Biodiesel Featured Articles
Biofuel and Global Biodiversity
By By Dennis Keeney and Claudia Nanninga, Institute for Agriculture and Trade Policy (IATP).Table of contents
Executive SummaryIntroduction
Chapter 1: Biofuel Production and the Global Biofuel Industry
- Biofuel Feedstock
- Biofuel Production Trends
- Domestic Policy Incentives and International Trade Rules
- Indonesia and Malaysia
- Brazil
- United States
- Future Opportunities: Cellulosic Ethanol
Resources
Executive Summary
The reduction in global biodiversity has emerged as one of the greatest environmental threats of the 21st century. Urban and agricultural development have traditionally been primary drivers of encroachment on important, biodiversity-sustaining ecosystems. But a new agricultural trend, the use of plant biomass to provide liquid fuels, is exacerbating agriculture’s impact on biodiversity. These fuels, called biofuels, are changing land-use patterns in many regions around the world, including some of the most diverse and sensitive regions on the planet.
This new industry has expanded due to two complementary drivers: the increase in crude oil prices, and national policies and incentives directed toward the production and use of biofuel. The U.S. has established federal subsidies and tax advantages for biofuel production, plant construction and the acceleration of research. Many U.S. states have provided additional incentives. Renewable fuels standards, which mandate particular volumes of renewable fuel consumption by certain dates, have also been key to the industry’s growth in the U.S. and Brazil. The European Union and other countries that have limited ability to grow biofuel feedstocks themselves have followed suit. The result has been an accelerated expansion of the biofuel industry, with many implications for biodiversity that are unclear.
Due to policy, available infrastructure and knowledge, the feedstocks of choice for the biofuel industry thus far have been “conventional” crops such as corn, soybeans, sugarcane, canola and palm. The use of these crops for biofuel has already had significant impacts on biodiversity. In the U.S., the tremendous increase in land planted in corn is further reducing the diversity in crop rotations and threatening wetlands and acreage set aside for conservation. In Brazil, sugarcane is moving into the fragile, diverse Cerrado region, and other crops such as soy are contributing to significant destruction of the Amazon rainforest. Yet perhaps the largest loss of biodiversity is occurring in the rainforests of Malaysia and Indonesia, where palm oil plantations are rapidly being established to feed the growing demand for biodiesel in Europe and elsewhere.
Given current trends in the biofuel industry, regional and global biodiversity could be substantially harmed, particularly in developing countries. But this does not need to be the case. Many of the biodiversity impacts of biofuel feedstock production are not inherent to biofuel, but are more symptomatic of inappropriate agricultural production systems and policies.
Simply put, a key issue for global biofuel production is the growing volatility of agricultural commodity prices that has resulted from an increased demand for food, industrial products and energy from agricultural land. It matters little for biodiversity whether a bushel of corn, for example, gets processed through an animal or a distillery. The issue is that growing demand for agricultural commodities changes the behavior of farmers and the agribusiness industry. Skyrocketing prices, whether induced by a new demand like biofuel, weather-related crop losses or government policies, can lead to the reckless clearing of native vegetation to take advantage of the increased profit potential.
On the other hand, keeping commodity prices low is not an environmental solution either. For much of the past 30 years, commodity prices have been in collapse and have rarely provided farmers with an income that covers production costs. The low price of corn, in particular, created an economic climate that facilitated research and development into industries such as corn-based ethanol and industrial livestock production.
Environmental groups in the U.S. and throughout the world have struggled to get policies enforced that can mitigate the environmental damage from the monocultural production systems that thrive in times of low prices. Family farm groups in the U.S. have advocated for policies that would better manage production to set fair prices, protecting against volatility that sends prices too high or too low, and ultimately remove disincentives to expand production into biodiverse areas.
In many ways, the biofuel industry juggernaut has already gained substantial momentum and will be difficult to manage. But we have identified opportunities in four policy arenas that can help mitigate the impact of biofuel production on biodiversity:
- Protect native ecosystems and indigenous lands. The most significant biodiversity threat is the potential for biofuel feedstock production to extend agriculture’s encroachment on native vegetation. Lax enforcement of land protection laws in Malaysia, Indonesia and Brazil have all contributed to the proliferation of industrial agricultural production. In the United States, higher commodity prices are encouraging farmers to take land out of conservation reserve programs and into production. Land-use policies must be strengthened and enforced, and conservation programs adequately funded, so that these lands are protected.
- Make sustainability a priority for all biofuel production. One of the main reasons for broad public and policy support of biofuel has been perceived environmental and rural development benefits. From a biodiversity perspective, biofuel feedstock production provides an opportunity to diversify agricultural cropping systems and generate more environmental benefits from agricultural land, while keeping farmers on the land. But a more sustainable biofuel production system simply cannot get off the ground if it is competing on the same economic terms as the fossil fuel industry on one side and industrial agriculture on the other. For biofuel to really succeed, policies need to assure that sustainability is a priority for all biofuel production. To that end, policies should encourage more sustainable production of biofuel feedstocks, which could potentially include economic incentives for meeting sustainability criteria, procurement preferences for sustainable biofuel, and greater research and investment in more environmentally beneficial biofuel feedstocks to accelerate the transition to the next generation of biofuel.
