The Global Implications of Increased Biofuel Production
Biofuels have been a major source of renewable energy, aimed at curbing carbon dioxide emissions from traditional diesel and ethanol. Biofuels are commonly made from crops by converting corn or sugarcane into ethanol, or by turning palm oil into biodiesel. FDI has previously written about the challenges of balancing food and biofuel production in an increasingly food-scarce world.
In the United States, the Obama Administration set its final target under the Renewable Fuel Standard (RFS) programme in November 2016. Under the RFS, the US Government requires companies to meet a higher target of biofuel use in 2017. The target has been set for use at 73 billion litres in 2017; a six per cent increase from the 2016 target. The renewed RFS target includes 56.8 billion litres of biofuel, mainly produced from corn. As corn prices are currently stable – a trend that, that in the short-term at least, looks set to continue – the RFS programme has been welcomed by Midwest farmers who supply the corn used to create biofuel.
In Indonesia, demand for crude palm oil is expected to spike in the first quarter of 2017. This is due to a predicted limited supply after Indonesia commenced its B-20 programme, which aims to increase the percentage of palm oil converted to biodiesel from 15 per cent in 2016, to 20 per cent in 2017. Demand from both Indonesia’s domestic and international markets for biofuel has caused prices to increase under the B-20 programme. Indonesia’s use of biofuels has cut 4.3 million tonnes of carbon dioxide from greenhouse gas emissions in 2016, and created jobs for 380,000 people.
In a break from the trend of increased biofuel use, the European Commission (EC) is reconsidering the use of crop-based biofuels in transport after concerns the fuels actually increase carbon emissions (rather than reduce them). The EC hopes to transition away from the use of crop-based biofuels, to more advanced biofuels made from agricultural and forestry waste. Under the EC’s proposal, use of crop-based biofuels in the European Union will decline to seven per cent in 2021. Crop-based biofuels have also been criticised for using agricultural products that could otherwise have been used for human consumption, including sugar or rapeseed oil, and that have resulted in indirect changes in land use. The use of waste materials in biofuel production, however, could go some way toward achieving a circular economy in which resources are utilised more effectively.
“Land grabbing” has been a phenomenon throughout the developing world, where grain-producing countries have been purchasing land in other countries to secure their own food supply. Land grabbing was a particular trend during the period from 2005 to 2009, when countries were concerned about high food prices. An increasing reliance on biofuels, however, has also added another element to this trend. Biofuel policy increases the demand for agricultural land, particularly in the US and Europe. One country affected by land grabbing is Sierra Leone, where Swiss companies have taken over farming land for the purposes of producing sugar cane to produce ethanol. Similar processes have taken place in much of Africa, particularly Sudan, as well as Cambodia, Indonesia, and Papua New Guinea. This trend, which threatens to take productive land away from food production, has the potential to weaken food security in vulnerable countries.
While initially thought to be a clean source of energy, biofuels have been found in recent years to potentially do more harm to the environment than first thought. Agricultural land, when used to plant crops for biofuels, uses land that would be otherwise used for food and therefore requires fresh land to be ploughed. Greater ploughing of land can lead to forest destruction and greater carbon emissions, as well as the displacement of indigenous peoples. Biofuels are an alternative source of energy to crude oil. In a future that requires clean, renewable energy, however, the limits of biofuels must not be ignored.