Biofuels and Sustainability in Asia in Asia Asia Regional Seminar - - PDF document

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Biofuels and Sustainability in Asia in Asia

Asia Regional Seminar for Sustainable g Resource Management: Session 3 Biomass Use and Biofuels

Mark Elder Principal Researcher p Manager, PMO-Policy & Governance and Biofuel Project, IGES

Mita Conference Hall, Tokyo, Japan, 10 March 2009

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Introduction to the IGES Biofuel Project

Objectives: Assess the benefits and costs of biofuel use in Asia in order to formulate policy options that optimise its application in an formulate policy options that optimise its application in an environmentally sustainable manner. Special focus will be given to the transport sector. The research aims at formulating policy options at the national The research aims at formulating policy options at the national level with regional perspectives taken into consideration. Funding: Funding: This research is being conducted in collaboration with other universities and research institutes and is funded by two research grants. g

– The (BforSD) project (‘Biofuel utilization Strategies for Sustainable Development) is funded by the Ministry of Environment of Japan until FY2010. It is led by the University of Tokyo and focuses on case studies of Indonesia India China and Japan

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case studies of Indonesia, India, China, and Japan. – One is led by Keio University and funded by the Japan Science and Technology Agency (JST). It focuses on economic modelling.

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Research Partners and Funding

• This research will be conducted in collaboration with other

universities and research institutes and is funded by two research grants. g

– The ‘Biofuel utilization Strategies for Sustainable Development’ (BforSD) project is funded by the Ministry of Environment of Japan until FY2010 and led by the University of Tokyo. Th l d b K i U i it d f d d b J S i d – The one led by Keio University and funded by Japan Science and Technology Agency (JST) is implemented by the IGES Economic Analysis Team

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Focus of this Presentation: Biofuels and Sustainability in Asia y

This presentation will present material from our chapter in the IGES White Paper, “Prospects and Challenges of Biofuels in Asia: Policy Implications ” Challenges of Biofuels in Asia: Policy Implications, as well as some of our recent research results.

http://enviroscope.iges.or.jp/modules/envirolib/upload/1565/ attach/07 chapter5 pdf attach/07_chapter5.pdf

Dimensions of sustainability: y

– GHG emissions – Food fuel conflict – Economic – Poverty reduction Rural development

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– Rural development

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Biofuels and Greenhouse Gas Emissions

• Life cycle analysis studies show that biofuels have some theoretical

potential to reduce GHG emissions.

• In practice, it is difficult to be sure due to several potentially offsetting

factors

– Variation in production methods Variation in production methods – Land use change (direct and indirect) – Especially deforestation

• Not much LCA analysis has been conducted in Asian contexts

– May be variation in feedstock production methods and agro climactic conditions – So GHG reduction potential could be more or less

• More research is needed

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Food-fuel Conflict

• Global trends

– Worries about the food-fuel conflict peaked during the recent period of high

• il prices and corresponding rush to biofuels.

– Now, worries are reduced due to the recent economic crisis and sharp fall in

• il prices. Pressure on food prices at least has lessened.

– However, the situation could reverse itself in the future.

• In Asia, one major response to this potential problem was a search for

non-edible agricultural feedstocks or crops that can grow on non-edible agricultural feedstocks, or crops that can grow on wastelands.

• There are some difficulties with this logic

– Non-edible crops will stlll require land, so food crops could still be displaced. – Farmers may prefer to grow crops with dual uses, because market is better. – Crops that could grow on wastelands sound good in principle, but if a large

IGES | http://www.iges.or.jp Biofuels and Sustainability in Asia, 10 March 2009

Crops that could grow on wastelands sound good in principle, but if a large market is developed, it may be difficult to limit to wastelands due to high pressure to reduce costs and increase profits..

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Economic Sustainability & Resource Availability

• No evidence yet that biofuels are price competitive

with fossil fuels, especially with recent drastic decline , p y in oil prices.

– India and Indonesia are still considering price support measures.

• Water availability concerns: this has not been well-

researched as far as we are aware researched, as far as we are aware.

• Potential need for increased fertilizer.

– This could reduce any GHG emissions benefits and increase – This could reduce any GHG emissions benefits and increase costs.

