Master thesis in Sustainable Development 273 Examensarbete i Hållbar utveckling

A review and analysis of sustainable issues related to liquid biofuels

M Munirul Islam

DEPARTMENT OF EARTH SCIENCES

I N S T I T U T I O N E N F Ö R

G E O V E T E N S K A P E R

Master thesis in Sustainable Development 273

Examensarbete i Hållbar utveckling

A review and analysis of sustainable issues

related to liquid biofuels

M Munirul Islam

Supervisor: Dr. Serina Ahlgren Evaluator: Dr. Åke Nordberg

Copyright © Munirul Islam and the Department of Earth Sciences, Uppsala University

Published at Department of Earth Sciences, Uppsala University (www.geo.uu.se), Uppsala, 2015

Content Page Number 1 Introduction … … … … … … … … 01

2 Objectives … … … … … … … … 05

3 Methodology … … … … … … … … 05

4 Literature review … … … … … … … 06

4.1 Environmental impacts of liquid biofuel … … … … 06

4.1.1 Effect on biodiversity … … … … … 06

4.1.2 Effect on greenhouse gas emissions due to land use change (LUC) 07

4.1.3 Particulate matters (PM) and other pollutants from biofuel use 08

4.1.4 Effect on water … … … … … … 09

4.2 Liquid biofuel policies … … … … … … 10

4.2.1 EU policies … … … … … … 10

4.2.2 UK policies … … … … … … 11

4.2.3 US policies … … … … … … 11

4.2.4 Policies in Brazil … … … … … … 12

4.2.5 Trade policies … … … … … … 12

4.3 Ethical issues of liquid biofuel … … … … … 13

4.4 Biofuel from a business perspective … … … … … 14

5 Discussion ... … … … … … … … 15

6 Conclusion … … … … … … … … 18

7 Acknowledgement … … … … … … … 20

8 Reference … … … … … … … … 21

A review and analysis of sustainable issues related to liquid biofuels

M MUNIRUL ISLAM

Islam, M Munirul., 2015: A review and analysis of sustainable issues related to liquid biofuel. Master thesis in Sustainable Development at Uppsala University, No. 273, 26 pp, 30ECTS/hp

Abstract:

Most of the time when developing policies for the promotion of future biofuel, the social dimension of sustainable development is neglected. But it is important to incorporate both social and economic issues along with environmental issues for a successful sustainability strategy because sustainable development depends on all three aspects of sustainability. This paper focuses on the sustainable development of liquid biofuel for the transport sector.

The global transport sector is booming as is the need for energy. With the growing concern about climate change, governments of developed countries have been implementing different policy directives to promote biofuel as an alternative source of energy.

But strategies implemented to fulfill the target of mitigating effects of climate change have exposed negative effects of liquid biofuels on both environment and society. This paper reviewed information on liquid biofuels and their effects on environment, society and economy and analyzed them from a sustainable development point of view.

Although scientists have developed biofuels through advanced technology that seem to have less negative effects than traditional biofuels, they are still on a trial basis. In addition to this the effects of these biofuels are also need to be tested on a commercial basis in order to ensure their sustainability. Due to these considerations the process of switching from traditional biofuel to advanced biofuels will require time.

It is imperative to develop sustainable ways of production and use of available biofuels which do not harm nature or exploit vulnerable communities. Biofuel policies also need to be studied thoroughly in order to find weaknesses and pitfalls.

Although numerous studies related to specific issue like indirect land use change, GHG emission, biofuel policies or the biofuel market etc. have been conducted, it is rare to find a study that takes into consideration of all three aspects (economy, society and environment) of sustainable development.

After reviewing and analyzing the literature, this thesis has come to a conclusion that the potential of liquid biofuel in the future transport sector is unlimited. But due to the negative effects on environment and society it has not achieved sustainability. Moreover the expense of production and lack of investment in the sector has made it economically unsustainable. But, it is possible to change the scenario by implementing proper policies in a way that the social and environmental issues that happened in the past do not happen again and the sector can achieve sustainability.

Key words: Sustainable Development, Liquid biofuel, Biofuel Policies, Climate change, Global transport sector, Sustainability

M Munirul Islam, Department of Earth Sciences, Uppsala University, Villavägen 16, SE- 752 36 Uppsala, Sweden

A review and analysis of sustainable issues related to liquid biofuels

M MUNIRUL ISLAM

Islam, M Munirul., 2015: A review and analysis of sustainable issues related to liquid biofuels. Master thesis in Sustainable Development at Uppsala University, No. 273, 26 pp, 30ECTS/hp

Summary:

Sustainability can be defined from various points of view. Economic sustainability deals with economic growth (Doane and MacGillivray, 2001), social sustainability takes into consideration of given society and its values and norms while environmental sustainability deals with the maintenance of natural capital (Goodland, 1995).

Therefore, sustainable development in the liquid biofuel sector for transportation depends on environmental, social and economic factors. The current biofuel market for the transport sector is not very big (only 2% of the need). Governments of developed countries are implementing different policy directives to promote biofuel over fossil fuel in order to achieve energy security and to fight against global warming. As a result of the policy target fixed by the governments of the involved countries, the demand for biofuel is experiencing a sudden increase. But, with certain negative effects on the environment, society and economy the entire project of biofuel replacing fossil fuel has become endangered. Luckily biofuel scientists have invented advanced methods for biofuels production which have less negative effects on the environment and the society. However, these advanced technologies are expensive and not easy to produce which brings up the question of sustainability in the sector.

This paper reviews literatures on effects of liquid biofuels on environment, society and economy. It concludes with the following findings:

• The potential of liquid biofuel in the transport sector is unlimited although due to its negative effects on environment and society, liquid biofuel in the transport sector is still not sustainable.

• There is advanced technology to be implemented in the liquid biofuel sector which has less negative effects on environment and society although the technologies are very expensive that makes these advanced biofuels economically unsustainable.

• The liquid biofuel market does not have enough investment. To achieve economic sustainability, more investment is needed in this sector.

• There is policy directives implemented by different governments for liquid biofuel promotion in the transport sector. Some of these policies are for achieving environmental sustainability; some are for economic while some focuses on social sustainability. Still the sector lacks of policies that sees the development of biofuel as a long term process.

• To achieve sustainability in the transport sector biofuels need to be more available and cheap with less negative effects.

Key words: Sustainable Development, Liquid biofuel, Policy Directives, Energy security, Global warming, Sustainability

M Munirul Islam, Department of Earth Sciences, Uppsala University, Villavägen 16, SE- 752 36 Uppsala, Sweden

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1 Introduction

Sustainability can be defined from various points of view. Economic sustainability deals with economic growth (Doane and MacGillivray, 2001), social sustainability takes into consideration the situation of a community in a society (McKenzie, 2004) and environmental sustainability deals with the maintenance of natural capital (Goodland, 1995). But, so far, the most famous definition of sustainable development was found in ‘Our Common Future’ also known as the ‘Brundtland Report’. According to the report, development that meets the needs of the present without compromising the ability to meet the need of future generations is recognized as sustainable (World Commission on Environment and Development (WCED), 1987). However, environmental, social and economic sustainability has become the three core dimensions of conventional idea of sustainable development (Adams, 2006). Different authors have represented the relation of sustainability and these three dimensions in different ways. Depiction of three pillars as three dimensions of sustainability with a triangular roof representing sustainable development itself (Figure 1A) provides a clear idea of the dependency. Three concentric circles but not having a common centre point while the outermost circle represents environment and the innermost one represents economic aspects (Figure 1B) comes from the perspective of integration. The third picture (Figure 1C), with three interlocking circles represents three dimensions of sustainability. The part, where all three circles overlap, represents sustainability (Lozano, 2008).

