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The designations employed and the presentation of material in thisinformation product do not imply the expression of any opinion whatsoeveron the part of the Food and Agriculture Organization of the United Nations(FAO) concerning the legal or development status of any country, territory, cityor area or of its authorities, or concerning the delimitation of its frontiers orboundaries. The mention of specific companies or products of manufacturers,whether or not these have been patented, does not imply that these havebeen endorsed or recommended by FAO in preference to others of a similar

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ISBN 978-92-5-107414-5

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Biofuels and the sustainability challenge:A global assessment of sustainability issues, trends and policies for biofuels and related feedstocks

2.2.3 COMPETITIONWITHFOOD 59

2.2.4 TRADECOMPETITION 60

2.2.5 ECONOMICSUSTAINABILITYASSESSMENTS 61

Cost-benefits analyses (CBA) 61

Full-cost pricing 62

2.3 Environmental sustainability of biomass-biofuels 63

2.3.1 ENERGYBALANCE 63

2.3.2 GREENHOUSEGASANDOTHERAIRPOLLUTANTS 65

2.3.3 LIFECYCLEASSESSMENTS 66

2.3.4 ANEXAMPLEOFLIFECYCLEANALYSIS: SWEETSORGHUMFORBIOETHANOL-

CREDITVERSUSALLOCATIONMETHOD 69

2.3.5 LANDUSECHANGE(LUC) 71

2.3.6 BIODIVERSITY 72

2.3.7 WATERUSEFORAGRICULTURE(BIOENERGY) ANDWATERFOOTPRINT 74

2.3.8 LANDUSEANDPRESERVATIONOFSOILPRODUCTIVECAPACITY 792.3.9 LOCALENVIRONMENTALIMPACTASSESSMENT 80

2.3.10 INTEGRATEDENVIRONMENTALASSESSMENTANDREPORTING 81

2.4 Socio-institutional factors in biofuel sustainability 85

2.4.1 LANDOWNERSHIPRIGHTS 85

2.4.2 LOCALSTEWARDSHIPOFCOMMONPROPERTYRESOURCES 91

2.4.3 LABOUR/EMPLOYMENTEFFECTS 92

2.4.4 SOCIALSUSTAINABILITYASSESSMENT 94

2.5 Initiatives on bioenergy sustainability 94

2.5.1 NATIONALINITIATIVES 94The Netherlands 94

United Kingdom 95

Germany 97

European Union 98

United States 99

Brazil 100

Canada 101

Malaysia 101

Indonesia 101

2.5.2 INTERGOVERNMENTALINITIATIVES 102

2.5.3 PRIVATEANDMULTI-STAKEHOLDERSUSTAINABILITYINITIATIVES 103

2.6 Conclusion 104

CHAPTER 3 A REVIEW OF BIOFUEL CERTIFICATION SCHEMES ANDLESSONS FOR SUSTAINABILITY 113

3.1 Introduction 113

3.2 Examples and lessons from certification schemes 114

3.2.1 FORESTRY 114

3.2.2 AGRICULTURE 115

3.2.3 BIOFUELS 119

3.2.4 SUSTAINABILITYSCORECARDS(IDB, WORLDBANK) 122


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3.3 Assessment of sustainability in biofuel feedstocks and implications forcertification schemes 126

3.3.1 SOYBEAN-BIODIESEL: COMPLIANCECOSTWITHBASELCRITERIAINBRAZIL 126

3.3.2 COSTESTIMATIONFORSUSTAINABLEETHANOLINBRAZIL 1283.3.3 ARGENTINA: ORGANICSUGARANDSUSTAINABILITYBENEFITS 128

3.3.4 DEMOCRATICREPUBLICOFTHECONGO: SHORT-ROTATIONTREES(EUCALYPTUS) 130

3.3.5 INDIA: JATROPHA-BIODIESELANDSUSTAINABILITY 131

3.3.6 GHANA: JATROPHA-BIOSDIESELPROSPECTSANDSUSTAINABILITY 132

3.3.7 PALMOIL-BIODIESEL: MALAYSIA 133

3.3.8 CASSAVA-ETHANOL: THAILAND 137

3.4 Conformity assessment issues 138

3.5 Harmonization of certification schemes 143

3.6 Conclusions: Strengths and limitations of biofuel certification schemes 143

REFERENCES 149

ANNEX1: AGRONOMICCONDITIONSFORSELECTEDFEEDSTOCK 171

ANNEX2: SELECTEDLIFECYCLEANALYSISFORBIOFUELS 172


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1.1 Country case: Sugarcane ethanol - Brazil 18

1.2 Country case: Sweet sorghum ethanol - Mozambique 23

1.3 Country case: Cassava ethanol - Thailand 26

1.4 Country case: Oil palm biodiesel - Malaysia 29

1.5 Country case: Soybean biodiesel - Argentina 33

1.6 Country case: Jatropha biodiesel - Ghana 36

1.7 Turning waste into energy: Application of integrated food energy systems for small-scale

farming in developing countries 41

2.1 European Union Renewable Energy Directive (RED) and its take on biodiversity 74

2.2 Soybean-biodiesel sustainability in La Pampa Province, Argentina 822.3 Soybean-biodiesel sustainability in Mato Grosso and Par, Brazil 84

2.4 Sugarcane-ethanol sustainability review for Brazil 86

2.5 Peruvian Amazon case - Importance of stakeholder engagement 92

3.1 Biofuel certification schemes: Are smallholders left behind? 123

1.1 Global biodiesel production, 2006 27

1.2 Global pellets exports, 2006/07 43

1.3 Biofuel feedstocks, yields, lifespan and input intensity, 2006 48

2.1 Linkages between the Brazilian energy and sugar markets 55

2.2 Fossil energy balances for liquid biofuels 632.3 Life-cycle GHG balance of different conventional and advanced biofuels 66

2.4 Biofuel carbon debt allocation, annual carbon repayment rate (years) 67

2.5 Conflict zones: High potentials for biomass production vs. high biodiversity 73

2.6 Proportion of biofuels meeting sustainability standards 97

List of boxes

List of figures


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List of tables

1.1 Summary of bioenergy processes, biofuel types and feedstock sources 16

1.2 Input-output in cultivating oil palm and other crops 30

1.3 Soybean and soybean oil yields, by-products and prices 32

1.4 World Jatropha acreage in 2008 35

1.5 Biogas production in select countries (estimates) in 2006 40

1.6 World wood pellet production in 2006 43

1.7 World eucalyptus plantations, 2005 46

1.8 Trade in wood pulp, 2009 47

2.1 Cost of production of biofuels from selected feedstocks 582.2 Initiatives to develop GHG calculation methodologies 70

2.3(A) Water footprint of biomass for 15 crops in four countries m3/tonne) 77

2.3(B) Water footprint of biomas for 15 crops in four countries (m3/Gj) 77

2.4 Principles and criteria of different bioenergy certification initiatives 106

3.1 Green Gold Label program 120

3.2 Criteria for the SEKAB Verified Sustainable Ethanol initiative 121

3.3 IDB Scorecard list 125

3.4 costs and benefits of conventional versus organic sugar in San Javier, Argentina 129

3.5 Establishment and upkeep costs of conventional versus organic cultivation 136

3.6 Direct costs and benefits of operative schemes 1403.7 Certification costs for palm oil RSPO supply chain systems 142


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AFS Australian Forestry StandardAT Alianca da TerraBAFF BioAlcohol Fuel Foundation (Sweden)BNDES Brazilian Development BankBQA Biofuel Quota Act (Germany)BSO Biomass Sustainability Ordinance (Germany)CBA Cost Benefit AnalysisCCOF California Certified Organic FarmersCERFLOR Brazilian Program on Forest CertificationCGEE Center for Global Environmental EducationCHP Combined Heat and PowerCIAT Centro International de Agricultura Tropical

(International Center for Tropical Agriculture)CPR Common Property ResourcesCRP Conservation Reserve Program (US)CSBP Council on Sustainable Biomass Production (US)DDGS Distilled Dried Grains with SolublesDLUC Direct Land Use ChangeEEA European Environmental AgencyEFA Ecological Footprint AnalysisEIA Environment Impact AssessmentEPA Environment Protection Agency (US)EPFL Ecole Polytechnique Federale de LausanneETS Emissions Trading SchemesEU European UnionFAO United Nations Food Agriculture OrganizationFDI Foreign Direct InvestmentFLO Fairtrade Labeling OrganizationFSC Forest Stewardship CouncilGBEP Global Bioenergy Partnership

GEXSI Global Exchange for Social InvestmentGGL Green Gold LabelGHG Green house gasesGSI Global Subsidies InitiativeICRISAT International Crops Research Institute for the Semi-Arid TropicsIDB Inter-American Development BankIEA International Energy AgencyIFAD International Fund for Agricultural DevelopmentIFOAM International Federation of Organic Agriculture MovementsIGCC Integrated Gasification Combined Cycle

