Transition to a Biofuels led energy regime in Asia
P.P. Bhojvaid, IFS, Chief Conservator of Forests,
Anupama Arora, Research Associate, TERI
Abstract
The use of biofuels1 as green alternate energy source in Asia has been debated a lot in the recent
past. There have been numerous arguments and advocacies on physical possibilities, socioeconomic viability and environmental sustainability for the use of ethanol and biodiesel to fuel
the wheel of economic development in Asia in general and rapidly growing economies such as
India and China in particular. Many have argued that the use of biofuels offers not only a
potential cleaner, greener and environmentally friendly energy source but would also provide
relief from dependence from geopolitically sensitive counties and save precious foreign exchange
spent on import of fossil fuel. Furthermore, the production of feed stock (Jatropha seeds and
palm oil for biodiesel and sugar cane/molasses and elephant grass etc for ethanol) will generate
employment for the teaming millions and provide a suitable and sustainable land use in poor
Asian countries. However, others have criticized and opined that this alternative to the fossil fuel
would result in reduced agricultural production due to competition for productive land thereby
threatening the food and nutritional security of rural poor in these nations.
Despite these
arguments and debates the last two decades have witnessed focused to sporadic attempts to attain
expertise in production of variety of feed stock such as Jatropha, corn, soybean, palm oil and
pongamia on different scales in many Asian nations. Although planners have advocated the use
of wastelands for production of feedstock for biofuels there are instances where tropical forests
have been cleared to raise palm oil (Indonesia and Malaysia). Similarly, there have been efforts
(in terms of policy initiatives) on pricing of electricity and fossil fuels (largely surrounding the
issues of subsidies) to make way for biofuels. There have also been serious attempts to explore
alternative crops and research and development on biological processes for production of ethanol
from cellulose and trans-esterification processes for conversion of Straight Vegetative Oils (SVOs)
to biodiesel. In nutshell the individual and collective issues involved in the value chain of biofuels
from SEED to WHEEL such as land for production, finance, agronomy, research, processing etc.
have policy imperatives, which have local, regional and global implications (externailities). These
1
Biofuels are defined as feedstock intended for the production of bio-energy, produced directly or indirectly from
biomass. Biofuels can be in solid form (fuelwood, charcoal, wood pellets, briquettes etc.) or liquid (bioethanol, biodiesel).
need to be discussed and resolved to enhance sustainability for the use of biofuels in Asia and
would be addressed in detail in this paper. The paper therefore considers the pros and cons of the
debate over the potential social, economic and environmental impact of the increase in biofuel
production. It also recognizes that the developing world has its own set of bio-energy issues,
which can be different from those of the developed world.
Introduction
The world currently uses 86 million barrels of oil per day with forecast that demand will increase
to 118 million barrels by 2030. The growth of the Asian economy will contribute substantially to
the increased demand of fossil fuel imports to meet the energy demand. Given these demand
projections the import of oil is likely to grow exponentially in the coming years. This would lead to
increased financial burden on the countries and the poorest developing countries in particular
would be the target of severe economic hardships. Therefore it is imperative for the developing
countries in particular to explore alternative energy sources to meet their ever increasing energy
demands.
In the above context, biomass, a widely available energy resource, has received considerable
attention over the recent decades as a renewable substitute for fossil fuels. Biofuels derived from
sustainable agricultural practices provides an opportunity for developing countries to utilize their
resources and attract the necessary investment to accelerate their sustainable development
process. Biofuels can help mitigate climate change and reduce dependence on oil in the
transportation sector. They can also have a positive impact on the limited foreign exchange
reserves of many developing countries. When well managed, they also offer large new markets for
higher prices products for agricultural producers that could stimulate rural growth and farm
incomes. Some of the potential benefits include: environmental benefits from the reduction of
greenhouse gases (GHG) and the recuperation of soil productivity and degraded land; economic
benefits from the increased activity resulting from improving access to and quality of energy
services; and international benefits derived from the development of sustainable bioenergy.
Sustainability of Biofuels led energy regime transformation
There are three types of biofuel sources: woodfuel, agrofuels and municipal by-products.
