Comments on the High Level Panel of Experts Report
On Biofuels by the Private Sector Mechanism
January 30, 2013
The Biofuels report has several areas of sound analysis, but the private sector notes with concern that many of the policy recommendations do not draw upon that analysis.
Currently the report does not distinguish between well considered economic consensus and more peripheral or theoretical views. Weighting of the analysis should reflect it gravitas and consensus rather than its capacity for soothsaying.
The policy section should be reconsidered in the next draft and the private sector mechanism offers the following points to close considerable gaps:
Page 7 – reference to country typologies being a starting point for biofuels policies. This doesn’t seem to include either trade or energy resources as part of the analysis.
Page 8 – the “division of labour” argument between developing and developed countries does not seem well conceived. The paragraph which starts off with wood and talks about biorefineries seems not well grounded.
Page 9 – the paragraph that “ a substantial fraction of each ton of crop diverted to biofuels comes out of consumption by the poor” needs thorough substantiation. Many of the really poor are not touched by commercial markets.
Page 10 – The references to land grabbing. Authoritative sources are needed here as to how much this is really to do with biofuels. Early analysis by World Bank would suggest it is much more a matter of foreign national governments trying to secure food production for thier people.
Draft policy recommendations
P13 – para 1. “the central role of biofuels in provoking high and volatile prices” is not fully substantiated by this report in its current state. Therefore the policy outcome that its growth needs to be controlled is not well grounded.
P17 - There is a reference to the EU having an increasing level of food imports due to climate insecurity. This needs substantiating: the EU is the world’s biggest importer and exporter of food and ag products.
P18-19 - The section on the EU is somewhat misleading. The EU has always imported soybeans primarily for the meal.
P25 – Again the reference to Argentina is misleading because the key driver is the demand for meal.
P26 – the EU has issued a proposal – it is not agreed yet. Biofuels policies remain somewhat experimental and changing – look at all the different ones in member states of the EU as one example.
The whole piece about “emerging global market for biofuel” seems mistaken. The idea of a dedicated attempt at a global market just doesn’t ring true.
P27 – the country typology model seems to ignore trade issues and anything to do with other energy resources.
P32 – the speculation about the location of second generation biofuels seems confused and unhelpful. It is only speculative and cannot be grounded in research. While best removed from the report, at a minimum it must also point to the improvements that second generation biofuels could offer.
P34 – There are various models around trying to estimate indirect land use change: this remains an emerging science and the models should be treated with caution. The argument about the effect on the hungry is highly complex and inadequately draws conculsions regarding biofuels. The numbers of the hungry fluctuate and factors such as political stability, local weather, and other factors are key – both in price and availability. Biofuels demand is only a small factor in price and in some regions minimally so. In areas of hunger, few have access to commercial markets – so they are much more impacted by local factors. Also the idea that there is a commonly accepted target that the world should produce 10% of its transport fuels from biofuels is absolutely not established and should not be stated as fact.
P35 – the demand for biofuels is part of the increased demand that has happened since about 2004. It is a new source of demand but it is the combined demand on food crops that is important vis a vis supply. The reason that the supply response to the increased demand has been sluggish has many factors – ranging from stagnating yields to government export bans that disincentivised farmers to produce more.
It is also important to remember that there has been underinvestment in agriculture because prices were previously low – some of the price increase was a necessary correction to ensure that investment again started to be attracted to the agricultural sector.
Biofuels and Land
Overall - The science of indirect land use change is new and evolving and not currently a sound basis for policy.
P55 – There are some sweeping generalisations about foreign investments that need to be grounded in fact and less conjecture. For instance, the idea that one third to two thirds of all investments in land are linked to biofuels, particularly when it is still a first generation industry, seems unlikely and is difficult to sustain.
P63 – Certification schemes. These are presented as the only means of social compliance but there are other ways involving governments and different policy and law enforcement. More options are needed that better suit a range of national situations and sectors.
Related links and resources:
Biofuels and Food Security - A consultation by the HLPE to set the track of its study
Committee on World Food Security (CFS)
High Level Panel of Experts (HLPE)
The High Level Panel of Experts on Food Security and Nutrition (HLPE) Key Elements