IICA Instituto Interamericano de Cooperacin para la Agricultura (Inter-AmericanInstitute for Cooperation on Agriculture)IIED International Institute for Environment and DevelopmentILO International Labor Organization

List of acronyms and abbreviations


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ILUC Indirect Land Use ChangeIPCC Intergovernmental Panel on Climate ChangeISCC International Sustainability & Carbon CertificationISEAL International Social and Environmental Accreditation and LabelingISO International Standards Organization

IUCN International Union for the Conservation of NatureIWMI International Water Management InstituteLCA Life Cycle AnalysisLCFS Low Carbon Fuel Standard (California, US)LEI Lembaka Ekolabel IndonesiaLUC Land Use ChangeMPOB Malaysian Palm Oil BoardMPOC Malaysian Palm Oil CouncilMTCC Malaysian Timber Certification CouncilNGO Non-Governmental OrganizationNPV Net Present ValueODP Ozone Layer DepletionOECD Organization for Economic Co-operation and DevelopmentPEFC Program for the Endorsement of Forest CertificationR&D Research and DevelopmentRED Renewable Energy Directive (EU)RFS2 Renewable Fuel Standards 2 (US)RSB Roundtable on Sustainable BiofuelsRSPO Roundtable on Sustainable Palm OilRTFC Renewable Transport Fuel Certificate (UK)RTRS Roundtable on Responsible SoySAN Sustainable Agriculture NetworkSBA Sustainable Biodiesel AllianceSEA Strategic Environmental AssessmentSFI Sustainable Forest Initiative (North America)SIA Social Impact AssessmentSRWC Short Rotation Woody CropsUNCTAD United Nations Conference on Trade and DevelopmentUNDP United Nations Development ProgrammeUNEP United Nations Environment ProgramUNICA Brazilian Sugar cane Industry AssociationUS United StatesUSDA United States Department of AgricultureWCED World Commission on Environment and DevelopmentWF Water FootprintWTO World Trade OrganizationWWF World Wildlife FundZAE Cana Zoneamento Agroecolgico da Cana-de-Acar (Sugar cane agro-ecological

zoning) (Brazil)


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Main conclusions

1. The initial surge of biofuels in industrial economies was driven by energy security andrising fossil fuel prices; but market forces alone were not sufficient to drive the process,which required heavy policy support (subsidies, mandates and tariffs for imports)targeting few domestic-based feedstocks (corn, rapeseed, soybeans); meanwhileresearch and development of new feedstocks to support future biofuel expansions tookoff, including high-yielding (sweet sorghum) and more versatile crops (jatropha), as wellas dedicated energy crops for second-generation biofuels. Yet the expected large gapbetween future demand and potential domestic supply in the North required expandingbiofuel production in developing countries, which had the land and the climate neededto produce raw feedstocks on a large scale.

2. However, rising concern about climate change and its necessary mitigation as well as

the increasing awareness of the relationship between climate change and sustainabilityhas altered views about biofuels, including a criticism of biofuels using feedstocks thatare only moderately efficient but requiring direct subsidies. Moreover, the food crisis of2007-08 and the debate over food-versus-fuel competition has raised concerns aboutbiofuels clashing with food security and ushered in a critical debate about the long-term sustainability of current biofuel systems.

3. Measured in terms of efficiency and sustainability, feedstocks grown for biofuels are not

alike. Crop feedstocks such as sugar cane or palm oil are relatively more efficient, interms of biofuel yields per area, and can be economically viable without direct subsidies.However, their environmental sustainability comes into question when water irrigationis required (sugar cane) or when plantations take place in carbon-sensitive lands (palmoil). Sweet sorghum, still under development, offers high-efficiency potential and widerscope for adaptability to soil and water conditions compared to sugar cane. However,sweet sorghum quickly loses sugar after harvest, therefore limiting its adaptability tothose countries with well developed infrastructure and supply chain capabilities.

4. Established feedstocks for ethanol (corn) and biodiesel (rapeseed, soybeans) havethrived largely under the protection of subsidies and mandates, but their long-term

economic and environmental sustainability are not clear, and the future prospects ofthese first-generation biofuels will depend on a range of factors including the possibledeployment of new and efficient feedstocks, the improved economics of biofuelsthrough continued innovations, future policy support, as well as the commercialdeployment of second-generation biofuels and related feedstocks, including waste,residues and other non-crop biomass.

5. Alternative feedstocks with potential growth in developing countries like jatrophaand cassava may present attractive agronomic characteristics and good suitability inmarginal lands with varying weather, water and soil conditions; yet several obstacles

may limit the scope of these crops as future feedstocks. Key among these is theeconomic need to ensure intensive management systems to maximize yields andefficiency, which may lead to direct competition for prime land, often with establishedinfrastructure and where food production is already established. In the end, the


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economics of production will likely trump the agronomy of the crops. Hence theprospects of seeing widespread use of these crops as biofuel feedstocks are notoptimistic, especially for poor, least-developed countries that may have idle land butlimited value chain development capacity and the required infrastructure to support it.

6. Assuming second-generation biofuels become commercially viable, we can expectsignificant expansion of biomass use (broader set of crop feedstocks, waste andagricultural residues). Such development will likely alter the demand and supply ofbiomass sources, and hence their economics, tightening even more the agriculture-energy linkages, and the potentially even more intensive competition for landbetween food and energy uses. This in turn will have uncertain implications for ruraldevelopment opportunities, especially in poor, developing countries that continue torely heavily on traditional uses of biomass that are neither sustainable nor climate-smart. What is clear is that the economics of production will be the determining driverin sorting out how resources (land, labour, water and other resources) are likely to shift

between food or energy. If the past is any guide, the market forces alone are unlikelyto be the sole drivers of these processes, and the role of policy support (throughincentives or disincentives) will also be critical in guiding the outcomes.

7. From a sustainability perspective, biofuels offer both advantages (energy security, GHGreductions, reduced air pollution) and risks (intensive use of resources, monocultures,reduced biodiversity, and even higher GHGs through land use change); and measuringbiofuel sustainability requires approaching economic, environmental and socialsustainability in an integrated way to maximize benefits and minimize risks. Yet thereview of the biofuel sustainability initiatives taken as a whole does not show that such

an integrated framework is being pursued or that the impacts of the core dimensions ofsustainability are fully measured or understood.

8. Biofuel certification schemes, despite their multiplicity, are dominated by a singular formof governance namely voluntary, private industry-led initiatives targeting sustainabilityassurances with input from non-industry stakeholders. These schemes are driven asmuch by market access and trade considerations as by the need to provide sustainabilityassurances. This may explain why the first schemes and initiatives have focused onthose feedstocks and biofuels most involved in south-to-north trade (soybeans,sugarcane and oil palm). This dual role of biofuel certification schemes also explains thetendency to target selected sustainability criteria and not others and hence the absence

of a full integration of the three core dimensions (economic, environmental and social)into a coherent framework or strategy.

9. National and supra-national initiatives on biofuel sustainability have been led byWestern Europe a region that is most dependent on future imports of biofuelsand feedstocks to meet projected domestic needs. Leading exporting countrieslike Argentina, Brazil, Indonesia and Malaysia have also responded with their ownsustainability initiatives in part to protect their export markets and to meet importingcountries requirements. Transnational forums, such as the Global BioenergyPartnership, have been set up to harmonize sustainability initiatives across interested

countries. Such forums emphasize consensus building around methodologies and othervoluntary meta-standards, but they are unlikely to agree to fully harmonize policies orapproaches (outside voluntary guidelines) that may clash with their national biofuel orrenewable energy policies, driven by domestic priorities.


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10. Competitiveness of biofuels in the long run will continue to depend on the economicsof fossil energy, the policy support environment, and the relative incentives anddisincentives to encourage renewable versus fossil-energy sources. Economiccompetitiveness of biofuels will also depend on the substitution possibilities betweenfood and fuel market uses, and the advances in technology and innovation in biofuelproduction processes. Continued reliance on policy support through subsidies andmandates indicates the lack of market competitiveness of biofuels in the short and eventhe medium run.

11. A full assessment of economic biofuel sustainability require a complete internalizingof the full-cost of environmental effects (i.e. putting a market price on negativeexternalities). On the other hand, economic sustainability may clash with environmentalconsiderations when the need to maximize returns on investments dictates pursuingintensive management practices that could clash with sustainable use of resources, andexacerbate competition with food for productive resources such as land. Consequently,

large productivity gains are required to minimize such conflicts and bridge the gapbetween efficiency and long-run sustainability.