Woodfuel refers to all types of biofuels derived directly and indirectly from trees and shrubs
grown on forest and non-forest lands, from silvicultural activities, harvesting and logging, as well
as industrial by-products. Agrofuels are biofuels obtained as products of agriculture biomass and
by-products from farming, and/or industrial processing of raw material (agroindustries). They
include biomass materials derived directly from fuel crops and agricultural, agro-industrial and
animal by-products. Municipal by-products refer to biomass by-products produced by urban
populations (including residential, commercial, industrial and public). They consist of solid
municipal by-products and gas/liquid municipal by-products produced in cities and villages
While the potential for bioenergy to reduce global greenhouse gas emissions is emphasized time
and again, the extent to which it reduces the green house gas emissions varies, depending not
only on the feedstock conversion technology but also on the methods used to produce the
feedstock. For example, ethanol produced in industrialized countries from corn may reduce lifecycle greenhouse gas emissions only 10-30% compared to oil, whereas ethanol produced from
sugar cane or cellulose may reduce it by 90% or more (Smil). In both cases, the greenhouse gas
reductions increase dramatically if agricultural practices are adopted that enhance soil carbon
sequestration and are less intensive in use of petroleum-based fertilizers and fuels. This is
especially significant in the case of bioenergy-dedicated crops like grasses and trees, as their
production is characterized by relatively low use of fertilizer and other petroleum-based products.
Further if produced and used appropriately biofuels can deliver substantially lower net
greenhouse gas emissions than fuels derived from fossil fuels, however if produced in an
environmentally unsustainable manner can actually lead to increase in GHG emissions. This is
because of the employment of energy intensive agricultural practices and the large scale use of
artificial fertilizers, resulting in the emission of additional GHG, N2O and other polluting gasses
(GAVE, 2005).
These biofuels can be produced by gasification of a large variety of biomass (woody materials,
grasses, agricultural residues) followed by a catalytic conversion. Other options include a
pyrolysis process (gasification without oxygen) and a biocrude-process, using high temperatures
and pressures to produce a biocrude that can be used as a feedstock for biodiesel. This conversion
process is much more efficient, requiring lesser area of land, and creating greater environmental
gains (up to 90% higher than fossil fuels). These advanced forms of biofuels are presently
available only at pilot scale and would require more research for large scale commercial
production. Studies in Netherland have labeled these forms of fuels as second generation biofuels.
These advanced biofuels are not yet commercially available and it is expected that most of these
advanced forms of biofuels would take some years before commercial introduction. However the
present energy regime in Asia largely dependent on fossil fuels or traditional forms of biomass,
offers a suitable platform for transitions experiments 2 which can bring about a transition to a
new energy regime3 led by advanced and sustainable forms of biofuels.
Transition from fossil fuels to Biofuels : Analysis through the lens of SNM
The method of Strategic Nice Management (SNM) can be employed for this as the purpose of
such experiments. The purpose of SNM is ‘to learn more about the technical and economical
feasibility and environmental gains of different technological options, that is to learn more about
the social desirability of the options’; and ‘to stimulate the further development of these
technologies, to achieve cost efficiencies in mass production, to promote the development of
complementary technologies and skills and to stimulate changes in social organisation that are
important to the wider diffusion of the new technology’ (Hoogma et al., 2002). The method of
SNM is a significant tool in investigating the experimental introduction of new sustainable
technologies through societal experiments and studying about the prospects for a transition
towards advanced biofuels in Asia
However the success of such transition experiments in most economies has so far been
constrained
by several challenges. Particularly a strong technology push approach, lack of
productive relations between producers and users and neglect of this issue of societal embedding
of new energy technologies has produced few success stories and many failures, despite a fairly
high level of public funding of energy research (Verbong, 2004).
Moreover, due to the limited availability of the advanced forms of biofuels, promoters for the first
generation biofuels(produced by less environmentally sustainable means of production) have
succeeded in acquiring some degree of support such that they have been supported by ad hoc tax
exemptions and other forms of government support. Suurs and Hekkert (2006) asserted that the
Government policies have not been clear, while there is a preference for advanced forms of
biofuels , the first generation biofuels (less efficient) are being supported as well. This unclear
implementation policy on the part of the Government has restricted the wider diffusion of the
advanced forms of biofuels
‘Experiments’ can be defined as “unique socio-technical laboratories for learning about the problems, shortcomings
and barriers a new technology faces” (Hoogma, 2000)
3 A regime can be described as a set of ‘rules’ that structures actors’ behaviour and guides them into specific directions
(Raven, 2005a)
2
The introduction of sustainable innovations is not an easy task. This is because existing energy
and transport systems are characterized by lock in and resistance to change (Cowan and Hulte´n,
1996; Jacobsson and Johnson, 2000; Unruh, 2000). Systems are locked in through technological,
institutional and social path dependency, resulting in a variety of barriers for new innovations
such as the lack of a fuel infrastructure, the lack of clear government regulations or fierce
competition with a network of incumbent actors that do not support the innovation. Moreover,
new technologies (for instance those led by biofuels) often suffer from limited technological and
economic performance compared to the dominant design, which has already profited from
decades of dedicated research and development. For instance biofuels produced in unsustainable
way which is less energy efficient. Yet new technologies often do get support on the basis of
expectations about future performance improvements or (expected) problems within the
incumbent system. Because the innovation lacks a competitive advantage, it still needs nurturing
and further improvement. Van de Belt and Rip (1987), for example, argue that the success of a
new innovation is initially only a promise of success.
