Preface .................

1
1. Purpose of the Paper .........................................................................................................................2
2. oenergy n the 6IobaI fnergy Context ..............................................................................................3
3. key SustanabIty Issues ....................................................................................................................6
Issuc 1: AbIty of Hodern oenergy to
Provde fnergy Servces for the Poor .............................................................................6
Issuc 2: ImpIcatons for Agro-IndustraI ueveIopment
and ]ob Creaton ........................................................................................................12
Issuc 3: BeaIth and 6ender ImpIcatons of Hodern oenergy ................................................20
Issuc 4: ImpIcatons for the Structure of AgrcuIture ...............................................................24
Issuc 5: ImpIcatons for food Securty ...................................................................................31
Issuc 6: ImpIcatons for 6overnment udget ...........................................................................36
Issuc 7: ImpIcatons for 1rade, foregn fxchange aIances,
and fnergy Securty ....................................................................................................39
Issuc 8: Impacts on odversty and haturaI kesource Hanagement .......................................43
Issuc 9: ImpIcatons for CImate Change .................................................................................48
4. lookng forward .............................................................................................................................51
5. Source HateraI and further keadng ...............................................................................................57
1able oI Contents
SfC1IUh
SfC1IUh
SfC1IUh
SfC1IUh
SfC1IUh

I
n our Irst paper, uh-Fnergy Iocused on "1he Fnergy
Challenge Ior Achieving the Hillennium uevelopment
Coals." we pointed out that available energy services
Iail to meet the needs oI the world's poor, with 2.4 billion
people relying on traditional biomass Ior their energy
needs and 1.6 billion not having any access to electricity.
1he basic commitments to poor people cannot be met
without a Iar more Iocused approach to energy services.
At the same time, awareness has grown across the world oI
the impact oI human energy consumption on our environ-
ment, and speciIcally on our global and regional climate.
whatever the optimal energy mix, it is clear that nations
Iace tough choices in their approach to sources oI energy.
It is no surprise, then, that global interest in bioenergy
has grown rapidly in recent years. Irom being merely an
interest oI marginal innovators, it has become a multi-
billion dollar businesstransIorming economiesthanks
to rising attention and support Irom governments and the
public. what could be more appealing than home-grown
energy, essentially created by sun-and-water-Iuelled
photosynthesis, with new |obs and development
opportunities to be tapped?
et, nothing human or ecological is straightIorward. And
so it is with bioIuels, perhaps particularly liquid bioIuels.
will bioIuels push out Iood crops, raise Iood prices, and
exacerbate Iood security? will bioIuels create unexpected
negative rather than positive external environmental
eIIects? Could bioIuels even exacerbate the impact on
climate when the entire production chain is taken into
account? Eow will increased investment in bioIuels
aIIect trade patterns? what would a sustainable
approach to bioenergy look like? 1hese questions
need to be addressed.
In this latest publication, uh-Fnergy seeks to structure the
approach to the current discussion on bioenergy. "Sus-
tainable 8ioenergy: A Iramework Ior uecision-Hakers" is
the contribution oI the uh system to the issues that
need Iurther attention, analysis, and valuation, so that
appropriate trade-oIIs can be made and both the energy
needs oI people met and the local and global environ-
ment adequately protected. we hope that development
partnerships at the country level as well as the manage-
ment oI global issues will be helped by our articulation
oI the issues.
uh-Fnergy is a collaborative Iramework Ior all uh bodies
that contribute to energy solutions. It was born out oI the
2002 world Summit on Sustainable uevelopment (wSSu}
in }ohannesburg, South AIrica. 8ased on the Summit's
outcomes and action plan, it brings together the top-
level energy managers oI the uh system in a modest,
collective approach to inIorm analysis, inspire dialogue,
and ultimately promote action by governments, energy
stakeholders, and multilateral organizations. we do not
replace inter-governmental policy dialogue. hor can we
match the resources oI the private sector and civil society.
Eowever, rooted in the multilateral Irameworks oI the
Hillennium Summit, Iinancing Ior uevelopment, the
wSSu, and the world Summit oI 2005, we hope to use the
collective strength oI the uh system to eIIect change.
1his paper was sponsored by the Iood and
Agriculture urganization (IAu}, drawing on important
support Irom the worldwatch Institute in creating the
document. Hany members oI uh-Fnergy have contributed
actively. we are grateIul to all, and in particular to the
vice Chair oI uh-Fnergy, Custavo 8est oI IAu. In the spirit
oI our chosen method oI work, this is a |oint product. we
hope that you will Ind it inspirational reading.
!o!; )o+!;;o+
VA1S kARLSSUN
CEAIR, UN-FNFRCY
APRIL 2007
PreIace
...APPRUPRIA1F 1RAUF-UIIS CAN BF VAUF ANU
BU1E 1EF FNFRCY NFFUS UI PFUPLF VF1 ANU
1EF LUCAL ANU CLUBAL FNvIRUNVFN1
AUFUA1FLY PRU1FC1FU.

1
his paper on sustainable bioenergy was
draIted collectively by uh-Fnergy members,
which include all oI the united hations (uh}
agencies, programmes, and organizations working
in the area oI energy, reIecting their insights and
expertise. It is intended to contribute to internation-
al discussions on the strategies and policies needed
to ensure economic, sustainable, and equitable
development oI bioenergy in the years ahead.
uh-Fnergy uses the deInition oI sustainable
development adopted by the uh Commission on
Sustainable uevelopment (CSu}, i.e., "development
that meets the needs oI the present without
compromising the ability oI Iuture generations to
meet their own needs."
1he paper points to key social, economic, and
ecological sustainability issues raised by the rapid
development oI bioenergy in both small- and
large-scale applications. It encompasses the entire
bioenergy value chain, Irom production to use,
with the goal oI providing a Iramework Ior decision-
makers who are considering adopting new policies
or launching new investments in the bioenergy
sector. It is not designed to provide prescriptive
measures, but rather to identiIy areas that
require priority attention at the national and
international levels.
1he paper encompasses all bioenergy systems but
Iocuses in particular on modern bioenergy, which
includes liquid bioIuels, biogas, and solid biomass
Ior heat and power generation. 1raditional use oI
bioenergy, in the Iorm oI ineIIcient direct combus-
tion, is prevalent in many poor rural regions but is
not the primary Iocus oI this document. 8ecause
oI rapidly increasing attention to liquid bioIuels,
this paper discusses these in more detail than other
Iorms oI modern bioenergy.
1he issues raised by bioenergy development are
complex and highly dependent on local
circumstances (climatic, agronomic, economic, and
social}, such that sweeping generalizations about
the eIIcacy oI particular approaches are rarely
valid. 1he paper is intended to raise key questions
and explain the principal trade-oIIs involved in
bioenergy development, and to contribute to both
the international discourse on these issues and the
inIormed decision-making oI policy makers.
Crowing commitments to bioenergy in recent
years are based on studies showing that the
diversiIcation oI energy supplies can contribute to
both economic and environmental goals, includ-
ing the uh Hillennium uevelopment Coals (HuCs},
adopted in 2000.
1he paper adopts the Iollowing outline. Section 2
describes the role oI bioenergy in the global energy
context, including the potential beneIts and
trade-oIIs. Section 3 provides a Iramework Ior
decision-makers to consider nine key sustainability
issues Iacing bioenergy development:
1. Ilc ability oj modcrn biocncrgy to providc
cncrgy scrvircs jor tlc poor;
2. lmplirations jor agroindustrial dcvclopmcnt
and job rrcation;
3. hcaltl and gcndcr implirations;
4. lmplirations jor tlc strurturc oj agrirulturc;
5. lmplirations jor jood scrurity;
6. lmplirations jor govcrnmcnt budgct;
7. lmplirations jor tradc, jorcign cxrlangc
balanrcs, and cncrgy scrurity;
8. lmparts on biodivcrsity and natural rcsourrc
managcmcnt; and
9. lmplirations jor rlimatc rlangc.
Section 4 concludes that bioenergy should continue
to be discussed at the national and international
levels and oIIers a brieI Iramework Ior action.
Section 5 provides a list oI sources and suggestions
Ior Iurther reading.
Section 1: Purpose oI the Paper

