Volume (Issue): June 2007
Biofuels are attracting attention worldwide due to their potential to address global warming and energy security issues. In January 2007, the European Commission proposed a binding minimum target of a 10% share of biofuels used in transport for the European Union by 2020 as a part of its long-term renewable energy roadmap. In his State of the Union Address in the same month, US President Bush proposed to increase the use of biofuels as one means of achieving a 20 percent reduction in US gasoline consumption over the next 10 years. In Asia, many governments are already developing plans to rapidly expand biofuel production. The Cebu Declaration on East Asian Energy Security, which advocates the development and expanded use of biofuels, was adopted in January 2007 by the heads of 16 States/Governments of the Member Countries of the Association of Southeast Asian Nations (ASEAN), Australia, People's Republic of China, Republic of India, Japan, Republic of Korea, and New Zealand.
However, there are serious concerns about this “biofuel frenzy” policy trend. Since biofuel crops like corn are also utilized for food and animal feed, price hikes caused by an increased demand for fuel may hurt lower-income people. Moreover, large-scale expansion of biofuel crop production may lead to environmental problems such as deforestation, loss of biodiversity, land degradation, and water pollution. In fact, protest marches occurred in Mexico when corn prices jumped due to a sudden increase in corn demand in the United States. Deforestation cased by the expansion of biofuel crop production has been reported in Malaysia and Brazil.
Various potential solutions have been proposed to address these concerns. Technical solutions include the use of biofuel crops which minimise conflicts with food or feed, the allocation of such crop production to land where food crop production is not suitable, and the use of wastes instead of crops to produce biofuel. In particular, bioethanol production from cellulosic materials is promising. An institutional solution that is being considered is a possible pact between developed and developing countries that aims to facilitate technological/financial assistance from developed countries which consume biofuels in order to promote sustainable production of biofuels in developing countries （http://www.biopact.com）. However, many of these potential solutions have not yet been put into practice on a commercial scale, and their potential effectiveness needs to be assessed in the context of the Asian region.
Considering these challenges and opportunities of biofuels, IGES plans to conduct policy research to develop strategic policy options to promote sustainable production and consumption of biofuels in Asian countries in a way that helps alleviate poverty without compromising environmental sustainability. This research will try to develop an integrated burden-sharing policy package that will generate revenue in developed countries in a way that promotes sustainable consumption of biofuels, and will use that revenue to promote sustainable production of biofuels in developing countries. This would be based on both green fuel taxes in which the tax rates depend on environmental impacts and preferential tariff schemes for “green” biofuels. These economic incentives will generate revenues that would be used to green the biofuel production process in developing countries, for example through technical and financial assistance, and promote sustainable consumption and production of biofuels. Other complementary policies such as an environmental certification/labelling system for biofuels will also be considered.
Volume (Issue): June 2007