Review Biofuels and Food Security V0 DRAFT
Anselm Eisentraut, Adam Brown
International Energy Agency
Anselm.Eisentraut@iea.org; Adam.Brown@iea.org
+33(0)1 4057 6767
Overall comments
- The current draft seems to have a quite negative bias towards biofuels, but in many places
lacks sufficient scientific evidence to justify the conclusions drawn.
- IEA analysis suggests ((see: IEA Biofuel Roadmap,
http://www.iea.org/publications/freepublications/publication/Biofuels_Roadmap.pdf) that
even when the full range of efficiency measures and advanced technologies are indeed
deployed rapidly, biofuels may still have an important role in decarbonising some transport
sectors, particularly those related to long-haul transport, since there is a lack of other lowcarbon technologies. Some of the conventional (1st generation) biofuels based on starch and
vegetableoil based feedstocks will no doubt only play a limited role in achieving significant
decarbonisation in the transport sector. There will therefore need to be a shift towards
more advanced technologies using a range of other feedstocks as input materials, notably
residues and cellulosic based sources, if major carbon savings are to be made.
- The report should mention the important role of biofuels in the transport sector, and should
discuss the impact of a scenario with large-scale deployment of advanced biofuels,
compared to a scenario without biofuels (that the report seems to suggest), which would
undoubtedly lead to higher transport sector emissions and thus a more rapidly advancing
climate change, with possibly severe impact on agricultural production and therefore food
security.
Specific comments
Executive Summary:
p.1, 1st para
- For instance, the first paragraph in the executive summary starts with a hypothetical, and
very unrealistic scenario that assumes the use of the total global crop production for biofuel
production.
- While one might argue such a theoretical exercise is justified in order to outline the
maximum contribution conventional (1st generation) biofuels can make towards meeting our
energy needs, it lacks some key aspects:
o 1. The energy content of the biofuels is compared to the total primary energy supply
worldwide. This comparison is not reasonable, as biofuels are principally used as
transport fuel. The comparison should therefore be made with the world total
transport energy demand (18.5% of total primary energy supply).
o 2. No mention about co-products is made. However, most conventional biofuel
crops have high protein feed as a co-product (soybean: 15% biofuel, 85% protein
meal; corn: 30% biofuel, 30% DDGS), which draws a very incomplete picture.
p.1, 4th para; p. 14, 3 para
- There has never been a 10% biofuel mandate in the EU, only a target for 10% renewable
energy in the transport sector by 2020. And more importantly, there has not been any
decision in the EU to limit the contribution of conventional biofuels to 5% of total transport
fuel demand in 2020. The only document that has yet been published is a European
Commission draft legislation that includes, amongst others, the 5% cap as a proposal. The
draft legislation is currently under review by Member States and will need to be formally
adopted through the European Parliament, before it becomes legally binding.
p.2, 3-5th para
- The definition of 1st, 2nd, and 3rd generation biofuels is not clear, and does not cover some
of the new technologies that convert, for instance sugar via microorganisms (other than
algae) into fuels. The terms “fuel crops”, and “lignocellulose-technology”, are not defined
and thus confusing. We suggest to use the IEA definition of conventional, and advanced
biofuels (see: IEA Biofuel Roadmap, p. 8,
http://www.iea.org/publications/freepublications/publication/Biofuels_Roadmap.pdf).
3. Biofuels, food prices, hunger & poverty
Overall comments:
- The chapter lacks the results of robust, scientific analysis on the key factors driving
agricultural commodity prices. The source indicated is a 2011 report by the HELP, which
again lacks a serious scientific analysis of the issue and instead refers to 3 studies that were
published in 2008 (“After some initial debate, hardly anybody today contests the fact that
biofuel production was a major factor in the recent food price increases (FAO 2008; Mitchell
2008; OECD 2008).”). However, at this time a proper analysis of the observed increase in
food prices was not yet possible and more recent studies have been able to derive a much
more balanced analysis on the impact of biofuels on food prices. This includes analysis from
the World Bank (2010, Placing the 2006-08 commodity price boom into perspective), as well
as analysis of OECD/FAO in their common Agricultural Outlook 2012 (relation between oil
price and agricultural commodities: p. 41, Fig 1.17). These studies show that, other than
claimed by the authors in the current report, the role of biofuels on commodity prices is
limited. The key drivers are the price of oil, weather extremes, demand growth in emerging
economies (higher share of meat in the diet), exchange rates and to some extent
speculation. The OECD Outlook, which is based on a robust modelling exercise, outlines in
some detail the implications of higher oil prices, demand for meat and other factors on
agricultural commodity prices, and shows the effect on different grain types, and should be
consulted in detail to revise the conclusions drawn in chapter 3.
