Highlights from the International Conference on Biofuels (Day 1)

The European Commisson's Directorate-General (DG) for External Relations organised its first high-level International Conference on Biofuels, taking place today and tomorrow in Brussels. The event comes at a time when most developed countries are implementing biofuel policies, whereas the potential from the Global South is gradually being recognized.

Biopact was amongst the non-governmental organisations invited to attend. Commissioner for External Relations, Benita Ferrero-Waldner, hosted the conference, which on its first day attracted some 200 experts from around the world and political leaders from African, Asian and Latin-American countries as well as civil society organisations from the South. This is part 1 in a series of exclusive articles with highlights from the event.

Opening the conference, Benita Ferrero-Waldner outlined the topics for debate: the fact that biofuels are becoming an internationally traded commodity with a large potential, which requires the creation of new trade rules and sustainability frameworks. Current global patterns of energy consumption are untenable in their current form, as they trigger climate change and threaten the security of energy supplies for most countries. Ferrero-Waldner stressed that the EU will be affected by climate change to a much lesser extent than the developing world. Therefor, a new generation of leaders must ensure that the tension between economic development in the South and climate change is overcome. Sustainable development through biofuels offers a key to such a strategy. (Ferrero-Waldner's full speech can be found here).

Security of energy supplies and climate change
Andris Piebalgs, European Commissioner for Energy, then introduced the first session on 'Biofuels policies in the EU and Other Countries', by sketching the main reasons behind the EU's ambitious biofuels targets (10% by 2020). First of all, Europe is the world's largest importer of energy, and oil dependence on foreign sources currently stands at around 50 per cent. The transport sector is dependent on oil for 98 per cent. Europe produces less and less oil, whereas the trend to declining reserves can be observed globally as well. An ever smaller group of countries supplies an ever growing need. In short, the security of petroleum supplies is increasingly difficult to guarantee and new geostrategic risks arise. This calls for short and medium term alternatives. Currently, biofuels are the only realistic option to subsitute oil on a large scale.

Besides the security of energy supplies, climate change is the major driver of the EU's efforts to promote renewable fuels. The transport sector is currently responsible for one third of the EU's carbon dioxide emissions, and growth in the sector is negating reductions made in other economic sectors (industrial and domestic). Without alternatives to oil, growth in the EU's greenhouse gas (GHG) emissions will be dominated by the transport sector, which will contribute up to 60% of all new emissions.

There are only two options to change this situation: increasing the efficiency of transport and utilizing more biofuels. For Piebalgs, biofuels offer advantages in that they bring rural development, new markets and jobs, as well as opportunities for scientific work and technological development which will result in newer generations of cleaner fuels. But their potential to reduce GHG emissions remains the main reason for their support.

Importantly, Piebalgs stressed that, contrary to previous goals (5.75% by 2010), the EU's new biofuel targets are binding, that is, each member state must reach them. The Commissioner then touched a subject other speakers focused on as well: the EU cannot meet these goals alone, and will rely on imports. This calls for the creation of an international market for biofuels:
energy :: bioenergy :: biofuels :: ethanol :: biodiesel :: biomass :: energy security :: poverty alleviation :: rural development :: trade :: sustainability :: developing world :: European Union ::

However, the Energy Commissioner left the debate of how to organise such a market to other speakers (amongst them EU Commissioner for Trade, Peter Mandelson), and instead focused on the sustainability of such internationally traded green fuels.

Biofuels are not automatically sustainable. And not all biofuels are born equally. When they are grown on new land for which forests are cleared, they may lose much of their potential to reduce GHGs. However, most biofuels as they are produced today, can be labelled as environmentally sustainable; new expansion of the sector makes the issue more problematic.

Sustainability criteria
For this reason the European Commission is working on a framework for biofuels sustainability criteria, to be presented to the European Parliament which will decide on the matter in September, and later to the European Council.

The framework will be part of the EU's broader package on renewable energy, because biofuels cannot be seen outside of the context of efforts on the front of efficiency, research, and trade. The new legislation's sustainability scheme will in all likeliness contain the following provisions:

• a minimal set of sustainability criteria must be met by all biofuels in the EU
• only these biofuels will count for the 10% target the EU member states must reach by 2020
• and only these fuels are eligible for European support (subsidies, tax incentives, etc...)
• finally, the minimal criteria apply to imported biofuels as well

However, Piebalgs noted that 'sustainability' as such is a descriptive concept, open to debate. The EU wishes to help define it in the context of biofuels, fully aware of the fact that such criteria cannot constitute new barriers to trade.