For example the introduction of improved cooking stoves was initially resisted due to fixed mind
set of consumers. Similarly, the introduction of solar impliments ranging from lamps to milk
churning machines could not gain momentum due to lack of adequate servicing and repair
centres in distant locations.
Furthermore, a standard technology for transesterification for
production of biodiesel, which can use multiple feedstock is still not available in Asia.
For successful innovation introduction in society, experimentation and testing in niche markets is
a fundamental step in the innovation process (e.g. Schot, 1992; Levinthal, 1998).
The potential of transition towards a biofuels led energy regime can be analysed on three different
levels through a multi-level framework including micro, meso and macro levels. At the micro
level are the niches , the second level is the regime and finally the macro level is the landscape.
The success of a transition experiment and adoption of the new technology are influenced by all
the three levels . Successful niche processes can be reinforced by changes at regime and landscape
levels; together, they determine whether a regime shift will occur (Kemp et al, 2001 in Geels,
2002)
The next sections describes each of these levels in context of biofuels
Landscape
The landscape is at the macro level. Developments in the landscape level are external to
developments in the regime and niches but nonetheless have a significant influence on them.
Factors at this level include material infrastructure, social values, political culture, macroeconomic developments like rise in oil prices, financial recession or growth in GDP, pervasive
technologies(ICT, electricity, steam engines) and environmental problems, supply of raw
materials (Geels & Kemp, 2000)
The landscape though would across countries in Asia, for most developing countries is broadly be
composed of Landscape factors of the curren energy regime in Asia
1.
Rising oil prices for most oil importing countries
2. Dependence on oil exporting countries: The dependence on countries in the (unstable)
Middle East is considered to be a risk. Therefore, domestic (national) sources of energy
are important for sustained economic development.
3. Increasing environmental awareness
4. Increasing global interest in biofuels
5.
Renewed interest in agriculture The World bank and other organizations view
agricultural development as being very important for achieving the Millennium
Development Goals, especially for developing or low-income countries (World Bank,
2006). Cultivating advance forms of biofuels in developing countries is supported by
such initiatives
Regime
The second level, the regime is composed of the dominant social, technical and economic forces
that support the technology and its physical and non-physical infrastructure” (Lane, 2002). The
dominant regime typically exerts a certain resistance against a certain niche development; that is,
its permeability is limited. The energy regime is quite complex. There are different applications
(fuel for diesel engines, electricity generation, lighting and cooking) and sources (fuelwood,
kerosene and diesel fuel, among others). There are currently problems in this regime, which vary
from health issues to limited availability of energy. User preferences are important in this regime.
Consumers are price-sensitive, and they are choosy with respect to their cooking regime. This
limits the prospects for biofuels as a source of lighting and cooking fuel. However, blending
biofuels with normal diesel fuel seems to have better prospects. It requires the least modification
to engines, so it is most likely to be facilitated by the current regime. Also, there would probably
be little resistance to using biofuels to generate electricity given that effective technologies are in
place . Finally, in the financial regime, a new development which facilitates provision of
microcredit has a positive influence on the transition.
Niche
Raven defined niche as “a loosely defined set of formal and informal rules for new technological
practice, explored in societal experiments and protected by a relatively small network of
industries, users, researchers, policy makers and other involved actors” SNM views transition as a
gradual learning process driven by several experiments executed by the new technology's
stakeholders in a protected space called a 'niche'. It is important to note that the niche processes
occur in a broader context, composed of a so-called 'landscape' and a 'regime' and thus are heavily
influenced by them
The dynamics at the three levels described largely determine the success of the failure of the
transition experiments involving experimental introduction of biofuels. For most developing
countries within Asia developments at the landscape level have had a relatively positive influence
on the transition to biofuels.
Current Energy Regime in Developing Asia
Given the presence of some of the fastest growing economies in Asia, the energy demands in
region have been increasing exponentially over the recent decades. The commercial energy needs
of Asia are set to dominate global demand in coming years. At the same time, a substantial
proportion of the population in Asia is poor and distinguished by some of the lowest levels of per
capita energy use in the world. Moreover, the poor are the most affected by supply system
shortfalls and are also unable to pay for the limited services available—a situation that traps them
into interminable poverty and debilitating human misery. Energy use patterns in Asia are not
only characterized by wide contrasts between different regional economies, but also in terms of
non-uniformity in access to modern energy supplies within most countries. Apart from a few
affluent nations( including the PRC), most non-OECD Asian countries fall well short of providing
universal access to the basic energy services to their populations, with 30% of the region’s total
population lacking electricity. In addition, there are also wide variations in terms of the quality of
power supplied, with the poorest often getting very little electricity, and usually only
intermittently and of inferior quality. The data on such connections are also suspect, as utilities
often classify even limited and rudimentary electricity service in the category of regular gridsupplied regions in order to meet government-specified rural electrification targets. Therefore,
the situation is actually even less sanguine than such figures portray, with a significant number of
the fraction with access to grid power unable to access it “on demand”.
