The new report, sponsored by the German Federal Ministry
of Food, Agriculture and Consumer Protection (BMELV), is a comprehensive
assessment of the opportunities and risks associated with the
large-scale international development of biofuels. It includes
information from existing country studies on biofuel use in Brazil,
China, Germany, India and Tanzania.
Brazil is the world’s biofuel leader, with half of its sugar cane crop
providing more than 40 percent of its non-diesel transport fuel. In the
United States, where 15 percent of the corn crop provides about 2
percent of the non-diesel transport fuel, ethanol production is growing
even more rapidly.
This surging growth may allow the U.S. to overtake Brazil as the world’s
biofuel leader this year. Both countries are now estimated to be
producing ethanol at less than the current cost of gasoline.
Figures cited in the report reveal that biofuels could provide 37
percent of U.S. transport fuel within the next 25 years, and up to 75
percent if automobile fuel economy doubles. Biofuels could replace 20
percent–30 percent of the oil used in European Union countries during
the same time frame.
As the first-ever global assessment of the potential social and
environmental impacts of biofuels, Biofuels for Transportation warns
that the large-scale use of biofuels carries significant agricultural
and ecological risks.
“It is essential that government incentives be used to minimize
competition between food and fuel crops and to discourage expansion onto
ecologically valuable lands,” said Worldwatch Biofuels Project Manager
Suzanne Hunt. However, the report also finds that biofuels have the
potential to increase energy security, create new economic opportunities
in rural areas, and reduce local pollution and emissions of greenhouse
gases.
The long-term potential of biofuels is in the use of non-food feedstock
that include agricultural, municipal, and forestry wastes as well as
fast-growing, cellulose-rich energy crops such as switchgrass. It is
expected that the combination of cellulosic biomass resources and
“next-generation” biofuel conversion technologies—including ethanol
production using enzymes and synthetic diesel production via
gasification/Fischer-Tropsch synthesis—will compete with conventional
gasoline and diesel fuel without subsidies in the medium term.
The report recommends policies to accelerate the development of biofuels,
while maximizing the benefits and minimizing the risks. Recommendations
include:
--Strengthen the Market. Biofuel policies should focus
on market development, based on sound fiscal incentives and support for
private investment, infrastructure development, and the building of
transportation fleets that are able to use the new fuels.
--Speed the Transition to Next-Generation Technologies.
It is critical to expedite the transition to the next generation of
biofuel feedstock and technologies, which will allow for dramatically
increased production at lower cost, while minimizing environmental
impacts.
--Protect the Resource Base. Maintaining soil
productivity, water quality, and myriad other ecosystem services is
essential. National and international environmental sustainability
principles and certification systems are important for protecting
resources as well as maintaining public trust in the merits of biofuels.
--Facilitate Sustainable International Biofuel Trade.
Continued rapid growth of biofuels will require the development of a
true international market in these fuels, unimpeded by the trade
restrictions in place today. Freer movement of biofuels around the world
should be coupled with social and environmental standards and a credible
system to certify compliance.
Report Highlights
The report notes a number of interesting trends and facts, including the
following:
--Ethanol Production: In 2005, Brazil produced 16.5
billion liters of fuel ethanol (45.2 percent of the world's total) with
the United States a close second at 16.2 billion liters, or 44.5 percent
of the total. Ethanol provides roughly 40 percent of Brazil's non-diesel
fuel and 2–3 percent of U.S. non-diesel fuel.
--Sugar Cane and Corn: Sugar cane is the most important
crop for producing biofuels today and the feedstock for more than 40
percent of all fuel ethanol. Corn ranks a close second: the primary
source for biofuel production in the U.S., it supplies nearly the same
share of world fuel ethanol as sugar cane.
--Rapeseed: Biodiesel, produced mainly from rapeseed or
sunflower seed, comprises 80 percent of Europe's total biofuel
production. The EU accounted for nearly 89 percent of all biodiesel
production worldwide in 2005. Germany produced 1.9 billion liters, or
more than half the world total.
