1. Biofuels: is the cure worse than the disease? IEA Bioenergy Executive Committee Oslo, Norway 14 May 2008 Round Table on Sustainable Development

2. Outline Potential conventional and advanced biofuels –Technical –Economic –Climate change Consequences –Land use change –Cost-effectiveness An alternative policy agenda –Certification May 14, 2008IEA Bioenergy Committee Oslo, Norway 2

3. Technical Potential Energy crops – ‘first-generation’ Available land with potential for rain-fed cultivation –deduct forest land –deduct land already in use (arable land) –deduct land needed to accommodate growing population –deduct needed pasture land Estimate at lower end of range in alternative studies, however, still optimistic –Overestimate land that could be used –Underestimate land already in use –Underestimate water shortage (f.e. Africa) –Competing demands Yield – 190 Giga Joule per hectare a year Total: 14 Exa joule in 2050 (8% of demand transport) May 14, 2008IEA Bioenergy Executive Committee Oslo, Norway 3

4. Technical Potential Residues/waste – ‘second-generation’ Crop residues –Higher productivity, less residuals –Prevent soil erosion Forest residues –Increased demand for material use –Prevent soil erosion –Inaccessibility very distant locations (< 200 km between harvesting and processing) Animal and organic waste –Cost of collection / complexity of logistics Marginal and degraded land –not taken into account (in the order of 5 – 7 Exa Joule) Total: 24 EJ in 2050 (12% of demand in transport) May 14, 2008IEA Bioenergy Executive Committee Oslo, Norway 4

5. May 14, 2008IEA Bioenergy Executive Committee Oslo, Norway 5 Biofuels potential in 2050Energy demand in 2050 6% 101% 16% 55% 9% 18% Technical Global Biofuels Potential max. 20% of energy demand in transport sector

6. Economic Potential IEA: between 7% (2030) and 14% (2050) of energy demand in transport Assumptions: –Declining feedstock prices –Technological breakthroughs –Acceptable cost of logistics However: –Trend feedstock prices is up and correlated with oil price –Breakthroughs are inherently uncertain –Cost of logistics high May 14, 2008IEA Bioenergy Executive Committee Oslo, Norway 6

7. February 21, 2008 Source: IEA (2006), Ralph Sims

8. Complex price relationship between petroleum, biofuels and crops May 14, 2008IEA Bioenergy Executive Committee Oslo, Norway 8 Source: Ron Steenblik IISD, Stephan Perkings ITF Jun-07 Sep-07

9. Climate Change mitigation potential May 14, 2008IEA Bioenergy Executive Committee Oslo, Norway 9 Source: IEA

10. May 14, 2008IEA Bioenergy Executive Committee Oslo, Norway 10 Emissions from land use Change 167 Incl. Indirect Effects land use Change

11. Food versus Fuel 1 st generation: competition for land, water and fertilisers 10% target: –EU: 70% relevant agricultural land –US: 30% relevant agricultural land Winners and losers in agriculture 2 nd generation? May 14, 2008IEA Bioenergy Executive Committee Oslo, Norway 11

12. Cost-effectiveness ENERGY SECURITY support per litre of fossil fuels displaced –US: between $ 0.66 and 1.40 –EU: between $ 0.77 and 4.98 CLIMATE CHANGE support per tonne of CO 2 avoided –US: > $ 500 –EU: $ 340 – 4520 May 14, 2008IEA Bioenergy Executive Committee Oslo, Norway 12

13. Certification no Panacea Two types of problems Fundamental –Indirect effects Practical –International agreement necessary –Enforcement –WTO rules  Certification useful instrument but no guarantee for overall sustainability May 14, 2008IEA Bioenergy Executive Committee Oslo, Norway 13

14. Alternative policy agenda 1.Cease creating new mandates, support schemes 1.phase out existing ones 2.Support R&D 2 nd generation technologies 3.Introduce more technology neutral policies 1.carbon tax, low carbon fuel standard 4.Increase energy efficiency 5.Step Up certification efforts May 14, 2008IEA Bioenergy Executive Committee Oslo, Norway 14

15. Conclusion Current policies risks to: –Achieve limited GHG benefits or even –Increase GHG emissions taking land use change into account –Damage the environment (biodiversity, soil quality, water supplies) –Increase food insecurity –Without benefiting energy security –And while ‘loosing’ a lot of taxpayers’ money in the process Policies should: Stop distorting, start supporting the market –Differentiate fuels by pricing (1st best) or regulating (2nd best) on carbon content May 14, 2008IEA Bioenergy Executive Committee Oslo, Norway 15

16. Thank you! www.oecd.org/sd- roundtable www.iisd.org/subsidies May 14, 2008IEA Bioenergy Executive Committee Oslo, Norway 16 Round Table on Sustainable Development

17. Literature Doornbosch, R., R. Steenblik (2007), Biofuels: is the cure worse than the disease, background paper prepared for the 20 th meeting of the Round Table on Sustainable Development, OECD, Paris Fischer, G. and Schrattenholzer, L. (2001): Global bioenergy potentials through 2050, Biomass and Bioenergy, 20 (3):151-159. Reprinted as RR-01-009. International Institute for Applied Systems Analysis, Laxenburg IEA (2006), World Energy Outlook, OECD, Paris IEA (2006), Energy Technologies Perspectives, OECD, Paris Righelato, R. and D. V. Spracklen, Carbon Mitigation by Biofuels or by Saving and Restoring Forest. Steenblik, R. (2007), Biofuels at what costs? Government support for ethanol and biodiesel in selected OECD countries, Global Subsidies Initiative of the IISD, Geneva Zah, Rainer, Heinz Böni, Marcel Gauch, Roland Hischier, Martin Lehmann and Patrick Wäger (2007a), Life Cycle Assessment of Energy Products: Environmental Assessment of Biofuels — Executive Summary, EMPA – Materials Science & Technology, Federal Office for Energy (BFE), Bern, p.161 May 14, 2008IEA Bioenergy Executive Committee Oslo, Norway 17

18. May 14, 2008IEA Bioenergy Executive Committee Oslo, Norway Biodiesel Ethanol Methane Fossil Source: Zah (2007) 18