8
ioenergy, deIned as energy produced Irom
organic matter or biomass, has recently be-
come one oI the most dynamic and rapidly
changing sectors oI the global energy economy.
Accelerated growth in the production and use oI
bioenergy in the past Iew years is attracting interest
Irom policy makers and investors around the globe.
Hodern bioenergy technologies
1
that produce heat,
electricity, and transport Iuels are advancing rap-
idly, with much oI the recent interest Iocusing on
liquid bioIuels, in particular ethanol and biodiesel.
1he united States and 8razil dominate today's liq-
uid bioIuels industry, but many other governments
are now actively considering the appropriate role
Ior bioIuels in their Iuture energy portIolios.
"1he gradual move away Irom oil has begun. uver
the next 15 to 20 years we may see bioIuels provid-
ing a Iull 25 percent oI the world's energy needs."
Alexander H ller, Assistant uirector-Ceneral Ior
the Sustainable uevelopment uepartment, IAu
Clobal production oI bioIuels alone has doubled in
the last Ive years and will likely double again in the
next Iour. Among countries that have enacted new,
pro-bioIuel policies in recent years are Argentina,
Australia, Canada, China, Colombia, Fcuador, India,
Indonesia, Halawi, Halaysia, Hexico, Hozambique,
the Philippines, Senegal, South AIrica, 1hailand,
and Lambia.
"|8ioenergy| is an opportunity to add to the world
supply oI energy to meet the enormous growing
demand and hopeIully to mitigate some oI the price
eIIects. It's an opportunity to do so in an environ-
mentally Iriendly way and in a way that is carbon-
neutral. It's an opportunity to do so in a way that
developing countries like 8razil can provide income
and employment Ior their people." world 8ank
President Paul wolIowitz.
1hree times in the past three decades, oil-depend-
ent economies have been aIIected by dramatic oil
price increasesin the mid 1970s, the early 1980s,
and the current period (200407}. uil imports now
consume a large and unsustainable share oI the
meagre Ioreign exchange earnings oI many poor
nations, in some cases oIIsetting any gains Irom
recent Ioreign debt elimination agreements. In
some countries, the Ioreign exchange drain Irom
recent higher oil prices was Ive times the gain
Irom recent debt relieI.
unstable and unpredictable oil prices have com-
plicated economic planning around the world,
and market analysts expect this pattern to persist.
uil production has already peaked in a long list oI
ma|or oil producing nations, including Indonesia,
Hexico, horway, the united Kingdom, and the unit-
ed States. 1he International Fnergy Agency pro|ects
that oil prices will remain in the $48$62 range
through 2030.
1
In addition to the price level, the
dramatically increased volatility oI oil prices that
began in 2004 is Iurther damaging poor economies.
AIrica's current oil crisis is "an unIolding catastro-
phe that could set back eIIorts to reduce poverty
and promote economic development Ior years."
Abdoulaye wade, President oI Senegal
kecent oil price increases have had devastating
eIIects on many oI the world's poor countries, some
oI which now spend as much as six times as much
on Iuel as they do on health. uthers spend twice
the money on Iuels as on poverty reduction. At a
time when energy analysts predict a period oI
Section 2: 8ioenergy in the
Clobal Fnergy Context
1EF CRAUUAL VUvF AwAY IRUV UIL EAS
BFCUN. UvFR 1EF NF\1 1S 1U 20 YFARS wF
VAY SFF BIUIUFLS PRUvIUINC A IULL 2S
PFRCFN1 UI 1EF wURLU'S FNFRCY NFFUS.
1
Hodern bioenergy
reIers to biomass
that may be either
burned directly,
Iurther processed
into densiIed and
dried solid Iuels,
or converted into
liquids or gaseous
Iuels using so-called
Irst- or second-
generation technolo-
gies, depending on
their level oI
development.

