AgRicuLTuRE & RuRAL DEvELOPmENT 50294 NOTEs Bioenergy Development: issues and impacts for poverty issuE 49 and natural resource management AugusT 2009 ExEcuTivE summARy begun to explore bioenergy alternatives. Most countries encouraging bioenergy development have at least one The Food and Agriculture Organization of the of the following policy objectives: to increase energy United Nations (FAO) defines bioenergy as all ener- security; stimulate rural development; reduce the impact gy derived from biofuels (FAO, 2004). Biofuels are, in of energy use on climate change; and improve the turn, defined as fuels derived from biomass (i.e., matter of environment more generally. Bioenergy systems present a biological origin). Biofuels can be further sub-divided by opportunities for countries with land resources suitable type (solid, liquid or gas) and by origin (forest, agriculture for energy crop cultivation to develop a national source or municipal waste). Biofuels from forests and agriculture of renewable energy (and possibly provide additional (woodfuel and agrofuel) can come from a wide range export revenues). of sources (e.g., forests, farms, specially grown energy crops and waste after harvesting or processing of wood Bioenergy developments present both opportuni- or food crops). ties and challenges for socioeconomic develop- ment and the environment and have a number of The last five to ten years have seen a strong potential impacts on forests and the rural poor who resurgence of interest in bioenergy along with depend on forests for their livelihoods. In developing the gradual development of more modern and countries, the impact of bioenergy on poverty alleviation efficient bioenergy production systems. This has will depend on the opportunities that are presented for been driven by several factors including instability in oil agricultural development, including income and employ- producing regions, financial market shift of investments ment generation and the potential to increase poor in 2007-2008 to commodities and oil, extreme weather peoples' access to improved types of bioenergy. There events, and surging energy demand from developing are significant concerns surrounding the efficiency of countries. High oil prices were directly related to the different bioenergy options to combat climate change, establishment of biofuel mandates and rising biofuel the impact on agriculture, food security and sustainable production directly tracks rising oil prices from around forest management and the social impacts of bioenergy 2004-2008. Other drivers for biofuel production may development, particularly related to land use changes, include domestic agricultural support programs, demand land tenure, and land rights. Food insecurity may result for self-supply of energy commodities, mitigation of cli- if staple crops are used for energy production or land mate change, and the belief that such fuels are cheaper. conflicts and if production displaces local communities In response to these various factors, many countries have or restricts access to land. The environmental impacts of these developments are uncertain and will vary consider- ably from case to case. The development of bioenergy is likely to have significant impacts on the forest sector directly, through the use of wood for energy production, and indirectly, as a result of land use changes. It is expect- ed that energy production from solid biomass will have both direct and indirect impacts on the sector, whereas liquid biofuels will mainly have indirect effects. mAiN fiNDiNgs Finding 1: Solid biomass will continue to pro- vide a principle source of energy and should not be overlooked. At the global level in 2005, primary solid biomass accounted for 95 percent of Total primary energy supply (TPES) from bioenergy, while biogas and bioethanol accounted for about two percent each Photo: © Curt Carnemark / World Bank THE WORLD BANK and biodiesel the remaining one percent. At the regional duction is likely to increase. Although some bioenergy devel- level, biogas and liquid biofuels are relatively more important opments are planned for, and likely to occur on, degraded in North America, the European Union (EU) and Latin America, or unused lands, this is not likely to meet the overall require- (with shares of about 15 percent, 10 percent, and 5 percent ments. Therefore, land will need to be converted from other respectively), but these sources of bioenergy are extremely uses--namely agriculture/rangelands or forests/grasslands. small outside these three regions. This analysis suggests that large changes in land-use may occur Solid biomass has various uses. Traditional biomass energy as a result of solid biomass and liquid biofuel feedstock produc- (wood, charcoal, dung, and crop residues) is used primarily tion in order to meet current government targets. Most of the by the poor for heating and cooking and artisanal purposes, changes are likely to result from