Asian countries, with their multitudes of the “energy poor,” therefore, need to urgently find ways
of addressing these issues comprehensively if they are to join the ranks of more developed and
prosperous countries. Meeting Asia’s growing energy needs and providing energy services to the
vast number of the poor are major challenges facing the region. Developing Asia, would require a
reevaluation of national energy planning and management structures, as well as a consideration
of emerging market realities in these countries, each offering its peculiar conditions and
solutions. Additional energy supplies can be tapped in the form of renewable energy options—
hydro, wind, solar, modern biomass, etc.—especially for dispersed supplies of energy and
decentralized generation of electricity. Given these determinants of energy demand and use
forecasts in Asia, new interventions would be required to put in place an alternative energy
development strategy that better addresses the needs of the poor in a manner that is both
sustainable and mutually reinforcing of overall economic growth. Such a strategy could rely on
better resource utilization and end-use management to optimize the benefits of existing energy
supplies, and technological advancement, especially in alternative systems and renewable energy,
to tap potential additional energy resources in order to expand supplies.
In most Asian countries there is a high level of dependence on traditional fuels. Such traditional
energy resources barely help meet minimum standards of living even among the poor who depend
on them. It is estimated that approximately 1,040 MJ of useful energy per capita per year is
required to meet basic household cooking, lighting and space heating needs(translating into about
8 to 10 gigajoule (GJ) per capita of primary energy). However, when biomass conversion
inefficiency is taken into account, the majority of rural households in Asia fall below this basic
consumption level.
From the above discussion it is evident that energy use by the poor in most Asian countries
represents a precarious balance between meeting basic survival needs, largely through recourse to
cheap or “free” traditional fuels. Most poor seem to aspire for greater access to commercial energy
supplies as their incomes allow it remains persistently below the levels required to substantially
improve per capita consumption rates. Improved energy supplies and devices that ensure greater
efficiency of use, on the other hand, can translate into substantial increases in the purchasing
power of the poor.
Although not without their own environmental and economic risks, such technologies carry
virtually none of the climate change and local pollution drawbacks associated with fossil fuels,
and in addition offer other important advantages: practically inexhaustible resource base; zero
fuel costs or recurring import requirements; predictable lifetime production costs; suitability for
dispersed deployment near loads served, hence reducing transmission costs and losses; and
application sizes ranging from household-level to utility-scale. These latter attributes make
renewable energy, especially power and biogas generation, particularly apt for rural or remote
locations, where modern energy services are most needed and for which expansion of electricity
and gas transmission networks is particularly difficult or load demand uneconomical.
Increased renewable energy use, especially for the rural poor, is thus an important potential
means for significantly improving energy provision. Thus the present energy situation in Asia
presents suitable platform for transition experiments that could bring about a transformation to a
more sustainable energy regime
Before taking this discussion forward it is important to look at the impact of level of stability in
the regime on the likelihood of achieving success in the process of niche formation. Raven has
defined three different regime situations. In the first there is there is a high stability in the regime
such as there is a clear and dominant design, supported by an effective regulatory framework;
firms, authorities, societal groups and all the actors have a clear and shared vision about the
regime, and about the direction of development. There are problems, but the general perception is
that they can be solved while maintaining most of the existing regime through optimizing the
dominant design. In this situation, the chances for niche breakthrough are very limited. In the
second scenario regime is highly unstable and also suffers from several uncertainties. Typically in
such a regime the dominant design has been abandoned due to substantial environmental
problems. Firms that previously dominated the regime may be looking in different directions;
they no longer have shared search heuristics nor do they share a vision on the regime’s future.
Moreover, new firms have emerged, trying to gain market shares by using new strategies or by
supporting different technologies. Because of diversification in the technological base, there is no
longer a clear and effective regulatory framework, there are no longer obvious user preferences or
clear markets. In this situation, the opportunities for niche breakthrough are also very limited,
due to a high level of uncertainty about future requirements for innovative technologies, and
scattered use of resources.