12. Environmental sustainability assessments for biofuels are difficult owing to thecomplexity and the multiplicity of indicators, some of which are global (GHG, renewableenergy), while others are local or regional (water management, soil and resourcedepletion, local pollution, etc.). Initiatives on sustainability via regulations, directives orprivate-led certification schemes have had no clear and measurable impact, apart fromincreased awareness of their importance, and this despite the numerous initiatives andthe huge sustainability debates. A key problem continues to be a lack of consensus

on measurement methodologies (such as life-cycle analyses and the way to tackleindirect land use change). Moreover, certification schemes are of recent creation andcontinue to be impeded by inherent measurement and monitoring problems, whichvary according to situation (location, feedstock, technology, alternative resource use,policy environment and local capacity). Until progress is made on these obstacles, theapproaches pursued so far will continue to be selective and haphazard, focusing onself-selected sustainability measures and ad-hoc rules such as no-go zones for high-carbon stock or biodiversity-rich areas.

13. The social impacts of biofuels certification schemes remain the weakest link in mostsustainability initiative thus far. Most certification schemes, scorecards and regulations

make mention of social impacts but only seek to mitigate few of the obvious negativeimpacts (child labour, minimum wage, compensation for lost land and resources) orcall for adherence to national laws or international conventions. However, evidenceof how these measures are actually implemented, or their impacts on the ground, hasbeen very limited, and successful cases are rare. Among the reasons are the complexityof social impacts, and their inherently local context, often encompassing contrastingsocial norms, practices, capacity, community empowerment and varied levels ofpolitical participation. Clearly, the social sustainability dimension requires a qualitativerethink that goes beyond mitigating few negative impacts, but rather integratesparticipatory processes that ensure wider economic benefits to marginal stakeholders

and local communities, and therefore guarantees broader acceptance and long-lastingstewardship of resources.


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14. From food security and rural employment perspectives, biofuel certification schemes,unless tied to specific public initiatives, are not structured to be inclusive of small-scaleproducers. Most certifications require costly, complex and intensive information systemsand management capacities that are easily absorbed by large-scale agribusinesses(with their advantage of economies of scale) but are largely out of reach for small-scaleproducers. This implies that private-led certification schemes may not be sufficientby themselves to facilitate wider participation in promising feedstock-biofuel valuechains or to offer small-scale producers opportunities for market diversification.Consequently, biofuel projects may have limited development, rural employment,and income-enhancing potential at a local or regional level. Filling the inclusivenessgap for small-scale producers, especially in poor, developing countries, requires activepublic interventions carefully tailored towards incentives to develop capacity, betterorganization, adoption of cost-cutting technologies and new techniques to enablesmallholders to better leverage the new market opportunities offered by any newpossibilities for biofuel-led agricultural value addition and diversification.

15. Linking biofuels to food security in developing countries also requires establishing closerlinks between food security and energy security. This requires choosing among differentdevelopment model paths, depending on the stage of industrial development of thecountry, the general state of food security, the extent of agro-industry development andthe capacities of producers and agribusinesses. No single model fits all situations. Forpoor countries with limited industrial capacity, emphasis should be placed on small-scalebioenergy systems that can integrate existing crop and livestock enterprises at farm,household and community levels. Such schemes have larger developmental benefitpotential in terms of local employment, productivity enhancement and improved food

security. FDI-induced larger-scale biofuel projects, on the other hand, may be suitablein those situations where countries have sufficient industrial capacity, besides landand biomass potential, and when these biofuel projects can be fully integrated intodomestic energy strategies that do not conflict with food production potential and foodsecurity.


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Executive summary

Execut ve summary

The development of biofuels, which hasemerged at the interface of agricultureand energy at the global level, has beenone of the most significant agriculturaldevelopments in recent years. During the1990s, the industrialized economies ofNorth America and Europe actively pursuedpolicies in support of domestic biofuelindustries to achieve energy security,

develop a substitute for fossil fuels andsupport rural economies. In addition, therising concern over climate change in thelast decade propelled interest in biofuels asa possible means of mitigating greenhousegas (GHG) emissions.

The need to address the growingchallenge of climate change has led tocloser scrutiny of biofuels to assess whether

they can be produced, traded and usedsustainably. Criticism of biofuels centredaround their perceived negative impactson the environment through deforestation,spread of monocultures, loss of biodiversityand possible higher GHG emissions underuncontrolled land-use change. Moreover,the food crisis of 2007-08 and the ensuingsurge of commodity prices heightenedthe debate over food versus fuel and thepossible consequences of biofuel production

on food security. The potential of biofuels tocontribute to a shift into more sustainableenergy systems became contested,and scientists started to question theenvironmental superiority of biofuels.

As a result of these concerns,sustainability has been promoted asessential condition for biofuels long-termviability and for continued public support

to renewable energy and to climatechange mitigation. Consequently, a rangeof biofuel certification schemes emerged,all purporting to ensure sustainability. Yet

these schemes also seem to be driven by theneed to regulate the current and potentiallyhuge future trade flows in feedstocks andbiofuels between industrialized economies(with high potential excess demand forenergy) and developing countries (withrecognized comparative advantages inbiomass production and huge potentialexcess supply).

What this report is about

This report addresses the central issueof biofuel sustainability using a globalassessment of major commodities andfeedstocks currently employed forbioethanol and biodiesel production.The approach taken was guided by twooverriding considerations. First, the need

to understand the basic dimensions ofsustainability for biofuels (economic,environmental and social), their linkagesand how they relate to the centralchallenges they address, namely land-usechange, food security and climate change.Second, the need to critically evaluatethe extent to which the recent trends inbiofuel certification schemes reflect truesustainability versus trade flow regulationunder the guise of sustainability; in other

words, are the initiatives essentially marketdriven or sustainability motivated, or both?

The report is global in scope and surveysa large number of country case studiesaimed at shedding light on the sustainabilityissues examined. It focuses on currentbiofuel production systems as well as themajor biofuel sustainability initiatives andcertification schemes.

The report is divided into three chapters.The first chapter provides a broad economicoverview of the major feedstocks used


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to produce liquid, solid and gaseousbiofuels. An analysis of each feedstock ispresented, including a general overviewof its production, energy and other inputrequirements, productivity and efficiency ofbiofuel generation. Chapter 1 also includesa review of country case studies focusingon a key biomass-biofuel pair to providespecific context to biofuels. Chapter 2addresses sustainability as such, with acomprehensive review of the three coredimensions (economic, environmental andsocial). Chapter 2 also review country andinter-government sustainability initiativesrelative to biofuels and bioenergy and serves

as a sagueway to chapter 3. The latterprovides a broad and critical review of thebiofuel certification schemes.

Biofuel feedstocks: assessingsustainability beyond efficiency

In countries where biofuel industry isestablished, the first feedstocks utilised tendto be drawn from among the most important

crops in the country (e.g. corn in the USA,rapeseed in the EU, sugar cane in Brazil andoil palm in Malaysia/Indonesia). Biofuels tendto be led by few dominant crops targetedthrough an active policy support programthat also account for domestic biofuelconsumption patterns (e.g. ethanol in theUSA and Brazil and biodiesel in the EU).Still, to meet expanding future demand inbiofuels, there is growing interest in exploringother possible feedstocks (e.g. sugar cane,

cassava, palm oil, sweet sorghum, Jatropha)and dedicated energy crops (e.g. switchgrass,miscanthus and short rotation tree crops)for advanced (cellulosic) biofuels. Inthis report, for ease of exposition, wedivide the biofuel feedstocks into 4 broadcategories: (1) high-efficiency feedstocks(e.g. palm oil, sugar cane); (2) moderate-efficiency feedstocks (e.g. corn, soybean,rapeseed, sugar beet); (3) feedstocks under

development (e.g. sweet sorghum, Jatropha);and (4) dedicated energy feedstocks (e.g.switchgrass, miscanthus, short rotation crops,algae, waste).

Efficient feedstocks: not alwayssustainable

Sugar caneis an efficient crop (in terms ofyield per unit of land), but its sustainabilityhinges largely on water availability andthe crop does better when there is amplerainfall and minimal need for irrigation(as in Brazil). Besides high biomass, sugarcane also produces a range of useful by-products all contributing positively to itseconomic competitiveness. Sugar canecontinue to be attractive even under secondgeneration technologies as bagasse can bea prime feedstock source. Sugar cane also

offers the possibility of using molasses (i.e.sugar production by-products) for biofuelin situations where sugar production haspriority over biofuels (as in India). Sugarcane is also very demanding agronomically,requiring deep soils, high water use, anda full 12-month growing season; hence,sugar cane is less optimal in drier areasthat require irrigation, especially if it hasto compete with food crops for water

use. Irrigated sugar cane is less of anoption if water is sourced from depletableunderwater or aquifers.

Another key concern with sugar canewith respect to sustainability is the potentialundesirable impacts in terms of land usechange. This has been a particular issuein Brazil, the worlds leader in sugar caneethanol, where sugar cane expansion intograzing areas, can push livestock systems

into the forest zones. Brazil, being sensitiveto these concerns, has placed restrictions onsugar cane expansion areas to minimize thenegative impacts.