agricultural crops to produce whereas modern uses (co-firing, heat and power installations ethanol and biodiesel since these make up the largest percent- or pellets) of wood biomass are generally used at an industrial age of all government targets. Solid biomass is likely to account scale for heat and power generation, although there are appli- for a smaller, but still significant amount of land conversion. cations for small-scale use. Globally, traditional uses of biomass are expected to Finding 3: It is critical to consider tradeoffs, includ- decline slightly. This decline is mostly driven by large shifts ing those related to poverty, equity, and the envi- in energy consumption patterns in East Asia and the Pacific ronment, when choosing a bioenergy system. toward other fuel sources, including electricity. In other In most countries, current bioenergy policies have a regions, traditional biomass use is likely to grow, particularly in Latin America and Africa. number of (often conflicting) objectives that require careful decisions to reach desired outcomes. For example, However, modern uses of primary solid biomass for between energy security and rural development on one hand heat and energy production are expected to increase versus food price implications and natural resource impacts significantly. Thus, the share of primary solid biomass in total on the other. Increased consumption of bioenergy is likely to bioenergy production will remain high. result in increased competition for land that has potential to impact agriculture and forestry and could negatively affect Finding 2: There will be major land use implica- the poor in other ways, such as through changes in access to tions resulting from bioenergy developments. resources and overall environmental quality. Another consider- ation is whether bioenergy provides climate reduction benefits. The impact of bioenergy production on land and other Furthermore, there are many measures and instruments that resources is determined by the demand for biomass and can be used as part of policy implementation and these may the efficiency of land use (i.e., energy yield per hectare). have different impacts on different objectives. An important question is whether the biomass crop can be grown on unused or degraded land or will take land out of In choosing a bioenergy system, it is important to identify agriculture and/or forests. In order to meet ambitious global the expected outcomes and to choose a system based on targets, the total area of land that is used for bioenergy pro- the stated program goals for a particular location while minimizing negative impacts. For example, a country may choose Total Primary Energy supply from Primary solid different systems based on employ- Biomass by Region and Type in 2005 and 2030 ment benefits versus maximization of fuel production. Also, cost con- North America 2005 siderations are likely to play a role in 2030 making these decisions. It is critical European Union (27) + 3 to keep in mind the land use and Australia, Japan, New Zealand environmental implications of each system in the locale in which they East Asia and Pacific are implemented, since production of a particular feedstock may have Europe and Central Asia minimal impacts in one location Latin America and Caribbean and very severe impacts in anoth- er. The chart below presents an Middle East and North Africa example matrix view of some of the South Asia tradeoffs that can be considered for liquid biofuels. Africa The matrices below are broad gen- 0 50 100 150 200 250 300 350 400 eralizations of potential impacts, Primary Energy Supply in Metric Tons of Oil Equivalent (MTOE) which will vary widely depend- ing on specific site conditions and Traditional uses (wood) Traditional uses (agricultural residues) Production of heat and power Internal use in forestry and agricultural processing land uses currently in place. There is more need for technical analysis Source: Based on IEA (2006) and Broadhead et al (2001). 2 and evaluation of options, measures, and instruments in many the Pacific), forestry thinnings are underutilized and the cost of countries with respect to bioenergy development. Thorough biomass can be quite low. In addition, in some situations, bio- environmental and social impact evaluations (including strategic mass waste presents a disposal problem (i.e., where disposal in a evaluations) should be undertaken in advance of making large- landfill is costly) and producers may be willing to have this mate- scale investments into bioenergy, which can help to identify and rial removed. Some timber and biofuel operations are already mitigate potential impacts. energy self-sufficient due to co-firing (using forestry residues and bagasse) and the availability of logging and milling wastes from Finding 4: There is considerable potential for traditional timber operations provide additional opportunities for greater use of forestry and timber waste as a bio- heat and