Finally the third type of regime scenario is characterized by regime instability but still offers
enough certainty and structure. In this situation, dominant regime actors are facing large
problems (e.g. environmental problems, external (political) pressure or competitors gaining
market share). They are increasingly aware that they cannot solve these problems while
maintaining the existing regime. They orientate towards more radical solutions. The established
regime in terms of social network relations, regulatory frameworks, market rules, R&Dinfrastructures, etc. is to a large degree still intact; regime actors can build upon established
relations in the past and maybe continue the cooperation. Nevertheless, they are also looking for
solutions and partners outside established networks. This situation creates the most
opportunities for niche breakthrough, because it makes resources at the regime level available for
niche development. The current energy situation in most Asian economies is somewhat a
reflection of this regime type.
Protection extended by the Government:
In the initial phase of introduction of the
innovation, it needs to be protected from too harsh selection, for example with investment grants,
tax exemptions or other forms of ‘protection’. To distinguish these protected space from regular
market niches, Kemp et al. (1998) coined them ‘technological niches’. Technological niches can
serve as a test bed for learning with the aim of wider societal embedding.
Governments have provided substantial support for biofuel development to enable it to compete
with conventional gasoline and diesel. The measures included consumption 1 World incentives
(fuel tax reductions), production incentives (reduced taxes and direct subsidies) and mandatory
blending standards. The private sector responded to these incentives, setting up processing plants
for converting crops into energy in a relatively short time. Alarms were raised when the resulting
increased demand for fuel crops contributed to increased commodity prices with adverse effects
on consumers and environmentally sensitive land that was cleared for planting palm oil. These
excesses raised some valid concerns about the impact of biofuel production on local
environments, livelihoods of the displaced people and the global greenhouse gas (GHG) emissions
Transition experiments in most Asian countries have met with little success so far and a complex
web of social, economic, technological and cultural factors together have curtailed the wider
diffusion of biofuels. The below section analyses how each of these factors have impacted the
diffusion of biofuels and suggests way forward for overcoming the barriers
Social Factors
1.
Reduced access to land & exploitation of the smallholder farmers . The biofuel
expansion create new pressures on land tenure arrangements, leading to alienation.
There is considerable fear that the poor may either sell or be forced to relocate as the rush
to meet increasing demand gathers momentum. Further if the land tenure systems are
weak having no clause for the redressal of the issues faced by the poor farmers , there is
risk of appropriation of land by large private entities interested in the lucrative biofuels
markets. This is particularly true for the poor farmers who live and work in remote areas
and have little negotiating power, as due to their low economic status they get tempted to
sell their land at low prices or where land is “de jure” owned by the state (typical in most
African countries). These lands are then allocated to large, outside investors. Appropriate
policies for biofuels should be developed and integrated into a broader strategy of
protecting land rights of the poor and disadvantaged, including Indigenous People, who
are mostly at risk of becoming “bio-fuel refugees”, to ensure that they retain ownership or
usufruct rights to their land. Prioritizing improvement of land policies and land
administration systems will be important to maximize the extent to which poor
smallholder farmers can benefit (particularly those with insecure or customary tenure)
or, in some cases, to protect them.
2. Climatic risks. Farmers involved in biofuel production are subject to the effects of
extreme weather situations such as droughts or floods. Effective insurance mechanisms
should be put in place to prevent the farmers against such climatic risks.
3. Exploitation of the small holder farmers. Since in most situations no legally
binding contracts are signed between the farmers supplying raw materials and the private
companies engaged in biofuel processing, exploitation of smallholder farmers and rural
people at the hands of the private companies has occurred in several cases.
4. Increased exertion for women: There is risk that women benefit less than men. This
is because large scale diversion of wastelands including degraded forests for feedstock
production for biofuel production would mean extra miles for home makers(women in
majority of the households in developing countries) to collect firewood and fodder.
Besides the increased labor and destitution for women it leads to wastage of productive
resources in a non productive activity. It is therefore important to ensure that bio-fuel
development policies represent the interest of and enable women to engage and benefits
from the opportunities created by biofuels production
Environmental Factors

Threat to the Ecosystem : Cultivation of biofuels can involve agricultural practices
that are not environmentally friendly and lead to soil degradation and depletion of
natural resources. When land is cleared for planting biofuel crops, the effect can be
harmful to the environment, because expansion of biofuel crops can displace other crops
or threaten ecosystem integrity by shifting from biodiverse ecosystems and farming
systems to industrial monocultures. In Brazil, it is feared that future sugarcane expansion
might involve fragile areas. In Indonesia and Malaysia, 14 to 15 million ha of peat lands
have been cleared for the development of oil palm plantations. Policies promoting
sustainable farming activities, such as conservation agriculture, can protect the natural
resource endowments of the poor and avoid bad practices such as deforestation that
would increase GHG emissions. The relative advantage of reducing GHG emissions
following less intensive farming indicates that incentives need to be provided to
developing countries, especially poor farmers, to encourage them to mitigate the effect of
climate change.

