Can biofuels reduce poverty and tackle climate change?

Biofuels have been hailed as a solution to climate change and a way to reduce poverty. Some researchers argue that by successfully entering the biofuel market, developing countries can create jobs, boost incomes and so increase food security. However, are biofuels sustainable in environmental, social or economic terms?

Research from the Overseas Development Institute in the UK explores the arguments and evidence around claims that biofuels can play a role in poverty reduction.

Biofuels can be produced from specially grown crops, from multi-use plantations, or as a by-product of other agricultural activities. The two main types are bioethanol, which is made from sugar or starch crops, and biodiesel, which is made from vegetable oils. Bioethanol has been in production for longer and accounts for most global production, with Brazil and the USA the main producers. The European Union is the main producer of biodiesel. The production of both is increasing steadily, with many more countries becoming involved.

The impacts on poverty of increased biofuel production are hard to predict, because they depend on a range of factors, which vary greatly between countries. Potential impacts include:

• poverty reduction through employment: some biofuel production systems require significant labour
• biofuel production tends to be large scale, so it may not be easy for small, poor farmers to organise themselves to access biofuel supply chains
• increasing demand and pressure for biofuels may reduce poor people’s access to land
• using land to produce biofuels instead of food could affect food security, through decreased food availability, increased prices and less food aid from USA grain surpluses (as they will instead be used for biofuels).

Increased biofuel production is likely to have differing effects, both internationally and within countries. For example, if oil prices continue to rise, the demand and prices for biofuels are likely to increase as well. This will be good for producers, but less so for consumers: countries such as Brazil will benefit, while importing countries in sub-Saharan Africa will see prices rise. Within countries, agricultural producers will see increased incomes, but those who rely on energy imports will be worse off.

With so many uncertainties over global markets and price fluctuations for fuel and staple foods, it is not possible to make general predictions over the sustainability of biofuels. With this in mind, the researchers make the following recommendations:

• Each country must consider its own suitability for biofuels, in terms of available infrastructure for production and transport, human resources, food security and energy regulations (for example the sale of energy to the national grid).
• Data should be collected globally on food stocks and the prices of fuel and staple foods. These could be used for food security early warning systems.
• Climate change mitigation funds should be used to identify and support the cleanest biofuel production techniques.

Source(s):
‘Biofuels, Agriculture and Poverty Reduction’, Natural Resources Perspectives 107, ODI: London, by Leo Peskett, Rachel Slater, Chris Stevens and Annie Dufey, 2007 (PDF) Full document.

Funded by: http://www.passlivelihoods.org.uk/

id21 Research Highlight: 21 November 2007

Further Information:
Leo Peskett
Rural Policy and Governance Group
Overseas Development Institute
111 Westminster Bridge Road
London, SE1 7JD
UK

Tel: +44 207 9220300
Fax: +44 207 9220399
Contact the contributor: l.peskett@odi.org.uk

Overseas Development Institute, UK

Other related links:
id21 viewpoint 'Biofuels, climate change and GM crops – who is really benefiting?'

'Can biofuels benefit both the environment and poor people?'

'Bioenergy: promises and challenges'