power generation (particularly in developing countries energy feedstock. where waste products are not fully utilized). Although there is considerable variation (depending on local market conditions and average transport distanc- Finding 5: The climate benefits of bioenergy devel- es), the least expensive source of biomass is recovered opment are uncertain, and highly location- and wood (i.e., post-consumer waste) and forest processing feedstock-specific. waste (residues from timber mill or timber processing). Climate change impacts of bioenergy have the potential to Agricultural and forest residues (those left over from harvest- ing operations) are the next most inexpensive source of waste. be both positive and negative. The major liquid biofuel crops Crops specifically managed for biomass production (e.g., in the future are expected to be sugarcane, maize, and oil palm. energy crops such as switchgrass, miscanthus, and short- Ethanol production from sugar cane will account for a major rotation coppice) are generally more expensive than these share of bioethanol production and, so long as this does not wastes, as are forest thinnings produced using traditional result in forest clearance, this production system has a fairly low forest harvesting systems. In the developed regions of the energy intensity and good potential to reduce net greenhouse world, traditional wood energy is already supplied mostly by gas emissions because ethanol processing facilities often utilize forest thinnings, harvesting residues, and trees outside forests, sugarcane bagasse for heat generation. Biofuel production from whereas biomass for heat, power, and internal use is mostly corn requires fossil fuel inputs through every stage of the process, supplied from industry waste and recovered wood products. including conversion into corn ethanol. Corn ethanol has minimal There are opportunities for the private sector, and orga- carbon savings versus conventional gasoline and may actually nizations which invest in private sector development, to increase emissions. Biodiesel from oil palm can have lower emis- develop processing facilities serving more than one pur- sions than fossil fuels, but is highly dependent on the type of land pose. In some developing countries (particularly in East Asia and on which it is planted. Trade-off matrix for Liquid Biofuels Sweet Corn Sugarcane Cassava Nypa Palm Soy Oil Palm Rapeseed Jatropha Jojoba Pongamia Sorghum Employment Low Medium Medium Medium High Low High Low High High High potential Potential for Low Medium High High Medium Low Medium Low High Variable High smallholders Improvement of Low Low High High High Low Low Low High High High degraded land Impact on Variable Variable Low Low Low High High Medium Low Low Low natural forests Impact on High Low Low Low Low High Low High Low Low Low agriculture Resource High Low Low High Low High High High Low Low Low competition Impact on water High Medium Medium Low Low Medium High High Low Low Low resources Impact on soil High High Low Low Low Low High High Low Low Low resources Impact on Variable Variable Variable Variable Low High High Variable Medium Medium Medium biodiversity Invasiveness Low Low High Low High Low High High High Low Medium Note: Impacts are evaluated based on the minimum necessary inputs and the type of land uses targeted by decision makers. It does not take into account planting on land areas aside from what are targeted or additional inputs, such as irrigation. These changes would be likely to change the suitability of the above-mentioned crops. Source: Based on Cushion et al (2009). 3 The impacts of increased bioenergy production from There is also a role for investors and development orga- primary solid biomass are similarly complicated. Increased nizations, including helping to drive investments into traditional uses of biomass are likely to result in some forest feedstocks that meet best practices for environmental, degradation and possibly increased greenhouse gas emis- social, and climate change considerations. sions (where woodfuel is not collected sustainably), but the increased production of heat and power using industry resi- cHALLENgEs AND OPPORTuNiTiEs dues could have a positive impact on climate change. As a result of various initiatives that are being devel- If agricultural or forested land is converted for bioen- oped to reduce carbon emissions and environmental ergy production, the carbon emissions may actually degradation, (including payments for environmental ser- increase over fossil fuel emissions (especially if the land vices, carbon markets and bioenergy developments) new converted is forested peatlands). Land conversions, nitrous demands are being placed on environmental goods and oxide emissions from degradation of crop residues during bio- services, and lands (including forests) are being assigned logical nitrogen fixation (common with soy and rapeseed), or a monetary value. While these initiatives may provide