How much pollute biofuels

Biofuels in the Transport Sector Prospects, Risks and Opportunities

context - There are serious concerns about the environmental pollution of the production of liquid biofuels for transportation, the cost of producing them and possible unintended consequences.

Although the production of biofuels such as ethanol and biodiesel is growing rapidly, their contribution to total fuel consumption in the transport sector will remain limited in the coming decades. The demand for biofuels, on the other hand, is already having a significant impact on global agricultural markets, the environment and food security, which is causing controversy.

What role could biofuels play in agriculture, food security and climate protection?

Latest update: September 30, 2009

1. What are biofuels?


Sugar cane is one of the feedstocks for making biofuels
Credit: Rufino Uribe

1.1 In the broadest sense, biofuels are fuels that are produced from biomass, i.e. from organic material that comes from plants or animals. Biomass has traditionally been used in the form of wood, charcoal or animal waste to generate energy. A fundamental distinction is made between unprocessed primary energy sources, such as firewood, and processed secondary energy sources. The latter include liquid biofuels such as ethanol and biodiesel and have been used increasingly in the transport sector in recent years. More...

1.2 Ethanol and biodiesel are the most widely used liquid biofuels. Ethanol can be obtained by fermentation and distillation from raw materials that contain a lot of sugar (e.g. sugar cane or sugar beet) or contain a lot of starch (e.g. corn, wheat or cassava).

To produce biodiesel, vegetable oils or animal fats are chemically combined with alcohol. Biodiesel can be made from rapeseed, soy, palm or coconut oil, for example. More...

1.3 Current liquid biofuels belong to the first generation and only use sugar, starch or oil and thus only part of the energy contained in vegetable matter. Most of the plant material, however, consists of lignin and cellulose. In order to improve the yield, second generation biofuel technologies are being developed to utilize these components.

There are still significant technical hurdles to overcome before the production of ethanol from lignocellulose can be competitive. However, once these technologies are economically viable, they could recycle agricultural, forestry, industrial and household waste, as well as new crops such as fast-growing trees and grasses. More...

1.4 Mass production of biofuels from agricultural products requires large areas of land, so biofuels can only replace fossil fuels to a very limited extent. Today's production equates to less than one percent of global fuel demand.

The proportion of fertile land that is used to grow crops for the production of liquid biofuels worldwide is expected to increase from 1% to around 4% between 2004 and 2030. Coupled with first generation biofuel technologies, this land area could cover 5% of total road fuel consumption. The contribution would be twice as high if second generation technologies were available on the market. More...

2. Which economic and political factors could influence the development of biofuels?

2.1 The prices of liquid biofuels and their raw materials are partly due to the prices of fossil fuels.

Agricultural and energy markets are closely linked as agriculture supplies and consumes energy. Agricultural products compete with one another for land and water, and farmers sell their products on the market regardless of what they are used for, be it for the production of biofuels or as food.

When an agricultural product that is used to produce biofuels has a high market value, the prices of other agricultural products that also require land and water also tend to rise. More...

2.2 The main impulses for state funding for biofuels are concerns about energy security and climate change, as well as a political will to support agriculture. More...

2.3 Common policy instruments include:

  • Obligation to mix a percentage of biofuels with normal diesel fuel or gasoline
  • Aid for the distribution and use of biofuels,
  • Tariffs on imported biofuels to protect domestic producers
  • Tax incentives for buying biofuels as well
  • increased support for research and development

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2.4 Many of these instruments have been introduced in OECD countries at a cost of up to one US dollar per liter. They tend to create new distortions in agricultural markets.

Policy measures in agriculture and forestry have a strong impact on the biofuel industry. Agricultural subsidies and price supports affect both production volumes and the prices of raw materials for first generation biofuels. Agricultural policy also requires global trade flows of agricultural products, including bioenergy raw materials. More...

2.5 Raw material costs represent the major part of the total costs of biofuels. During the last few years raw material prices have been highest when oil prices have been high. Biofuel policies in themselves have contributed to increased demand for agricultural products and thus to an increase in prices. However, high crude oil prices and state aid also enable biofuel producers to pay higher prices and continue to make profits. Measures to promote biofuels have themselves led to increased demand for agricultural products and thus to higher prices. More...

3. How are biofuel markets and production developing?

3.1 Food prices generally fell for 40 years, including inflation, up to 2002. Since then, they have risen sharply, especially for vegetable oils and grains.

The high prices are partly a result of the increasing demand from developing countries and for biofuel production. In addition, harvests in some countries have been poor and safety stocks have been relatively low. More...

3.2 It is expected that biofuel demand and supply will continue to grow rapidly. Although the contribution of liquid biofuels to total fuel consumption in the transport sector will remain very limited, the increasing cultivation of crops for biofuel production is expected to represent a significant proportion of the foreseen growth in total agricultural production.

The growth in biofuel production could be based on the cultivation of larger areas of land and improved crop yields. If meadows or forests are converted to grow plants for biofuel production, however, this would have environmental consequences.

For ethanol, Brazil and the USA are likely to remain the largest producers, but strong production growth is also expected in China, India, Thailand and several African countries. In the biodiesel sector, the EU dominates, but significant growth is also foreseen in Brazil, Indonesia and Malaysia. More...

3.3 The government measures that have been taken in the EU and the USA to support biofuels have distorted agricultural markets at the national and international levels. This leads to higher costs for the taxpayer in developed countries and to unequal treatment of producers in developing countries. As a result, biofuels are not necessarily produced where it makes the most sense from an economic and environmental point of view and not necessarily with the most powerful technologies.