Next to sugar cane, palm oilis by farthe most efficient source for biodiesel (yieldper unit of land), far exceeding alternativeslike rapeseed, soybeans or sunflowers.The bulk of world palm oil production is

concentrated in Malaysia and Indonesia,but major investments in new plantationsare also taking place in Africa and LatinAmerica, driven by rising consumer demand,


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Executive summary

pre-dominates. Therefore, maize has notbeen favoured outside of the US as anethanol feedstock because of concernsabout competition with food.

The EU, on the other hand, centred itsinitial biodiesel development strategy aroundrapeseed a domestically grown crop thatcan be promoted through subsidies. Thisstrategy squared fully with the overridingobjective of achieving energy securitythrough the promotion of renewableenergy, including biofuels. Although morerapeseed is grown in Canada, China andIndia, only the EU (and to a lesser extent,

Canada) has vigorously promoted rapeseed-biodiesel production, largely through heavysubsidies and mandates. However, in termsof biodiesel yield per acre or GHG savings,rapeseed feedstock doesnt comparefavourably with other alternatives (such aspalm oil). Consequently, there is very littlebiodiesel production from rapeseed outsideof the EUs direct support. Even withinthe EU, there has been some retreat from

direct support to rapeseed-biodiesel dueto increased pressures on environmentalgrounds, seeing that rapeseed offersweaker benefits in terms of climate-changemitigation.

Soybean oilis the second-largestbiodiesel feedstock after rapeseed oil.Biodiesel production from soy oil isconcentrated in the USA and Latin America(e.g. Argentina, Brazil, Paraguay). China, a

major soybean producer, does not producebiodiesel from this feedstock because of itsban on using food crops for biofuels and thefact that China is a net importer of soybeans.The largest expected expansion of soy oil forbiodiesel is in Argentina and Brazil becauseof the availability of land and relatively lowercost of production. However, soybeans inthese countries, under the current marketforces, tend to be grown under monoculture

systems which pose sustainability challenges.Moreover, expansion of corn for ethanol inthe USA which tends to reduce soybeanacreage as corn-soybean rotation contracts

high potential for expanded trade andopportunities for biodiesel production. Interms of environmental sustainability, oilpalm presents a huge dilemma. On theone hand, this oil crop is highly efficientand its GHG emission potential and energybalance compares favorably with alternativefeedstocks. However, oil palm plantationscan also pose environmental problemswhen expansion takes place on sensitivelands (e.g. peat soils, forests). This is aparticular concern in Malaysia and Indonesiawhere some oil palm is planted in drainedpeatlands, resulting in significant CO2emissions outweighing any carbon benefits

arising from the new palm-oil plantations. Acomplicating factor is that new investmentsin new palm oil plantations are not onlydriven by biodiesel alone, but rather (ormore so) by increasing consumer demandin vegetable oil in many high growth andpopulous developing countries. This in turnmay minimize the impact of sustainabilitysafeguards geared toward plantationsfocusing on biodiesel and not the underlying

feedstock food crop.Moderately efficient feedstocks, but noassured economic viability

Much of the burst in biofuel productionin the USA and the EU depended on afew feedstocks that are only moderatelyefficient relative to alternatives. In theUSA, maize is the predominant feedstockfor ethanol, while rapeseed dominates

biodiesel production in the EU. Maize hasthe advantage of high productivity per unitof land, although it also uses large amountsof fertilizers and pesticides, and henceconsumes a lot of fossil energy. However,the increasing concern about climatechange and GHG mitigation lessens theappeal of maize compared with sugar canebecause its energy input-output balance,or carbon footprint, under current biofuel

technology is relatively modest. In Canadaand Europe, maize is traditionally used forfeed, while in other countries (apart fromchina), white maize for food consumption


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season. As a biomass source, under thissystem, the sweet sorghum fibrous residuescan be used in the same way as sugar canebagasse to produce electricity, process heatand power.

Another potential alternative feedstockfor biodiesel is the non-edible crop,Jatropha. Jatropha is drought-tolerant,has low input requirements and is highlysuitable for marginal lands. Jatropha canalso improve the soil quality because ofits deep root system; however, clearingJatropha land for conversion into crop landwould be a considerable investment. Equally

important is Jatrophas suitability for small-scale production as its seeds can be easilystored before processing. However, large-scale biodiesel production is capital-intensiveand thus requires tight supply arrangementssuch as out-grower schemes, in whichproducers deliver directly to local processingplants to ensure economic viability. Indiahas been particularly keen on developingJatropha for biodiesel in line with its non-

food biofuel policy. Jatropha has alsobeen tried in a few African countries (e.g.Ethiopia, Ghana, Mozambique). Still, thelong-run economic viability of Jatropha forbiodiesel is still untested. The key concernis that to ensure economic profitability,Jatropha would require intensive cropmanagement which, in turn, would resultin competition for top farm land unlessexplicit regulations on farm land use are inplace. Consequently, the development of

these feedstocks in more marginal areasby small-scale farmers is less likely withoutgovernment incentives. In general anyfeedstock will compete with food crops forland and water resources. In other words,economics will trump agronomy in terms ofwhere the feedstocks can be grown.

Cassavahas also been targeted as apotential feedstock for ethanol because

of its high starch content and high yieldpotential per hectare. However, cassava isa staple food crop in much of Africa andAsia and a critical food security source for

pushes up soybean acreage expansion inLatin America. This, in turn, raises concernsover potential undesirable land expansionand even encroachment into forested areas,with potentially negative environmental andGHG emission consequences.

Promising feedstocks choice set:advantages and limits of newfeedstocks

The prospects of even greater expansion ofbiofuels in the future unleashed a search foralternative and highly productive feedstocksto meet future demand. Among these,

sweet sorghumhas been the objectof sustained research and developmentprogrammes in China, India and the USA.Sweet sorghum is the closest competitor tosugar cane in terms of yield potential perunit of land. Sweet sorghum is an annualcrop that is more versatile and can begrown in a variety of soil depths and waterconditions. Sorghum is drought-tolerantand can be grown in a shorter season with

less labour requirements and is suitable intropical areas too dry to grow sugar cane.

The drawback to sweet sorghum is thatit requires quick processing after harvestbecause its sugar content drops significantlyafter only three weeks. This presents achallenge for transportation and storagegiven the bulkiness of the crop (i.e. 70percent water at harvest).This may limit thenumber of countries capable of developing

the industrial infrastructure to produce,harvest, store and process this bulky cropon a large scale. It further would lead tothe need to concentrate production aroundthe processing facilities limiting the optionsfor more sustainable diversified productionon that land (crop rotations). Anothersustainability problem is the potentialcompetition for food over land. A study onsweet sorghum in Mozambique showed

that one solution to food competition isto plant sweet sorghum on fallow sugarcane land to be harvested and processedbefore the start of the sugar cane harvesting


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would increase competition for land andnot lower it. Moreover, the advent of thesecond-generation biofuels would createhuge pressure for land to produce dedicatedenergy crops, hence worsening competitionwith food crops. The net effect on landcompetition will depend on whetherthe expansionary effect (resulting from asurge of investments in second-generationplants and the resulting high demands forfeedstock) will dominate the substitutioneffect (i.e. away from traditional feedstockcrops and into residues and waste). Atany rate, second-generation biofuels,should they become commercially viable,

would likely induce a fundamental shift inagricultural systems, and would bring muchcloser agriculture and energy markets, withfar reaching consequences difficult to fullyascertain contemplate at this stage.

Biofuels and the sustainabilitychallenge: framing the problem

The sustainability concept is complex and

multidimensional, and its implementationon the ground requires an understandingof the specific local context. A sustainablebiofuel production system is one that iseconomically viable, conserves the naturalresource base and ensures social well-being.Moreover, the three core dimensions ofsustainability (i.e. economic, environmentaland social) are interlinked and can best beapproached holistically.

From a sustainability perspective, biofuelsoffer advantages as well as risks. On theupside, biofuels can contribute to increasedenergy security, help reduce GHG emissions,improve air quality in cities and, in theprocess, spur growth in rural areas. On thedownside, expansion of biofuels, especiallyunder intensive production systems, couldhave negative impacts on biodiversity (e.g.replacement of natural forest with biofuel

crops, spread of monocultures), wateravailability under scarcity, water quality, soildegradation, negative carbon and energybalances, potential conflict with food

many poor rural communities. This raisesconcern over its suitability as a biofuelfeedstock, as the crop is for the most partgrown by small scale farmers for self-consumption. Moreover, Cassava is a highlyperishable crop and cassava value chains,especially in Africa, are typically impededby limited processing technologies andunderdeveloped marketing channels. Giventhe agronomy of the crop, its central rolefor food security among the poor and ruralhouseholds in many parts of Africa, andthe largely underdeveloped Cassava supplychains, there are serious doubts that suchcrop can become a magnet for biofuel

development at the local level, at leastnot on a large scale or when involving asignificant share of small farmers.