A. The three pillars of Sustainable Development B. Concentric Circles

C. Overlapping Circles

Complete Sustainability Partial Sustainability

Fig 1: Different graphical representation of sustainable development (Adams, 2006)

Sustainable Development

Econ

omy

Envi

ronm

ent

Soci

ety

Environment

Society

Economy

Economy

Society

Environment

2

Biofuels have been a source of energy for mankind since the beginning when people first learned to use fire. There is evidence of using branches and leaves of plants as a source of energy from 160,000 years ago (Gomiero et al., 2010). Since then, different types of biomass have become a part of our daily life. Today, more than 10% of the global energy need is fulfilled by traditional bioenergy sources (Hazell et al., 2006).

The words, ‘bioenergy’ and ‘biofuel’ can sometimes be confusing. Bioenergy can be defined as energy produced from different biofuels (“What is bioenergy?,” 2015). Fuels that are produced by living organisms or result from organic or food waste which contain at least 80% renewable material are called biofuels (“Biofuels,” 2015). Branches, tree leaves and other burnable biological residues are examples of traditional biofuels. Bioethanol, biodiesel, biogas, etc. are good examples of biofuels used in transportation. In this paper, liquid biofuel refers to fuels used in the transportation sector. Figure 2 represents differnts states of biofuels from biomass.

Fig 2: Different states of Biofuel

Biofuels for transportation can be produced from all kind of biomass. There is no official classification system of biofuels. However, the techniques and raw materials used to produce the biofuel can be used to separate biofuels into four different categories or generations (Figure 3).

Fig 3: Generations of liquid biofuel

Biomass Biofuel

Solid Biofuel

Biogas

Liquid Biofuels

Bioethanol

Biodiesel

Liquid Biofuels

First Generation

Sugar & Sugar rich seeds Bioethanol

Vegetable oil or animal fat Biodiesel

Second Generation

Cellulose & Ligno-cellulose Bioethanol

Third Generation Lipid rich Algae Biodiesel

Fourth Generation

Engineered Algae Biodiesel

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The first generation bioethanol is made from sugar and sugar rich seeds or plants using conventional techniques. Sugar is broken down through fermentation followed by distillation to produce ethanol (Lee and Lavoie, 2013). First generation biodiesel is made through transesterification of oil from oil seeds or animal fat (Lee and Lavoie, 2013).

Biofuels produced mainly from cellulose and lingo-cellulose materials are known as the second generation biofuels (Lee and Lavoie, 2013). As the fiber part is much larger than the sugar part in a plant, it is possible to get more fuel than the first generation by using second generation’s techniques (“Open Fuel Standard,” 2011).

The third generation biofuels are produced from lipid rich algae. Production depends on the lipid content of the microorganism. Usually species like Chlorella are targeted because of their high lipid content (Lee and Lavoie, 2013). Bioethanol can be produced from the cellulosic materials of the algae.

The fourth generation biofuel are produced from engineered algae. Metabolic engineering will help production of algae based biodiesel while the algae will be grown in ponds or closed photo-bioreactor systems (Lü et al., 2011). Bioethanol can be produced from the cellulosic materials of the algae using second generation techniques.

At present, the most common type of liquid biofuel throughout the world is first generation bioethanol, produced from corn and sugarcane (“Biofuel: Background,” 2013). Ethanol has properties like petroleum hence can be blended with petrol. E85 is a blended bioethanol which has 15 part petrol and 85 part bioethanol in it. E100 on the other hand is an example of 100% bioethanol. Both of them are available in the current liquid biofuel market.

First generation biodiesel is produced from soybean or other oil rich seeds or animal fats. It is the second most common liquid biofuel for transportation on a global scale (“Biofuel: Background,” 2013). Biodiesel has properties like petro diesel and can be used as an alternative to that (Van Thuijl et al., 2003). In 2012, the global biodiesel production was recorded 68.5 million liters. USA became pioneer using soybean oil as feedstock (Wisner, 2013) followed by EU using rapeseed oil (Davis, 2014). The third position belongs to South America which uses soybean as a feedstock (“International Energy Statistics - EIA,” 2012) (Bergmann et al., 2013).

Fig 4: Carbon cycle for biofuel

Like fossil fuel, all types of biofuel emit carbon dioxide when combusted. However, the main difference between fossil fuel and biofuel is that the carbon biofuel emit have been sequestered from the atmosphere (Figure 4) by plants, meaning there is no net contribution to the atmospheric carbon content or to the green

Atmospharic CO2

Saved in plants by

photosynthesis

Converted into bioethanol and

biodiesel

Burning of liquid biofuel

generates CO2

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house effect. By reducing the natural carbon cycle time from millions of years (as for fossil fuels) biofuels contribute fighting against climate change.

At present, the amount of liquid biofuel used in the global transport sector is only 2% of the total need (International Energy Agency, 2011) and more than 15% of the global GHG emission (biofuel + fossil fuel) is coming from this sector (Kille, 2014). Increasing the use of liquid biofuel in this sector will certainly reduce the GHG emissions significantly. To fight against global warming and to ensure future energy security, a number of developed countries have taken initiatives of using biofuel in the transport sector. However, questions have risen about how sustainable biofuels are, considering some reported environmental and ethical issues along with the availability of raw materials and biofuel policies.

To save the environment from the negative impacts of biofuel production there are some sustainability criteria propagated by EU RED (European Union Renewable Energy Directive) which mainly focuses on the environmental dimensions of sustainability (German and Schoneveld, 2011). But the social impacts were not taken into consideration. Although EU RED has a social standard, it is very loosely implemented (German and Schoneveld, 2011).

Even though there are numerous studies on liquid biofuel related issues like land use changes, recent advancement on biofuel technology and ecological effects or GHG emissions, it is rare to find a study that has combined environmental, social and economic issues together in order to understand its sustainability comprehensively. This paper therefore will try to discuss such issues of liquid biofuel.

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2 Objectives The objective of this paper is to review and analyze the sustainability issues of liquid biofuels for the transport sector. This thesis will discuss the following topics to make the study comprehensive.

• Sustainability issues of liquid biofuels for the current and the future transport sector on the basis of environmental, economic and social sustainability.

• Biofuel policies, both current and the future.

3 Methodology Unlike natural science, most of the time, social science issues are abstract. To get an understanding on the whole, literature reviewing and discussion is a must. It helps selecting, organizing and summarizing the main argument. Still a high degree of uncertainty is very natural because of biasness. However, methodology for this paper was literature review and the literatures were chosen with utmost care so that the discussion does not get biased on the positive or negative sides of liquid biofuel. No other specific framework was used.