--Global Production: Global ethanol production more
than doubled between 2000 and 2005, while production of biodiesel,
starting from a much smaller base, expanded nearly fourfold. In
contrast, oil production increased by only 7 percent over this period.
--Percentage of World's Gas Supply as Ethanol: In 2005,
ethanol comprised about 1.2 percent of the world's gasoline supply by
volume and about 0.8 percent by transport distance traveled (due to its
lower energy content).
--World Oil Demand: From 2002–04, world oil demand
increased by 5.3 percent. China's consumption alone increased by 26.4
percent, while consumption in the United States rose by 4.9 percent;
Canada 10.2 percent; and the United Kingdom 6.3 percent. Demand in
Germany and Japan, meanwhile, dropped by 1 percent and 2.6 percent
respectively.
--Net Oil Producers: Of the world’s 47 poorest
countries, 38 are net oil importers, and 25 of these import all of their
oil. Yet many of these countries have substantial agricultural bases and
are well positioned to grow highly productive energy crops.
--State-controlled Oil Reserves: Roughly 80 percent of
the world's conventional oil reserves are under state control and off
limits to private investment.
--Jobs: The World Bank reports that biofuel industries
require about 100 times more workers per unit of energy produced than
the fossil fuel industry. The ethanol industry is credited with
providing more than 200,000 jobs in the United States and half a million
direct jobs in Brazil.
--Transportation and GHG Emissions: Transportation,
including emissions from the production of transport fuels, is
responsible for about one-quarter of energy-related greenhouse gas (GHG)
emissions, and that share is rising.
--GHG Balance of Biofuels: The GHG balance of biofuels
varies dramatically depending on such factors as feedstock choice,
associated land use changes, feedstock production system, and the type
of processing energy used. In general, most currently produced biofuels
have a solidly positive GHG balance. The greatest GHG benefits will be
achieved with cellulosic inputs, such as dedicated energy crops and
waste residues.
--Reduction of GHG Emissions: Energy crops have the
potential to reduce GHG emissions by more than 100 percent (relative to
petroleum fuels) because such crops can also sequester carbon in the
soil as they grow. Estimated GHG reductions for biofuel feedstock
include: fibers (switchgrass, poplar) 70 percent to 110 percent; wastes
(waste oil, harvest residues, sewage) 65 percent to 100 percent; sugars
(sugar cane, sugar beet) 40 percent to 90 percent; vegetable oils
(rapeseed, sunflower seed, soybeans) 45 percent to 75 percent; and
starches (corn, wheat) 15 percent to 40 percent.
--Energy Balance and Biofuels: Despite controversy
about the energy balance of biofuels, there is an emerging consensus
that all common biofuels contain more useful energy than is required to
produce them. Corn ethanol has been particularly controversial, but its
average energy balance now clearly exceeds one, thanks to improved
energy efficiency in both agriculture and ethanol refining. In the
future, the type of processing energy used will be more relevant: a
biofuel plant that uses biomass energy will contribute far more to
reducing GHG emissions than one that uses coal energy.
--Subsidies and Savings: Even with subsidies, the
economic savings with biofuels from avoided oil imports can be
considerable--between 1975 and 1987, ethanol saved Brazil $10.4 billion
in foreign exchange while costing the government $9 billion in
subsidies. This investment paid off even more in subsequent years:
studies show that from 1976–2004, Brazil’s ethanol production
substituted for oil imports worth $60.7 billion—or as much as $121.3
billion including the avoided interest that would have been paid on
foreign debt (based on debt previously incurred importing oil).
Recent Developments
The report also covers recent developments in the biofuel industry.