Feedstocks for second-generationbiofuels: still facing unfavourableeconomics

Advanced biofuels (including cellulosicethanol) are still under development

and have yet to reach commercial stage.Dedicated energy crops (e.g. alfalfa,switchgrass, miscanthus), fast-growingshort-rotation trees (e.g. poplar, willows,eucalyptus) and agricultural and woodresidues offer much greater potential forthe biofuel industry. But the economics andhigh capital investments for the new supplychains remain serious obstacles for 2ndgeneration biofuels.

Assuming commercialization stagehas been reached, concern over land-use competition between food and fuelmay not disappear simply because wecan use agricultural residues or waste forfeedstocks. The answer will turn essentiallyaround economics and will depend on therelative costs of land-using feedstocks (e.g.dedicated energy crops) or non-land-usingfeedstocks (e.g. wood, municipal or other

wastes). Even when agricultural residues(e.g. cereal straws) are targeted this wouldalter the economics of traditional crops(i.e. pushing up their market value) and


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responded to rising sustainability concerns,largely to protect their export markets. Theother large developing economies, suchas China and India, with huge populationsto feed, have adopted a more cautionarystrategy with biofuels avoiding altogetherany feedstock that could be used as foodor feed.

Are biofuel certification schemesenough to assure sustainability?

A number of sustainability initiativesdefined through standards, principalsand criteria as a regulating instrument

for biofuel and feedstock trade. Theseinitiatives, both national and transnationalpaved the way for several biofuel-specificcertification schemes either targeting allbiofuels as a whole or tailored to specificbiofuel feedstocks (sugarcane, soybeans,palm oil etc). Despite their diversity, mostbiofuel certification schemes followed adominant type of governance: voluntary,industry-led, multi-stakeholder forum

with some input from civil society. It hasadvantages and disadvantages. On theupside, it allows the biofuel industry toself-regulate, while preserving marketefficiency. Specifically, these private-ledcertification schemes have the ability to:(1) influence corporate social responsibilityin biofuels; (2) influence businesses toimprove efficiency within a supply chain;(3) decrease risk; and (4) raise awarenessabout problems in the supply chain. Also,

the multiple forms of certification schemes(e.g. roundtables, consortia, private labels,industry-wide certificates) could generatepositive pro-competitive effects, improvingimplementation and verification tools.On the other hand, a commonly raisedconcern among exporting countries isthat certification schemes are viewed asdisguised trade barriers. Another limitationof the voluntary-private based certification

schemes is that sustainability itself maytake second place to efficiency, especially ifsome provision of public goods is requiredthrough a direct public intervention.

production and food security, as well asworsening GHG emission levels because ofindirect land-use change.

Balancing the economic benefitswith environmental and social impactsis a delicate act. Even when biofuelsmeet some environmental and socialsustainability criteria, they need to first passthe economic sustainability (or viability)test. This means ensuring efficiency ofproduction (through high yields andintensive management) and long runprofitability, access to productive resources(e.g. land, labour, technology), and reliable

output markets. The challenge is achievingall this while ensuring economic viabilityand minimizing potential negative social orenvironmental impacts.

Most of the initiatives on biofuelsustainability at the country or supra-national levels come from industrializedeconomies where biofuel growth hasbeen most dynamic and where there is

large scope for bioenergy demand andhuge energy substitution possibilities.Sustainability initiatives coming fromEurope or North America largely mirror theindustrial economies priorities for biofuels(e.g. energy security supply, protection ofagriculture, and increasingly climate-changemitigation).

Because the EU (more than NorthAmerica) depends relatively more on

imported feedstocks for its biofuel needs,it took the lead in setting regulationsand encouraging private-led schemestargeting biofuel sustainability. Bycontrast, the USs biofuel productionbeing largely domestically-oriented, thereis no comparable push to require broadbased sustainability criteria for biofuels,apart from the requirement to regulateGHG emissions as required by existing

legislation and Supreme Court rulings.Outside Europe and North America, majorfeedstock exporters (such as Argentina,Brazil, Indonesia and Malaysia) have


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determinant in globalising biofuel market.However, if trade barriers are lowered(including tariffs) and biofuels are moreopenly traded, market competition wouldmoderate prices. Further, higher commodityprices, by making food more expensivewould draw resources from biofuels backinto food production a result of food-fuel competition over shared productiveresources. The linkages between food andenergy will likely grow stronger affectingthe relative competitiveness of biofuels, andtheir long term viability and sustainability.This is especially the case should secondgeneration biofuels become commercially

available. In that case, competition forshared resources will become even moreintense, and it is unlikely that policies orregulations would not have to step into balance between food versus energysecurity.

Biofuels are bulk commodities withlittle scope for price premium. Moreover,the quasi-mandatory requirements for

certified biofuels (or biomass) entering theEU market also remove the conditions forprice premiums. Yet despite the addedcertification costs, many producers indeveloping countries are still able tocompete in the European market as theycan produce feedstocks more efficiently (atleast the high yielding ones such as sugarcane and oil palm). This partly explain themuch concentrated focus of certificationschemes on few key traded biofuels

feedstocks (sugar cane, oil palm, soybeans).By contrast, commodities produced,transformed and used domestically can falllargely outside the writ of these voluntarycertifications schemes, especially in theabsence of strong and enforced domesticregulations (e.g. corn-ethanol in the USA,sugar cane-ethanol produced and used inBrazil, soybean-biodiesel in Argentina, sugarin India, palm oil in Indonesia and beef in

Brazil).

One complicating factor in assessingthe economic sustainability of biofuels is

Economic sustainability, subsidies,and competition with food and otherfeedstock uses

Economic sustainability (viability) requireslong-term profitability, minimal competitionwith food production and competitivenesswith fossil fuels. The economics of biofuelshave been in part driven by active policysupport measures (subsidies and mandates)which makes it difficult to assess the longrun economic viability of biofuels systemscurrent or future. However, the protectionof the domestic biofuel industry (sugar-cane ethanol in Brazil from the 1970s, US

corn-ethanol and EU rapeseed biodiesel),have managed to develop the economiesof scale and cut long run costs through theintroduction of technological improvements(diversification and market opportunitiesfor by-products; efficient internal energyconsumption..etc).

The food crisis of 2007/08 triggeredthe food-versus-fuel debate and raised

concerns about out-of-control expansionof biofuels to meet ever larger energyneeds. If left unchecked, biofuel expansioncould well shift food production into moremarginal lands, resulting in lower yields.Also, competition over resources such aswater and fertilizers may also constrain foodavailability (depending on feedstock andlocation). Competition could also enhanceyields as a result of higher rents (i.e. themarket price of land) and the adoption of

other productivity boosting technologies(rotations, inter mixed-cropping). First-generation biofuels are also experiencingslow and progressive technologicaladvances, including improved energyinput-output ratios and increased marketvalue and uses for by-products. However,these effects may vary depending on localmarket conditions and relevant policies orregulations in place.

Increased demand from biofuels forfeedstocks tends to push up agriculturalcommodity prices, and trade is a key


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not standardized and have yet to adequatelyaccount for indirect land-use change.

Another important motivation for biofuelis the promise of energy substitution toreplace fossil fuels. Energy balance (i.e. theratio between renewable energy output andfossil energy input) show great variationamong different biofuel feedstocks, withpalm oil for biodiesel leading the pack withan energy balance up to 9.0 (i.e. nine timesthe energy required for its production).Sugar cane also has a relatively high butvariable energy balance, ranging from 2.0to 8.0. Most other feedstocks have energy

balances that range from 1 to 4. Still, thesecalculations do not take into account theeffect of indirect land-use change.

Besides GHGs and energy, waterresource preservation may top otherconsiderations in specific areas whenevaluating environmental sustainability.In some cases, constraints regarding thequantity of water used and the impact on

local water quality and future availabilitymay be the most limiting factor againstbiofuels. Linked to water is the problemof fertilizer runoff especially near streamsand rivers.

Preserving biodiversity or avoidingbiodiversity loss from biofuels is anothercritical criterion for sustainability. However,there are no standard ways to measurewhich systems to promote, except in

general terms (such as use of rotations).Most current production systems do notindicate stability or even maintenance ofbiodiversity. Biomass production underintensive monoculture systems can havenegative impacts on biodiversity includinghabitat loss, the expansion of invasivespecies and contamination from fertilizersand herbicides. However, the deploymentof biomass in previously degraded land

may benefit biodiversity; but this can onlyoccur if there are strong enough incentives(including payments for environmentservices).

the multiple market outlets for feedstocks(e.g. food, feed, fibre and, now, fuel). Yet,sustainability requirements as articulated incurrent certification schemes appear to belimited to biofuels use only. A certificationscheme established on the basis of a singlefinal use (i.e. biofuel) may be ineffective insecuring sustainability, resulting in indirectdisplacement effects. One remedy is to focuson sustainability at the biomass productionside. However, the substitution possibilitiesamong different final-end uses of feedstockmakes it difficult to enforce sustainabilitycompliance if tied only to biofuel supplychains.