unpredictable oil markets, with prices dependent

on developments in some oI the world's least stable
regions, Iossil Iuel dependence has become a ma|or
risk Ior many developing economies. In such
national settings, the macroeconomic beneIts
oI channelling Iuel revenues into poor, rural
economies could be substantial.
with oil production already in decline in many
nations, greater bioIuel use could help bring the oil
market into balance and greatly reduce oil prices.
Ior countries that obtain 50100 percent oI their
modern energy Irom an increasingly unstable world
oil market, the arguments Ior supply diversiIca-
tion are strong. Hany oI these nations lie in tropical
zones where relatively low-cost bioIuel crops, such
as sugar cane and oil palm, already grow. In this
context, 12 AIrican nations |oined Senegal in 2006
in Iorming the Pan-AIrican hon-Petroleum Produc-
ers Association, aimed in part at developing a robust
bioIuels industry in AIrica. 1he idea behind such
eIIorts is to divert a portion oI the money now being
sent abroad to pay Ior oil to local agricultural and
manuIacturing sectors, where it would strengthen
economies and generate employment.
Hodern bioenergy can also help meet the needs oI
the 1.6 billion people worldwide who lack access to
electricity in their homes, and the 2.4 billion who
rely on straw, dung, and other traditional biomass
Iuels to meet their energy needs. Locally produced
bioenergy can provide energy Ior local agricultural,
industrial, and household uses, in some instances at
less than the cost oI Iossil Iuels.
1he rapid development oI modern bioenergy
worldwide clearly presents a broad range oI op-
portunities, but it also entails many trade-oIIs and
risks. Fxperience with the associated economic,
environmental, and social impacts is limited, and
the types oI impacts will depend largely on local
conditions and on policy Irameworks implemented
to support bioenergy development. Agricultural
policy, including the availability oI rural inIrastruc-
ture, credit, and land tenure, will determine the
scale and distribution oI economic beneIts. At the
international level, eIIorts to reduce agricultural
subsidies in rich countries and to allow Iree trade in
agricultural commodities are inextricably linked to
the development oI Irst-generation
2
liquid bioIuels
which have become the Iastest growing segment oI
the world agriculture market. 1rade reIorm eIIorts
will both have powerIul eIIects on and be sub|ect to
sizable impacts Irom bioIuels expansion.
1he development oI new bioenergy industries could
provide clean energy services to millions oI people
who currently lack them, while generating income
and creating |obs in poorer areas oI the world. 8ut
rapid growth in Irst-generation liquid bioIuels
production will raise agricultural commodity prices
and could have negative economic and social eI-
Iects, particularly on the poor who spend a large
share oI their income on Iood. In many countries,
the current structure oI agricultural markets means
that the bulk oI the proIts go to a small portion oI
the population. unless ownership is shared more
equitably, this divide could become as true Ior
energy commodities as it is Ior Iood commodities
today. Ior instance, two companies, Cargill and
Archer uaniels Hidland, control more than halI oI
the world's grain trade.
1hus, the economic, environmental, and social
impacts oI bioenergy development must be assessed
careIully beIore deciding iI and how rapidly to de-
VUUFRN BIUFNFRCY CAN ALSU EFLP VFF1 1EF
NFFUS UI 1EF 1.6 BILLIUN PFUPLF wURLUwIUF
wEU LACk ACCFSS 1U FLFC1RICI1Y IN 1EFIR
EUVFS, ANU 1EF 2.4 BILLIUN wEU RFLY UN
S1RAw, UUNC, ANU U1EFR 1RAUI1IUNAL BIU-
VASS IUFLS 1U VFF1 1EFIR FNFRCY NFFUS.
Section 2: 8ioenergy in the
Clobal Fnergy Context
2
"Iirst-generation"
Iuels reIer to bioIuels
made Irom sugar,
starch, vegetable
oil, or animal Iats
using conventional
technology. "Second-
generation" Iuels are
made Irom lignocel-
lulosic
biomass Ieedstock
using advanced
technical processes.

velop the industry and what technologies, policies,

and investment strategies to pursue. kapid growth
in liquid bioIuel production will make substantial
demands on the world's land and water resources
at a time when demand Ior both Iood and Iorest
products is also rising rapidly. Liquid bioIuel growth
has already begun to raise the prices oI the world's
two leading agricultural Ieedstockmaize and
sugarand soaring palm oil demand may be lead-
ing industrialists in Southeast Asia to clear tropical
Iorests Ior new plantations.
1he ability oI various bioenergy types to reduce
greenhouse gas emissions varies widely, and where
Iorests are cleared to make way Ior new energy
crops, the emissions can be even higher than those
Irom Iossil Iuels. unless new policies are enacted
to protect threatened lands, secure socially accept-
able land use, and steer bioenergy development in
a sustainable direction overall, the environmental
and social damage could in some cases outweigh
the beneIts.
1he rapid advance oI new crops, Iarming practices,
and conversion technologies now under develop-
ment may mitigate some oI the social, environmen-
tal, and economic costs associated with large-scale
production oI liquid bioIuels and increase their
potential environmental and economic beneIts.
1he bioenergy Ield is experiencing an unprecedent-
ed wave oI research and development, Iowing Irom
both the public and private sectors. 1he timing oI
commercialization is uncertain, but those countries
that have begun to develop bioenergy industries
may be the most likely to attract investment and
beneIt Irom the resulting technology transIer.
Accelerated interest in bioenergy in the coming
years will place great demands on decision-makers
to evaluate and guide the development oI these
new industries. 1hey will need to address chronic
structural problems in agriculture, Iorestry, and the
economy so that the economic beneIts to the poor
outweigh the losses. 8razil, the Furopean union,
and the united States have already demonstrated
that government regulations and tax incentives are
essential to the development oI modern bioenergy.
1he structure oI these and other policies will
shape the direction oI the new industries in a
powerIul way.

Biocncrgy is hcing uscJ oll ovcr thc worlJ. ln somc

instonccs it is truly sustoinohlc, onJ in othcrs it is
highly Jcstructivc. A wiJc rongc oj hiocncrgy typcs
currcntly cxists, os wcll os o voricty oj proJuction
onJ utilizotion systcms thot hovc vcry Jijjcrcnt
sociol, cconomic, onJ cnvironmcntol impocts.
Thc jollowing cight scctions Jiscuss thc kcy issucs
rclotcJ to thc sustoinohility oj hiocncrgy onJ roisc
criticol qucstions jor Jccision-mokcrs to consiJcr
os thcy cvoluotc vorious hiocncrgy options.
Issue 1 AbIty of Hodern
oenergy to Provde fnergy
Servces for the Poor
Ih1kUu0C1IUh
h
o country in modern times has substantial-
ly reduced poverty in the absence oI
massive increases in energy use, and
countries with higher incomes and higher human
development indexes also tend to be those with
higher energy consumption. Ior the world's poorest
households, basic energy services Ior cooking and
heating, lighting, communication, water pumping,
and Iood processing are particularly important.
ShiIting these basic energy uses Irom traditional
bioenergy (when used in unsustainable and health-
damaging Iorms} to modern Iuels and electricity
is probably one oI the most important and long-
lasting challenges.
hational and international eIIorts have Iocused on
this issue Ior decades, and many lessons have been
learned, hopeIully pointing to possible solutions.
Some oI these eIIorts include the introduction oI liq-
uid petroleum gas (LPC}, which in many instances,
and when backed with technical and Inancial sup-
port mechanisms, oIIers an excellent manner to re-
duce pressure on wood demand and reduces heavy
human work and smoke-related problems. Although
this path does not resolve long-term sustainability
worries, it establishes a context Ior transitioning to
more sustainable and renewable resource bases in
the Iuture. Solar systems such as cookers and water
heaters have had some success and will probably
continue to enter poor rural societies mainly in the
Iorm oI subsidised programmes. Hodern bioenergy
as a solution to lack oI energy services by the poor
Its in a context that includes many more such solu-
tionsLPC and solar systems as well as microhydro
and wind energy, to name a Iew.
1he situation with modern bioenergy systems is
more complex to assess due to the variety oI options
as well as trade-oIIs among various social, environ-
mental, and economic sustainability goals. Some,
such as more eIIcient cook stoves, may contribute
to reduced biomass demand in many countries.
work continues to enhance eIIciency, reduce costs,
and better understand acceptability. 8ioIermenta-
tion (biogas} systems can be a Irst-rate solution
when the necessary Ieedstock, water inputs, and
knowledge converge. uther systems, such as small-
scale biomass gasiIcation, torriIcation, and char-
ring, are still under development and demonstra-
tion, with outstanding examples in some countries.
Liquid bioIuels such as vegetable oils and biodiesel
oIIer opportunities Ior power production at
relatively small scales and, in particular, Ior small
and medium-size electricity grids at village or
community levels. 1he adaptation oI the many
existing diesel engines to use these bioIuels has
enormous potential. 1he challenge remains to
break the cost and other barriers Ior expanded use
oI modern bioenergy systems, as these systems are
Iar Irom reaching the levels oI conversion eIIciency
oI power plants and generators based on the
combustion oI solid bioIuels or biogas.
Section 3: Key Sustainability Issues