To analyze sustainability of liquid biofuel it is necessary to analyze environmental, social and economic sustainability simultaneously. This paper thus reviewed suitable and available scientific articles, policy papers, journals, online information and case studies in order to analyze such information.

This report is structured as follows: Some definitions along with classification of biofuel have specified in the introduction for clarification and future reference. The following literature review is separated into four individual parts describing environmental impacts, biofuel policies, ethical issues and business issues of liquid biofuel. The chapter describing environmental impacts again separated into four headings due to their importance in environmental impact assessment for biofuel and for easier understanding. The categories are: effects on biodiversity, effects on GHG emission due to land use change, particulate matters and other pollutants from biofuel use and effects on water. Biofuel policies are categorized according to their implementation places. Countries / regions are chosen according to the amount of liquid biofuel they use in the transport sector. Finally all the trade policies are kept under another heading for convenience of understanding. The discussion part presents an analysis of the topics mentioned in the objective chapter by reviewing the key issues from the literature review. Criteria for environmental, social and economic sustainability presented by the World Energy Council and criteria from Nuffield Council for a sustainable biofuel are also quoted in this chapter as example. Finally, the paper concludes with a formal conclusion.

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4 Literature Review

4.1 Environmental impacts of liquid biofuel All agricultural practices affect nature. Depending on the type of crops and management systems the effect can be positive or negative. Even though improved agricultural practices have increased the productivity and decreased the effects on land and the environment there are still some effects on biodiversity, water and air quality, carbon sequestration in the soil and soil fertility (Figure 5) (Fargione et al., 2009).

Fig 5: Environmental impacts of liquid biofuel

Since liquid biofuels are produced from biological feedstock, the impacts on the environment due to feedstock production fall on the account of biofuels. Severity of the impact depends on feedstock type and their management practices including use of fertilizer or pesticides etc. (Fargione et al., 2009).

4.1.1. Effects on biodiversity

Depending on the liquid biofuel feedstock both positive and negative effects on the biodiversity have been reported.

In Brazil sugarcane and soybeans, the feedstock for its biofuel, are being planted in the savanna area located south of the Amazon rainforest (Lapola et al., 2010). The forest is thought to contain 1-8% of the earth’s total species which is now 84% deforested. The remaining parts are highly defragmented and poorly protected (Ribeiro et al., 2009). Forest restoration and protection of the remaining parts conflicts greatly with the increasing demand of food, feed, pasture and biofuel feedstock agriculture in that area (Lapola et al., 2010).

In the USA between 2006 and 2007, corn plantation had increased due to increased demand for bioethanol as fuel (Fargione et al., 2010). According to the reports of the conservation reserve program (CRP), during this time period (2006 - 2007), at least 1,931,000 hectare of previously retired CRP land has been brought back to cultivation along with 203,000 hectare of newly cropped lands (Fargione et al., 2009). The original purpose of the CRP program was to convert the retired lands to perennial grasslands in order to reduce soil erosion and improve water quality in the area (Fargione et al., 2009). The use of CRP lands for feedstock production thus hampered the chance of protecting land erosion and wild life.

Liquid Biofuel

Effect on Water

Effect on Biodiversity

GHG emissions due to LUC + other

air pollution

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If the feedstock for these lands is switchgrass, the effect on CRP lands becomes positive. According to Fitzherbert et al, these lands will be able to support more biodiversity than keeping them retired (Fitzherbert et al., 2008). It has reported that, the type and the number of insect population got increased with switchgrass plantation. (Gardiner et al., 2010). The habitat will be able to support other grass land animal as well (Paine et al., 1996). To increase the bird population in the switchgrass fields, an appropriate harvest rotation is needed. (Perlut et al., 2008). Hartman et. al, argued for a mixture of harvested and non harvested lands in the area to increase the diversity of the birds (Hartman et al., 2011). Harvested field will support short grass bird species while non harvested fields support tall grass bird species (Roth et al., 2005).

Even though, only 0.2% of the total palm oil production is used for biodiesel production (May, 2012), a report from the UNEP (United Nations Environment Program) blamed increasing palm oil plantations as the leading cause of rainforest destruction in Malaysia and Indonesia (Greenpeace, 2007). However, a significant amount (85%) of animal and plant species were found missing in the palm plantations in Malaysia comparing to the Malaysian rain forest (Fitzherbert et al., 2008). Denser covering of the palm canopy prohibits the penetration of sunlight through and creates microclimate inside the forest which affects the adjunct habitat through fragmentation and edge effect. Farmers need to mange this situation with additional fertilizers (Sharma, 2011). To cope up with the need of artificial fertilizer, fungicides or herbicides in the palm forest, integrated pest management and cultivation of leguminous plants in between palm plantation can be the remedy (Fargione et al., 2010).

4.1.2. Effect on greenhouse gas emissions due to land use change (LUC)

Biofuels need land for production of its feedstocks. Global increase in demand for liquid biofuels thus put pressure on cultivable land area and cause land use changes (LUC). Till recently, LCA studies didn’t consider LUC as a source of air pollution which resulted in less emission compared to fossil fuel (Farrell et al., 2006). However, land use change is a huge source of GHG (especially CO2) emissions and need to be taken seriously. The sources of emission due to land use change can be burning of forest, decomposition of trees, burning of wood as fuel and soil respiration (Nakićenović and Intergovernmental Panel on Climate Change, 2000).

Direct land use change (dLUC): When previously not cultivated land is cleared for a bioenergy project, it can be considered as direct land use change (Figure: 6a) (Beck, 2013, p. 20). By comparing the carbon balance between the previous land use and the after land use, the emission can be calculated. Both above ground (existing vegetation if any) and underground (soil carbon) carbon needs to be considered in order to get a correct result (Fritsche et al., 2010).

Fig 6a: Direct land use change (dLUC)

If a carbon rich land (peat land) is converted to produce energy crops, the ecological impact can be negative but, if feedstocks are grown on a low carbon soil, the impact can be positive (Fritsche et al., 2010).

A bioenergy project needed

land for cultivation of feedstock

Land has been prepared by

clearing forest and grass land

Direct land use change occurred

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A bioenergy project needed land for

cultivation of feedstock

Land has been allocated from previously

cultivated food grain fields.

To cope up with the shortage of food, forest were cleared to prepare

more cultivable fields for food grain in the

food exporting country

Indirect land use change occured for the

bioenergy project

Indirect land use change (iLUC): This type of changes in land use occurs as a consequence of a bioenergy project but not necessarily geographically connected with the project (Figure 6b) (Ahlgren and Di Lucia, 2014).

Fig 6b: Indirect land use change (iLUC) By definition, iLUC cannot be quantified directly as it cannot be related to any individual feedstock production (Fritsche et al., 2010). For example, iLUC analysis for corn will blame biofuel for all the GHG emissions resulted for indirect land use change for corn production although, over 70% of the global corn production is for animal food (Kim et al., 2009).

