Biofuels production, trade and sustainable development

Nov 2010

This document presents case studies from Pakistan, Costa Rica, South Africa and Ecuador that give a low- and middle-income country perspective on the potential for biofuel development. The focus is on the transport sector as this is the main use of liquid biofuels but co-benefit possibilities for use in domestic lighting, cooking and heating are noted. Each case study, prepared by experts from each of the four countries, examines the potential for developing the biofuel sector in the national context, explores the trade-offs for economic development and the sustainable development implications.
These countries were chosen because they all are significant producers of one or more of the main feedstock crops for bioethanol or biodiesel, and because they are small or medium size. Their current level of biofuel development is small or incipient and their governments are currently faced with the task of developing an appropriate enabling policy framework. By focusing on particular feedstocks in particular contexts, the case studies demonstrate the complexities in predicting the range of impacts and designing policies to guide and promote biofuel development.
Chapter 2 by Shaheen Rafi Khan, Moeed Yusuf, Selina Adam Khan and Reza Abbasy focuses on sugarcane bioethanol in Pakistan. It provides a preliminary assessment of the production potential of energy crops in Pakistan and the foreign exchange benefits in terms of savings from reduced fossil fuel imports and earnings potential from biofuel exports. It then analyses the sustainable development implications of increased biofuel production and trade. The chapter concludes by proposing anticipatory policy measures to help maximise sustainable development opportunities at minimum risk. It also identifies research gaps.
Chapter 3 by Carlos Murillo looks at Costa Rica. The chapter analyses the country’s experience with sugarcane bioethanol production since the 1980s, highlighting the constraints encountered and drawing out the main lessons learned. It also analyses the implications for sustainable development of an increase in bioethanol in view of current supply capacity issues related to production costs, trade trends and supply, as well as the implications arising from meeting future demand. The author concludes with the identification of some institutional challenges that will need to be addressed if biofuel production and distribution are to develop on a sustainable basis.
Chapter 4 by Anthon Cartwright examines the case of South Africa, which unlike the other three countries does not yet have significant biofuel production or trade. The study focuses on sugarcane and maize, which are the most likely feedstocks, examining the potential for bioethanol trade to and from South Africa to contribute to sustainable development. The author explores South Africa’s processing capacity, potential to export bioethanol in terms of trade policies, ability to comply with international bioethanol standards and the macro-economic, environmental and social impacts of bioethanol exports from South Africa. A key question arising from the chapter is whether or not South Africa can rise to the economic governance challenge of ensuring that an exportoriented bioethanol industry can deliver on its sustainable development potential.
Chapter 5, by Maria Amparo Albán and Helena Cárdenas, explores the case of palm oil biodiesel in Ecuador where the palm oil sector – one of the fastest growing industries in the country – has taken the lead in producing biodiesel for export. Biodiesel production is still not very high, but shows potential for the development of a whole new industrial sector. The chapter explores how international and national policies on biodiesel trade are affecting the development of the sector. It surveys the key economic, environmental and social issues associated with palm oil biodiesel and concludes with policy recommendations to foster sustainable practice.
Finally, Chapter 6 compares and contrasts the findings of the case studies and draws out some common lessons for biofuel development in other potential producer countries.

By: International Institute for Environment and Development (IIED)

 
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