Depletion of water resources : Cultivation of some forms of biofuels requires a lot of
water which takes away from the farmers the water that they need for other purposes. For
instance feedstocks, such as sugar cane, require considerable quantities of water. In dry
areas cultivation of biofuel crops like jatropha can enable saving water resources

Soil Degradation. Impact on soil is another environmental concern that has been one
of the major barriers to biofuel diffusion. In rural areas that fertilize with crop wastes and
manure rather than external inputs, biomass production could lead to dramatic declines
in soil fertility and structure. However biofuel plants such as jatropha and pongamia that
grow on marginal lands have potential to improve soil quality and coverage and reduce
erosion while their oilcakes can provide organic nutrients for improving soil.

Many biofuels have limited GHG or net energy benefits. Application f
unsustainable production methods and cultivation of energy inefficient
biofuels can increase the GHG emissions. high-yielding feedstocks grown on
existing cropland and converted to fuel using highly efficient processes result in
significant net energy and GHG benefits. Ethanol produced from non-irrigated sugarcane
grown on existing croplands or degraded land, with efficient use of co-products and
wastes, has the most favorable net energy and GHG savings. Ethanol produced from
sweet sorghum grown on degraded land as well as cellulosic ethanol also provide
favorable energy and GHG balances. However, current grain-based biofuels systems in
Asia result in negative or low net energy and GHG savings. Biodiesel produced from oil
palm provides the best net energy and GHG benefits, but only when its cultivation does
not involve land conversion and where there is full utilization of co-products and wastes.
Biodiesel produced from jatropha planted on degraded land and coconut produced under
optimal conditions can also provide benefits compared to fossil fuels.
It is required that different scenarios are visualized and rigorous lifecycle analysis of potential
environmental impacts employed for different biofuel production systems to ensure the
development of environmentally friendly biofuel programmes
Economic Factors

Analyzing the economic attractiveness of cultivating crops for bioethanol production, and
large-scale plantations biodiesel production instead of other competing “crop”,
“plantation” choices: The economics of Biofuel production is critical in ensuring that
biofuels could be used for enhancing Asia’s energy security. In this regard the price of the
feedstock is important. There is scope of volatility in the yields and prices of the
feedstocks for biofuel production impacting biofuel production and energy security. For
example at the moment the Jatropha Seed Price has been fixed at Rs.7/ k.g by the
government of Rajasthan, in India, which is a significant step to hedge the risks of price
volatility of feedstocks for biofuel production. The price of Biodiesel ranges between Rs.
40 – 50 per litre, which closely matches with the cost of production of Diesel in India
without subsidies. If the net income from the Biofuel feedstocks is greater than that from
the existing crops which are grown, then farmers would switch to biofuel crops. The
impacts of such switchovers on food security would be different across the various states
and zones in India depending on the existing crops, which are grown, and the variable
economic returns from them. Economic returns could be high in some of the biofuel
crops like Sweet Sorghum, which gives rise to a net income of Rs.20000/ha in 3 months
in India and many other South Asian countries. In addition to that Sweet Sorghum has
been certified as an efficient energy crop by Food and Agriculture Organization (FAO).
This is because Sweet Sorghum requires one – fourth of the water required by sugarcane
for biofuel production. The drought resistant crop is less energy intensive and could be
grown in arid regions. Sweet Sorghum could be used for 4 months in the existing sugar
distilleries during the off – season. Sweet Sorghum production also creates a production
of 1 ton per hectare of grains, which could contribute in reducing the grain availability
and could complement food security along with its usage as a feedstock for biofuel
production. A strong argument was made that given limited information on impacts of
the biofuel plantation on the incomes and livelihoods of local people and farmers, one
needs to tread with care. Current enthusiasm to convert vast tracts of wastelands to
biofuel production may be very risky for farmers and other small investors given the
limited information Other competing uses of wastelands which also address energy
insecurity, such as timber plantations, eucalyptus, etc, should also be considered.

Increased food prices : Biofuel production has pushed up prices of some food crops,
particularly for those used as feedstock. For example the price of maize increased by 23
percent in 2006 and some 60 percent during the past two years, largely because of the
U.S. bioethanol program.The U.S. is the world’s largest maize exporter and when its
biofuel expansion contributed to a decline in grain stocks, it inadvertently, contributed to
an increase in world cereal prices. Similar price increases have occurred for oil crops such
as palm, soybean and rapeseed because of bio-diesel production. Further research is
required in advanced biofuel which can enabled efficient conversion of ligno-cellulosic
biomass (from grasses and other biomass) into liquid and gaseous energy forms. This
would allow use of cellulose-rich biomass to be grown on marginal lands that do not
compete with food.

