Biofuels Hold Global Potential for Rural Economies

New report says coordinated action to expand biofuel markets and advance new technologies could relieve pressure on oil prices while strengthening agricultural economies and reducing climate-altering emissions. Compiled by staff

Published on: Jun 23, 2006

Biofuels such as ethanol and biodiesel can significantly reduce global dependence on oil, according to a new report by the Worldwatch Institute, released in collaboration with the German Agencies for Technical Cooperation and Renewable Resources.

Last year, world biofuel production surpassed 670,000 barrels per day, the equivalent of about 1% of the global transport fuel market. Although oil still accounts for more than 96% of transport fuel use, biofuel production has doubled since 2001 and is poised for even stronger growth as the industry responds to higher fuel prices and supportive government policies. "Coordinated action to expand biofuel markets and advance new technologies could relieve pressure on oil prices while strengthening agricultural economies and reducing climate-altering emissions," says Worldwatch Institute President Christopher Flavin.

The new report, Biofuels for Transportation: Global Potential and Implications for Sustainable Agriculture and Energy in the 21st Century, sponsored by the German Federal Ministry of Food, Agriculture and Consumer Protection, is a comprehensive assessment of the opportunities and risks associated with the large-scale international development of biofuels. It includes information from existing country studies on biofuel use in Brazil, China, Germany, India, and Tanzania.

Brazil is the world's biofuel leader, with half of its sugar cane crop providing more than 40% of its non-diesel transport fuel. In the United States, where 15% of the corn crop provides about 2% of the non-diesel transport fuel, ethanol production is growing even more rapidly. This surging growth may allow the U.S. to overtake Brazil as the world's biofuel leader this year. Both countries are now estimated to be producing ethanol at less than the current cost of gasoline.

Figures cited in the report reveal that biofuels could provide 37% of U.S. transport fuel within the next 25 years, and up to 75% if automobile fuel economy doubles. Biofuels could replace 20-30% of the oil used in European Union countries during the same time frame.

As the first-ever global assessment of the potential social and environmental impacts of biofuels, Biofuels for Transportation warns that the large-scale use of biofuels carries significant agricultural and ecological risks. "It is essential that government incentives be used to minimize competition between food and fuel crops and to discourage expansion onto ecologically valuable lands," says Worldwatch Biofuels Project Manager Suzanne Hunt. However, the report also finds that biofuels have the potential to increase energy security, create new economic opportunities in rural areas, and reduce local pollution and emissions of greenhouse gases.

The long-term potential of biofuels is in the use of non-food feedstock that include agricultural, municipal and forestry wastes as well as fast-growing, cellulose-rich energy crops such as switchgrass. It is expected that the combination of cellulosic biomass resources and "next-generation" biofuel conversion technologies - including ethanol production using enzymes and synthetic diesel production via gasification/Fischer-Tropsch synthesis - will compete with conventional gasoline and diesel fuel without subsidies in the medium term.

The report recommends policies to accelerate the development of biofuels, while maximizing the benefits and minimizing the risks. Recommendations include:

  • Strengthen the Market. Biofuel policies should focus on market development, based on sound fiscal incentives and support for private investment, infrastructure development, and the building of transportation fleets that are able to use the new fuels.
  • Speed the Transition to Next-Generation Technologies. It is critical to expedite the transition to the next generation of biofuel feedstock and technologies, which will allow for dramatically increased production at lower cost, while minimizing environmental impacts.
  • Protect the Resource Base. Maintaining soil productivity, water quality, and myriad other ecosystem services is essential. National and international environmental sustainability principles and certification systems are important for protecting resources as well as maintaining public trust in the merits of biofuels.
  • Facilitate Sustainable International Biofuel Trade. Continued rapid growth of biofuels will require the development of a true international market in these fuels, unimpeded by the trade restrictions in place today. Freer movement of biofuels around the world should be coupled with social and environmental standards and a credible system to certify compliance.