Land cleared for oil palm plantation, Indonesia. Photo Credit: Flickr (Nanang Sujana/CIFOR)

BY: David Laborde and Simla Tokgoz, IFPRI

The world is hungry for food and energy. Expanding population increases demand and rising income changes consumption patterns, both leading to competition over resources. On the supply side, there is growing pressure to convert land for agricultural production. There is tension between using inputs such as land, fertilizers and water to meet human and livestock demand for food versus using those finite resources to meet energy demands from transportation sector. In terms of demand dynamics, the tastes of rich consumers will shape the world to come — if the rich want to have a big car and a big steak, the world will grow crops to make biofuels and feed cattle — but there are still calls to recognize the needs of consumers with less financial and political clout and use available resources to improve global nutrition outcomes and resource preservation. Finally, if that is not complicated enough, the positive short-term effects of one policy can have detrimental long-term effects in another arena.

The perfect example of this complex interplay between competing forces can be found in the case of biofuels. The last decade saw a burst of biofuel production under the rationale that using biofuels instead of fossil fuels for transportation will limit the carbon release in the atmosphere. Since that is technically true (carbon emissions are avoided to some extent when biofuels replace gasoline and diesel use in vehicles), biofuels were initially seen as a mitigation option for climate change.

A closer analysis, however, brings complications into high-relief. To produce biofuels, especially first-generation, dedicated biomass is needed. (First generation biofuels are made from feedstocks that have traditionally been used as food-- ethanol from corn and biodiesel from oilseeds, for example-- while second generation biofuels are made from non-food feedstocks.) In order to meet this demand for biomass, especially in the short run where technological innovation is limited, crop production is expanded by clearing and/or converting land. Land itself has carbon value, since carbon is stored in it through natural means both below the surface in the soil and above ground in the biomass of forests. As such, change in land use and land cover releases a significant amount of carbon. Furthermore, in addition to the carbon cost of this land use change, which we refer to as ILUC, biofuel processing still requires fossil fuel energy, even if it is from relatively “clean” ones such as natural gas power plants. In short, we save CO2 through one mechanism and emit CO2 through others.

Measures to intensify the climate-positive value of biofuel production are subject to same dynamic. Increased crop production through higher yields is possible, for example, but mechanisms to raise yields (such as higher fertilizer use) have environmental consequences to consider. R&D investments in inputs and methods are critical, but it takes time before benefits of this process are fully realized. A few areas that policy makers can focus on are promotion of feedstocks that need less land and inputs to grow, R&D investments for second-generation biofuels, and investments in sustainability-sensitive productivity gains.

The questions posed by this trade-off among many objectives illustrate the importance of conducting carbon accounting accurately and in both spatial and in temporal dimensions. This is why a sophisticated and interdisciplinary modelling framework is needed to produce evidence-based policy decisions. There is no free lunch, and the research community is here to address these challenges ex-ante. In many cases it is too late, but often there is still a place for smart agricultural and trade policy. There is a significant market potential for biofuels in aviation, for instance. This technology is still in the experimental stage and a serious assessment of costs and benefits is necessary. As we learned from our experience in biofuels for transportation in the past decade, this assessment needs to be made before the policy decisions are made. Uncertainty is a key dimension of both the research and the policy agenda when discussing biofuels and climate change mitigation. Policy design should acknowledge the underlying uncertainty, but this does not mean that policy makers should avoid tackling this critical issue.

For further reading:

Indirect Land Use Change Debate: What Did We Learn?

Impact of energy prices and cellulosic biomass supply on agriculture, energy, and the environment: An integrated modeling approach

Workshop on Biofuels and Food Security Interactions: Outputs Day 1

Workshop on Biofuels and Food Security Interactions: Outputs Day 2

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