However, by using agricultural economics models and global historical data on land conversion Searchinger et al. had conducted a study to determine the indirect land use change effect of corn for biofuels. According to that study, comparing to fossil fuel pollution, the pollution level of corn ethanol will be measured double if expanded use of corn for ethanol production continues (Searchinger et al., 2008).

According to a spatially explicit model’s prediction, to pay off the carbon debt due to fulfill the target of 136 billion liters of corn ethanol annually in the United States by 2022 (Dinan, 2013) it will take 167 years. The GHG emission reduces by 20% if land use change emissions are excluded from the study which points out the importance of including such emissions (Schuster, 2013).

However, more recent studies show that the iLUC could be lower than previously calculated. This is due to models being more refined and also include use of by-products from the biofuel production. Distiller’s dried grains with solubles (DDGS) are a nutrient rich bi-product of corn. Almost 8 kilograms of DDGS produce from 25 kilogram of corn when milled for bioethanol production (U.S. GRAINS COUNCIL, 2012). DDGS is used as animal feed which reduces the need of further cultivation for animal feed resulting less iLUC. Soymeal, another protein rich bi-product from soy based biodiesel plants also have the same effect on reducing iLUC.

4.1.3. Particulate matters (PM) and other pollutants from biofuel use

Pollutants into the atmosphere can come from sources like vehicles, industries, other human activities or even from natural causes like eruption of a volcano. Human health can be compromised because of this complex mixture of emitted chemicals.

The transport sector is a major source of atmospheric pollutants. Besides emission of regulated pollutants like suspended particulate matters (PM), hydro carbons (HC), CO, and NOX, there can be other pollutants that are not regulated by law. Polycyclic aromatic hydrocarbons (PAHs), Nitro PAHs and Volatile Organic Compounds (VOC) resulting from incomplete combustion can be considered as such pollutants (Nani Guarieiro and Nani Guarieiro, 2013).

However, as alcohol combusts better than gasoline in the presence of air, it naturally produces less particulate materials or CO than gasoline. But, of course, in case of blended fuel, the amount of PM or CO differs. The more the gasoline part, the more the emission and vice versa (Nani Guarieiro and Nani Guarieiro, 2013).

In case of biodiesel, the emission varies on the type of the raw material (soybean, rapeseed or animal fat etc.). In case of a blend, emission quantity also depends on the petro diesel itself. Increasing the percentage of biodiesel in a blend decreases the amount of PM but increases the amount of NOX (Nani Guarieiro and Nani Guarieiro, 2013).

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Although, biofuels emit much less PM into the atmosphere while combusted, according to several epidemiological studies, emissions from biofuel use may be hazardous for health (Kousoulidou et al., 2008). The combustion exhaust of biodiesel can cause inflammation in mammalian cells and lungs in a grater devastation than regular diesel (ChemistryViews, 2013).

Burning of biofuel produces a specific kind of shapeless carbonaceous particles commonly known as ‘tar balls’. They are abundant in biofuel smoke (Pósfai, 2004). Because of their nature of absorbing sunlight, this particles are responsible for increasing air temperature (Kousoulidou et al., 2008) and thus should be considered independently in different climate models (Adachi and Buseck, 2011). It also affects the humidity by scattering clouds (Kousoulidou et al., 2008).

4.1.4. Effect on water

Not only water pollution but also physical modification of water bodies can be resulted by biofuel. Both of the actions can be labeled as negative effects on water. Water is necessary for cultivation of biofuel feedstock as well as biofuel production process. To measure the impact ‘Water Footprint (WF)’, an indicator of misuse for freshwater, is use (Gerbens-Leenes et al., 2012). Both direct and indirect water use throughout the supply chain of biofuels is taken into account by WF’s analysis (Hoekstra, 2003).

The tool presents three different indexes to represent a complete overview of freshwater use and pollution by biofuel. Index ‘green’ WF indicates the consumed rainwater, ‘blue’ WF refers to consumed ground and surface water that has evaporated as a result of the production and ‘grey’ WF indicates the volume of freshwater, that is needed to absorb the pollutant based on existing ambient water quality standards (Gerbens-Leenes et al., 2012).

According to a study, the USA national average of blue WF for corn grain, stover and wheat straw is 31, 132 and 139 L/ liter of ethanol respectively. On the contrary, soybean has a blue WF of 313L/liter biodiesel without harvesting residues (Chiu and Wu, 2012).

A simulation based study has conducted by Gerbens-Leenes et al., on the global water use changes related to increased biofuel use in the transport sector in 2030 to assess the impact on water scarcity. The study includes first generation bioethanol from sugar cane, sugar beet, sweet sorghum, wheat and maize, and biodiesel from soybean, rapeseed, jatropha and oil palm. By using data from International Energy Agency-Alternative Policy Scenario (IEA-APS) for 2030 the study concludes that the WF will increase more than ten times by the year 2030 comparing to 2005 (Gerbens-Leenes et al., 2012). Figure 7 and 8 represents the findings.

Fig 7: Change in Water Footprint of bioethanol consumption in road transport between 2005 – 2030 (Gerbens-Leenes et al., 2012)

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Fig 8: Change in Water Footprint of biodiesel consumption in road transport between 2005-2030 (Gerbens-Leenes et al., 2012)

According to the study, North America has the largest WF for bioethanol and Europe for biodiesel (Gerbens-Leenes et al., 2012). WF for biodiesel from micro algae is approximately 3726 kg-water/ kg-biodiesel if the used water is not recycled. About 84% of this water can be recycled which brings down the WF to 591 kg-water/ kg-biodiesel (Yang et al., 2011).

Green WF and blue WF can vary from region to region. Some countries have enough rainwater for cultivation thus will have high green WF and some countries depend on irrigation. Obviously they will have larger blue WF. However, the USA, China and Brazil have the largest WFs for both blue and green (Gerbens-Leenes et al., 2012).

Use of fertilizers and pesticides in the field pollutes the water through leaching and surface runoffs (Randall et al., 1997) resulting higher grey WF. These sorts of pollution often affect the quality of the ground and the surface water as well. Surface water ends up resulting unwanted algal bloom where ground water can be contaminated with toxic substances. The BOD (biological oxygen demand) of the surface water gets increased due to algal bloom and marine animal life gets endangered. Lack of clean drinking water in dry countries can also result in different diseases or even death.

4.2 Liquid biofuel policies

Driving force behind the increasing demand for biofuel use are energy security, economic development and mitigation to climate change. (Hazell et al., 2006, p. 200). To fight against global warming by promoting biofuel in the transportation sector, many countries in the world had implemented different policies related to the agricultural policies of the country (Nuffield Council on Bioethics, 2011). Keeping a sustainable economy by implementing consumption subsidies, production subsidies, import barriers and setting sustainability standards is also a target (EurObserv’ER, 2014). In this chapter, policies and instruments implemented by different countries and their effects will be analyzed.

4.2.1 EU policies

After the reformation in 1992, the common agricultural policy (CAP) of the EU allowed the use of retired land for cultivation of non food crops. These lands were used for biofuel feedstock production later (Forge, 2007). During 2003 a new subsidy for the farmers who grow biofuel feedstock was announced (European Commission, 2006). The EC also exempts tax from the farmers of the EU members growing biofuel feedstock to facilitate biofuel production (UNION, 2009).