These include:
United States: In the U.S., high oil prices and
agricultural lobbying prompted passage in 2005 of Renewable Fuels
Standard (RFS) that will require the use of 28.4 billion liters (7.5
billion gallons) of biofuels for transportation by 2012. Under new
guidelines implementing the Energy Policy Act of 1992, many government
fleet vehicles that run on diesel fuel are now required to use B20 (20
percent biodiesel) blends. Many in the industry believe that these
targets represent a floor, rather than a limit, to biofuel production.
Brazil: The Brazilian government hopes to build on the
success of the Proálcool ethanol program by expanding the production of
biodiesel. All diesel fuel must contain 2 percent biodiesel by 2008,
increasing to 5 percent by 2013, and the government hopes to ensure that
poor farmers in the north and northeast receive a fair share of the
economic benefits of biodiesel production.
Central/South America: As of early 2006, Columbia
mandates the use of 10 percent ethanol in all gasoline sold in cities
with populations exceeding 500,000. In Venezuela, the state oil company
is supporting the construction of 15 sugar cane distilleries over the
next five years, as the government phases in a national E10 (10 percent
ethanol) blending mandate. In Bolivia, 15 distilleries are being
constructed, and the government is considering authorizing blends of
E25. Costa Rica and Guatemala are also in the trial stages for expanding
production of sugar cane fuel ethanol. Argentina, Mexico, Paraguay, and
Peru are all considering biofuel programs as well. Many of these
countries have learned from the experience of Brazil, the world leader
in fuel ethanol.
Europe: A European Union directive, prompted by the
desire for greater energy security as well as the requirements of the
Kyoto Protocol, has set the goal of obtaining 5.75 percent of
transportation fuel needs from biofuels by 2010 in all member states. In
February 2006, the EU adopted an ambitious Strategy for Biofuels with a
range of potential market-based, legislative, and research measures to
increase the production and use of biofuels. Germany and France, in
particular, have announced plans to rapidly expand both ethanol and
biodiesel production, with the aim of reaching the EU targets before the
deadline.
Japan: The government has permitted low-level ethanol
blends in preparation for a possible blending mandate, with the
long-term intention of replacing 20 percent of the nation’s oil demand
with biofuels or gas-to-liquid (GTL) fuels by 2030.
Canada: The Canadian government aims for 45 percent of
the country’s gasoline consumption to contain 10 percent ethanol by
2010. Ontario will be the center of the ethanol program, where the
government expects all fuel to be a 5 percent blend of ethanol by 2007.
Southeast Asia: Thailand, eager to reduce the cost of
oil imports while supporting domestic sugar and cassava growers, has
mandated an ambitious 10 percent ethanol mix in gasoline starting in
2007. For similar reasons, the Philippines will soon mandate 2 percent
biodiesel to support coconut growers, and 5 percent ethanol, likely
beginning in 2007. The palm oil industry plans to supply an increasing
portion of national diesel fuel requirements in Malaysia and Indonesia.
Asia: Chinese and Indian planners have also sought to
expand the national supply of ethanol and biodiesel. In India, a
rejuvenated sugar ethanol program calls for E5 blends throughout most of
the country; the government plans soon, depending on ethanol
availability, to raise this requirement to E10 and then E20. In China,
the government is making E10 blends mandatory in five provinces that
account for 16 percent of the nation's passenger cars.
Africa: In Africa, efforts to expand biofuels
production and use are being initiated or are under way in numerous
countries, including Benin, Ethiopia, Ghana, Guinea Bissau, Kenya,
Malawi, Mozambique, Nigeria, Senegal, South Africa, and Zimbabwe.
The full report will be available later this year. To find out more
about the report, check out the Worldwatch Institute's
Web site.
The information in this article was provided courtesy of the
WorldWatch Institute, which is
an international research organization based in Washington D.C., has
provided fact-based analysis of global economic, resource, and
environmental trends to decision makers around the world since 1974. The
Institute’s work has been published in 36 languages and regularly
reaches top policy makers.
Published 08/04/2006
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2005 Greenmedia Publishing Ltd.