Are Second Generation Biofuels a Curse or a Blessing?

C. Ruiz Marrero | Center for Intl. Policy Americas Program | April 2008

In the debate regarding climate change and the shortage of fossil fuels, biofuels were for a long time considered to be the ideal solution. However recently, they have increasingly come under fire. Critics denounce the fact that through production of ethanol and biodiesel, the foodstuffs which are urgently needed in poor countries end up in the gas tanks of Western cars. In addition, the production of biofuels requires using huge amounts of the cultivable land. Indeed, the entire corn and soy harvest of the USA would barely be sufficient to cover an eighth of domestic oil and 6% of diesel needs - and this is the case although the America's share of the worldwide corn production, 44%, is larger than that of China, the EU, Brazil, Argentina, and Mexico all together. Even in Brazil, a country which attracts the highest investments in the field of biofuels worldwide, resistance to monoculture - a practice which is associated with the development of biofuels - is growing. Environmental organizations reckon that the deforestation, the erosion, and the water and air pollution involved, are causing higher emissions of CO2 than could be spared by means of biofuels.

According to the UN, the market for biofuels displays the strongest growth in global agriculture. The OECD states subsidize this market with 15 billion dollars every year. The industry expects production to increase from 11 billion gallons in 2006 to 87 billion in 2020. Particularly the biotechnological industry presents promising growth prospects. The focus is, among other things, on genetically modified plants, a second generation of biofuels based on cellulose and synthetic biology. The industry hopes for improved environmental sustainability of the biofuels of this second generation and therefore for higher levels of approval in the public sphere.

One of the largest markets for biofuels is Brazil. The Brazilian share of the global sugar market already reaches 62% today (in 1994, it was only 7%). And there are other ambitious plans: Until 2025 the cultivable land for sugarcane should be multiplied by six - in the first place for the sake of ethanol. At the same time, President Lula da Silva announced his intention to turn the country into the leading producer of biodiesel over the next ten to fifteen years. 21% of the country's agricultural crop land is planted with soy, the most important plant for the production of biodiesel. At the same time, Brazil actively campaigns for its "biofuels revolution" in China, India, Japan, South Africa, and Nigeria among others. For companies specializing in biotechnology, Brazil is the regional hub. In addition, the subject of biofuels brings the former rivals Brazil and the USA closer together. Brazil and the USA provide 70% of the global production of ethanol. In order to secure their advance in this area, both countries are working ever closer together. In the medium term, this could change the balance of power in South America, especially if the USA has a strong interest in economically isolating Venezuela and Bolivia - two countries specialized in the export of fossil fuels.

This summary was prepared by the Atlantic Community editorial team from "Biotech Bets on Agrofuels," published here in the "Americas Program" of the Center for International Policy on April 24, 2008.

Related materials from the Atlantic Community:

• Harald Welzer: Climate Change Brings Forth a Century of Violence
• J. F. Laurson & G. A. Pieler: Biofuels for Thought
• Michael T. Klare: The Rise of the "Petro-Superpowers"