- The chapter seems to underestimate the impact of high prices and increased demand on
crop production. Higher prices typically allow for production of crops on less productive
land, and also lead to yield increases. On the other hand, without these price signals,
farmers are not able to increase production due to economical reasons. The analysis that is
missing in this paper is how large global crop production would be without biofuel
production as a driving force in the market. The second step would then be to analyse the
effect that rapid economic growth in emerging economies, combined with the high energy
prices and extreme weather effects observed over the last decade, would have. These
questions do deserve considerably more attention in the report, as they are important in
order to address questions related to food security.
p.22, para 4
- The assumed 10% biofuel share worldwide in 2020 is more than unrealistic. Except for Brazil,
the US and potentially the EU, no other country/region could reach such a share in the near
future. The scenario drawn here should thus be revised to a more reasonable estimate,
following for instance IEA analysis, which suggests that by 2020 4.5% of global transport fuel
demand will be met by biofuels (IEA (2012), World Energy Outlook 2012, OECD/IEA, Paris).
p.22, last para
- The fact that there is a lack of scientific evidence supporting your conclusions should be
flagged up front. It is questionable that such an important topic like the role of biofuels on
food security is addressed by “rough” back of the envelop calculations, which the authors
“believe” provide “reasonable evidence” to draw certain conclusions and policy
recommendations.
p.23, para 3
- The report states: “The simplest reason to believe that biofuels have driven large increases in
grain prices is that it has made economic sense for biofuel producers to drive up grain prices
dramatically”. This statement is contradictory to any analysis on the economics of biofuel
production. As is well known, feedstock prices account for up to 80% of total production
costs of conventional biofuels, and profit margins are therefore strongly depending on
feedstock prices. As shown in the figure below, the increase in corn prices during the
summer of 2012 has led to a drop in US ethanol production as a result of lack of profitability.
There is therefore no reason to believe that producers deliberately drove up grain prices,
and the statement should therefore be revised.
US$/
bushel
US: Corn Price vs. Ethanol
Production
kb/d
9.0
1000
8.0
950
900
7.0
850
6.0
800
5.0
750
4.0
Oct-11
Jan-12
Apr-12
Jul-12
700
Oct-12
Data source: EIA, CME
US corn futures
Weekly fuel ethanol production
Source: IEA analysis, 2012
p. 27, 1st para
- The chosen data format does not seem to be suitable to analyse the actual impact of
weather on yields, and production volumes of grains. A split in different grain types, ideally
split by region would be more useful, since weather extremes are typically affecting specific
regions, and crop types.
p.28
-
It would be useful to not only present the share of biofuels in growth of grain production,
but also as share of the total production.
-
The conclusions drawn from the presented data are questionable and should be compared
to analysis presented for instance in the FAO-OECD Agricultural Outlook (see above).
p.34, 3.4.3., 2nd para
- According to the FAO-OECD Agricultural Outlook 2012 (p.41), a 25% increase in oil price
translates into a 14% increase in fertiliser prices. In addition costs for fuel for tractors, and
other machinery along the supply chain increase. On the other hand, the energy input costs
to an ethanol distillery also increase and reduce the profitability of ethanol production
relative to the oil price. The conclusion drawn in the paper seems to underestimate these
two strong relations between energy, and agricultural commodity prices, as well as the
feedback effect of high energy prices on biofuel production costs.