ISS0fS 1BA1 hffu 1U f AuukfSSfu Ih

1Bf lUCAl CUh1fX1
4. Resource 4vulublty unJ Cometng Uses
Key issues with any energy source are physical
availability and access (mainly location oI demand
and supply, and purchasing power versus cost}.
A key concern in poor rural areas is the competi-
tion oI biomass energy systems with present use oI
biomass resources (such as agricultural residues} in
applications such as animal Ieed and bedding,
Iertiliser, and construction materials. 1hese may
be oI higher priority to rural populations, as
alternatives might not exist. 1hus, a very detailed
and participatory resource assessment must be
done beIore initiating action on bioenergy systems
using existing resources.
B. Fconomc 4ccess, Relublty, & 4ccessblty
Fconomic access by poor rural societies to diIIerent
bioenergy options is a key matter. In many cases, it
is precisely their low economic level that prohibits
these populations Irom purchasing modern energy
services and makes them rely on wood Iuels and
residues Irom their own land, or on other non-com-
mercial Iuels acquired Irom public or open-access
lands or traded inIormally (in the case oI solid Iuel-
wood and some agricultural residues}. In the case oI
bioenergy Ior cooking, the cost and eIIciency oI a
stove or other systems such as biogas or small gasiI-
ers is oIten a greater barrier to uptake by consumers
than the actual cost oI Iuel, which is still practically
zero in many areas.
1he level oI trade in Iuelwood (and in some areas,
agricultural residues} is on the increase, and the
poorest oI the poor are struggling increasingly to
meet even their minimum requirements. Liquid
bioIuels, where Ieedstock cost sometimes represents
7590 percent oI the cost oI the Iuel, can be an
interesting option Ior rural areas where local avail-
ability and reliability oI supply are high, iI overall
production costs are competitive with alternative
energy sources. (1he share oI the cost Irom Ieed-
stock depends on the scale oI production as well as
the type oI bioIuel: it tends to be higher Ior smaller-
scale production, and higher Ior alcohol-based
ethanol than Ior methyl-ester biodiesel.} In remote
rural areas or on islands, where Iossil Iuel prices are
usually high due to transport costs, bioenergy sys-
tems may prove to be the most economical option.
8ioenergy options such as small- and medium-scale
biogas or gasiIers and power generators operating
with locally available biomass sources such as vege-
table oils, biogas Irom manure, and agricultural and
Iorestry by-products can become in some areas the
most economical and reliable providers oI energy
services Ior the poor. keliability, local maintenance
and monitoring capacity, and accessibility oI the
technologies needed to make use oI these resources
are in many cases the key barriers.
Issue 1 - 4blty oj MoJern Boenergy to ProvJe Fnergy 5ervces jor the Poor

UX 1.
fUS1fkIh6 ]A1kUPBA IUfhfk6 Ih HAlIAh vIllA6fS
5nce 1999, u locul N60 n Mul culleJ the Mul-Iolkecenter Nyetuu jMIC Nyetuuj hus been workng
on the romoton oj jutrohu, un olseeJ lunt, us u source oj locul boenergy. MIC Nyetuu
reresents 0enmurk's Iolkecenter jor Renewuble Fnergy unJ s suorteJ by globul urtners
ncluJng UNFP, UN0P, unJ the 6lobul Vlluge Fnergy Purtnersh j6VFPj.
MIC Nyetuu's nterest n jutrohu stems jrom two mun observutons. Irst, becuuse the lunt
s reslent enough to grow n the jrugle unJ urJ Mulun envronment, t cun be cultvuteJ on
substunJurJ lunJ unJ hel restore eroJeJ ureus, ejjectvely generutng cleun energy whle helng
to reJuce curbon JoxJe emssons unJ revtulse locul ecosystems. 5econJ, Mul JeenJs heuvly
on jossl juel morts to meet ts moJern energy neeJs. jutrohu rovJes u vuble energy
ulternutve unJ hus vust otentul jor bulJng u vbrunt unJ Jynumc locul economy n remote
vlluges, uJJng vulue locully unJ generutng emloyment unJ ncome through the sule oj seeJs
unJ sub-roJucts.
MIC Nyetuu's rojects jocus on severul usects oj jutrohu roJucton unJ use, ncluJng
luntuton, use us u lvng heJge, sou mukng, use us u Jesel substtute jor trunsortuton, unJ
ower generuton jor rurul electrcuton. In the vlluge oj Tcourubougou, the grou luuncheJ
the Jeu oj "energy servce centres" bult urounJ jutrohu. 5ome 20 hectures oj luntutons grow
seeJs jor roJucng jutrohu ol, whch s useJ us juel to ower uctvtes lke mllet grnJng unJ
buttery churgng. Vlluges wthn u 20-klometer ruJus ulso benet jrom these servces.
In colluboruton wth ts urtners, MIC Nyetuu hus emburkeJ on u lurge-scule, 15-yeur
jutrohu-jueleJ rurul electrcuton roject n the vlluge oj 6urulo n southern Mul. The roject
wll set u 1,000 hectures oj jutrohu luntutons to rovJe ol jor u 300-klowutt ower lunt.
The juclty ums to rovJe electrcty unJ other moJern energy servces to more thun 10,000
resJents, otentully trunsjormng the locul economy.
Section 3: Key Sustainability Issues