Biofuel policy must be coordinated at the international level in order to counter the global failure of agricultural policy and to make better use of resources. More...

4. How environmentally friendly is the production of biofuels?

4.1 The extent to which different biofuels reduce the use of fossil fuels and the emission of greenhouse gases varies greatly when one takes the entire life cycle - including production, transport and application - into account. The impact balance depends on the raw material, the production process and the amount of fossil energy that is required. More...

4.2 An increase in the production of biofuels can be achieved through improved soil yields and an expansion of the cultivated areas. Existing arable land as well as marginal land or less productive areas can be used for this purpose. However, it is more likely that biofuels will exacerbate pressures on fertile soils, where yields are higher.

When forests or meadows are converted into agricultural land - be it to grow raw materials for the production of biofuels or other crops that have been displaced by such raw material cultivation - carbon that was stored in the soil is released into the atmosphere. The effect can be so strong that the benefits achieved by biofuels are canceled out and the replacement of fossil fuels with biofuels even leads to more greenhouse gas emissions. More...

4.3 If the cultivation of crops for the production of biofuels requires irrigation, this puts pressure on local water resources. In addition, water quality can be affected by soil erosion or by fertilizers and pesticides run off from fields. More...

4.4 Changes in land use and intensification of agriculture could damage soils. The effects depend on how the land is managed. Various methods and the use of certain plant species can reduce harmful effects or even improve the quality of the soil. More...

4.5 Biofuel production can damage biodiversity. For example, habitat is lost when natural landscapes are converted into energy crops or peat bogs are drained. In certain cases the cultivation of energy crops can have a positive effect, for example when it is used to replenish soil that has been used up. More...

4.6 In order to ensure that biofuels are produced in an environmentally friendly way, it is important to observe good cultivation methods and sustainability measures should be taken consistently for all crops. In addition, national policies will have to take into account the international consequences of biofuel development. More...

5. How will biofuel production affect food security and poverty?

5.1 Food prices have risen sharply in recent years, particularly for grain and vegetable oils, in part because they are used for both food and biofuel production. In addition, increased transportation costs increase the cost of imported food. While some countries will benefit from increased food prices, the food bills for least developed countries that are net importers of food will go up.

Increased food prices will hit all households, but will be the hardest hit on poor families, who sometimes spend half their salaries or more on food. This price hike would have a significant impact on an estimated 850 million people worldwide who are malnourished, urban and rural, most of whom are net food buyers. More...

5.2 In the longer term, biofuel production could revitalize agriculture and reduce poverty by increasing rural incomes. Nevertheless, government subsidies to improve infrastructures, institutions and services remain essential, for example to give farmers access to credit. Government funding is also necessary to protect the most vulnerable. More...

5.3 While growing crops for biofuel production could offer favorable prospects for farmers in developing countries, it could also lead to increased competition for land. Those who take the greatest risk are smallholders, and women in particular, who usually do not own the land they are farming. Strong government commitments are needed to improve crop yields and ensure equal opportunities as well as access to land and markets. More...

6. How could policies for biofuels be improved?

6.1 The positive contribution of biofuels to energy security and to reducing greenhouse gas emissions is increasingly being called into question. Unintended effects on market prices and food security have often not been considered in political disputes.There are still uncertainties about the economic viability of biofuels due to future oil and commodity price fluctuations as well as political and technical developments. Biofuels are influenced by a variety of policies and a coordinated approach is needed to assess the overall benefits and risks. More...

6.2 Biofuel policy should:

  • protect those who are poor and whose food supplies are insecure.
  • Create conditions so that poor countries and small farmers can take advantage of future market niches.
  • Ensure that biofuels truly reduce greenhouse gas emissions and protect soil and water resources.
  • Reduce or avoid distortions on biofuel and agricultural markets.
  • Developed in appropriate international cooperation.

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6.3 Aid and blending obligations have artificially caused rapid growth in biofuel production and exacerbated negative effects. Existing policies have so far made a limited contribution to energy security and climate protection and therefore need to be revised.

Government incentives and promotion of biofuels have been mainly driven by national and regional interests rather than a global perspective. An appropriate international forum is necessary to agree sustainability criteria and to achieve environmental goals without creating trade barriers. More...

7. Conclusions

7.1 The food security of urban and rural poor people is directly threatened by high food prices, some of which are due to increased biofuel production. Well-designed and targeted rescue nets are needed to make it easier for them to access food. More in English about food security. More...

7.2 In the long term, high food prices could stimulate agricultural development, but measures are needed to ensure that the benefits are for smallholders and socially excluded people, including women. More...

7.3 Replacing fossil fuels with certain biofuels could reduce greenhouse gas emissions, but the impact depends on where and from what raw material they are produced. Carbon emissions released by changes in land use when forests or pastures are converted to arable land largely risk offsetting the greenhouse gas emissions savings achieved through the use of biofuels. More...

7.4 An increase in biofuel production could threaten soil, water resources and biodiversity. Appropriate policy measures are needed to minimize possible negative impacts. More...

7.5 Certain countries with many natural resources and appropriate infrastructures and institutions may also be able to develop a biofuel sector that is economically viable.

So far, the growth of the biofuels sector has been driven primarily by political will rather than market forces. Policies need to be revised to avoid negative impacts and promote sustainable biofuel production. More...