Environmental sustainability: multipleindicators and the challenge ofmeasuring impacts

Environmental sustainability encompassesa broad set of issues, some are global(e.g. climate change, GHG mitigation,renewable energy), while others are morelocation-specific (e.g. water management,

soil quality, erosion, water and local airpollution).

Environmental sustainability ofbiofuels has been largely defined interms of reducing GHG (e.g. CO2,methane, N2O) emissions. For non- CO2GHGs, agricultural practices ((e.g. soiltillage, irrigation practices, fertilizer use,pesticides, harvesting) are leading sourcesof emissions. Moreover, land use prior to

biofuel conversion is also a critical factorin evaluating the environmental impact. Abiofuels GHG reduction potential suffersmarkedly if grasslands or forests are used forbiofuels.

Definitive assessments of the GHGeffects of biofuels continue to be hamperedby a lack of reliable methodologiesto measure indirect land-use change,

soil carbon, etc. Life-cycle analysesare increasingly used to measure thesustainability of various biomass-biofuelsystems, but the methodologies so far are


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through value addition, expanded marketopportunities and diversification. For mostcertification schemes and scorecards, thesocial aspects of sustainability are addressedonly in terms of removing selected negativeimpacts (e,g. child labour, minimum wages),or calling for adherence to national lawsor international conventions. However,critical social factors such as participatoryprocesses, common management ofresources, health implications and otheraspects of poverty reduction or smallholderinclusiveness are not typically addressedas primary concerns of existing certificationschemes. This may seriously limit the scope

of these schemes as designed in addressingsocial sustainability in an integrated way.

In the end the existing biofuelcertification schemes are not properlystructured to adequately address socialsustainability. The private-led voluntaryschemes are not the correct instrument toaddress social issues that are essentiallypublic good types. Rather the appropriate

sustainability measures require strongnational supplemental policies andregulations that safeguard the potentiallybroad domestic social benefits as part ofany biofuel development. More than theeconomic and environmental dimensions,social sustainability for biofuels and relatedfeedstocks need a serious rethink of how tomainstream and implement sustainability.Essentially we need to move away fromsimply focusing on targeting selectively few

of the most obvious negative impacts (childlabor, minimum wages) and incorporatedevelopment goals where local communitiesshare sustainably in the potential economicbenefits from biofuels in comparison tocurrent alternatives.

Biofuel sustainability and foodsecurity: Missing links

Another limitation of the prevailingbiofuel certification schemes is the lackof inclusion of small scale farmers. Bydesign, certification schemes favour large-

A general problem with theenvironmental side of certification schemesis the difficulty of translating principles andcriteria into effective sustainability indicatorson the ground. This is partly due to inherentproblems with identifying measurable,permanent impacts of certification schemes.Another reason is the lack of availableand meaningful data that enable propercomparison and assessment of compliance.Moreover, the principles and criteriathemselves can be too broadly stated (withfew exceptions) or, inversely, translated intoindicators that are too narrowly specified,making it difficult to agree on broad

values of sustainability. For example , thecertification under the Round Table onResponsible Soy good agricultural practicessuch as crop rotations or zero tillage are notmandatory as they would reduce the marketfor soya qualifying under this certification.

Social sustainability: the weak linkand inadequacy of current certificationschemes

The social impacts of certification schemesare even less well documented. The keydifficulty lies in the ability to translate socialsustainability standards and criteria intomeasurable indicators. This is in part dueto the wide range of social conditions,practices and norms (e.g. labour structures,types of land ownership, local resourcemanagement). Another reason is the highlylocation-specific context of social impacts.

For example, the indicator all workersreceive minimum wages may mean littlein countries where informal employmentis widely practised, particularly in theagricultural sector. If no formal contractsexist, compliance with this indicator mightbe difficult and costly to assess.

While the enactment of certificationschemes may have some positive impacts

on workers and local communities, thereis still limited evidence of direct poverty-related impacts, improved food security, orenhanced sustainable income opportunities


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especially in developing countries presumedto have abundant land, water and/or labourresources. The drive behind biofuel FDI indeveloping countries has been essentiallydriven by cost cutting and efficiencyenhancing objectives. Yet despite the manytouted advantages of biofuel investmentsfor rural development, energy security andemployment, serious obstacles to biofuelgrowth remain in developing countries,including a lack of qualified labour, basicinfrastructure and the investment capitalneeded to develop feedstock supplychains. Much of these requirements arebeyond the capacity of many developing

countries, especially among the poorest.Even assuming FDI is forthcoming, this stillrequire an infusion of complementary andinvestment commitments from nationalgovernments to assure success and viability.Even under the best situations, one canexpect smaller positive spillover impactson the local economy because labourand capital are imported while biofuel isproduced for export. There is also the issue

of land acquisition for large scale biofuelprojects and the potential conflict withexisting or traditional land rights, accessand use. This concern have become acuteenough since the food crisis of 2007-08that FAO, along with other internationalorganisations, developed a new set ofguidelines for land access (VoluntaryGuidelines on the Responsible Governanceof Tenure of Land, Fisheries and Forests).

An alternative model that can contributeboth to food and energy security for manydeveloping countries would be based onthe promotion and development of small-scale biofuel or bioenergy systems that canbe integrated into existing farm, householdor community development activities. Suchsystems (e.g. biodiesel-fuelled cookingstoves, solar lanterns and biodiesel-fuelledsmall power stations for electricity or small-

scale irrigation) can be more effectivein providing energy security for small-scale producers and local communities,especially in poor developing countries

scale agribusinesses as they require costlyprocedures with significant amounts ofinformation and resources and also becausebig players have the means and incentivesfor scaling up production to absorb thecertification costs. Moreover, largercompanies typically already keep recordsneeded for audits, but small-scale farmersoften keep no written records on yields,fertilizers and by-products data that isneeded for the GHG estimations.

There are several ways to enhancesmallholder inclusion, includingenhancing the capacity and skills of small-

scale producers to master compliancerequirements (such as record keeping,facilitating farmers aggregations intoproducers organisations to reducecertification costs and to adopt moreefficient and sustainable technologies thatcan facilitate certification. Though thereare some incentives to address prohibitivecertification costs for smallholders by someof the leading feedstock roundtables, a

more sustainable solution is to ensure amore balanced representation of theseroundtables, with active participation ofsmallholders representatives in these multi-stakeholder certification schemes. Theassessments of sustainable soy in Brazil andJatropha in India showed that smallholdersgenerally have good knowledge of on-farmconservation, but not the same optionsto extend native vegetation buffer zones.Similarly, field burning an important

emitter of GHGs is mainly practised onsmall farms, while many large plantationshave already mechanized their productionand can easily respond to this pollutionissue.

Biofuels for poor developing countries:bridging food with energy security

Much of the focus about biofuel industry

moving south has been on leveragingforeign direct investments (FDI) to bringlarge scale capital intensive biofuel plantscloser to feedstock production sources,


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For example, biofuel development isalso facing, with increasing urgency, therising challenges of climate change andthe need to account for carbon footprintsand to reduce GHG emissions. How shouldthe initial concern of biofuel certificationbe expanded to include carbon footprintcertification, or are these separate concerns?Are the social criteria of these existingcertification schemes compatible with therecently endorsed Voluntary Guidelines onthe Responsible Governance of Tenure ofLand, Fisheries and Forests by the WorldCommittee on Food Security? How couldthese voluntary guidelines be implemented

within the existing biofuel certificationschemes?

Overall, the increased awareness andpursuit of biofuel sustainability has gainedmomentum in recent years which in itselfis a positive development. However, theassessment of the core biofuel sustainabilityissues and the certification schemes showedthe limitations of the processes followed

and the lack of an integrated approach.Moreover, there is a huge gap betweenthe conceptual definitions of standards,principals and criteria and actual testingand verification on the ground. Clearly thevoluntary private-led certification schemesare not sufficient instruments to ensurea balanced and an integrated coverageof the essential elements of sustainabilitybe it economic, environmental or social.Strong public complementary public

policies including incentives, disincentivesand regulations are needed to ensure amore balanced treatment of sustainabilitychallenge, safeguard the mobilisedresources, and enable smallholder inclusivevalue chain development processes.