• Land availability (next page)

IGES | http://www.iges.or.jp Biofuels and Sustainability in Asia, 10 March 2009

y ( g )

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Land Availability

Biofuel production (1st generation) requires

New land or Land converted from other uses, or “wastelands”

Key concerns

– Potential deforestation, a major source of “new” land. In some cases, forests are reclassified as “unproductive.”

• Biofuels are not the only source of pressure for deforestation
• Biofuels are not the only source of pressure for deforestation

– Ownership issues. Sometimes “unused” or “wastelands” are actually common lands used by low income people. – Potential displacement of indigenous peoples

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Poverty Reduction Potential

• Biofuels could increase employment under the following conditions

– Use of more labor intensive production methods – Biofuel refining structure is local – Local production and consumption – If previously unused land is used If previously unused land is used

• Limiting factors

– Production may be capital intensive – Potential displacement of poor farmers – Potential poor labor market conditions

• Need to consider potential displacement effects (for example reduced

Need to consider potential displacement effects (for example, reduced employment relating to fossil fuels)

• Could be a tradeoff between employment and cost

M l b i i d i h d ld b ll l d hi h

IGES | http://www.iges.or.jp Biofuels and Sustainability in Asia, 10 March 2009

– More labor intensive production methods could be smaller scale and higher cost

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Jatropha -- Hope or Hype?

• Jatropha was believed by many to be a miracle plant

– Oil has high GHG reduction potential according to LCA It g p g needs little water so could grow on wastelands. – No food fuel conflict because

it t l d

• it grows on wastelands
• It is inedible (actually poisonous – traditionally used as fences)

– Oil has high GHG reduction potential according to LCA g p g

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Jatropha – Problems Key issue: jatropha yield is low, so it is high cost.

• It will grow on wastelands, but its yield is meager

g , y g

• Improved yield requires better land, fertilizer, and water
• This offsets GHG reduction benefits.

Results from IGES field research in India

• Farmers are not interested because profit is too low

Hi h t t t t fi ld ( t l d ) diffi lt f

• High transport costs – remote fields (wastelands) difficult for

villagers to access, difficult to transport to market.

• Inputs are needed to increase yield

p y

• Overall, productivity is too low.

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Second Generation Biofuels

• Generally considered more promising than 1st

generation ones (better theoretical GHG reduction). g ( )

• Waiting for technological breakthroughs to increase

productivity and reduce costs.

• But 2nd generation ones still face potential difficulties.

– Use of agricultural feedstocks will still raise issues of food fuel conflict and land use change. – Use of agriculture waste & crop residues– in many cases this is typically returned to the soil. Their use for biofuels this is typically returned to the soil. Their use for biofuels could lead to soil degradation and erosion. Increased fertilizer use could become necessary. Forest litter collection could expose forests to soil

IGES | http://www.iges.or.jp Biofuels and Sustainability in Asia, 10 March 2009

– Forest litter collection could expose forests to soil degradation & erosion.

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IGES Case Study Field Research

• Three cases: Indonesia, India, China
• Interviews with stakeholders, including government, business, NGOs.

Visited feedstock plantations especially Jatropha

• Visited feedstock plantations, especially Jatropha
• Workshop in Indonesia as a means of data collection and stakeholder dialogue

(Jakarta, February 2009).

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Jatropha, 1 year growth Yunnan, China, December 2008

Jatropha replantation (1 yr), in Uttaranchal, India, Dec. 2008

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Overview of Biofuel Policies in Case Study Countries

Country Blend Overall Targets & policies Indonesia E5

• Gov’t views current ambitious strategy as
• National Energy Program,

unrealistic; now considering revisions target B20 and E15 in 2025

• Diesel: subsidies (at same

level as fossil fuel)

India E5

• Gov abandoned recent ambitious but unrealistic
• Biofuel National Strategy, 2008

India E5

Gov abandoned recent ambitious but unrealistic new strategy; now revising

• Several states actively promote biofuels,

including pilot projects

• Focus on use of wastelands, rural development

Biofuel National Strategy, 2008 / target 20% biodiesel and bioethanol by 2017 (abandoned)