IHPlfHfh1A1IUh ISS0fS
4. Inuncng
Iinancing has a unique connotation when Iocusing
on the poorest sectors oI rural populations. In these
cases, the main ob|ective should be to provide the
means (including the minimum levels oI energy
services} to allow these populations to move out oI
extreme poverty. "Iinancing development" is an ap-
proach that has been applied widely in many coun-
tries, with subsidies being granted Ior electricity
and in many cases liquid Iuels Ior operating water
pumps and other devices. 1he key issues are level,
timescale, and conditions. Ior example, with regard
to conditions, subsidized Inance could tie policy
support speciIcally to least-cost energy options.
A commonly accepted concept is that subsidies
Ior energy sources and/or services should be
transparent and linked to the economic
development they are supposed to promote.
Subsidies should "accompany" development and,
iI successIul, ultimately become unnecessary. 1o
date, consumption oI domestically produced liquid
bioIuels has always depended on government
support, but additional measures may be necessary
Ior small-scale Iarmers iI they are to be included
in medium- or large-scale bioIuel crop production.
1his support can be in the Iorm oI policies sup-
porting decentralised production, local use oI the
energy produced, and organization oI cooperatives
or other Iorms oI participation.
Iinancial development instruments vary greatly,
in some cases targeting the price (price support
measures}, the consumer (bank loans Ior purchasing
end-use equipment}, or the producer (helping entre-
preneurs invest in production Iacilities, tax breaks,
etc.}. 1he universe oI prospective beneIciaries in-
cludes instances where pro-poor energy services are
economically viable, competitive, and/or aIIordable
without subsidies, but do not get oII the ground due
to lack oI access to upIront Inance. It also includes
beneIciaries that are never competitive or aIIord-
able, but that |ustiIy subsidies due to their dramatic
public beneIts.
In many developing countries, small-scale bioenergy
pro|ects could Iace challenges obtaining Inance
Irom traditional Inancing institutions, as such
initiatives generally have a less Iavourable risk
rating compared to more well-established energy
technologies. Although these pro|ects could be
critical in providing modern energy services to
populations currently lacking access, they will likely
require an eIIective microcredit or other alternative
credit delivery mechanism to assist at all stages
plantation, oil extraction (in the case oI oil seeds},
conversion, distribution, and end-use. Iinancial
institutions with a network oI branches and
expertise in microcredit (e.g., Crameen 8anks} are
best qualiIed to IulIl this requirement; however,
they may perceive a high risk given the current
absence oI strong market and other linkages in
bioenergy development. As mentioned beIore,
this risk perception may need to be addressed
through policy and technical support measures
in the initial stages.
IN VANY UFvFLUPINC CUUN1RIFS, SVALL-SCALF
BIUFNFRCY PRU}FC1S CUULU IACF CEALLFNCFS
UB1AININC IINANCF IRUV 1RAUI1IUNAL
IINANCINC INS1I1U1IUNS...
Issue 1 - 4blty oj MoJern Boenergy to ProvJe Fnergy 5ervces jor the Poor

In cases where bioenergy development requires considerable investments, such as large-scale ethanol or pellet
production, appropriate Inancing mechanisms will be important. 8usinesses, companies, and communities
investing in the new technologies will need access to Inance, risk guarantees, and/or innovative mechanisms
such as microcredit or cooperative investing platIorms.
Hore broadly, there are diIIerent roles to be played by private banks (in physically providing the actual
loans or credits} and public banks (in hedging the risk or giving guarantees}. In the case oI Ioreign direct
investment, export credit agencies or multilateral banks could provide the guarantees, while in the case oI
domestic investments, banks with a national scope may be better poised to play a role.
UX 2.
P0lIC-PkIvA1f IhvfS1Hfh1 f0hu 1U kfu0Cf 6B6 fHISSIUhS Ih fCUhUHIfS
Ih 1kAhSI1IUh
5nce 1991, the Fnergy Fjcency 21 Project jFF21j hus workeJ to ucheve sustunuble Jeveloment
n the energy sector ut u regonul level. FF21's mun objectve s to ussst 5outheust Furoeun j5FFj
unJ Fustern Furoeun, Cuucusus, unJ Centrul 4sun jFFCC4j countres to enhunce ther energy
ejcency, Jmnsh juel overty, unJ meet nternutonul envronmentul treuty oblgutons unJer
the UN Irumework Conventon on Clmute Chunge unJ the UN Fconomc Commsson jor Furoe
jUNFCFj. FF21 jocuses on Jevelong the sklls oj rvute unJ ublc sector exerts ut the locul level
jor energy ejcency unJ renewuble energy nvestments.
4 new huse oj the roject wll rovJe jor u Publc-Prvute Purtnersh IunJ JeJcuteJ to nunc-
ng energy ejcency unJ renewuble energy nvestments n selecteJ UNFCF trunston economes.
The objectve s to jorm un energy-ejcency murket n 5FF unJ FFCC4 countres so thut cost-
ejjectve nvestments cun rovJe u selj-nuncng methoJ jor reJucng globul greenhouse gus
emssons. The roject s ntenJeJ to comlement other nuncng schemes unJ ntutves unJ
to hel urtcutng countres uJJress the nuncul, techncul, unJ olcy burrers to energy
ejcency unJ renewuble energy nvestments, ncluJng boenergy nvestments.
Section 3: Key Sustainability Issues

UX 3.
fIhAhCIh6 SHAll-SCAlf IUfhfk6 PkUu0C1IUh Ahu 0Sf Ih IhuIA

Fxerence n bojuel cro nuncng s very lmteJ n InJu. 4urt jrom technologcul nhbtons,
nuncers ure concerneJ ubout olseeJ suly rsks unJ return on nvestments, snce roJuctvty
s currently nconsstent. IunJ roJuctvty unJ ol yelJ ure mujor concerns oj bunkers rovJng
mcrocreJt to smull jurmers. Therejore, reseurch unJ Jeveloment exumnng techncul otons to
ncreuse the yelJ unJ reJuce roJucton volutlty s neeJeJ.
The erceveJ rsk oj cro julure meuns nuncers neeJ urorute mtguton meusures-jor
exumle, cro nsurunce, strong techncul ussurunces through uvulublty unJ use oj best cro
vuretes unJ ructces, unJ ussureJ murket lnkuges jsuch us lnkuges through contruct jurmng
jor bg buyersj.