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The first directive related to biofuel by the European Union is EU directive 2003/30/EC. The directive had set a target of 2% by 2005 and 5.75% biofuel use by 2010 for all the member nations in the transport sector. The overall target was a 20% biofuel use in the transport sector by 2020 (EU Directive, 2003).

Directive 2003/30/EC was canceled by EU Directive 2009/28/EC known as the ‘Renewable energy directive’ to assure less impact on agricultural land use for production of food and feed grains. Directive 2009 has put a limit to 10% biofuel use by 2020 which previously was targeted to 20%. Indirectly the new target helped promoting production of second generation biofuels over the first generation ones (European Commission, 2012). The fuel quality directive 2009/30/EC mandated the member states to reduce their life cycle GHG emissions of transport fuel by 6% by 2020 which also indirectly affected the biofuel market (Nuffield Council on Bioethics, 2011).

Recently the European Parliament in Brussels voted to approve a new directive called the iLUC directive. To remove the increasing pressure on the food price due to biofuel feedstock, and to control the emission from indirect land use change, the parliament has decided to put a limit on first generation biofuel use to 7% in the transport sector. Now the EU member nations will fulfill the target of 10% biofuel use by 2020 by using only 7% first generation and 3% of advanced biofuels. Experts believe that, the decision of capping the use of first generation biofuels might make the European fuel security unstable. Modernization of the industries to be able to produce advanced biofuels will cost a lot of money and thousands of people may lost their jobs (“Biofuels Policy and Legislation,” 2015).

4.2.2 UK policies

From April of 2008, the UK implemented effectively the Renewable Transport Fuel Obligation (RTFO) policy. The policy made it obligatory for all the transport fuel suppliers to ensure supply of certain percentage of biofuel in every supply (Nuffield Council on Bioethics, 2011). This policy is effective for both biofuel and fossil fuel suppliers who supply at least 450,000 liters of fuel a year (“Renewable Transport Fuels Obligation,” 2012). The target of 5% renewable fuel set by the policy was supposed to be fulfilled by 2010. But later in 2009, the time scale was reset to 2013 (Nuffield Council on Bioethics, 2011).

For both biodiesel and bioethanol producers, a 20 pence/liter duty remittance was introduced in 2002 (HM Treasury, 2010a) and in 2005 respectively (HM Treasury, 2010a), although, these exemptions were cancelled except for producers of biodiesel from used cooking oil in 2010. Then in 2012, this 20 pence per liter benefit was cancelled for all (HM Revenue and Customs, 2010).

A lower rate of road tax was introduced in the UK during 2003 for the most environmental friendly cars in order to promote the use of biofuel in the country (HM Treasury, 2010b).

4.2.3 US policies

The increased use of biofuel blends in the transport sector and the biofuel policies implemented by the US government has boosted the corn-ethanol industries in the US in 2000. The ethanol production had increased 10 times within the year 2000 to 2010. It seems the US policy of subsidizing the sector by removing tax of $0.45/gallon for blending ethanol with gasoline paid off. But, to prevent foreign ethanol producers from taking advantage of this policy the American government has implemented another policy of imposing a tax of $0.54/gallon on importing ethanol (Moschini et al., 2011).

The Energy Policy Act of 2005 introduced the renewable fuel standard (RFS) and Energy Independent and Security Act of 2007 (EISA) enhanced it with annual production targets (Yacobucci, 2008). A target of 136 billion liters of renewable fuel per year by 2022 was set by the RFS with the limitation to corn ethanol of a maximum of 56.78 billion liters by 2015 (Moschini et al., 2011). The U.S. energy policy act of 2005 ensured tax incentives and loan guarantees for energy production of various types (PRNewswire, 2014).

Moreover, to promote the production and use of biofuel, RFS was revised under the jurisdiction of EISA. The revised RFS also known as RFS2 had set a target of using 42 billion liters of renewable fuels in 2009. The amount will continue to increase until it reaches to 136 billion liters by 2022. It has set another target of producing at least 3.78 billion liters of biodiesel by 2012 (Chaudhuri, 2010).

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4.2.4 Policies in Brazil

The energy crisis of 70s influenced the Brazilian government to start using biofuel instead of fossil fuel. The first program related to bioethanol in Brazil was launched in 1975 to replace fossil based fuel with ethanol made from sugarcane in the transport sector (Nuffield Council on Bioethics, 2011).

By keeping the selling price of ethanol comparatively lower than fossil fuel, Brazilian government ensured the longevity of the market for biofuel in the country. Also, to encourage the development of the ethanol sector, the government of Brazil guaranteed purchase of sugarcane ethanol by ‘Petrobras’, the oil company owned by the state. Moreover, the producer companies were also offered loan with a lower interest rates in order to promote ethanol production (Goldemberg, 2008).

The ZAE Cana, the agro-ecological land use zoning system was introduced in 2009 to conserve the forest areas from the increasing sugar cane plantation. According to this zoning system, sugar cane plantation is prohibited near environmentally sensitive areas. Future expansion of sugarcane plantation was also made restricted to 7.5% on the basis of several mandatory environmental, social, climate and soil restrictions by ZAE Cana (Nuffield Council on Bioethics, 2011).

To stop air pollution and soil contamination from burning of sugarcane fields a state law came into action which prohibits burning fields in flat areas by 2012 and hilly areas by 2031 (“Brazil SP cane growers to ban burning by 2017,” 2008).

4.2.5 Trade policies An important factor of biofuel policy is unfair taxation. According to the ‘Biodiesel’ magazine, EU still holds the position for producing the most biodiesel in the world. Germany, France and Spain are the top three biodiesel producers. However, imported biodiesel from Argentina is putting these European companies into hardship. APPA (The biofuels division of the Spanish renewable energy producers association) blames the faulty / unfair export tax system which favors biodiesel over soybean oil in Argentina (Biodiesel Magazine, 2010).

According to an article in the renewable energy magazine, Argentina and Indonesia has exported 90% of the biodiesel in Spain in 2011 when 85% of Spain’s own production capacity was idle (Price, 2011). Apparently, it was cheaper for Spain to import the biodiesel from Argentina and Indonesia than producing it locally. APPA argued against the export taxation system of Argentina which allowed the country to export biodiesel in a lower price than soybean oil. The tax for exporting soybean oil in Argentina is 32% while for biodiesel it is only 20% (Price, 2011).

Being the world’s leading producers of soy bean and palm oil; Argentina and Indonesia sets the reference price for these two raw materials. Therefore these two countries benefit from the advantage of unfair competition over the rest of the producers of biodiesel that depends on them for raw materials (Price, 2011).

The strategy of the policy makers is therefore a matter of utmost importance for the biofuel market to work properly with less or no stake on the environment. Production subsidies, import tariffs and sustainability standards act as inefficient strategy for trade. According to some researchers, in the absence of these policies the production of biofuel in the US would have been replaced by Brazilian production which would have resulted far less CO2 emission into the atmosphere (Gorter and Just, 2010).

