Thursday, April 17, 2014

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The Business of Biofuels

Biofuels may contribute to rural development but many complexities have to be addressed.
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Oil-based fuels remain a key contributor to global climate change, accounting for approximately 37% of total energy emissions. Of this, the transportation sector accounts for about 27% of total energy-based emissions. Finding less polluting alternatives to current transportation fuels is therefore a high priority for climate change mitigation.

One of the alternatives to petroleum-based transportation fuels is biofuels. Biofuels are biomass-derived fuels such as ethanol or biodiesel which can be used as a partial or total substitute for fossil fuels. Since the COemitted during the combustion of biofuels is equal to that taken up from the atmosphere during the growing of the crops, the simplistic view is that biofuels are carbon neutral. Unfortunately, the reality is more complex.

The indirect effects of biofuels

The production of fertiliser, ploughing the fields, and many other aspects of the growing and processing of biofuels all use energy and hence result in greenhouse gas (GHG) emissions. And emissions from biofuels are not limited solely to carbon dioxide. GHGs such as nitrous oxide, for example, may be increased due to fertiliser use. Additionally, there is the very real concern that land with a high carbon stock, such as indigenous woodland and forest, may be cleared to make way for low carbon stock biofuel crops such as maize or soybeans. This change in land use could result in large amounts of soil and above-ground carbon being released into the atmosphere.

At a global scale deforestation remains one of the greatest contributors to carbon emissions, and if biofuels increase the rate of deforestation the climate change benefits of biofuels could be undermined. Offsetting the negative impact of deforestation would take many years of biofuel use, and in extreme cases such as the peatland being cleared for palm oil in Indonesia, the payback period could be in the hundreds of years.

Despite the concerns expressed above, some biofuel crops still appear to have a relatively good chance of reducing greenhouse gas emissions compared with fossil fuels. Sugarcane, in particular, fares well in this regard when producing ‘first generation’ biofuel such as ethanol from the fermentation of sugar. Second generation biofuels based on the conversion of ligno-cellulose to ethanol are predicted to be able to perform even better in terms of the carbon balance once the technical challenges and financial viability of the production chains are sorted out.

The business of biofuels

The European Union’s Renewable Energy Directive (RED) mandates European countries to include a minimum percentage of biofuels in their national transportation fuel mix. It is unlikely that Europe can produce all the biofuel it will need to reach these targets but a number of studies have suggested that Africa has a huge potential for biofuel production. The perception of a large European market for biofuels has had a profound impact on Africa, with many international organisations acquiring vast tracts of African land to grow biofuels. African countries have also responded by developing their own strategies.

A number of social concerns have been raised around African biofuel expansion. Direct foreign investment in huge plantations has, in some cases, resulted in the displacement of communities currently residing on the land. Though Africa’s population density is low by global standards, most land outside conservation areas is allocated to some form of land use, although the land users typically have weak tenure rights and can therefore easily be marginalised.

There is also a potential conflict between food and fuel production. The land resources in Africa are theoretically sufficient to support both food and fuel production, but current agricultural practices have resulted in a food shortfall in many countries. Though this food shortfall is unrelated to biofuels, careful consideration needs to be given in biofuel development to ensure that both the food and fuel sectors are developed and that biofuel expansion does not lead to reduced food production. If biofuels are produced on existing food production land, there is a very real possibility of deforestation.

Past projects and promise

A large focus of African biofuels has been on the tree crop Jatropha curcas. Jatropha is an oil crop that is well suited to biodiesel production. Unfortunately there has been limited success from Jatropha in Africa to date. Misinformation around the species led to unrealistic expectations regarding the potential yields, growth requirements and profitability. Indeed, a number of current projects have failed, although there remains hope that selective breeding, better management and correct species-site matching in the future may yield better results. Sugarcane-based projects, though better understood from an agronomic and technical perspective, have been slower in being initiated. Though there are a number of sugar-to-ethanol projects are in the pipeline, there are almost no projects currently operational.

Within South Africa, it was originally the maize industry that pushed for the introduction of biofuels. Using maize for ethanol was seen as a mechanism to grow the national market for maize. Though agricultural land in South Africa is scarce, farmers believe that it was the lack of a market rather than the lack of land which currently limits agricultural expansion. The motivation for this industry was rural development, not GHG mitigation, and indeed the net emissions-saving from maize-to-ethanol is minimal.

In order to promote development, the South African government developed a biofuel strategy that effectively excluded maize as a feedstock, a move which supported emerging farmers rather than the already established commercial farming sector. Though a number of projects involving both sugar beet and sugar cane to ethanol are in the advanced planning phases, to date no large scale projects are up and running.

African biofuel projects, though showing promise for rural development, national fuel security and GHG mitigation, remain problematic for a number of social, economic and environmental reasons. Very careful planning that considers a large set of complicated tradeoffs is needed to ensure the sustainability of the industry. African countries need to ensure that their national interests, rather than the interests of importing countries, are being addressed through their engagement in biofuels. Fortunately a number of African countries and the South African Development Community are working together hard to establish locally-relevant policies and sustainability standards.

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