Impact on the poor as a result of reduced food security. The development of
biofuel as a source of energy, when grown on a large scale, could represent a paradigm
shift in agricultural development. Urban and rural landless households, wage earning
households, rural households that are net purchasers of food and urban consumers are all
expected to suffer as a result of this paradigm shift as a result of inevitable rise in food
prices. Some nutrition studies show that the number of food-insecure people in the world
would rise by more than 16 million for every percentage increase in the real prices of
staple foods, meaning that 1.2 billion people could be chronically hungry by 2025 – 600
million more than previously predicted. Existing institutions can play a crucial role in
making bio-energy pro-poor. For instance cooperatives or producer companies, can
bundle the interests of the poor, accumulate and attract capital and partnerships for the
necessary investments, organize feedstock supplies in large quantities and, in turn, create
a countervailing power to the larger firms operating in the energy market. Therefore the
challenge would be to design suitable policy measures that ensure that expanding the use
of bio-energy is conducive to reducing poverty and hunger and, thus, that bioenergy
becomes pro-poor(Eijick, 2006) . Particularly there are opportunities for creating benefits
for the poor where the production is labour intensive, processing technology for provision
of local energy is simple and public-private sector partnerships exists for supply to
national/international markets. However for farmers in developing countries to make
use of the biofuel opportunities economies of scale are necessary It is estimated that
global biofuel production could expand from 50 billion litres to more than 250 billion
litres by 2025, offering tremendous opportunity for the poor to participate in this vast
global market. (Prakash, 2007). Well managed supply chains, transporting crops to
processing plants or selling through middlemen and policy measures would be required
to ensure that small farmers are part of the national drive to promote biofuel production.

Limited Economic Viability without financial incentives : Most large-scale
biofuels production systems are not economically viable without extensive subsidies and
are subject to boom and bust cycles. Asian biofuels are expensive relative to fossil fuels,
and effective utilization of co-products and wastes can be crucial to achieve profitability,
which is otherwise highly volatile. Infact experience to date strongly suggests that existing
policies and incentives for biofuels production have been counterproductive and, in most
cases, too expensive For instance in Asia, ethanol from molasses and biodiesel from oil
palm and waste oil tend to have the lowest production costs. The return on investments
(both public and private) and the rate of market maturation will depend on how
government policy, R&D, and operating costs evolve. In addition, opportunities for
expanded trade in biofuels will be limited as long as countries enforce trade barriers and
protectionist policies. To address this smart incentives are needed to promote
sustainable biofuels

The potential of equity investments abroad in crops, plantations, land and
processing of crops for biofuel production in ensuring energy security: Equity
investments in seeking land, feedstocks and technology have already started across the
world. Already companies from U.S., U.K, and Germany have been investing in seeking
land in India and other Asian countries for producing Biodiesel through contract farming.
Similarly investments have been made by European companies for getting land for
biodiesel production in African countries like Mozambique. However for India’s Energy
Security one of the strategies could be to generate benefits from the equity investments
coming into India. Discussion is required around this point in all Asian countries.
Technology Factors
There are several limitations in existing biofuel technologies. For the technology innovation to be
accepted by the target users and the technology niche to develop it is important that the
introduced technology can replace the exisiting technology used in the current regime. However,
for that the technology needs to be suitable to meet the needs of the people and exceed the
previous technology in its performance. It has been seen that in most biofuel
transition
experiments have met with limited success on this front as the introduced technology though
more environmentally benign have often found it difficult to compete with the existing
technologies due to various technical limitations. The development of innovative conversion
technologies and advanced feedstocks will eventually allow for greater productivity per unit land,
at a lower cost, world-wide. These technologies include conversion of cellulose into ethanol, and
gasification of any type of raw biomass, with the synthesis gas converted into any number of
products (including synthetic bio-diesel and bio-gasoline). As these new technologies develop,
opportunities for production of bioenergy will increas. In the near future, countries with
substantial resource potential may be in a strong position to export excess bioenergy services.
Countries are already exploring the possibility of exporting and transferring new technologies to
countries that are currently lower-cost producers of bioenergy. There may be tremendous
potential, for example, for production of advanced, cellulosic ethanol in developing countries.