It has also been pointed out by some researchers that putting a sustainability standard for maximum emission of CO2 per unit of biofuel is inefficient as long as the standards are not globally implemented and there is no other policy to cover the other CO2 emitting sources throughout the world (Gorter and Just, 2010).

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4.3 Ethical issues of liquid biofuel

Debates about the consequences and the lack of systematic ethical enquiries, made it difficult to establish a strong ethical framework for discussing ethical issues of liquid biofuel. However such a framework is essential which includes moral values, justice, human rights, social ethics with stewardship and solidarity to evaluate all current and future liquid biofuels. To discuss the ethical issues of liquid biofuel, this chapter will first focus on some real life events and then discuss the issues related to them.

USA is the largest producer of corn based ethanol. From 2006 until the beginning of 2007, the demand for bioethanol in the US had increased suddenly due to policy targets. The consequences of this sudden increased need had raised the debate of food versus fuel (Gomiero et al., 2010).

The country has been blamed indirectly for the Mexican ‘tortilla riot’ incident. The demand for white corn which is been used to make tortilla in Mexico, raised in the country as the import of yellow corn from the USA got decreased during this time period (2006-2007). Yellow corn was used as a biofuel feedstock in the USA and animal feed in Mexico. Mexican government previously was importing yellow corn from the USA. But, as the US had a sudden increase in the bioethanol sector it had to decrease export. As a result, the Mexican government had to implement subsidies on white corn for tortilla to handle the situation (Nuffield Council on Bioethics, 2011).

Brazil produces bioethanol from sugarcane and has been considered as the most successful biofuel producer and user on a large scale. But, the harvest of the sugarcane is demanding and the country had been accused of breaking labor rights in the past. News of child labor and death due to over work has also been published (Nuffield Council on Bioethics, 2011).

Malaysia is the world’s second largest producer of palm oil (“Palm Oil Production by Country in 1000 MT - Country Rankings,” 2014). Illegal land grabbing by palm oil plantations and displacement of indigenous groups from their traditional land were reported in 2009 (Sharma, 2011) although the producers denied the acquisition (Nuffield Council on Bioethics, 2011). The country also faced loss of biodiversity due to deforestation (Buyx and Tait, 2011).

Science and development newspaper SciDevNet claims, existing biofuel policies in developing countries do not promote ethical practices. According to the report, the current policies are promoting human rights violation and also breaking labor and fair-trade rules (Sharma, 2011). So, it is very important that the policy makers keep an eye on these topics while making policies for biofuel.

This is true that biofuel may be a contributor in increasing food price throughout the world and maybe this is also true that vulnerable people in the world had to suffer because of that but blaming biofuel only for this incident is unfair. A Brazilian research unit “Fundação Getulio Vargas” conducted a study on increasing food price. According to that study, the increased food price in Brazil in 2008 was a result of a future market speculation motivated by increased demand of yellow corn in the USA. Low stock on food grain due to bad weather and poor harvest was also a reason of increasing grain price (Nuffield Council on Bioethics, 2011).

Amnesty International claimed of rescuing 2000 workers from Brazilian sugarcane industry. But, due to poverty and lack of skills for other jobs, most of them had to rejoin in the same industry. Brazilian Ministry of Labor conducted an investigation on the death of a worker. The result was horrifying. The deceased person worked seventy days in a row in the plantation during the harvest season in order to earn more because the method of payment was production based. This payment method usually encourages the workers to work more. Informal child labor was also noticed and estimated around three percent of the total employed (Nuffield Council on Bioethics, 2011).

However, Brazil is trying to use machines instead of man power in the plantations which can help reducing abuse of manpower but can cause physical and cultural disturbance of traditional communities (Nuffield Council on Bioethics, 2011).

The Brazilian government has published a list of the firms that violated human rights in order to prevent them from getting loans from banks. Moreover, more than 80% of the ethanol production facilities are now providing health and pharmaceutical care services and collective life insurance to the workers. Transportation, meals and different other social and educational facilities such as day care centers and schools have also been provided by the sector (Nuffield Council on Bioethics, 2011).

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However, it is a matter of utmost importance to find a way of produce biofuel feedstock with protection to the ethical rights of people and other species. Neo-agrarian philosophy suggests putting the land mass in its most valued use (Thompson, 2008). But, it is very important to distribute the cost and benefit in an equitable way so that; it does not turn out to be beneficial for a certain party and loss for others.

4.4 Biofuel from a business perspective The worldwide business and economy still depends mainly on fossil fuel. So far biofuel covers only a small percentage of the worlds energy need. According to a report published in the ‘Clean Technica’ the current transportation fuel market is so huge that, even if the global biofuel production gets doubled, it will only reach to 7% of the total need of transportation fuel (Marcacci, 2012).

In this chapter, past trade histories and current business situation of biofuel will be discussed.

Biofuel became competitive to fossil fuel because of the oil price shock during the 70s (Nuffield Council on Bioethics, 2011). In 2011, the global biofuel market was worth 82.7 billion dollars and the market is predicted to be expanded to 185.3 billion dollars by 2021 (Marcacci, 2012) at a compound annual growth rate of 10% (“Global Biofuel Production Forecast 2015-2020,” 2014). Still the demand of biofuel in the future market will exceed the supply. The reason behind it is inadequate financing (Marcacci, 2012).

Although the need for biofuel is rising, the industry is still dependent on the global fossil fuel price. As most of the available liquid biofuels are blended with fossil fuel, the price of the blend depends on the price of petroleum (Curtis, 2010). In some cases, the cost of the feedstock and cost of production is higher than the selling price of biofuel. Other causes for investors to lose their interests from the biofuel market are higher rate of credits and uncertainties about the first generation biofuel related to environmental sustainability issues (IEA, 2009).

During 2008, in the USA, a number of proposed ethanol projects were cancelled due to lower ethanol price in the market. Even the second largest ethanol producer of the country ‘Verasun’ along with two other producers, ‘Greater Ohio’ and ‘Gateway Ethanol’, were filed for bankruptcy protection during the end of 2008 (IEA, 2009).

At the beginning of 2009, one fifth of the countries production was fallen idle as the price of corn was too high (IEA, 2009). Actually, the price or corn in the market got increased four times during 2005 and 2012 (Energy, 2014). However, at the end of 2009, the situation had improved for biofuel companies as the price became economical (IEA, 2009).

Ethanol produced from lingo-cellulosic materials was promoted in the United States by companies like BP and Verenium. They have invested $45 million in a join-venture project to develop an advanced bioethanol plant that will use lingo-cellulosic materials as feedstock. A large fund was also been expected to invest for the research and development of such ethanol by the Department of Energy of United States (IEA, 2009).

The biodiesel market in the US is expected to reach 6,453 million liters by 2020. To promote the production and use of biodiesel, the US government implemented the energy independence and security act of 2007 (EISA). To meet the requirements of the policy, RFS2 was created. RFS2 demanded to produce at least 3.8 billion liters of biodiesel by 2012 (Chaudhuri, 2010).

In the US economy, biofuel development has created a positive signature. The renewable fuel association estimated an increase of 45 billion dollars of GDP in 2012 from the corn based ethanol industries only. More than 380,000 job opportunities were created and will reach to 2 million if the objective of the Energy Policy Act (EPA) can be maintained till 2022 (Energy, 2014).