new emissions from nitrogen fertilizer should be factored into the opportunities for income generation and job creation, they analysis. For this reason, life cycle analyses are the best predic- are also likely to become more attractive to investors. This can tors of total carbon reductions for a fuel source. For example, result in insecure rights for the poor, including reduced access a 2008 study presented how converting rainforests, peatlands, to the land or reduced ability to secure products. Therefore, savannas, or grasslands to produce food crop-based biofuels these new opportunities, including bioenergy, should ensure in Brazil, Southeast Asia, and the United States could create a the participation and land rights of the people already present "biofuel carbon debt" by releasing 17 to 420 times more CO2 in the areas targeted for new initiatives. than the annual greenhouse gas (GHG) reductions that these Bioenergy solutions should strive to be environmentally biofuels would provide. While there are uncertainties regarding sensitive and have a positive social impact. There appear the estimated amount of carbon emissions, the important mes- to be more opportunities for this with regard to solid biomass sage is that changes in land use could significantly outweigh than liquid biofuels (based on current feedstocks and produc- any carbon benefits that may result from planting biofuels. tion methods), which tend to have larger environmental risks and mixed benefits for the poor. POLicy imPLicATiONs In addition to opportunities for the poor resulting from It is important for consumer countries to consider the production of conventional bioenergy development (at upstream impacts of their bioenergy mandates and both large- and small-scales), there are other options targets, including social and environmental effects. For that should be studied more closely, including biochar, example, the EU has already begun discussions regarding which when produced at a small scale, may provide climate the potential environmental implications that their standards change mitigation potential and opportunities to increase rural will have in producer countries and what this means for the production (which would have nutritional and financial bene- targets. Consumer countries can help drive the development fits). Biochar is made as a by-product from the pyrolysis of solid of biofuel production standards (such as the roundtable on biomass and, when added to the soil on degraded lands, can sustainable biofuels). Consumer countries can also purchase help to improve fertility. Other opportunities mentioned in this biodiesel only from producers who already meet previously document include black liquor and the use of modern stoves. established standards (such as the roundtables on sustainable soy or sustainable palm oil). With respect to solid biomass, References: wood pellet use is expected to increase in developed and some 1) FAO, 2004, UBET, Rome, Italy, available at: http://www.fao.org/ developing countries. This growth in demand will not be met DOCREP/007/j4504E/j4504E00.HTM without imports, including from the tropics. This could, in turn, 2) Fargione, Joseph, Jason Hill, David Tilman, Stephen Polasky and increase pressures on land and for local populations if it is not Peter Hawthorne, 2008, Land Clearing and the Biofuel Carbon Debt, Science, Vol 319, No 5867, pp 1235 ­ 1238. under sustainable production schemes. 3) Broadhead, J S, J Bahdon, and A Whiteman, 2001, Past trends In producer countries, it is important to balance produc- and future prospects for the utilisation of wood for energy, tion targets with environmental and social concerns, Food and Agricultural Organization of the United Nations, including food security. The tradeoffs of bioenergy produc- Rome, Italy. tion should be carefully considered in order to determine the IEA, 2006, World Energy Outlook 2006, International Energy correct feedstock for a particular location and balance this Agency, Paris, available at: http://www.iea.org. choice with production costs and rural development. Some 4) Cushion, E., Whiteman, A. and G. Dieterle. 2009. Agriculture regional criteria within countries that have established national and Rural Development Series: Bioenergy Development: biofuels promotion policies may also need to be applied, since Issues and Impacts for Poverty and Natural Natural Resource Management. Agriculture and Rural Development, World Bank, some areas may have very low environmental risks of expand- Washington, D.C. (to be published in November). ing biofuels, while other regions have very high risks. This ARD Note was prepared by Elizabeth Cushion and Gerhard Dieterle of the World Bank and Adrian Whiteman of the Food and Agriculture Organization of the United Nations. It is based on the report Bioenergy Development: Issues and Impacts for Poverty and Natural Resource Management. THE WORLD BANK 1818 H Street. NW Washington, DC 20433 www.worldbank.org/rural