Criteria for assessing environmental, economic, and social aspects of biofuels in developing countries

Feb 2005

Preliminary work on the potential of energy crops in developing countries (DCs) indicates an order of magnitude similar to the total transport fuel use of the EU-25 and the USA.
If and to what extent this potential for sustainable biofuel exports from DCs could be used is not an academic issue, but – given rising fossil fuel costs and the tendency of reduced revenues from food and fodder exports – a question to be addressed within the context of development cooperation.
It must be recognised that the conditions for cultivating bioenergy in DCs are very heterogeneous – they are characterized (among other things) by population density and dynamics, natural factors, available infrastructure and capital, and logistical restrictions. One cannot consider the DC; instead, a differentiated analysis (potentially for clusters of groups of DCs) must be applied.
With regard to differentiation, one must take into account that the question of using endogenous biomass potentials to meet the domestic demand – instead of exporting processed biofuels – can only be addressed on a state-wide or regional scale.
In general, endogenous uses require less logistical demands, and, by replacing oil (product) imports, the costs of logistics also drop. With decentralized conversion and use, the utilization of by-products from biomass processing is usually easier (sites permitting) than for decentralized conversion routes. A key argument against decentralized strategies is that the processing in export-oriented central plants often allows higher yields, and – due to the economics of scale – less cost (though also less employment).
The potential export value of biofuels must be weighted against the value of substituted imports. Here, the balance of payments of the respective country, its attraction to (foreign) direct investment in export-oriented biofuel supply, and the availability of capital for regionally oriented, decentralized alternatives must be considered.

By: Oeko-Institut

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