In Europe, biodiesel has been introduced in the transport sector and the use of biofuel has been controlled through EU legislations. Europe produces biodiesel mainly from feedstock like rapeseed and sunflower seed. In 2005, over 80% of the world’s biodiesel was produced in Europe (Runge and Senauer, 2007). Being the second largest producer of biodiesel to USA, Germany was facing a threat to its biodiesel market due to the export subsidies for the US producers. To save the local market, EU had to put tax on import of biodiesel (Chaudhuri, 2010).

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Spain is the seventh largest biodiesel producing country in Europe with more than 28 biodiesel plants. And the biofuel industry is making rapid progress due to the Spanish renewable energy program (REP). The program was initiated in 2005. Full tax exclusion for biodiesel production was the cause behind the success of Spanish biofuel industries (Chaudhuri, 2010).

According to Allied Market Research, the global market for second generation (advanced) biofuel will reach to 23.9 billion dollars by 2020. Although, currently the market is ruled by biodiesel but by 2020 cellulosic ethanol will be the controlling factor. (Allied market Research, 2014). But, without subsidies from the government, the price of the ethanol can be too high.

Between 2003 and 2030, global energy consumption should rise by 71% according to the U.S. energy information administration’s latest projection. (Runge and Senauer, 2007). As a result, the price of oil will be increasing. As the price for fossil fuel and bioethanol has a proportional relationship, the increase in the price of fossil fuel will also increase the price of biofuel in the market (Curtis, 2010). New industries for producing biofuel are going to be opened with the vast opportunity of exports and thousands of new jobs which will result as healthier GDP.

Such an industry is going to be established soon in Canada. The thirteen plants will create 9000 job opportunities, 1.49 billion US dollar in GDP growth and 273 million dollar in tax revenue. In migration, new foreign investments and accommodation for the workers will also provide a positive response to the economy (“Betting on a biofuel boom - NB Telegraph-Journal - BioNB,” 2014).

5 Discussion To fulfill the goal of this paper, this chapter will discuss the core issues learned in the literature review and analyze them from a sustainability point of view.

As sustainable development can only be achieved in the liquid biofuel sector by putting priority on all of the three dimensions (i.e. environmental, social and economic) of sustainable development. This paper, therefore now present some important definitions along with sustainability criteria of those three dimensions presented by the World Energy Council as example.

Environmental sustainability: Issues related to biodiversity, land preservation, water and soil preservation etc. are addressed by environmental sustainability (Biofuels: Policies, Standards and Technologies, 2010). Table 1, shows the three principles for environmental sustainability for bioenergy, set by the World Energy Council.

Principle 1 The production of biomass for bioenergy must ensure the conservation of biodiversity, ecosystems and the protected areas.

Principle 2 To preserve the soil quality and to minimize the negative impacts, the use of the best practices in the production of biomass for bioenergy should be guaranteed.

Principle 3 To ensure the water preservation and to minimize the negative impacts such as contamination or an induced scarcity of water, the use of the best practices in the production of biomass for bioenergy should be guaranteed.

Table 1: Environmental sustainability principles (Garofalo, 2010)

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Social sustainability: Social sustainability addresses issue that occurs due to production and use of biofuel on the society. It also addresses labor standards, safety standards and local development. It ensures the implementation of human rights, land rights and land use rights (Biofuels: Policies, Standards and Technologies, 2010). Three principles are set by the World Energy Council and are presented in table 2.

Principle 1 Labor rights of the local indigenous people should be respected.

Principle 2 Land and land use right of the local indigenous people should be respected.

Principle 3 The relation with the local community and the responsibility-sharing between parties should ensure local development.

Table 2: Social sustainability principles (Garofalo, 2010)

Economic sustainability: Economic sustainability depends on the local, national and international level. It is a must for sustainable biofuel production (Biofuels: Policies, Standards and Technologies, 2010). Principles set by the World Energy Council are presented in table 3.

Principle 1 Economic profitability should be ensured by new projects (plant building, crop cultivation etc.) which will contribute to local development of the region

Principle 2 A fair sharing of the profit between the owners, the employees and the local community is a necessity.

Table 3: Economic sustainability principles (Garofalo, 2010)

The following points come up if we analyze our findings of the literature review from the view point of sustainable development. Below are listed a few of the main sustainability issues connected to biofuel production:

• First generation biofuels are produced from sugar rich seeds, food crops, oil seeds or even from animal fat. Thanks to availability of cheap feed stocks and easier conversion methods, first generation biofuels seem to achieve economic sustainability. However, this type of biofuels are lacking from both social and environmental sustainability when they are produced in a large scale and in a rush.

• Greenhouse gas emissions connected to land use change also come into account when the sustainability of liquid biofuel is analyzed. Proper modeling is essential to calculate indirect land use change emission in order to calculate the carbon debt properly to move towards environmental sustainability.

• Cultivation of previously non-cultivated land leads to reduction in biodiversity. In the USA between 2006 and 2007, CRP lands needed to be re-cultivated because of the increased demand of corn for bioethanol production. CRP retired lands are those that have served as cultivable land before and needed to be left alone to regain strength and regenerate fertility. Re-cultivation of those lands conflicts with environmental sustainability criteria.

• Use of fertilizer and pesticides during biofuel feedstock cultivation can result in water and air pollution which conflicts with the idea of environmental sustainability.

• As the raw materials of first generation biofuels are also used as food, it is possible that food shortage and increase of food price occurs when there is a sudden increase in need of biofuel. The ‘tortilla riots’ incident in Mexico in 2007 is undoubtedly an example of poor social sustainability.

• Although sugarcane ethanol has low GHG emissions comparing to corn ethanol, stories of violation of labor rights, child labor and unfair distribution of wedges in the sugarcane industries of Brazil are not a sign of social sustainability. However, Brazil has taken some really good measures such as making a list of those sugarcane producers that violates human, child and labor rights in order to

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protect them from getting further loan. Other sugarcane producers responded to their social responsibilities by introducing schools and day care centers in the community which definitely signify social sustainability in the sector.

• Second generation biofuels also emit less GHG compared to first generation biofuels but, the feedstock is not abundant in nature. Some report said, there is not enough cellulosic raw materials in the nature to provide the biofuel plants in the future (FAO, 2008). So, cultivation is needed for industrial production. Artificially cultured biomass seems essential to ensure continuous supply of feedstock to fulfill the need of biofuel in the future.

• Second generation of biofuels is more costly to produce than first generation biofuels which make it economically less sustainable. The production plant itself can be 10 times more costly than a first generation biofuel production plant (Greenergy, 2010). However more investment is needed for research and development of this type of biofuel in order to bring it in reach of general people.

• The conversion process of second generation bioethanol is more complex than first generation as cellulose and lingo cellulose are hard to break down to sugar. Also, as the energy value of second generation biofuel feedstock (i.e. switch grass) is very low this type of biofuel should be produced and used locally. Otherwise the process is not going to be economically sustainable.