Trade and solidarity
Intergovernmental and international efforts are needed to streamline and help the convergence of biofuel standards. Several initiatives on international standardisation are currently underway, which will improve the tradeability of the fuels.

The Energy Commissioner ended his presentation with two important thoughts. First, the EU is fully committed to creating an international market for biofuels - it does not want to rely on domestic production alone because this would require new land (set-aside land) to be taken in production, which is not desirable as it impacts biodiversity. But closing off the market is not desirable for another reason: biofuels offer a unique lever for global solidarity. Countries in the South have competitive advantages (land, sun, climate, crops) but often lack the technological and financial means to create biofuel industries. The EU can help transfer technologies, encourage investors to go South, and learn from countries like Brazil. Moreover, the sector will boost international cooperation in a range of fields - from biotech and agronomy, to bioconversion technologies and cooperation in the field of infrastructures.

Most importantly, in the era of problems like climate change and growing oil scarcity - which are truly global -, biofuels trigger a world-wide sense of responsibility: successful policies and the use of biofuels in one country, positively impact all citizens of the globe. (Piebalg's full speech can be found here).


Session One: Policies in the EU and other countries
The first session of the conference, moderated by Claude Mandil, executive director of the International Energy Agency, saw Xiong Bilin, deputy director of the National Development and Reform Commission of China, Purnomo Yusgiantoro, Indonesia's Minister for Mineral Resources and Energy, Salvador Namburete, Mozambique's Minister of Energy, C. Boyden Gray, U.S. Ambassador to the EU, and Javier de Urquiza, Argentina's Secretary for Agriculture present their respective countries' current policies, projections about the biofuels potential, and the challenges and opportunities in the sector.

Indonesia
Minister Yusgiantoro outlined Indonesia's biofuels plan, as we have discussed it here before. Interestingly, a new initiative called 'Energy Self-Sufficient Villages' aims to help around 1000 poor and remote villages to 'leapfrog' beyond the oil era. Indonesia counts over 70,000 villages, 45% of which have living standards below the poverty line. One of the key reasons of this situation is the lack of access to modern energy.

Even though petro-based fuels are heavily subsidised in Indonesia, a large number of these villages only have access to extremely expensive gasoline and diesel fuel. Creating local biofuel cottage industries will help them become less dependent on outside supplies. The 'Energy Self-Sufficient Villages' are a pilot group that will have to demonstrate the feasibility of producing modern energy in a decentralised manner. Funding for the program does not only come in the form of cash, but in material aid: seeds, machinery, education. Small and medium enterprises developing from this new market will benefit local economies and make the project self-funding over the medium term.

Indonesia stresses the social dimension of its ambitious biofuels and bioenergy program (5% of all energy by 2020; between 7 and 10% biofuels in transport by 2010). The program is expected to bring 3.5 million new jobs to the rural poor. Some 5.25 million hectares of land will be allocated for crops such as jatropha and palm oil (for biodiesel) and sugarcane and cassava (for bioethanol). A special biofuels trade zone will be established that must become a hub for global trade.

An impressive list of existing and planned biofuel factories in Indonesia was followed by an interesting overview of power plants utilizing solid biomass and liquid biofuels as feedstocks. Around 70MW of bioenergy is currently produced in these large plants, with a much larger potential for the future.

Mozambique
Mozambique's Minister Salvador Namburete opened his sketch with a strong point: all African countries, no matter whether they are oil importers or producers and exporters, suffer under high oil prices. Liquid fuels are crucial for the economy at large, as they are used in all productive sectors. When prices rise, indeed, all these sectors are affected - especially in African countries whose economies are energy intensive.

Mozambique chooses to utilize its huge biofuel potential for classic reasons: to cut dependence on imported fuels, to grab the opportunity biofuels offer to make use of existing infrastructures, to mitigate climate change and ensure low-carbon development, and to supply neighboring countries as Mozambique has a large potential for green fuels and demand in Southern Africa, with its 250 million inhabitants, is growing rapidly. But most importantly, biofuels offer a unique chance to boost employment opportunities in rural areas and to supplement the Mozambican government's poverty alleviation efforts.