- Moderate the environmental damage that results from the dramatic price volatility in agricultural commodities. Corn dominates the U.S. biofuel feedstock industry as well as the industrial livestock feed industry because, traditionally, no other feedstock could compete against low corn prices. Billions of private, state and federal dollars were invested in using up cheap corn. Now, even though corn prices have risen substantially, the ethanol and livestock industries remain just as corn-dependent because there has not been adequate research on other, environmentally beneficial feedstocks.
These price fluctuations in agriculture are devastating for farmers and destructive to the environment, and they even have harmful implications for the diet of consumers. Yet since much of the agribusiness industry thrives on market volatility, policies that traditionally ensured stable, well-functioning commodity markets have been dismantled. The U.S. Farm Bill used to have a series of tools in place to manage supply and prices of primary farm commodities. The University of Tennessee’s Agriculture Policy Analysis Center has documented how an updated supply management system would work to stabilize market prices. Maintaining functional markets is critical for growing and developing diversified agricultural systems. - Redesign the agricultural and energy sectors. number of factors—from high gasoline prices to Mideast conflicts to E. coli and Mad Cow outbreaks—have converged to create an overall sense of concern about the direction of agriculture and energy production. In response, there has been explosive growth in local foods, hybrid cars and small wind turbines as consumers seek positive alternatives.
As biofuel can be produced from a variety of plant materials in nearly every inhabited part of the world, the industry is well-suited for local production, thereby reducing the environmental costs of transportation and allowing local communities to benefit from the sustainable production of biofuel feedstocks and the economic development that can accompany this approach. Unfortunately, the environmental and economic benefits of local production and ownership have largely been abandoned in favor of huge production facilities focused on export to other regions and countries. In Minnesota, state policies initiated in the 1980s contributed to an ethanol industry that was truly homegrown; state incentives favored ethanol plants that were small and cooperatively owned by farmers. These plants had minimal impact on cropping systems and water supplies. Now, however, ethanol plants are most likely not locally owned, production capacity is several times larger, and water availability, air and water contamination, and the growth in monocultural corn production has become much more of a concern.
Rather than exacerbate industrial agriculture’s negative impacts on biodiversity, the emergence of the biofuel industry offers a chance to reorient our energy and agricultural policies to prioritize local production and use. A biofuel industry built in conjunction with these policy priorities could protect native ecosystems while providing an opportunity to diversify cropping systems and land use, and benefit rural communities. Public policy has been a major driver in the development of the biofuel industry. In moving forward, smarter policy is crucial if biofuel is going to protect and enhance—rather than decimate—global biodiversity.
Introduction
“The current massive degradation of habitat and extinction of species is taking place on a catastrophically short timescale, and their effects will fundamentally reset the future evolution of the planet’s biota.” Michael Novacek and Elsa E. Cleland, National Academy of Sciences proceedings.
The accelerated loss of global biodiversity is of great concern to ecological researchers. Up to one third of the plant and animal species in the U.S. are now at risk of extinction, and major economic and land-use forces at work worldwide are enhancing this loss.
In general, greater diversity leads to greater plant productivity, more nutrient retention and more stable ecosystems. For example, experiments with grasslands have shown that halving the number of plant species within a research plot leads to a 10-20 percent loss of productivity. Numerous other studies indicate that lower plant diversity leads to greater loss of nutrients from the soil through leaching, and subjects ecosystems to loss of productivity through drought, disease and insects. Animal ecology also is subject to major disruptions. An example is the emergence of capybara (a large rat-like mammal) and other small rodents typical of degraded areas that have proliferated in sugarcane areas of Brazil.
Major contributors to declining biodiversity include agricultural expansion, urbanization, land degradation, deforestation, land and water pollution, invasive species and, increasingly, climate change. The global dependence on fossil fuels has indirectly driven much of the loss of biodiversity. As the price of petroleum increases—and if the dependence on low-cost energy does not subside—many of the environmental issues associated with petroleum could be transposed onto production of biofuel feedstocks.
From an environmental perspective, the growth in biofuel production presents great opportunity and challenge. The diversity of potential biofuel feedstocks creates the opportunity— ecosystems such as native prairie could someday become the most efficient source of materials for biofuel. This industry provides one of the only economically viable methods of large-scale conversion away from monocultural production systems.
The current situation in agricultural commodity markets is unique; rarely in recent decades has the agricultural industry experienced sustained high prices for commodities. This creates a new set of environmental concerns, makes industrial agricultural production economically viable in places that it was not previously and exposes inadequate land-use policies in the U.S. and throughout the world.
These and many other drivers have contributed to the complex relationship between agricultural production and biodiversity, which has changed dramatically in large part because of the widespread shift from small-scale, locally based agriculture to largescale, industrialized agriculture over the past half a century. Modern industrial methods of farming are almost entirely dependent on fossil fuels. And the shift toward industrial agriculture has also diminished the genetic diversity of domesticated plants and animals, as well as biodiversity in ecosystems.
Growth in the biofuel market provides a unique opportunity to develop new agricultural cropping systems, while it also creates new challenges to limiting the encroachment of agricultural production systems on ecosystems that maintain much of the world’s biodiversity.
This paper explores the impact of current biofuel production systems on biodiversity and provides recommendations for moving biofuel production toward more sustainable systems that enhance, rather than damage, biodiversity.
Further Reading
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May 2008
