Growing concerns about petroleum price fluctuations, energy dependence, and the adverse environmental and economic effects of climate change have focused a good deal of attention on biofuels, derived from biomass.
While biofuels have displaced around 1 per cent of the fossil fuels used in transport sector, the International Energy Agency estimates that their share could reach 7 per cent by 2030. New technologies now under development – and particularly those that use wood materials, such as ligno-cellulosic ethanol – could enable biofuels to play an even bigger role.

Economic, social, and environmental goals could be fulfilled by increased production, use, and international trade of biofuels, provided this is backed up by the right strategy of resource allocation. Biofuels could slow the process of global warming and provide an opportunity for developing countries to diversify agricultural production, raise rural incomes, and improve the quality of life. They could also enhance energy security, reduce expenditures on imported fossil energy.

The producers
Several developing countries endowed with the land to devote to energy crops production, a favourable climate to grow them, and a relative abundance of labour are already or on the way of becoming biofuel producers. Before they do so, however, these countries will have to take some crucial decisions and answer some important questions. For example: Is biofuel production intended for transportation fuel security, or for broader energy replacement? What are the land requirements? What is the desirable level of technological sophistication?
These countries will also have to consider the possible economic and environmental impacts of biofuels, the compatibility of biofuels with existing fuel delivery infrastructures, and competing uses for arable land. For example, the amount and type of primary energy consumed in producing biofuels – and the related emissions of greenhouse gases – vary enormously. Powering refineries with coal has a much less beneficial environmental impact than powering them with sugarcane residues.

As long as current technology is used, the fast-growing demand for biofuels will mean devoting an increasing amount of arable and pasture land to the production of energy crops. This may have implications that require careful assessment, especially for food security. Before embarking on biofuels production, countries also have to identify the support measures needed to get the biofuel industry off the ground and flourishing; the most appropriate investment promotion measures; the type of regulatory framework likely to ensure job creation and rural development.

UNCTAD’s (United Nations Conference on Trade and Development) bio fuels initiative is intended to help developing countries answer these questions.

The benefits
According to UNCTAD studies, ethanol has become a very dynamic, fast-growing export commodity. It has especially benefited developing countries like Brazil, which has about a 50 per cent market share of global ethanol exports. As to biodiesels, however, there appears to be little international trade at present. Biodiesel feedstocks – the agricultural commodities used to produce biofuels – are traded internationally, and the processing of oil into biodiesel takes place in importing countries. 

International trade in biofuels and related feedstocks may provide win-win opportunities for all countries. For importing countries, such trade is essential if they are to meet self-imposed blending targets. Indeed, several developed countries do not have enough land to grow large amounts of energy crops and have to import them.
But biofuels face tariffs and non-tariff measures which can offset lower production costs in producing countries, pose significant barriers to international trade, and have negative repercussions on investments in the sector.
Moreover, export performance is often penalised by the graduation of successful exporting countries from preferential trade schemes. A more liberal trade regime would greatly contribute to the sustainable development goals that countries are pursuing.

(IPS – The writer is Secretary General, UNCTAD.)