Issue 2 ImpIcatons for

Agro-IndustraI ueveIopment
and ]ob Creaton
Ih1kUu0C1IUh
1
raditional bioenergy provision is labour
intensive and thus a signiIcant source oI
Iormal and inIormal employment in
developing countries. Hodern bioenergy provision
can also be labour intensive, particularly compared
with producing energy Irom Iossil Iuels and other
renewable sources. 8ioenergy is powering new
small- and large-scale agro-industrial development
and spawning new industries in industrialised and
developing countries alike.
ISS0fS 1BA1 hffu 1U f AuukfSSfu
Ih 1Bf lUCAl CUh1fX1
4. Tyes oj 4gro-InJustry to Be 0eveloeJ:
5hort- unJ Iong-Term
In the agro-industrial context, it is important to
distinguish between "raw" versus "processed" bioen-
ergy sourcese.g., the raw bagasse (sugarcane pulp}
generated in sugar mills, which can be used to
generate heat and power, versus the processed
sugar that becomes a Iuel in the Iorm oI ethanol.
8iomass can be used Ior industrial applications in
solid, liquid, or gaseous Iorm (Ior heat, mechanical
power, electricity, and transport Iuels} and
combusted in either pure Iorm or integrated energy
systems. Common integrated practices include
co-Iring biomass with coal, co-Iring biogas or
bioIuels with natural gas or diesel (respectively} Ior
heat and power generation, and blending bioIuels
with transport Iuels.
In the short-to-medium term, bioenergy use will
depend heavily on Ieedstock costs and reliability
oI supply, the cost and availability oI
competing energy sources, and government policy
decisions. Fstablished technologies with solid track
recordssuch as ethanol and biodiesel produc-
tion and biomass combustionwill predominate,
while up-and-coming technologies, such as modern
biogas utilization, will gain market share. hew,
smaller-scale industries can be expected to arise in
Ieedstock pre-processing and bioIuel post-process-
inge.g., Iuel densiIcation and drying, biogas
cleanup and compression. Supportive industries
(e.g., maintenance oI bioenergy hardware, Ieedstock
and bioIuel logistics} will grow in parallel to the
development oI bioenergy markets.
In the long term, the relative economics oI bioen-
ergy will likely improve as agricultural productivity
and agro-industrial eIIciency improve, as more-sup-
portive agricultural and energy policies are adopted,
as carbon markets mature and expand, and as new
methodologies Ior carbon sequestration account-
ing are developed. At the same time, technologi-
cal advancement will reduce costs and Ioster the
emergence oI a variety oI new products, including
advanced bioIuels like cellulosic ethanol (ethanol
made Irom cellulose rather than sugar or starch}
and bio-based synthetic diesel Iuel, as well as an
array oI co-products. Advanced bioIuels, also called
"second-generation" bioIuels, are Iuels made Irom
inedible plant material (i.e., lignocellulosic biomass}
using advanced technical processes.
Section 3: Key Sustainability Issues

1here are two basic pathways Ior converting cel-

lulosic biomass into liquid transport Iuels: (1} using
enzyme-enhanced Iermentation to convert crop
residues, perennial grasses, and other cellulosic
material into ethanol, and (2} using gasiIcation and
Iischer-1ropsch synthesis (also called I1 diesel, or
biomass-to-liquids, 8tL} to convert woody biomass
into synthetic biodiesel (and potentially other
products}. uemonstration plants exist Ior lignocel-
lulosic ethanol in Canada and 8tL in Cermany, and
pilot-scale pre-commercial plants are currently
being built. 8oth routes can make use oI non-edible
crops, reducing potential competition between Iood
and Iuel, and convert the whole plant material into
useable energy, making their eIIciency Iar higher
than today's plant oil or starch-based Irst-genera-
tion bioIuels. 1hese technologies are expected to
become commercially available beIore 2015.
uther pathways to advanced bioIuels are also being
researched, Ior example E1u (Eydro 1hermal up-
grading} diesel, which makes use oI moist biomass,
and biomethane Irom biogas and gasiIed wood.
uther research is investigating the production oI
bioIuels Irom algae, which could be grown in ponds
or photoreactors. II and when second-generation
bioIuels become competitive with petroleum-based
Iuelssome estimate that this could happen in the
next 1015 yearsliquid bioIuels will have a good
chance oI achieving low carbon dioxide abatement
costs while providing a host oI other environmental
and social beneIts.
B. 5cule oj Boenergy 4gro-InJustrul Chuns
1he appropriate scale oI a bioenergy Iacility will be
determined by a variety oI Iactors, including: the
Ieedstock chosen, proximity to markets, pro|ect
goals and company ob|ectives (e.g., local energy
provision vs. production Ior export}, type oI bioen-
ergy, and access to Inance. Scalable pro|ects will
be desirable in some instances, where it is best to
start with modular, experimental, and/or
demonstration pro|ects that can be enlarged or
replicated as markets grow and as appropriate
inIrastructure, human management capacity, and
awareness are developed.
Issue 2 - Imlcutons jor 4gro-InJustrul 0eveloment unJ job Creuton
IN 1EF LUNC 1FRV, 1EF RFLA1IvF
FCUNUVICS UI BIUFNFRCY wILL LIkFLY
IVPRUvF AS ACRICUL1URAL PRUUUC1IvI1Y
ANU ACRU-INUUS1RIAL FIIICIFNCY IVPRUvF,
AS VURF-SUPPUR1IvF ACRICUL1URAL ANU
FNFRCY PULICIFS ARF AUUP1FU, AS CARBUN
VARkF1S VA1URF ANU F\PANU, ANU AS NFw
VF1EUUULUCIFS IUR CARBUN SFUFS1RA1IUN
ACCUUN1INC ARF UFvFLUPFU.

UX 4.
A H0l1IPlIh6 HUufl Ih IU6AS ufvflUPHfh1

0ver the lust 13 yeurs, the 0utch-Neulese Bogus 5uort Progrumme hus nstulleJ more thun
120,000 bogus lunts n Neul, rovJng uroxmutely 3 ercent oj Neulese homes wth the ben-
ets oj juel jor lghtng unJ cookng us well us reJuceJ levels oj nJoor ur olluton. The rogrumme
s un excellent exumle oj how to scule u boenergy ulcutons. Moreover, becuuse roughly 72
ercent oj the bogus lunts connect to lutrnes, humun heulth rsks huve been reJuceJ unJ suntu-
ton mroveJ on u lurge scule.
Ths bogus rogrumme wus the rst oj ts tye to be recognseJ unJer the Kyoto Protocol's Cleun
0eveloment Mechunsm unJ hus snce truJeJ certeJ emsson reJuctons. Fuch oj the 120,000
oerutonul bogus lunts s worth junJs equvulent to 4.6 tons oj curbon JoxJe er yeur, or over
U5$18 u yeur buseJ on u mJ-runge rute oj U5$4 er ton n current curbon nunce murkets.
5nce 2003, 0utch-Vetnumese cooeruton hus bult on the jumous Neulese exerence by
mlementng u Bogus Progrumme jor Vetnum's unmul husbunJry sector. The rogrumme, whch
won un Fnergy 6lobe 4wurJ n 2006, hus bult uroxmutely 25,000 bogus lunts benetng more
thun 100,000 eole n 20 rovnces. The cooeruton ums to estublsh u commercully vuble
Jomestc bogus sector unJ jocuses on quulty ussurunce unJ the trunng oj enJ users, bogus
constructon teums, unJ techncuns.
Vetnumese householJs use the bogus jor cookng unJ use the bo-slurry resJues us cro jertlsers
unJ sh jeeJ. Heulth mrovements ncluJe reJuceJ nJoor ur olluton unJ oJour us well us
mroveJ lutrnes, suntuton, unJ stuble jucltes. In uJJton, the use oj bogus hus jreeJ
women unJ chlJren jrom burJens reluteJ to housework unJ rewooJ collecton whle ulso
reJucng Jejorestuton.
Section 3: Key Sustainability Issues