Continuing technical advances in existing bioenergy production also present an important avenue
for technology exports. In order for technology trade to flourish, a robust domestic bioenergy
infrastructure must be established in many countries, opening the door to bioenergy services
trade
Another closely associated debate that suggests the need for the upgradation of bifouels
technologies and their wider availability in the Asian economies is “ Whether the energy output
to input ratio high enough to make biofuel production viable in terms of its impacts on
environment and energy security? “
Crop rotation of energy efficient biofuel feedstocks is essential to address the issue of energy
output to input ratio of biofuels. Monoculture of biofuel feedstocks should be avoided. A larger
focus on wastelands for biofuel production has to be implemented for the enhancement of energy
output input ratio of biofuel production. A region wise identification of wastelands would be very
useful. A regional focus on alcohol production would be an effective option for implementation of
biofuel programme. A larger impetus should be given for biofuel production in those regions
which have a large supply of feedstocks for bioethanol or biodiesel. This has to be achieved
through adequate incentives and policy framework, which would support the use of excess
bioethanol for blending in gasoline thereby contributing to energy security. One of the ways of
improving biofuel production and enhancing energy security could be through an increase in the
yields of feedstocks for biofuel production. This could raise the biofuel output per unit of energy
input and hence could increase the energy output to input ratio of biofuel production. The yields
could be increased by a larger access to technology in other Asian countries through co –
operative agreements. In order to mitigate the probable impacts on soil and environment from
production of biofuel feedstocks, it is imperative to focus on crops, which have higher energy
output to input ratio, e.g., sugarcane in comparison to corn as a feedstock for biofuel production.
In addition to that it would be important to invest in R&D for development of technology for
cellulosic conversion to ethanol. The conversion of lignocellulosic feedstocks to bioethanol with
availability of new technology could create a favorable energy output input ratio and could
contribute towards energy security. The risk of pressure on arable lands for biofuel production
could be reduced with the availability of technology which could efficiently convert agri-residues
to biofuel with a high-energy output to input ratio. One of the other ways could be technology
development for syn-gas production. In this regard one company in Spain is already producing
cellulosic ethanol having a high energy output to input ratio. Very few companies have been able
to develop commercial technology for conversion of lignocellulosic feedstocks to biofuel
Besides the above discussed factors there are certain important issues that need
further consideration before the biofuel led energy regime can be made possible
Spiraling global oil prices, inherent foreign exchange risks, global and local environmental
pollution associated with fossil fuel imports and use has turned the spotlight on alternative
renewable biofuel options like bio-ethanol and bio-diesel. In this regard, indigenously produced
biofuels as blends with fossil fuels, it is argued, can play a key role in ensuring the country’s
energy security along with enabling employment generation, rural development, and reduction in
environmental pollution. However, in the last few years especially following the reduction in the
price of crude oil some issues have been raised to address sustainability of biofuels. These are
namely -
(i) what are the output-input ratios of various feedstocks for biofuel production and
their consecutive impacts on energy security. (ii) What are the food security issues associated with
the production of various feedstocks for biofuel production (iii) what is the economics of bio-fuel
production and net return from biofuel feedstocks in comparison to alternative plantation and
crop choices and (IV) what is the importance of equity investments in land, technology and
feedstocks for biofuel production in addressing energy security
Another major concern which has been raised by many in the recent past is the fact that a debate
on bio-fuel production should centre on energy dependence rather than energy security. Biofuel
Production has to be used to supplement petroleum products but not for their substitution.
Biofuel production is a risk-management option, and raises the following key trade-off: – can
potential increased food import dependence, because of diversion of cropland to biofuel
production, be acceptable if it leads to reduced oil import dependence? This is especially relevant
given that countries from where one could import food tend to be more stable geopolitically
compared to those from where India now imports oil.
Conclusions and Way forward:
Energy Output to Input ratio of biofuels is critical if energy security is really to be addressed
through this route. This could be achieved through a careful selection of feedstocks, crops for
biofuel production, complemented by energy efficient technologies.
Impact of biofuel production on food security of Asia would be dynamic and might have a larger
impact in the long run after 10 years. This impact on food security however would vary across
regions and states of India depending on the types of crops grown.
Benefit creation from the existing and forthcoming inward equity investments to Asian countries
could contribute to the overall energy security of the country through enhancement of rural
energy security. The rural energy security could be increased by an energy efficient usage of the
existing local feedstocks facilitated by the availability of advanced technologies through inward
equity investments. Appropriate institutions need to be designed to ensure such benefit creation.
Outward equity investments from Asia seeking access to land, efficient technology to raise
productivity of feedstocks, and subsequent energy efficient conversion to biofuel could contribute
to energy security in Asia.
To enable the transition to a sustainable biofuel regime it is important that the various social,
economic, cultural, technological issues are addressed. SNM as a tool can be greatly valuable in
this regard as it can help identify various challenges to the acceptance of biofuels by enabling the
stimulation of learning processes to improve the biofuels technologies and making them more
suitable to meet the needs of the end consumers.
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