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Re: HLPE consultation on the V0 draft of the Report: Biofuels and Food Security

Timothy A. Wise Tufts University, United States of America
30.01.2013
Timothy A. Wise

From: Timothy A. Wise, Policy Research Director, Global Development and Environment Institute, Tufts University, Medford, Mass.
Re: Comments on V0 draft of HLPE Biofuels Paper
Date: January 30, 2013

I congratulate the project team on a remarkable job taking on a complex and controversial topic and treating it with rigor and clarity. I find the strength of the paper, in the context of the CFS, is its comprehensive treatment of the topic – economic, social, and environmental aspects. Another is its clear emphasis on the food security implications, not just in the short term from higher prices but over the long term as well. This includes the very helpful presentation of the contribution to land-grabbing, a topic of great interest to the CFS. The modeling scenarios are well-presented and well-argued. The recommendations are justified by the text and data and make sense in terms of the problem at hand, with the CFS as one of the primary policy venues for discussion.

In response to the specific questions posed:

1.       Is the V0´s appreciation of the current policy conjuncture adequate, particularly its interpretation of the changing significance of mandates and targets?

Yes, I find the framing of the issue generally quite good. The paper would benefit from a closer consideration of the policy conjuncture in key markets, particularly the U.S. and the EU. This includes the U.S.’s moves toward E-15 blends and the inflexibility of the RFS in the recent drought. The latter highlighted for many in the U.S. just how poorly structured the RFS is, written as it was before the 2007 price spikes ushered in the new era of high and volatile food prices. Discussing the needed flexibilities in more detail and the dangers of the moves toward E-15 in more detail would be very helpful. So too would a discussion of the perverse environmental implications of the looming regulatory arbitrage represented by the trade of corn ethanol from the U.S. for sugar ethanol from Brazil. For the EU, the policy considerations relate to the weaknesses in the newly announced (and misnamed) “cap” on crop-based biofuels, with the reduction from 10% to 5%. Any limit should apply to production and consumption and should adequately reflect impacts in the country of origin. The key transitional policy recommendation to emphasize is the move toward meaningful flexible mandates in which, by automatic trigger (price or stocks-to-use), mandates are relaxed, placing people clearly before cars and food before fuel.

2.       Does the V0´s interpretation of land constraints regarding “available” lands – from an integrated food security and carbon emissions perspective – take into account all the relevant scientific evidence and arguments?

The presentation is strong and complete. It is important to detail the implications of ILUC not only for first but for second and third generation biofuels.

3.       The V0 provides a detailed and comprehensive discussion of the central role of biofuels for high and volatile food prices. Are there further discussions that need to be taken into account?

The discussion is detailed an excellent, however there may be some ways in which we’ve lost the forest to focus on the trees. That is, there is now a clear body of evidence showing that biofuels contributed 20-40% of the food price increases seen in 2007-8, and there are subsequent studies that show continued contributions (see Babcock 2011, National Academy of Sciences, among many others). I am confident your team is aware of these studies. I think it is worthwhile to cite them in a paper of this sort, because the assertion is still considered controversial. The authors make a very interesting, compelling and original case that biofuel expansion represents the largest single factor contributing to high food prices since 2007. That case should be made in the context of a broader citing of the literature on the subject, and a lodging of your argument within that larger discussion and controversy. I characterize it as a consensus that biofuels have been a major contributor, and the debate is over how much. This needs to be well grounded in the literature.

The discussion of food price impacts on consumption could be made clearer. It is not always clear whether the authors are faulting the modelling assumptions or are indeed pointing to the modelling results as clear evidence that biofuels expansion causes significant reductions in consumption. This is a rich area to explore. I believe there are indeed errors in the modelling that can lead to erroneous results, but that does not mean that the main finding – that higher prices from biofuels effects causes consumption decreases – is incorrect.

US corn ethanol should get separate treatment because the evidence suggests it has the largest impact on prices. It is somewhat misleading to examine “grains” prices as a category for all countries, when the US is by far the largest export of corn and by far the largest producer of corn-based ethanol. It deserves its own treatment.

There is no need for biofuels and financial speculation to compete as causes of high and volatile food prices, and your presentation makes it seem that way. In fact, they complement one another perfectly. Biofuels expansions reduces the level of grain reserves. Scarcity, or perceived or feared scarcity, is the medium within which speculators best thrive. Speculators are more heavily invested in oil and other energy crops than in agricultural commodities, but biofuels ties those markets closely together. There is ample evidence that financial speculation has contributed significantly to the price spikes we have seen in recent years, particularly in 2007-8, while biofuels expansion has been, arguably, the main driver (with China’s growing soybean demand) of rising prices due to supply-demand imbalances.

4. The V0 endorses initiatives which give priority to broad bioenergy strategies for local use in energy poor regions of the world where the potential social gains are large from even small quantities of energy and the impact on land use competition small. Which are the most far-reaching examples of such policies or experiences in practice?

 I am not familiar with these examples, but I think it is indeed a rich area to explore.

One final comment. The discussion of gender implication is welcome and could be even further explored. Because the authors took on the full complexity of the biofuels issue it would behoove them to take on the gender implications in all their dimensions as well.