• Subsidies, tax & price

incentives Focus on use of wastelands, rural development incentives

China E10

• Initial rapid promotion slowed to minimize food-

fuel conflict

• Still world’s 3th largest bioethanol producer

F lt ti f d t k 2nd ti

• Biofuel 15% of transport

energy by 2020

• Subsidies, tax & price

i ti

• Focus on alternative feedstocks, 2nd generation

incentives

Japan E3 Upper limit

• Strategy is modest compared to other countries,

but still difficult to achieve

• Emphasis on 2nd generation, R&D
• Plan to replace 500 ML/year of

transport petrol with liquid biofuels by 2010

IGES | http://www.iges.or.jp Biofuels and Sustainability in Asia, 10 March 2009

limit

p g ,

• Desire for domestic production but heavy

reliance on imports (from Europe & Brazil) y

• Subsidies, pilot projects, tax

incentives

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“Research Workshop on Sustainable Biofuel Development in Indonesia”

• Jakarta, February 2009
• Sponsored by IGES Biofuel Project

p

p y j

• Co-organized by Cooperation for Development (Europe) and the Indonesian Renewable

Energy Society

• A kind of multistakeholder dialogue
• Presentations and discussion by

t ffi i l NGO government officials, NGOs, researchers, businesses

• Common themes and importance

p

• f sustainability were shared
• Identified overall future direction

W k h di f th i

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Workshop proceedings forthcoming Institute for Global Environmental Strategies

Key Points of “Research Workshop on Sustainable Biofuel Development in Indonesia” p

• Indonesia faces a strategic policy choice: export vs. local use

– “Middle East of Biofuels” implies exports, large scale, and/or – Focus on locally produced locally consumed small scale; to – Focus on locally produced, locally consumed small scale; to promote rural development, poverty reduction, & energy security

• Indonesia has many available crops but

– Land availability is a big challenge (wastelands? savannas?) a d a a ab y s a b g c a e ge ( as e a ds sa a as ) – Food vs fuel problem, land tenure, transport costs, deforestation, displacement of indigenous people

• Difficulties with palm oil

– Deforestation, unstable supply, food-fuel conflict

• Big players like the state oil and power companies are hesitant,

concerned about costs & stability of supply.

• Current policy debate focuses on pricing mechanism, subsidies
• Difficulties of political leadership, coordination between

ministries

IGES | http://www.iges.or.jp Biofuels and Sustainability in Asia, 10 March 2009

• Potential for rural electrification (non-grid connected)

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Observations on Policy Trends in Case Study Countries (China, India, Indonesia)

• Oil price crash & economic crisis severely harmed economic

viability of biofuels (also reduced environmental impacts) ld id

(China, India, Indonesia)

worldwide

Governments (especially India and Indonesia) are scaling back

• verambitious plans (targets were overambitious even in the peak

period)

• Governments now recognize that overdependence on one

feedstock is undesirable feedstock is undesirable

• Governments are more sensitive to the food-fuel conflict
• Governments & businesses are increasing research & testing of

d

alternative feedstocks including 2nd generation

• More recognition about limitations of biofuels for energy

security, more emphasis on rural development.

IGES | http://www.iges.or.jp Biofuels and Sustainability in Asia, 10 March 2009

secu ty,

• e e

p as s o u a de e op e t

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Sustainability Criteria: Regional and International Initiatives

• International Initiative: Roundtable on Sustainable Biofuels (RSB)

– Is an international multi-stakeholder initiative led by EPFL concerned to ensure the sustainability of biofuels. – IGES participated in two of RSB’s regional outreach consultation meetings aimed at understanding the Asian perspective on biofuels:

• Southeast Asia consultation in Shanghai, China on November 2007
• South Asia consultation in Delhi, India on June 2008

– Version Zero of the globally-applicable principles and criteria for sustainable biofuels production was released in August 2008.

• These principles aim to be simple, generic (i.e., applicable to any crop in any country), adaptable (i.e., easy to

incorporate new technologies), and efficient. p g ),

– Incorporates other initiatives such as Roundtable on Sustainable Palm Oil (RSPO) – Sustainability indicators are still being developed

• Regional Initiatives: (IGES is cooperating)

– APEC Energy Working Group (EWG) – ADB project on Rural Renewable Energy Initiative in Greater Mekong Subregion (GMS) – Economic Research Institute for ASEAN and East Asia (ERIA) WG on Biomass Energy

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Sustainability Criteria: Some Implications

• Implications for different strategic directions:

– Large or small scale O i t d t d t d ti – Oriented towards exports or domestic use

• Key issues

– International vs. domestic standards (harmonization?) – Simpler (perhaps domestic) or more complex (perhaps internationally harmonized)

• Implications

– Simpler domestic standards

• Less costly, easier for domestic small producers
• But will hinder export potential; must meet international standards