What is needed is rethinking a newapproach that integrate sustainabilitywith the pursuit of renewable energy

strategies and food security that is inclusiveof marginal and small scale stakeholders.What is required as a more coherent andintegrated framework for sustainability

that traditionally rely on unsustainableexploitation of biomass which aggravatesdeforestation. An example of such a modelis the integrated food-energy system (IFES)widely practiced in some South East Asiancountries such as China and Vietnam withlong tradition of closely linked livestock-fishery-crop intensive systems . Suchbiofuel development model could boostagricultural and land productivity, raise landproductivity, secure more rural employmentopportunities, and offer greater positiveeconomic impacts on local communities,compared to large-scale biofuel productionsystems that rely imported capital and

skilled labour and export the producedgoods with fewer multiplier effects onthe local economy. However, an IFES likesystem would require an active policysupport in line with national strategiesthat integrate energy needs with foodsecurity and long term sustainable ruraldevelopment. For poor countries, suchstrategy could also be supported by ODI,international development agencies and

through bilateral aid funding includingfunds for climate change mitigation andadaptation.

Large scale biofuel production (ethanol,biodiesel) could also be included as partof national energy strategy, depending onthe countrys industrial capacity, energyneeds, and comparative advantage (landabundance, established feedstock valuechains (ex: palm oil-biodiesel in Malaysia;

Cassava-ethanol in Thailand..etc). Thekey criteria however is that the strategymust be dictated by domestic food andenergy security needs, with trade playinga complementary role in case of excesssupply.

Final conclusions and ways forward

This report presented a broad-based global

assessment of the biofuel sustainabilitychallenge, yet it is by no means exhaustive,and other related questions remain to betackled.


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integrate inclusive-development withfood security. Also required are policies,regulations and incentives that broadenthe biofuel development options to includesmall-scale locally harnessed renewableenergy technologies and systems. Finally,biofuel sustainability will need to bemainstreamed into larger trends towardssustainable and climate-smart agriculture inline with the triple objectives of enhancedproductivity, strengthened food security andclimate change adaptation and mitigation.

that combine both private schemes andpublic regulations in such a way as toassure inclusive processes, between largeenterprises and small scale producers, aswell as between northern and southerncountries goals and interests.

Rethinking sustainability also requireincorporating full environmental costs ineconomic cost-benefit assessments andfostering business models that can reconcilesustainability with economic growth and


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Executive summary

General introduction

Biofuels date back to the late 19thcentury, when ethanol was derivedfrom corn and Rudolf Diesels first engineran on peanut oil. Until the 1940s, biofuelswere seen as viable transport fuels, butfalling fossil fuel prices stopped theirfurther development. Interest in commercialproduction of biofuels for transport roseagain in the mid-1970s, when ethanol

began to be produced from sugar canein Brazil and since 1980s from corn inthe United States. During the 1990s, theindustrialized economies of North Americaand Europe actively pursued policies insupport of domestic biofuel industries toachieve energy security, develop a substitutefor fossil fuels and support rural economies.More countries have since launched biofuelprograms, and over 50 countries have

adopted blending targets or mandatesand several more have announced biofuelquotas for future years.

Reducing the use of fossil fuels andgreenhouse gas emissions rank amongthe key objectives in support of bioenergydevelopments. Yet, expanding biofuelproduction comes at a cost, mainlyconcerning food security and land useconflicts. Large-scale cultivation of feedstock

crops may be at the expense of foodcrops, thereby inflating the prices of foodproducts, endangering food security andfomenting social strife. Furthermore, thedrive toward greater efficiency throughhigher yields and hence intensificationof production, places greater stress onresources and generates unintendedconsequences by way of pollution and landdegradation.

The need to address the growingchallenge of climate change has led tocloser scrutiny of biofuels to assess whether

they can be produced, traded and usedsustainably. While some biofuels mighthelp reduce greenhouse gas emissions andimprove the air quality in cities, the overallimpact of biofuels on GHG reductions is notstraightforward and depends very muchon the type of feedstock used, productionsystem adopted, direct and indirect landuse changes, and potential effects on

biodiversity and deforestation. Moreover,the food crisis of 2007-08 and the ensuingsurge of commodity prices heightenedthe debate over food versus fuel and thepossible consequences of biofuel productionon food security. The potential of biofuels tocontribute to a shift into more sustainableenergy systems was contested, and scientistsstarted to question the environmentalsuperiority of biofuels.

As a result of these concerns,sustainability became an essential conditionfor biofuels long-term viability and forcontinued public support of biofuels aspart of the solution to renewable energyconversion and climate change mitigation. Inpractice, this has been approached througha range of biofuel certification schemes,all purporting to ensure sustainability. Yetthese schemes also seem to be driven by the

need to regulate the current and potentiallyhuge future trade in feedstocks and biofuelsbetween industrialized economies (whichhave high potential excess demand forenergy) and developing countries (whichhave recognized comparative advantagesin biomass production and huge potentialexcess supply).

This report addresses the central

issue of biofuel sustainability using aglobal assessment of major commoditiesand feedstocks currently employed forbioethanol and biodiesel production. The


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approach for this report was guided by twooverriding considerations. First, sustainabilityof biofuels hinges on understanding thefull economic, environmental and socialimpacts of biofuels and feedstocks takentogether and in relation to direct andindirect implications for land-use change,food security and climate change. Second,the recent trends in certification schemesfor biofuel sustainability are influenced byconsiderations of trade and market accessand the need to regulate the potentiallyhuge flows of feedstocks (e.g. palm oil,sugar cane, corn, soybeans) and biofuelsbetween consuming (i.e. industrial) and

producing (i.e. developing) countries.

This study examines in detail theimplications for the three core dimensions ofsustainability (i.e. economic, environmentaland social) and offers a critical evaluationof the biofuel certification schemes inrelation to sustainability. The report isglobal in scope and surveys a large numberof representative case studies aimed

at shedding light on the sustainabilityissues examined. It focuses on currentbiofuel production systems as well as themajor biofuel sustainability initiatives andcertification schemes.

The report is divided into three chapters.The first chapter provides a broad economicoverview of the major feedstocks usedto produce liquid, solid and gaseousbiofuels. An analysis of each feedstock ispresented, including a general overviewof its production, energy and other inputrequirements, productivity and efficiency ofbiofuel generation. Chapter 1 also includes areview of country case studies focusing on akey biomass-biofuel pair. These case studiesoffer an in-depth analysis of the specificcontext for the various sustainability aspectsof the feedstock under review. Chapter2 addresses sustainability, presenting

a detailed discussion of its three coredimensions: economic, environmental andsocial. Chapter 2 also review country andinter-government sustainability initiativesrelative to biofuels and bioenergy. Chapter3 provides a broad overview of the biofuelcertification schemes and critically evaluatesthe degree to which these schemes canachieve sustainability, ensure developmentobjectives and food security and contribute

to inclusive growth and climate-changemitigation. The report is based on anextensive review of literature augmentedwith direct communication with selectedexperts on related topics.


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Crops for biofuels: Economic and technicalassessment for sustainable production andutilization

The objective of this chapter is to providean overview of the main biomassfeedstocks: their production characteristics,resource needs, management requirementsand relative efficiency in generating

bioenergy. This information constitutes thetechno-economic background needed for amore in-depth sustainability assessment ofthe feedstock-bioenergy combination in aparticular locality.

The main feedstocks will be discussedunder three broad headings: solid, liquidand gaseous biofuels (see Table 1.1).Discussion of each category will begin witha general review of the key feedstocks in

terms of cultivation and technology, globalproduction and trade potential, followed byillustration with in-depth case studies, takingnote of feedstock input characteristics andutilization as a first step in assessing theirpotential for meeting sustainability criteria.

In the medium to long term, utilizationof biomass is expected to rise considerably,provided sustainability challenges,

competition for food and feed use andproductivity of food and biomass feedstockare addressed (Bauen et al., 2009). Inthe long run, the trend toward clean,

renewable energy will increasingly hinge oncommercialization of dedicated energy cropssuch as switchgrass, miscanthus and short-rotation tree crops, currently the subjectof substantial research and development

(R&D). A section of this chapter discussescharacteristics of second generationfeedstocks and assess their implications forsustainable bioenergy.

1.1 Sugar crops

Among the sugar crops, sugar cane, aperennial grass, is the most widespreadethanol feedstock. It is grown in tropicalclimates in latitudes of 30 degrees south to

30 degrees north (Clay, 2004, s. 159). Thestem, from which the sugar is retrieved,can reach up to 4 metres in length (Griffee,2000).

1.1.1 SUGARCANE

Among the sugar crops, sugar cane, aperennial grass, is the most widespreadethanol feedstock. It is grown in tropical

climates in latitudes of 30 degrees south to 30degrees north (Clay, 2004, s. 159). The stem,from which the sugar is retrieved, can reachup to 4 metres in length (Griffee, 2000).


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TABLE 1.1 - SUMMARY OF BIOENERGY PROCESSES, BIOFUEL TYPES AND FEEDSTOCK SOURCES

Liquid biofuels Solid biofuels Gaseous

biofuels

Principalfeedstocks

Starch cropsMaizeWheatCassava...

Sugar cropsSugar caneSugar beetMolassesSweetsorghum...

Oil cropsSoybeanSunflowerRape seedJatrophaOil palmAnimal fatsWaste oils...