International exports to the EU are obviously one important way to acquire income that can be spend on such important areas as education, health, social policies and poverty alleviation. Current imports of refined oil products cost Mozambique dearly and have decreased funds that can be spent on these services; biofuels can turn this situation around.

Minister Namburete briefly discussed Mozambique's vast biofuel potential: the country only utilizes around 5% of all land available for agriculture, and an additional 41.5 million hectares of degraded land can be used for the production of crops like jatropha. Farmers can for the first time tap these marginal lands to make a profit from them - this was not possible with any other type of crops.

Biofuel projects in Mozambique come under the guise of of private, private-public partnerships, cross-sectoral cooperation and Kyoto Mechanisms (such as the Clean Development Mechanism).

A preliminary biofuels regulation is in place in the country, but a two-phase project - first assessing the bottlenecks and opportunities, then outlining the long-term potential - is underway that will lead to the adoption of a national policy. This is important in order to attract foreign investments. Some challenges have already been identified, such as the need for the creation of monitoring mechanisms that must ensure land allocation rules are strictly adhered to.

Current projects are few in number (7 biodiesel plants and 4 ethanol plants), but, according to Namburete, Mozambique's potential is "enormous". The country will attract investors by showing off its stable political situation, its interesting investment climate, and its agro-ecological advantages. The biofuel campaign aimed at bringing in foreign investors will draw on the slogan that 'Mozambique will become the Brazil of Africa'.

The United States
U.S. Ambassador C. Boyden Gray was brief: the explosive growth in America's biofuels sector has been almost entirely market-driven. Silicon Valley money is in, and this will lead to technology developments that ensure the efficient production of next-generation, cellulosic biofuels. Gray devoted his presentation to 'debunking' some myths about corn-based ethanol: ethanol from corn does have a positive energy balance and helps clean the air. He attributed the U.S.'s far lower health burden from air pollution to the introduction of ethanol.

Speaking about the WTO's Doha trade round, Gray said that prices for global farm commodities will strengthen in such a way that both the EU and the US may find it easier to cut tariffs and other trade barriers, as well as lower farm subsidies. Doha can thus be 'saved' by biofuels.

Argentina
Javier de Urquiza, Argentina's Secretary for Agriculture, was the first to touch on this issue of trade barriers and tariffs, a theme that would pop up many times during the rest of the conference. The Secretary had a series of objections to the current state of things: ethanol tariffs in the US and the EU, import duties for biodiesel, subsidies European farmers and energy crops, technical rules for biodiesel based on certain crops (such as soybeans)... all these will have to go if the EU and the US are serious about creating a truly global market for biofuels.

De Urquiza therefor stressed the need to create a mechanism for multi-lateral negotiations on both the standardisation of biofuels and on the trade rules for the new market.


Claude Mandil wrapped up the first session by repeating the many social, economic and environmental benefits of biofuels, but he urged everyone to remain realistic. In the medium term, biofuels will not contribute more than 5, 7, maybe 10% of global liquid fuel demand. Second-generation fuels may allow a more significant share. But in all cases, this remains a petroleum-driven world.

Referring to ambassador Gray, Mandil noted that the discourse on 'market-driven' development cannot obscure the fact that both the U.S. and the E.U. lavishly subsidise their farmers, their biofuels sectors and protect their market against foreign competition.

According to Mandil, the key question remains that of sustainability: should there be a global framework with criteria, should such rules be compulsory, or will this be contrary to the committment to encourage free trade?

Finally, the IEA Chief stressed that his organisation's outlook on biofuels is extremely positive when it comes to the many opportunities the green fuels bring, but they remain only one of a much broader range of options to reduce oil consumption or to make its use less of a burden for the environment.

Jonas Van Den Berg & Laurens Rademakers, Biopact, 2007, cc.

Part 2 of this series of articles will appear shortly. It will include the staunchest defense of a sort of 'biopact' - the view that the North must import biofuels from the South - as it was expressed by Sweden's Minister for Trade. Part 3 will highlight the keynote speeches of the three portuguese speaking presidents who attended the conference: President Lula from Brazil, President of the European Commission José Manuel Barroso, and President of the European Union, José Socrates (PM of Portugal). Check back soon.