S t i bilit i t b l t i

• Sustainability impacts may be less certain

– More complicated International standards

• More costly, easier for larger producers to meet, difficult for small producers
• But will be necessary for exports

IGES | http://www.iges.or.jp Biofuels and Sustainability in Asia, 10 March 2009

• But will be necessary for exports
• Sustainability impacts may be more certain

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Conclusions – Biofuels and Sustainability

• Overall, biofuels have some potential to contribute to GHG emissions

reduction, energy security, and rural development

P t ti l d d l d h ff t h th t i bl Potential depends on land use change effects, whether sustainable production methods are used, etc. Therefore, policy should focus on encouraging sustainability in production methods and careful consideration of land use change methods and careful consideration of land use change. This leads to a focus on sustainability standards

• But biofuels’ potential contributions have physical limitations
• Need to emphasize energy conservation and other renewable energy sources in the
• Need to emphasize energy conservation and other renewable energy sources, in the

context of broader energy and transport policies.

• Why not focus on waste-to-biofuels?
• Governments should reemphasize resource efficiency in agriculture
• Governments should reemphasize resource efficiency in agriculture,

which will be beneficial regardless of whether crops are produced for food or energy.

• Continue development of 2nd generation biofuels though be aware of

IGES | http://www.iges.or.jp Biofuels and Sustainability in Asia, 10 March 2009

• Continue development of 2nd generation biofuels, though be aware of

limitations.

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IGES Biofuel Project Publications

Chapter in IGES White Paper

• Elder, Mark, Prabhakar SVRK, Jane Romero, and Naoko Matsumoto. 2008.

Prospects and Challenges of Biofuels in Asia: Policy Implications In Climate Prospects and Challenges of Biofuels in Asia: Policy Implications. In Climate Change Policies in the Asia-Pacific: Re-uniting Climate Change and Sustainable Development, edited by H. Hamanaka, A. Morishima, H. Mori and P. King. Hayama, Japan: Institute for Global Environmental Strategies. Pp. 105-126. June.

Articles in journals

• Sano, Daisuke, and Naoko Matsumoto. 2008. “Discussion about biofuel topics and

policies,” (Journal of Resources and Environment, December 2008) (In Japanese).

• Romero, Jane, and Mark Elder. 2009. “Biofuel ambitions could easily be pipe

dreams.” Bioenergy Business. January 22.

• SVRK, Prabhakar, and Mark Elder. 2008. Biofuels and Rural Development in India:

P bli P i t P t hi i A dh P d h Wh t' N f IGES N b Public-Private Partnerships in Andhra Pradesh. What's New from IGES, November, 3.

• Kojima, Satoshi, Daisuke Sano, and Naoko Matsumoto. 2008.

“Ajia ni okeru jizokukanou na baio nenryo katsuyo no tameno seisaku kenkyu (Policy

IGES | http://www.iges.or.jp Biofuels and Sustainability in Asia, 10 March 2009 21

Ajia ni okeru jizokukanou na baio nenryo katsuyo no tameno seisaku kenkyu (Policy research on sustainable biofuel utilisation in Asia).” Sangyo to Kankyo. No.1 (January), pp. 29-32. (in Japanese)

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IGES Biofuel Project Conference and Outreach Papers and Presentations

Conference Presentations

• SVRK, Prabhakar, and Mark Elder. 2008. CO2 Reduction Potential of Biofuels in

Asia: Issues and Policy Implications. In Energy Security and Climate Change:

p

Asia: Issues and Policy Implications. In Energy Security and Climate Change: Issues, Strategies and Options (ESCC). Bangkok, Thailand, August.

• Romero, Jane. 2008. Biofuels in Asia: What's Next After the Kyoto Protocol. In

Better Air Quality (BAQ) 2008. Bangkok, Thailand, November.

• Romero, Jane. 2009. Biofuels and CDM: An Assessment. Presented at the 6th

International Biofuels Conference, 4th & 5th March 2009, New Delhi.

Outreach presentations

• Several, including “Biofuels” at the IGES 10th Anniversary Forum on Strategy to

Combat Climate Change in Asia and the Pacific (Yokohama, June 2008), “Biofuels: Opportunities and Challenges” (in Japanese), “Biofuels, current developments and challenges” (in Japanese), and “Biofuel development in Asia” (in Japanese) at various events.

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