|A publication of the Asian Development Bank||No. 1 June 2008|
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“The question is whether one should commit to making fuel for a car when it is competing with food”
Arif Hasyim, Indonesia Country Director of the Bangkok-based Asia Biogas Company
Experts agree that biofuels, for all their benefits, are not a long-term solution to the problems posed by fossil fuels
Miracle or Menace?
Despite the buzz surrounding them, biofuels are not a long-term solution to the problems posed by fossil fuels
Losing Forest Cover Deforestation is among the negative aspects of increasing biofuel production
Photo by AFP
They have been called the salvation of the planet, and the savior of malnourished rural villagers in developing nations. From Indonesia to Brazil, the new buzz word is biofuels.
Produced from agricultural crops such as maize, palm oil, sugarcane, and jatropha, biofuels are used to run factories, power stations, and vehicles. Countries that have the right conditions are setting aside millions of hectares of land for new plantations as international demand for prominent biofuels, such as palm oil, continues to grow. However, like most sources of energy, biofuels too have a dark side. Deforestation, land seizures, rising food prices, and pollution are among the negative aspects, taking some of the luster off this so-called miracle.
“This was thought to be a great solution to the problem with fossil fuels and the international oil price (being around) $100 a barrel,” said Lukas Adhyakso, a member of the United Nations Development Programme (UNDP) environmental unit in Jakarta, the Indonesian capital. “There’s a lot of political momentum behind this, but we are a long way away from a solution.”
Different countries use different sources for biofuels, ranging from maize in the United States to sugarcane in Brazil. But the most sought after of them all is palm oil for biodiesel, making Southeast Asia the kingpin in the production of biofuels. Indonesia and Malaysia accounted for a whopping 86% of global production of palm oil in 2006, with neighboring Thailand and the African nation of Nigeria in the second tier with a meager 2.1%.
The Indonesian government views palm oil production as a high national priority, both for its export value and as a potential solution to its looming problem of insufficient power supply. International demand for palm oil, which can be used for a myriad of products including margarine, soap, and cosmetics, has never been higher, putting Indonesia and Malaysia under pressure to increase exports. But the people of both countries also use palm oil in many basic foods, as well as for cooking oil—a staple for tens of millions of poor people.
There is a growing fear that prices for cooking oil made from palm will continue to increase because of domestic supply shortages, sending a severe jolt through places like Indonesia where more than 100 million people live on $2 a day or less. “If, say, domestically they’re only willing to pay $200 a barrel and internationally it’s $500 a barrel, no oil will stay in Indonesia,” said a Western natural resources management analyst, who would only speak on background given sensitivities on the subject. There is talk in both Indonesia and Malaysia of a ban, or at least a cap, on the export of palm oil.
Fuel versus Food
Diverting palm oil to biofuel production could raise the price of an Asian staple
Photo by AFP
Palm oil supplies are just one of the ongoing battles related to biofuel. An even more sensitive battle is between fuel and food. Countries that produce biofuel need large swathes of land for commercial-scale production. The Indonesian government has set aside $110 million to assist farmers with loans so they can produce more crops for biofuels. The hope, according to President Susilo Bambang Yudhoyono, is to create 5 million new jobs in the palm oil industry and simultaneously solve the country’s unemployment and energy problems.
But the millions of hectares that the Indonesian government wants to use for palm oil and sugarcane production for export would not then be used to grow other agricultural crops to feed people at home. “The question is whether one should commit to making fuel for a car when it is competing with food,” said Arif Hasyim, Indonesia Country Director of the Bangkok-based Asia Biogas Company. In October, a United Nations (UN) official raised eyebrows by asserting that turning crops into biofuel was “a crime against humanity” because it created food shortages, sent food prices soaring, and left millions of poor people hungry. Jean Ziegler, the UN’s independent expert on the right to food, called for a 5-year moratorium on biofuel production, a move that was supported by some environmental and human rights groups. He said that within 5 years, biofuel could be produced from agricultural waste rather than food crops.
