Biofuels are a wash environmentally and a negative economically because they requite subsidies to be competitive but there is one way they are a boon: the increase in world agriculture prices caused by the global boom in biofuels could benefit many of the world’s rural poor, according to a new book, Biofuels for Transport: Global Potential and Implications for Energy and Agriculture, written by the Worldwatch Institute.

“Decades of declining agricultural prices have been reversed thanks to the growing use of biofuels,” says Christopher Flavin, president of the Institute. “Farmers in some of the poorest nations have been decimated by U.S. and European subsidies to crops such as corn, cotton, and sugar. Today’s higher prices may allow them to sell their crops at a decent price, but major agriculture reforms and infrastructure development will be needed to ensure that the increased benefits go to the world’s 800 million undernourished people, most of whom live in rural areas.”

The book assesses the range of “sustainability” issues the biofuels industry will present in the years ahead, ranging from implications for the global climate and water resources to biological diversity and the world’s poor. It finds that rising food prices are a hardship for some urban poor, who will need increased assistance from the World Food Programme and other relief efforts. However, it notes that the central cause of food scarcity is poverty, and seeking food security by driving agricultural prices ever lower will hurt more people than it helps.

Growth in biofuels production may have unexpected economic benefits, according to the experts who contributed to the report. Of the 47 poorest countries, 38 are net importers of oil and 25 import all of their oil; for these nations, the tripling in oil prices has been an economic disaster. But nations that develop domestic biofuels industries will be able to purchase fuel from their own farmers rather than spending scarce foreign exchange on imported oil.

World biofuels production rose 28 percent to 44 billion liters in 2006, according to the figures compiled since research on Biofuels for Transport was completed; fuel ethanol was up 22 percent and biodiesel rose 80 percent. Although biofuels comprise less than 1 percent of the global liquid fuel supply, the surge in production of biofuels in 2006 met 17 percent of the increase in supply of all liquid fuels worldwide last year.

This rapid growth is having unintended impacts. Large-scale biofuels production can threaten biodiversity, as seen recently with palm oil plantations in Indonesia that are encroaching on forests and edging out the endangered orangutan population, worrying European consumers who have begun importing palm oil from Southeast Asia. In Brazil, the Cerrado, a vast landscape of biologically rich forests, brush, and pasture just south of the Amazon, is coming under pressure as sugar cane cultivation expands.

“It is critical to the stability of the climate that we prevent biofuels from expanding at the expense of rainforests and other valuable ecosystems that store carbon and provide other ecological services,” says Suzanne Hunt, who directed the team of 15 researchers from four countries. “Energy crops should instead be established on the millions of hectares of degraded land that can be found around the world.”

“Current biofuels production methods place a heavy burden on land and water resources, due in part to the fossil fuel- and chemical-intensive corn that is used to produce over half the world’s ethanol,” says Hunt. “Farming practices need to be reexamined if agriculture is to provide energy as well as food for a rapidly growing global population that is hungry for both.”

The book concludes that the long-term potential of biofuels is in the use of non-food feedstock, including agricultural and forestry wastes, as well as fast-growing, cellulose-rich energy crops such as perennial grasses and trees. Following the model of Brazil’s sugar cane-based biofuels industry, cellulosic ethanol could dramatically reduce the carbon dioxide and nitrogen pollution that results from today’s biofuel crops.

“The question is not whether biofuels will play a major part in the global transportation fuel market, but when and at what price,” says Flavin. “The first priority should be to ensure that the industry develops sustainably—so that the problems of an oil-based economy are not replaced by another socially and ecologically bankrupt industry.”

The book recommends policies that protect natural resources and support a speedy transition to improved biofuels technologies. Freer trade in biofuels should be coupled with social and environmental certification and a credible system to certify compliance.

“Biofuels alone will not solve the world’s transportation-related energy problems,” the authors conclude. “Development of these fuels must occur within the context of a transition to a more efficient, less polluting and more diversified global transport sector. They must be part of a portfolio of options that includes dramatic improvements in vehicle fuel economy, investment in public transportation, and better urban planning.”

- Earthscan