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Belfer Center Researchers Suggest Five Organizing Principles for Maximizing Development Impact of Global Biofuel Market

Hausmann
Simulated impact of a sugarcane ethanol industry in terms of exports for different countries, based on non-crop land available for cane cultivation. The calculations set aside protected areas but not non-protected forests. Source: Hausmann and Wagner. Click to enlarge.

In a discussion paper released by Harvard University’s Sustainability Science Program and the Belfer Center’s Environment and Natural Resources Program at the Harvard Kennedy School, Ricardo Hausmann and Rodrigo Wagner lay out five organizing principles for maximizing the development impact of a global biofuel market.

Hausmann and Wagner note that a disproportionately large amount of the world’s agronomic potential for the production of bioethanol is concentrated in a subset of developing countries. In addition to contributing to the global energy supply, the emergence of a biofuels industry may also promote the competitiveness of some of these most vulnerable communities. To develop that potential, they write, countries need both the existence of an appropriate local business ecosystem and reliable global demand.

This opportunity is being threatened, however, by the complexity of the coordination challenges, like standardization and the building of an integrated supply chain, as well as by the large number of policy priorities that are shaping the industry’s emerging structure. This paper will discusses all these tensions in the context of the international policy debate.

Creating a viable global biofuels market depends on a range of both local and global policy inputs. Translating the biological potential for biofuels into an economically exploitable opportunity requires a business ecosystem that provides the intermediate inputs and market structures that maintain the private cost of production below the sale price. Since this complex network of requisite conditions...can neither be developed quickly nor provided by a single firm, it is crucial to coordinate entrant entrepreneurs by providing certainties.

—Hausmann and Wagner

Their five organizing principles for maximizing the development impact of a global biofuels market are:

  • Provide certainty for production in places that do not have it, but do it in a way that promotes competitiveness. This organizing principle implies that regulatory regimes should not limit the capacity of the national state—i.e., implementing firm-level regulation rather than putting requirements on national governments.

  • Not all biofuels are created equal, so we have to tell them apart (up to a point). Certification is an economically sound tool to tell apart products with different attributes, they note, but these should be attributes that can be observed by a certifier at some point in the value chain.

    Focusing on things that are not observable by a third party can not only increase the burden of requirements in these new areas, but also create mysterious and probably distortive ways to certify unobserved things, as it would be a requirement asking for biofuels produced in a give acre to not push the agricultural frontier as a secondary effect.

  • Have as many (targeted) instruments as policy goals.It will be impossible,” they write, “to create a sensible green market if we pile the requirements of distinct and often contradictory policy goals onto the shoulders of bioenergy.

    As illustration, this principle says that if we care about forests, then we should design incentives to compensate the owners of that land to keep the forest. This is much more targeted and specific than trying to preserve a forest through bioenergy policy. Two different goals require two independent levers to achieve them.

  • Minimize transaction costs, in a broad sense. This implies certifying only the crucial steps in the value chain, to avoid making the burden of regulation higher than the benefits of an efficient production.

  • Create “scaffolding” to deal with uncertain regulation in complementary policy arenas. scaffolding regulations are a flexible set of norms that can accommodate to future changes in the rest of the regulatory environment. As an example, they suggest that if a global carbon tax becomes available, then local regulation should piggyback on it, rather than doubling the burden of taxation on energy transportation.

Resources

Hausmann, Ricardo and Rodrigo Wagner, “Certification Strategies, Industrial Development and a Global Market for Biofuels,” Discussion Paper 2009-15, Cambridge, Mass.: Belfer Center for Science and International Affairs, October 2009.

Comments

Henry Gibson

Biofuels were tried for industrial nations 200 years ago and led to the deforestation of all industrial nations. Biofuels remain a major source of energy in undeveloped areas of the world and are leading to the total destruction of the natural environment by the expanding populations. The added demand for biofuels now by the advanced industrial nations from the less industrialized nations is merely pillaging the natural areas of such nations, and if the destruction of the natural environment is what the biofuels enthusiasts are wanting, they have been certainly getting it for over 200 years. ..HG..

ToppaTom

Good point Henry.

And besides who would say
" . .. Maximizing Development Impact of Global Biofuel Market"

Clarity is NOT that difficult,
nor, obviously, is pompous prose.

Sam

i would argue that food is also a biofuel and land has been deforested and degraded for food production for thousands of years. furthermore, recent deforestation projects may not capture significant energy from the destroyed biomass, compounding the issue. now we pump fuel out of the ground to produce and process food. we are far removed from the actual impact of our energy consumption practices. low-tech biofuels could help rural communities in industrialized nations change this while demonstrating low-input community design.

HarveyD

With over one billion people under-fed on our lettle planet, one may wonder how we can justify food-stock based bio-fuel production on an increasingly larger scale.

Bio-fuel should use wastes ONLY as feed stock. Corn, grains, sugar canes/beets etc should be used to feed people not gas guzzlers.

It is easy to electrify our vehicles but no so easy to feed our stomachs with e-nergy, (at least not yet).

fred schumacher

"It is easy to electrify our vehicles but no so easy to feed our stomachs with e-nergy, (at least not yet)."

Boy, what everybody is missing is that when cellulose is unlocked for biofuel production it is also unlocked for food production. Cellulose, after all, is a long-chain carbohydrate polymer composed of glucose molecules, the form of sugar our bodies convert food into for use at the cellular level. In a similar manner, crude proteins locked up in the vegetative parts of perennial legumes could be converted into usable proteins by non-herbivores.

Perennial biomass crops can produce four times the food quantity of annual food crops at one tenth the agronomic input. The first Agricultural Revolution 10,000 years ago harnessed annuals, the next one needs to harness perennials.

HarveyD

FS:

It is not that certain if prennials would produce much more edible food per ha than the current boosted annuals.

Many perennials take up to 40+ years to reach maximum productivity.

However, deeper rooted perennials would produce less top soil damage, less nutrients lost, require less fertilizer and herbicide, sink more carbon and handle climate changes much better.

You could save on planting and fertilizing but harvesting is much the same.

High productivity perennial grains (and other edible crops) have to be developed and that could take many years and even decades.

Most edible crops were perennials before they were domesticated. Perennials are still around in great numbers... apples, oranges, lemon, most edible fruits, berries, rhubarbes, etc etc.

A difficult question to answer is how to feed 2x or 3x todays world population without over-stressing the land and oceans available while producing enough agro-fuel for our gas guzzlers.

Vehicles electrification may become a neccessity, not a choice.

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