides started to become more evident, and environmental groups took up the cause, what we have witnessed is a gradual attempt to minimize the environmental risks through ever tighter sustainability requirements ... at least on paper.

    Of course, this is equivalent to stepping on the brake (standards) while still applying the accelerator (subsidies and mandates). The first-best policy would be to take one's foot off of the accelerator. But you can imagine the legal battles that would ensue: investments have been made in biofuel-production capacity on the basis of these support measures.

    Why single out biofuels and not other non-food industries that require agricultural land? Because the CONSUMPTION of biofuels is being mandated and subsidized. Tobacco and alcoholic beverages are taxed, by comparison. If biofuels had emerged through market forces alone, or in response to carbon taxes on transport fuels, I really doubt that there would have been any sustainability standards created for them.

    Note also that with respect to trade effects, these standards operate in the same way as standards for organic products. That is, they do not restrict trade in the products per se; rather, they restrict which products can gain access to the segment of the market that pays higher prices -- in the case of biofuels, those that can benefit from subsidies, tax breaks, or credit towards meeting biofuel-use quotas.

    One other observation: the PRIVATE standard-setters and certifiers have their own, highly ambitious agenda. Several years ago I raised the question, "why single out biofuels?", with the head of a major independent biofuel certification initiative, and also with a high-ranking official for an international NGO. Both were quick to reply, "Of course, biofuels are a narrow segment. But this is only the beginning. Our aim ultimately is to apply sustainability standards to ALL products of agriculture!" Supply-driven standards, what a surprise!