Liquid Biofuels for Transport Prospects, risks and opportunities
6. How could biofuel policies be improved?
- 6.1 What are the challenges of biofuel policies?
- 6.2 What principles should guide biofuel policies?
- 6.3 How could policies ensure environmental and social sustainability?
6.1 What are the challenges of biofuel policies?
Government incentives and support for
biofuel production and use
have been largely guided by national or regional interests
rather than a more global perspective. The desire to support
farmers and rural communities has been one of the strongest
There is a need for a more consistent set of policies and
approaches, based on a clearer understanding of the economic,
environmental and social implications, in order to balance the
potential and risks.
These policies must be formulated in a situation of
- The exact role of
biofuels in future
global energy supplies is unknown. Yet even if the
contribution of biofuels to global energy supply remains
small, it may still imply a considerable impact on
agriculture and food security.
- The future economic viability of biofuels is
uncertain, because it depends on fluctuating fossil fuel
prices and on policy developments.
- Technological developments may also influence their
profitability on the medium and long term. For instance,
commercial competitiveness of second generation
may significantly improve the prospects for biofuel
fossil fuels by
biofuels is not guaranteed to lead to net
greenhouse gas emission
reductions. The impact depends on how biofuels are produced,
transported and used, and the global impact on
climate change is
likely to be negative if large tracts of additional land are
brought into cultivation.
Land requirements are too large to allow liquid
biofuels to displace
fossil fuels on a large
scale; however they may still have a considerable impact on
agriculture and food security. The unintended impacts of
biofuels, especially on market prices and food-security have
frequently been overlooked in policy discussions.
Increases in demand for farm output could boost rural incomes
and stimulate rural development, but many poorer people will be
disadvantaged by higher food prices and increased competition
for land and water.
Biofuels are influenced
by policies in agriculture, energy, transport, environment and
trade, and these individual policies are not always coordinated.
Biofuels can only contribute to policy objectives if their
impact in each of these areas is considered.
6.2 What principles should guide biofuel policies?
Five guiding principles are proposed.
- (i) Biofuel
policies must protect those who are poor and have insecure
access to sufficient food. Priority should be given to the
impact of higher food prices on vulnerable people in rural
and urban areas who have to buy food, particularly in the
- (ii) Policies should facilitate growth in developing
countries by improving economic and technical efficiency and
by creating conditions where poorer countries and small
farmers can take advantage of future market opportunities.
- (iii) Biofuel policies should be environmentally
should ensure that
biofuels are produced
in ways that are effective in reducing
emissions, while protecting land and water resources from
depletion, environmental damage and pollution.
- (iv) Biofuel policies should seek to reduce existing
distortions in biofuel and agricultural markets and avoid
introducing new ones. They should also take into
consideration unintended consequences that may go beyond
- (v) Policies should be developed with appropriate
international coordination to ensure that the global system
supports the goals of environmental
agricultural development and poverty and hunger
6.3 How could policies ensure environmental and social sustainability?
Higher agricultural and food prices driven, among other
things, by an increased demand for
biofuels, are having
negative impact on food security in food-importing developing
countries, and especially on the many of the poorest households.
A sustained effort is needed to
protect the poor and food-insecure.
In the immediate context, the most vulnerable people may
require direct food distribution, targeted food
subsidies, cash transfers,
and nutritional programmes such as school feeding. In the short
to medium term, social protection programmes must be developed.
In the medium to long term, higher food prices could be
mitigated by increasing food supply provided that policy
interventions do not disrupt trade flows and that investments
are made in infrastructure for storage and
Higher prices for agricultural products can present
opportunities for agricultural and rural development
in developing countries, but sustained improvements in research,
infrastructure, and access to credit and risk management
instruments are also needed to increase productivity.
Measures should specifically address the needs of poor smaller
farmers by securing their access to natural resources and by
ensuring that their land rights are respected.
Policies must ensure that further expansion of
biofuel production is
and will provide a positive contribution to climate-change
mitigation. Therefore, an improved understanding of how
biofuels affect land-use
change is urgently needed, since this can have a significant
negative effect on
Promotion of good agricultural practices could help to reduce
the negative effects of expanded
Sustainability criteria are
needed for biofuels that do
not create trade barriers, particularly for developing
countries. There is a need for an appropriate international
forum to debate and agree on sustainability criteria.
In OECD countries,
subsidies for the
production and consumption of liquid
biofuels and trade
protection measures such as tariffs have restricted market
access for biofuel
producers in developing countries. These incentives were added
to pre-existent high levels of subsidies to the agriculture
sector, further exacerbating market distortions.
Biofuel policies need to
be reviewed as they have had limited success in achieving energy
security and climate-change mitigation. Rapid expansion of
biofuel production may increase rather than reduce
greenhouse gas emissions.
Subsidies and mandates
have created an artificially rapid growth in
exacerbating some of its negative effects and promoting
biofuels compared to other
sources of renewable energy. Expenditures on biofuels would be
much better directed towards research and development to improve
sustainability. This would
allow a more gradual development of the sector, reducing the
stress on natural resources and the pressure on food
The current combination of
blending and trade barriers does not lead to efficient and
equitable international allocation of resources.
The international community must provide assistance to
developing countries to develop their agricultural capacity
while protecting the most vulnerable population groups from the
effects of higher food prices.