• Third and fourth generation biofuels are still under research. Researchers are trying to find an economical way to produce advanced biofuels in an industrial scale. It is already been proved that, using algae as raw material for biodiesel can result in a 60 times more production per acre than land based plants (“Energy 101,” 2012). But, the setback is algae itself. It is very difficult to extricate oil from algae. Moreover an uninterrupted supply of feedstock is necessary for commercial production which is not assured.

Liquid biofuel has been promoted through policies. Providing either incentives or support, these policies are the reason for current biofuel development (FAO, 2008). Currently the policies are divided into several domains such as agriculture, energy, transport, environment and trade. Biofuel development relates to all of them but unfortunately, sometimes, the policies even contradict with each other (FAO, 2008).

However, formulation of a robust policy directive for biofuel deals with utmost uncertainties. Considerable variation in estimating the future biofuel price, the effects on the society and the environment and the potential in medium to long term basis brings forth such uncertainty. In the report of 2008, The State of Food and Agriculture (FAO) proposed five guiding principles to develop future biofuel policies (FAO, 2008) which supports sustainable development from environmental, social and economic points of view. The principles are presented in table 4 as example.

Principle 1 Biofuel policies must put priority on the problems due to higher food price in the least developed food-importing countries. The poor and vulnerable populations in the rural and urban areas of those countries also need to be prioritized.

Principle 2 By promoting research and development, the policies should ensure efficiency in environmental sustainability, feedstock production and conversion processes. They should also create an environment so that, even the developing countries can fulfill their demands for biofuel and the poor farmers can get the profit.

Principle 3 The new policy should support environmental sustainability. It should prevent excessive GHG emissions, protect land and water resources from being depleted and also protect environmental damages through pollutants.

Principle 4 The policy should be market oriented so that, it can reduce the current fluctuations in the biofuel and the agricultural market. The policy should also be based on a consideration of unwanted situations beyond the country boundaries.

Principle 5 An appropriate international coordination needs to be ensured in the process of developing such a policy so that, environmental sustainability goals, social goals for agricultural development and poverty and hunger reduction can be ensured.

Table 4: Guiding principles for developing future biofuel policies (FAO, 2008).

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However, it is important to see the development of biofuel as a long term process in the future policy making. Policy makers should believe biofuel as one of the several alternative renewable energy sources for the transport sector. If it can be done, the policy will imply a considerable impact on the agriculture and food supply even if the contribution of biofuel in the future stays small compared to the rest of the global energy supply.

Nuffield council, a UK based organization has come forward with a framework consisting of five conditions which will specify a perfect biofuel that will be environmentally, socially and economically sustainable. These frameworks can be used as theoretical base for future biofuels production. Table 5 states those conditions. 1 Development of biofuel should not cost people’s essential rights. (Including access to sufficient

food and water, health rights, work rights and land entitlements).

2 The biofuel should be environmentally sustainable.

3 It should have a net reduction of total greenhouse gas emission.

4 The fuel should develop in accordance with trade principles that are fair and recognize the rights

of people (including labor rights and intellectual property rights).

5 And finally, the cost and benefits of biofuels should be distributed in an equitable way.

6 If the first five Principles are fulfilled and if the biofuels can play a crucial role in mitigating

dangerous climate change then, depending on additional key considerations (i.e. absolute cost;

the availability of alternative energy technologies; alternative uses for biofuels feed-stocks; the

existing degree of uncertainty in their development; their irreversibility; the degree of

participation in decision making; and the overarching notion of proportionate governance), there

is a duty to develop such biofuels (Nuffield Council on Bioethics, 2011).

Table 5: Conditions that specify a perfect biofuel (Nuffield Council on Bioethics, 2011).

6 Conclusion From the discussion above, it seems that, the potential of liquid biofuel as a source of future global energy in the transport sector is still uncertain because of its environmental and social effects. Especially some of the first generation biofuels are stained with ethical issues. But the global transport sector is getting larger with the increase in global population. The need for fuel to energize the sector is also increasing. Currently liquid biofuels are providing only 2% of this need, but according to one study, it is possible to increase the amount till 27% within 2050 in a sustainable way (International Energy Agency, 2011).

In this situation, it is understandable that, the demand for fossil fuel will be fulfilled by other renewable energy sources including biofuels. Depending on the price and availability of the feedstock, it seems that, both first and second generation biofuels will partially replace fossil fuel from the transport sector in the future. Advanced biofuels will take more time to be fully developed for use as they are still going through research and development process.

In case of first and second generation biofuels, feedstocks with minimal impact on food supply, higher yields from less land and yields that can grow in low grade lands needs to be promoted. According to Ceres research center, the ideal biofuel feedstock should have shorter maturing time period with higher density of growth (“Ceres,” 2013).

Land for biofuel feedstock should be chosen efficiently in order to reduce impacts on biodiversity and water. More advancement is required in the conversion process of biofuels from raw material to increase the amount of production. Fuel production facilities should be closer to the feedstock production facility to save transport cost and to have less emission through transport.

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Investment in the biofuel sector is important to fund more research and development. Intergovernmental participation is essential in developing an international biofuel policy which will assure the potential investors to invest in this sector without fear of economic loss.

As different policy directives throughout the globe shapes the current biofuel development, to make future biofuel more ethically compatible to the society, ecological and environmentally friendly, the policies needs to be more comprehensive. The new policies should aim towards bringing out the opportunities from biofuel while managing the undeniable risks it presents.

There are a number of policies to promote biofuels especially first and second generations which helps developing the sector towards sustainability. The recent iLUC directive of EU limits the use of first generation biofuels to 7% when the rest 3% need to be fulfilled by either second generation biofuels or other alternative energy sources (“Biofuels Policy and Legislation,” 2015).

It is important to remember that although liquid biofuel brought challenges in our life it also has the potential to present opportunities for a sustainable future with energy security. It is up to us to make sure that we achieve both environmental as well as social sustainability along with economic sustainability in the liquid biofuel sector. Shall we not embrace this opportunity?

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7 Acknowledgement At the end of this paper, I would like to remember those individuals without whose help and support, it could have been an impossible task.

My supervisor, Ms. Serina Ahlgren (Ph.D.) has done the immense task of guiding me through the entire research. Without her help and guidance, it was impossible to complete this paper. Her knowledge and experience as a supervisor and in biofuel made it possible to fulfill this task. She has provided me with ideas and suggestions. She has also helped me finding appropriate articles that are related to the topic of this thesis. Her valuable comments on all most on every part of my paper were priceless. I am really grateful to her for her time, patience and support for my work.

Besides his immense business, my evaluator Mr. Åke Nordberg (Ph.D.) has given his time for evaluating this paper. I have gotten valuable inputs from him as well throughout the paper. I am grateful for his effort.

I must thank my good friend Mareike Brockmann. Despite her business, she has managed some time and helped me with language and grammar of this paper.

Last but not least, I am thankful to one another individual, my best friend and my life partner ‘Yuko’ for supporting me continuously. Although she is living in Japan, she helped me to gather mental energy by talking to me every day. Without her mental support, it was possible that I would have lost my patience and given up conducting this immense task. Thank you very much Yuko.

Finally, I would like to thank Uppsala University for providing the chance to conduct this work.

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