Lignocellu-losicbiomassBagasseWood,StrawAgriculturalwastesAlgae...

Forest andagriculturalresidues,wastes

Solid and liquidbio-fuels, forestand agriculturalresidues, wastes

Refiningprocess

Glucosehydrolysisyeastfermentation

Yeastfermentation

Trans-esterification

CellulosehydrolysisBiomass-ToLiquids (BTL)

Pyrolysis,compression

Anaerobicdigestion,gasification

Bioenergy Bioalcohols (ethanol, butanol,propanol) (ETBE), Bio-oil Biodiesel Secondand thirdgenerationbiofuels (e.gbiohydrogen,biobutanol,bio-methanolFischer-Tropschdiesel)

Pellets,charcoal,biochar

Biogas, syngas

Principalend uses

Transport sector Heat andpower

Heat andpower,transportation

Sugarcane field in Brazil (Source: FAO/Giuseppe Bizzari) Sugarcane ethanol plant in Brazil (Source: FAO/Giuseppe Bizzari)


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Brazils favourable growing conditions and its tradition for culturing sugar cane one of the most

efficient raw materials for the production of ethanol were essential for developing ethanol asa biofuel. The Brazilian governments massive investment in infrastructure and research between1975 and 1989 allowed the country to become a leader in the ethanol market.

After the 1973 oil crisis and following the rising import oil bills, Brazil turned into alternativefuels and started investing in ethanol through the National Alcohol Programme (Pro-lcool) toincrease ethanol production as a substitute for gasoline.

The tropical climate with abundant rainfall in the summer and dry and cool winters makes thecultivation conditions ideal for the state of So Paolo where most of sugar cane is produced.

The feedstock is typically grown in large monocultures with two harvests a year. As of 2009,there are 421 plants in operation crushing (MAPA, 2009) 494 million tons of sugar cane per year(UNICA, 2009b), approximately one half being used for sugar and the other half for ethanolproduction. There is no significant small-scale production of sugar cane ethanol in Brazil (Walterand Segerstedt, 2008).

Brazilian sugar cane yields amount to about 84.7 tonnes per hectare (So Paolo) (Orplana, 2007).On average, about 122 kg/ha/yr of fertilizers, 1.9 tonnes/ha of lime (mainly for planting), 2.2. kg/ha of herbicides and 0.16 kg/ha of insecticides are applied. Harvesting is 50 percent mechanized(Macedo and Seabra, 2008) and hardly any irrigation is used.

The heavy reliance on nitrogen fertilizers adds to sugar canes impact on climate and results inwater pollution, leading to eutrophication of coastal waters and estuaries. Pesticides add to thepollution build-up in rivers and streams. Furthermore, for every litre of ethanol, 10-13 litres of aresidue called vinhoto/vinasse or stillage are produced, which has the potential of contaminatingrivers and groundwater if not properly managed.

The burning of sugar cane fields is still widespread, causing damage to the soil and high lossof nutrients due to escape of carbon and nitrogen compound gases. This practice adds togreenhouse gas emissions as well as causing serious problems for the local population includingrespiratory diseases related to smoke and ash.

Brazil has established several legal framework to factor in environmental protection regulatingethanol production. An example of such regulation is the Environmental Impact Assessmentand Environmental Licensing, especially for the implementation of new project. Example, newgreen field projects in Brazil are being stringently assessed using these frameworks. Volunteeradherence to Environmental Protocols plays a role for the sugar business. For example theAgriculture and Environmental Protocol for the ethanol/sugar industry signed by UNICA and theGovernment of the State of So Paulo in June 2007 deals with issues such as: conservation ofsoil and water resources, protection of forests, recovery of riparian corridors and watersheds,reduction of greenhouse emissions and improve the use of agrochemicals and fertilizers. But

its main focus is anticipating the legal deadlines for ending sugar cane burning by 2014 fromprevious deadline of 2021.

Box 1.1: Country case: Sugarcane ethanol - Brazil


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Chapter 1: Crops for biofuels: Economic and technical assessment for sustainableproduction and utilization

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can be significant. Also displayed is theconsiderable variation in yields for grainsorghum, for instance from 3,440 Hg/ha inNiger to 54 100 Hg/ha in Argentina.

Sweet sorghum (Sorghum bicolor(L.)Moench) is an annual grass crop with stalksthat can reach a height of 1 to 5 metres. Itis grown in a similar way to conventionalgrain sorghum. Unlike sugar cane, withits requirement for fertile and deep soils,sweet sorghum is a highly versatile crop,adaptable to limited water and poor,shallow soils; it can be cultivated in tropical,sub-tropical, and temperate regions.

Compared to sugar cane and sugar beet,sweet sorghum is drought-resistant, andthe growing cycle is shorter: four monthscompared to 10-12 months for sugar cane(Reddy et al., 2007b). Production can belabour-intensive or completely mechanized.It generates almost equal yields of grain asgrain sorghum, and similarly there is muchvariation in potential yields: for example,experiments in Iran show that biomass

yields can range between 24 to 140tonnes/ha and the sucrose content variesbetween 7.2 and 15.5 percent (Reddy etal., 2007b). Achieving good yields mayrequire higher inputs of pesticides andfertilizers as well as tillage and irrigation(IFAD, 2007).

Although it has been traditionally used asan animal feed, sweet sorghum is a multi-purpose crop and its cultivation still at an

initial stage. It is known for its significantlyhigher sugar content in the stalk and it isnow bred for its high yield of sugar per unitof land and not for its grain.

On the negative side, it needs to beprocessed rapidly after the harvest andthe biomass is rather bulky (with over 70percent water content). Consequently,transportation and storage may pose a

challenge. Moreover, as Brittaine (2008)observed, the processing plants are typicallylarge, requiring high initial investments,so good infrastructure and efficient

organization between the producers in thevalue chain are required.

New sweet sorghum varieties are beingdeveloped for bioenergy, the ethanol beingattained from the lignocellulose-rich stalksafter fermentation of the sweet sorghum

juice. Ethanol yields have been estimated at760 litres /ha from the grain, 1,400 litres/hafrom the stalk juice and 1000 litres/ha fromthe residues (Reddy et al., 2007). Costs areabout 50 percent lower for large biofuelplants, but pilot studies show that small-scale production could be viable as well. Aswith all sugar crops, one drawback is that

the feedstock needs to be processed almostimmediately after harvest: it tends to loseits sugar content if not processed withinthree weeks, thus constraining storageand transport. As with sugar cane, sweetsorghum juice can also be used for sugarproduction. The remaining bagasse can beused as feed, pulp or as fertilizer, but itsmost common function will probably befor co-generation of heat and power (Sipos

et al., 2009). There is also the possibility oftransformation into pellets (pelletization) foruse as fuel. (Grassi et al., 2004).

China, India and the United States havealready begun to produce sweet sorghumethanol on a trial basis, and have investedsignificantly in continued research. Sweetsorghum hybrids under development areespecially suited for production in tropicalregions where drought or crop rotation

restrictions limit sugar cane production;research in India has resulted in the releaseand distribution of germplasm of thesehybrids. These sorghums have been testedand are now being used at ethanol productionplants in India. They are being evaluatedin other regions as well. In the southernAfrican region, Zambia, Mozambique andMalawi could have a high potential for sweetsorghum-based ethanol production. (Watson

et al., 2008 and Zhao et al., 2009).

Little research has been done on thesustainability of sweet sorghum as a


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bioenergy feedstock, but the grass has manysustainability characteristics, not least itshigh adaptability to tropical and sub-tropicalas well as temperate areas. It requires littlenitrogen fertilizer (about 100-200 kg/haper year), and it is also possible to intercropwith legumes, which would further reducethe fertilizer requirement and add to thefood supply. Additional advantages of thefeedstock are the low water requirement andthe high tolerance for flooding and for acidand saline soils (Grassi et al., 2004). Sweetsorghum has a shorter growing season thansugar cane and requires less labour (0.2 jobsper ha per year, compared with 1.0 for sugar

cane). From an economic point of view,production costs could be lower than for anyother biomass (IICA, 2007). Sweet sorghumprovides both a cane yield (40 and 25 tonnesper ha per harvest) and a reasonable amountof grain1; hence bioenergy production canbe combined with food and feed production(ICRISAT, 2007) and the wastewater from theethanol production process has been shownto be less hazardous than molasses (ICRISAT,

2007). In India, where grain sorghumproduction has declined due to the loweconomic returns and the general preferencefor other food crops, the adoption of sweetsorghum for energy purposes could be awelcome alternative (IFAD, 2007).

ICRISAT (2007) referred to an energybalance of 8.0 (which is close to theenergy balance of sugar cane, 8.3),while dos Santos (1998) had far more

conservative results: between 0.93 and1.09. An estimation of the potential ofsweet sorghum biofuels to reduce GHG inMozambique showed a saving potential of1 515.99-1 203.58 t CO2eq per year whenit is used for electricity

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