C. Iurge vs. 5mull Comunes

1here is no doubt that bioenergy production will
bring huge opportunities. 1he question is, Ior whom
and under what conditions? upportunities exist in
Ieedstock production, handling, and processing;
distribution and marketing; and many other Iacets
oI these new industries. Hany independent entre-
preneurs and small-scale Iarmers see the promise
oI bioenergy and are innovating and investing time
and resources in its development.
Heanwhile, many large companies Irom both devel-
oping and industrialised countries are studying bio-
Iuels markets and increasingly making substantial
investments. Small- and medium-sized enterprises
(SHFs} might also play a ma|or role in pioneering
these markets, particularly with Irst-generation bio-
Iuels and in rural settings. while large players have
advantages associated with economies oI scale and
vertically integrated agro-industrial chains, eIIcient
clusters oI SHFs could participate in diIIerent stages
oI those chains. In later stages, the "aggregation"
oI SHFs into larger Irms could become attractive;
this is already happening in markets where smaller
producers are trying to compete in the Iace oI
increased competition.

0. Tye, quulty, unJ 0strbuton
oj Fmloyment
SuccessIul bioenergy industries bring signiIcant
|ob-creation potential, with positions that include
highly skilled science, engineering, and business-
related employment; medium-level technical staII;
low-skill industrial plant |obs; and unskilled agricul-
tural labour. 8ecause the vast ma|ority oI bioenergy
employment occurs in Iarming, transportation, and
processing, most oI these |obs would be created in
rural communities where underemployment is a
common problem. 1he construction and operation
oI these Iacilities generates additional rural
economic activity, since the weight and volume oI
most biomass crops usually makes it necessary to
locate collection and conversion Iacilities close to
where the Ieedstock is grown. }obs are being cre-
ated in bioenergy agro-industries in rich and poor
countries alike.
Eowever, in some cases, large-scale, mechanised
Iarming may displace workers and poor labour
conditions are associated with some large-scale ag-
ricultural plantations. 1he shiIt to biomass produc-
tion Ior bioenergy will make it necessary to address
these issues.
F. Injrustructure ConsJerutons
8ioenergy's inIrastructure requirements depend
on the energy type, the distribution oI Ieedstock
sources and conversion sites, and the target end-use
application. while existing roads can oIten sup-
port additional Ireight movements Ior Ieedstock in
places where plant material is already transported
Irom Ields or Iorests, in some areas new roads will
need to be constructed. Second-generation Ieed-
stock material (lignocellulosic Ieedstock; densiIed
bales oI switchgrass, wheat, or maize; and chips oI
short-rotation coppice} can be shipped long distance
via waterways and railroads to centralised process-
ing plants, although decentralised densiIcation or
chipping equipment is required.
with regard to distribution, both conventional
bioIuels (such as Irst-generation biodiesel and
ethanol} and next-generation synthetic diesel and
cellulosic ethanol can be mixed directly with Iossil
diesel and gasoline, respectively (to diIIerent levels
depending on vehicle speciIcations}. 1hus, at least
at low blending levels, they may pose no signiIcant
additional inIrastructure needs. 1his is also
the case Ior upgraded biogas or bio-based
Issue 2 - Imlcutons jor 4gro-InJustrul 0eveloment unJ job Creuton

ShC (substitute natural gas Irom gasiIcation oI

lignocellulosic Ieedstock}, which can be Ied into
existing natural-gas distribution networks. Caseous
bioIuels require processing plants Ior gas cleanup,
carbon dioxide removal, and compression.
Ior regional dedicated vehicle Ieets running on
F100 and 8100 (i.e., pure ethanol and biodiesel} as
well as on bio-compressed natural gas (ChC} or bio-
ShC, additional investments in gas station pumps
will be required. Fxperience in Sweden and Switzer-
land indicates that these costs are relatively small.
In the case oI heating and industrial energy systems
that rely on Iorest biomass, the Ieedstock is typically
obtained Irom roadside chipping oI collected
logging residues (timber and pulpwood}, Irom
thinning sites where use oI Iorest residues is oIten
regarded as a bonus, or Irom collection sites where
used wood would otherwise be transported to
dumps or landIlls.
iv
I. Powerng or Iuellng 0ther InJustres
8ioenergy has implications Ior other industries as
well. Access to new or improved energy sources can
have dramatic beneIts Ior small and large com-
panies alike. II large upIront investment costs are
required, however, small- and medium-sized enter-
prises (SHFs} will Ind it more diIIcult to switch Iuels
relative to larger enterprises that are less risk averse
and have greater investment capacity.
In contrast to other renewable energy sources
(such as hydro, solar, or wind}, bioenergy is capa-
ble oI being converted into virtually any energy
serviceelectricity, process heat (Ior cooking and
drying}, various Iorms oI mechanical power and
steam production, etc. It is also largely independ-
ent oI the short-term supply Iuctuations that are
typical with wind and solar energy, Ior instance. In
addition, modern bioenergy can convert wastes into
a wide range oI productive uses, strengthening "co-
product" industries and creating related |obs in the
process (as is the case with cellulosic ethanol, wood
pellets and briquettes used Ior heating, biodiesel
derived Irom animal Iats, and biogas Irom wet agri-
cultural waste, sewage sludge, or landIll methane}.
using bioenergy as a backup or supplemental
energy source can help companies reduce losses
due to power outages and/or Iuel disruptions. In
Iinland and Sweden, most oI the process energy in
chemical pulp mills comes Irom recovered pulping
liquor, and sawmill and wood material industries
have become Iully energy selI-suIIcient mainly
through the use oI bark and sawdust. In both coun-
tries, the surplus wood Irom these industries Iuels
pulp mills, district heating plants, and even service
industries and households (using wood pellets Irom
upgraded sawdust}.
v
Fxcellent examples oI energy
selI-suIIciency and even oI selling power to the grid
come Irom the sugar industries oI Australia, 8razil,
Cuba, Cuatemala, India, Hauritius, and several
other countries.
vi
1hese industries serve as models
Ior the 80 sugar cane-growing developing countries
in which residues Irom sugar cane production and
processing represent a vastly underutilised energy
resource.
vii
IHPlfHfh1A1IUh ISS0fS