There are also concerns over land rights. Biofuel plantations require a minimum of 100 hectares for large-scale production, meaning the vast majority of them are corporate-owned. Environmental and human rights groups say local communities in the Indonesian province of Riau, the center of the country’s palm oil production, and Malaysia’s Sarawak state are shut out of decision making on how land is used and, in some cases, thrown off the land their families have lived on for centuries. There have been more than 500 incidents between local residents in Riau and palm oil plantations, and more often than not, local government officials, backed by the police and sometimes the military, side with the plantation owners.
Some industry experts, however, say provincial governments in Indonesia, Malaysia, and Thailand do have the right to develop public land, noting that commercial biofuel plantations create more jobs within local communities. “In Sarawak, local customary land rights should be recognized, but to what extent?” said Vengeta Rao, secretary-general of the Roundtable of Sustainable Palm Oil, based in Kuala Lumpur. “You get multiple ownership claims by people who should not be claiming [the land].”
Not Squeaky Clean
Others say the land rights issue is minor compared to environmental concerns surrounding biofuel production. “This is really happening in Brazil, but I don’t think we have this situation in Asia,” said Thierry Lefevre, director of the Centre for Energy Environment Resources Development in Bangkok. “Food versus oil, and emissions, are the issues.”
That statement might take some people by surprise. Among the popular beliefs about biofuels are the views that they are environmentally squeaky clean and can replace fossil fuels. Neither is true.
A recent study of 26 biofuels by the Smithsonian Tropical Research Institute found that while 21 had reduced greenhouse gas emissions by more than 30% compared to petrol, 12 had greater overall negative environmental impacts than fossil fuels. A 2007 study by scientists from Britain, Germany, and the US, including Nobel Prize winner Paul Crutzen, also found that burning rapeseed and maize biofuels—two of the more commonly produced varieties in the US and Europe—emitted high levels of nitrous oxide, a greenhouse gas several times more powerful than carbon dioxide.
Fuels made from Brazilian soy and Malaysian palm oil may even be worse than fossil fuels because carbon-rich tropical forests are being razed to establish new plantations, the Smithsonian study found. A recent report by Greenpeace, the global environmental group, said that 1.8 billion tons of climate-damaging greenhouse gases are released yearly because of the degradation and burning of Indonesia’s peatlands for plantations—a whopping 4% of global greenhouse gas emissions. The European Union is considering restricting imports of biofuels that generate low CO2 reductions or those derived from forests, wetlands, and grasslands because of environmental concerns.
The debate on whether to declare a moratorium on biofuel production continues to rage given new evidence of environmental damage that offsets the benefits biofuels offer over fossil fuels. But some analysts say a moratorium would only affect millions of poor workers in developing nations from South America to Asia. “It’s like saying they should ban the production of food,” said one. “What’s the point of banning it? Small farmers can grow jatropha and make money.”
A hardy plant that grows on wasteland, jatropha is a more recent discovery now considered as one of the better sources of biofuels as it does not compete with food. “You can plant hectares of jatropha. It can grow even in non-fertile areas,” explains Asia Biogas Company’s Arif Hasyim. UNDP’s Lukas Adhyakso adds that jatropha doesn’t displace the current supply chain and production line of edible oil.
Because of these factors, jatropha production is also cheap. A recent study by Goldman Sachs found that a barrel of fuel from jatropha costs only $43 to produce—cheaper than palm oil, maize, and rapeseed. Jatropha is now the centerpiece of biofuel programs in India and the Philippines. Being new though, research and experience on its cultivation remain limited, and some jatropha farmers have reported less-than-expected oil yields.
In any event, experts agree that biofuels, for all their benefits, are not a long-term solution to the problems posed by fossil fuels because global supply could never meet demand as a replacement for fossil fuels. “Even if we produce all the palm oil to make biodiesel, and the United States uses all the maize crops to produce fuel, we would not be able to cope with demand,” Lefevre said. “The solution is that another fuel will replace (fossil fuels).”
That very well could be hydrogen, analysts say. The Indian Space Research Organisation, for example, is developing hydrogen fuel cells to be used as fuel for customized automobiles. But it will likely be decades before hydrogen-based fuel is commercially feasible, so some analysts say it would be a waste to impose a moratorium on biofuels and not use crops to produce fuel in the short-term. The debate is no closer to ending. •
|© 2013 Asian Development Bank|