Global Perspective on Production of Biotechnology-basedBioenergy and Major Trends

Simonetta ZarrilliUnited Nations Conference on

Trade and Development - UNCTAD

Rome, 12 October 2007

Why Bioenergy?• Economic growth and increasing population will

lead to 1.6% p.a. increase in global energy demand between 2006 and 2030 (IEA, 2006)

• Increasing fossil fuels cost, energy security concerns and climate change preoccupations have motivated countries to explore alternative energy sources, including bioenergy – energy produced through the processing of biomass (any derived organic matter available on a renewable basis): e.g. biogas, bioethanol, biodiesel

• Concerns about high fossil fuels prices and energy security and efforts towards climate change mitigation are expected to feature highly in the international agenda in the years to come. This will keep interest for bioenergy high

Bioenergy perspective by 2050

• Bioenergy may satisfy 1/3 of the world’s future energy needs key alternative to fossil fuels

• Represents 1-3 trillion US$ market value worldwide

• Involves some 10% of the world land surface (Copernicus Institute for Sustainable Development and Innovation Management)

Biofuel ClassificationFirst Generation (from sugars, grains, or seeds)• Biodiesel

– rapeseed, soybeans, sunflowers, jatropha, coconut, palm, recycled cooking oil

• Ethanol– From grains or seeds: corn, wheat, potato– From sugar crops: sugar beets, sugarcane

Second Generation (from lignocellulose: crop residues, grasses, woody crops)

• Biological fuels– Ethanol via enzymatic hydrolysis

• Thermochemical fuels (most made via “gasification”)– Fischer-Tropsch liquids (FTL)– Methanol, MTBE, gasoline– Dimethyl ether (DME)– Mixed alcohols– Green diesel

First Generation Biofuels• Use of sugar or starch crops creates limitations:

– Competition for food uses– Plants optimized for food, not energy– Only part of the plant is converted to biofuel– Co-product sales often important for acceptable

economics• Only modest energy and GHG benefits, except

with sugarcane ethanol (due to greater utilization of the above-ground biomass)

• Can blend with existing petroleum-derived motor fuels – minimal infrastructure change

• Large-scale experience in Brazil and USA• Relatively high costs (except sugarcane ethanol in

Brazil) due to high feedstock cost• Cost penalties less severe at smaller scales

Second Generation Biofuels• Made from lignocellulosic materials

– Biomass that is generally not edible– Larger fraction of the plant is converted to fuel– Plants can be bred for energy characteristics (high yield, low

inputs)

• Two generic processing routes: biological or thermochemical• Can blend with petroleum fuels in most cases• Substantial energy/environment benefits compared with

most 1st generation biofuels due primarily to greater biomass usability per unit land area

• Greater capital-intensity than 1st generation biofuels, but lower feedstock costs higher cost-scale sensitivity larger scale facilities needed for optimum economics

The role of biotechnologyBiotechnology is not a source of energy, but a scientific

method that provides tools to produce energy •Biotechnology permits the modification/selection of plants to enhance their conversion to fuels •Biotechnology can be used for yield increase, better biomass quality, disease resistance

Biotechnology can be used to facilitate the manufacturing

process (from biomass to biofuels)

Concerns related to environment/biodiversity

protection

More acceptable for consumers

The International Trade Dimension• Biomass & biofuel trade has been limited in the past as

most of the production has been for domestic consumption

• Several countries will not be in a position to produce enough biofuels to satisfy their demand; some countries/regions are endowed with conditions which allow them to produce biofuels and feedstock competitively production& international trade are expected to escalate rapidly to satisfy increasing worldwide demand

concerns about the sustainability of biofuels development

Flows of ethanol in 2000 (thousand tons)

Total trade of ethanol: 3 billion liters (2004)Total production of ethanol: 51 billion liters (2006)

Flows of ethanol in 2004 (thousand tons)

Biofuels Certification Initiatives• National governments and regional groupings: Belgium, the

Netherlands, UK, Brazil, Canada, Germany, US-California, European Commission

• Companies: e.g. Electrabel, Essent

• NGOs: e.g. WWF

• International Bodies and Initiatives

• International Networks and Roundtables: e.g. RSPO, RSP-EPFL

What for?Ensuring that biofuels/biomass production contribute to climate

change mitigation, improved energy security and rural development, without having detrimental side-effects on food security, land use,

environmental protection, labour conditions, etc.

Specific concerns related to biotechnology

• Several certification systems do not allow the use of GMOs. These are for example FSC for forest and all certification systems for ecological agriculture

• EurepGAP certification program: (i) Planting of any GMO must comply with all existing regulations in the countries of production and consumption (ii) The use of GMO cultivars must be agreed with individual customers prior to planting; (iii) Suppliers must inform all customers of any developments relating to the use of products derived from genetic modification before engagement

• Cramer report: no indicator has been included for GMOs. The views with regard to GMOs are divided and the discussion about this lies beyond the field of activity of the project group

Why is certification important?

• Market access and market acceptability

• Only certified biofuels may count towards biofuel blending targets

• Only certified biofuels may benefit from tax breaks and other incentives

WTO Implications

• The “Like products” issue

• “Less favourable treatment” (EC-Biotech case)

• The role of non-WTO law (Cartagena Protocol)

• « Grey area » WTO coverage of certain labelling programmes

Development Implications

• Bionergy is a development opportunity for developing countries, especially if appropriate policies are put in place; “second” generation technologies may alleviate some of the present shortcomings

• Access and adaptation to technology• Developing country involvement in

sustainability certification for biofuels/biomass

THANK YOU

Simonetta.Zarrilli@unctad.org

www.unctad.org/biofuels