GMF examines industry, policy, and scientific perspectives of biofuels
On Wednesday, February 14, 2007, GMF hosted the first of a series of luncheon discussions on transatlantic approaches to biofuels. A full-house of over 60 participants, including representatives of government and think tanks, journalists, and academics gathered to discuss policy, scientific and industry perspectives with a panel made up of former German Federal Minister of Consumer Protection, Food and Agriculture Renate Künast, Professor David Tilman from the Department of Ecology at the University of Minnesota, and John Bozzella, Vice President for External Affairs and Public Policy for the Americas at DaimlerChrysler. A podcast interview with Renate Künast can be found here.
Ann Tutwiler, Managing Director of Trade & Development at the Hewlett Foundation, introduced the panelists and opened the event with a summary of the current status of policy discussions on biofuels. Ethanol and biodiesel, though they represent possible solutions to poverty, energy and environmental issues, also pose some complex difficulties, especially for policymakers. As both a food and fuel commodity, biofuels represent a significant portion of the global economy, and the fluidity (or lack of) in trade in biofuels could have huge potential impacts for developing countries. When prices for food rise as a result of the increased demand for fuel biomass, it can negatively impact the low-income consumers (who outnumber farmers) in developing nations. Farmers are beginning to realize that they may simply be substituting one dependence for another. It was argued that biofuels were an issue that must be dealt with region by region in terms of production and consumption, while simultaneously being addressed at the level of the global trading system.
Renate Künast began with an explanation of the EU's policy approach to biofuels. She applauded the fact that climate change had finally become a priority for policymakers everywhere: Europeans were especially pleased to see that a range of cities, counties and states in the United States have started fighting for better climate policies. Ms. Künast argued that the EU and U.S. need to cooperate to find sustainable solutions to energy needs ("think in carbon-free solutions"). She also discussed the potential energy independence that could be structured in least developed countries -- most of which are currently net oil importers, and yet almost as many would have the capability to satisfy their own energy needs.
Künast cited figures on recent biofuels policy developments in the European Union: 5.75% of EU transport fuel is mandated to be biomass-based by 2010, and in Germany, 5% of all energy consumption by the same year. The problem, she argued, was that these policies are not well executed. The palm oil imported into Europe, for example, has often been grown in areas of natural forest that have been logged for that reason. She stressed the need for minimum efficiency standards and a focused approach to solving climate change problems.
With global population expected to reach 9 billion by 2030, the need to balance the food vs. fuel issue with regard to biomass is critical. Biofuels have some clear benefits: energy independence, climate health, and sustainable rural and urban employment opportunities, resulting in strengthened local economies. The disadvantages of biofuels are equally apparent: production of biomass could lead to over-consumption of the world's water resources, and a loss of biodiversity through monoculture and higher food costs. Certain biomass production methods are practiced in extremely fragile biodiversity hotspots, as can be seen in the deforestation in Brazil and Indonesia. In conclusion, Künast re-emphasized the need for a simultaneously regional and global approach-no "one size fits all" solution exists - and argued that we should not make the same mistakes as the generations before us in the so-called Green Revolution; we need to avoid overuse of chemical fertilizers and pesticides, resist the "easy" solution of massive monoculture, and ensure decent labor standards. Developed countries need to cooperate with each other in terms of research and policy and provide a thoughtful, sustainable example for developing countries to follow as they join the global market. She argued for a strict labeling and certification regime and against an "explosion of biofuels." Lastly, she mentioned that conservation and the idea of saving energy has to be part of any renewable energy approach, and that one key factor would be to better educate energy consumers.
Professor David Tilman focused on the scientific aspects of biofuels, emphasizing the need to move quickly beyond ethanol to the next generation of biofuels. Food-based biofuels have significantly lower energy and CO2-emissions balances than biomass-based biofuels: Second-generation biofuels, such as ethanol and synfuels made from low-input and high-diversity prairie biomass, can provide substantially greater net energy gains and greenhouse gas reductions, including the potential to create carbon-negative biofuels. When assessing ethanol production we must look at all lifecycle energy inputs and outputs, including the energy (often from fossil fuels) that is used to process biofuels. This is one of the reasons why the net energy gain for ethanol from corn is much lower than that of sugar cane or perennial feedstock.
On a more controversial note, Tilman suggested the use of Conservation Reserve Program (CRP) land for biomass cultivation, so as to avoid competition for land resources with food producers. CRP is a voluntary land conservation program where the federal government subsidizes farmers who plant their land with native instead of growing for-profit crops. The merits of CRP land use aside, Tilman emphasized the importance of ensuring that next-generation biofuels production comes from low-input high-diversity (LIHD) sources. Professor Tilman's policy brief on "Energy Gains and Greenhouse Gas Reduction from Food-Based versus Biomass-Based Biofuels" can be found here.
John Bozzella of DaimlerChrysler gave an automotive industry perspective, praising the environmental potential of biofuels as way of meeting growing energy needs. However, he cautioned that biofuels should not be seen as a cure-all. Market demand, too, will ultimately be key: regardless of environmental or social benefits, biofuels will have to be financially sustainable in order to succeed in the longer-term. According to Bozzella, biofuels will be one of several components in any solution to climate change and energy independence. DaimlerChrysler has invested €1.4 billion into fuel-efficient vehicle production and research. He argued that the two main components of best utilizing biofuels would be research and development and regulatory cooperation: Fifty percent of new EU vehicles are diesel and meet even California's stringent new energy efficiency standards. Their focus now is on large hybrid vehicles, and finding a common recipe for biodiesel across the Atlantic, even with first-generation biofuels, though the greater advances in E85 vehicle production will most likely come with the second generation. He emphasized that, from the perspective of a quintessentially transatlantic company such as DaimlerChrysler, the United States and European Union need to work on a coordinated effort to harmonize fuel standards. The issue of harmonization has been raised by the German Chancellory during Germany's G8 presidency and will be a topic at the U.S.-EU summit at the end of April 2007.
Renate Künast's concluding remark captured a key element of the discussion: the need to avoid having the solution become the new problem. She said there are no easy solutions to the complex dilemmas involved in biofuels production, but the stakes are important enough that policymakers must seize the chance of getting it right from the beginning.