4. Why unJ How to Fncouruge 5mull-5cule,
Iocul Plunts
1o create and maintain the bioenergy value chain,
all players must operate in synchrony to deliver the
product. 1his can be a challenge when new indus-
tries are developing and when the costs, beneIts,
and interests oI actors within the chain diIIer. 1hus,
parallel support Ior the whole value chain must be
considered.
Section 3: Key Sustainability Issues

1his challenge will increase as the number oI actors

increases. In general, large-scale, vertically integrat-
ed operations have logistical and economy-oI-scale
advantages. 8ut in many developing countries, in-
dustry is characterised by SHFs. 1here are numerous
examples oI successIul cooperative structures where
several independent SHF biomass producers work
together to supply larger Iacilities or markets. 1he
development beneIts oI bioenergy are enhanced
dramatically when more people own more oI the
value-added chain.
B. Whether unJ How to Fncouruge job Creuton
where |ob creation is a high priority, the Iocus
may include the encouragement oI labour-inten-
sive bioenergy Ieedstock, biodiesel versus ethanol
production, and/or community-Iocused bioenergy
applications. uI all bioIuel Ieedstock, oilseed crops
in developing countries tend to be most amenable
to |ob creation particularly when harvested manu-
ally. Horeover, direct use oI the oil is sometimes
possible, and because the process oI converting
plant oils into biodiesel is relatively straightIorward,
biodiesel conversion can oIten occur at a smaller
scale. 1hat said, small-scale and labour-intensive
production oIten gives rise to trade-oIIs between
production eIIciency and economic competitive-
ness. It is important Ior decision-makers to weigh
achievable |ob-creation potential against the costs
oI creating and maintaining the |obs.
A Iew other general tendencies have emerged Irom
the growing body oI research on this topic. un aver-
age, the ratio oI investment cost per |ob created
in the bioenergy sector is lower than that in the
industrial, petrochemical, or hydropower sectors.
8ioenergy pro|ects based on agriculture tend to
generate more employment and earnings than their
non-agricultural counterparts.
C. Testng New Iuels, Technologes,
unJ Cuuctes
uuality control will be critical, particularly in
the early stages oI bioIuel market development.
Fxperience with new bioIuel products in Australia,
Colombia, and Costa kica has shown that a Iew bad
consumer experiences can result in large setbacks.
Similarly, engine problems that have Iollowed the
deployment oI a bioIuel (most oI which can only be
partially blamed on the Iuels}, such as a mix oI bio-
Iuel and coal-derived ethanol in South AIrica, oIIer
cautionary tales that linger long aIter their resolu-
tion. Horeover, an ongoing controversy involving
widespread silicon-induced engine misIring and/or
loss oI power in the united Kingdom raises the
possibility that even misdirected perceptions oI bad
consumer experiences with ethanol can diminish
consumer conIdence in bioIuels and add another
variable oI complexity to regulatory processes.
viii

Avoiding such setbacks will require the develop-
ment oI institutional capacity to assure Iuel qual-
ity, as well as international standards Ior both the
Iuels and the conversion systems (stoves, boilers,
engines}. Standards Ior solid and liquid bioIuels
have been developed at the national level in the
Furopean union (Ior wood chips, pellets, and bi-
odiesel} and are under development in several other
countries, including China. Ior SHFs active in the
bioIuels market, checking compliance oI their prod-
ucts with quality standards is critical; this requires
capacity building as well as testing systems that are
not cost prohibitive. See Issue 8, Implementation
C Ior a discussion oI sustainability standards and
certiIcation.
Issue 2 - Imlcutons jor 4gro-InJustrul 0eveloment unJ job Creuton

0. Whether unJ How to Creute

0strbuton Chunnels
1he costs and beneIts oI decentralised versus more-
centralised bioenergy production and distribution
will need to be weighed in diIIerent local and
regional contexts. In the case oI local production Ior
local use, distribution is less oI an issue, although
achieving satisIactory Iuel quality or using reli-
able conversion systems might be crucial. where
distribution is a greater concern, planning will be
needed to distribute bioenergy domestically as well
as internationally. In some areas, it may be most
cost eIIective to retroIt existing inIrastructure or to
co-locate new and old distribution inIrastructure.
1he creation oI distribution channels is a serious
challenge, requiring inIrastructure and an inte-
grated approach in order to avoid Iailures like those
in the united Kingdom, where despite considerable
attempts to encourage wood bioenergy develop-
ment, the market never developed. Institutional
development is also required, as evident in the
main obstacles encountered in the implementation
oI cane-based bagasse co-generation eIIorts world-
wide; a lack oI standardised and enIorceable power
purchase agreements with electric utilities; and a
lack oI Inancing, particularly Ior smaller developing
countries.
ix


F. Whether unJ How to Fncouruge
Internutonul Investment
Already, the private sector is undertaking serious
capital investments in bioenergy production and
distribution around the world, spurred in many ar-
eas by strong government incentives. In cases where
these returns are less clear, however, international
Inancial institutions (IIIs} may play a critical role
in providing investment Iunding. Ior instance, in
developing countries that lack the enIorcement
mechanisms or market incentives to successIully
attract Ioreign direct investment, IIIs might play
a role in helping to "guarantee" higher risk loans,
particularly where pro|ects have potentially large
development and climate beneIts.
8ecause the production oI ethanol and other
bioIuels would occur on a proIt-making basis,
the implementation oI investment pro|ects and/or
programmes could be based on strategic
partnerships between the private and public sec-
tors, possibly with donor community support. 1he
private sector could mobilise, say, the bulk but not
all oI the Inancing Ior the investment components
(agriculture, distillation capacity, and agro-
industrial systems} and would provide the necessary
management capacity. Covernments, in turn, would
establish "private sector enabling environments"
(i.e., conducive Iscal and legal regulation, basic
rural inIrastructure, etc.}; lay down the necessary
policy and regulatory Irameworks to ensure a social
and environmentally responsible implementation
process; and underwrite new rural inIrastructure
investments (assets and services}, as well as the
rural capacity development required to underpin
large private-sector scale-ups in agricultural
production systems.
1he successIul implementation oI such a
partnership would require active participation
by multilateral and Inancial institutions. Fxisting
development cooperation budgets Ior energy,
agriculture, rural inIrastructure and development,
and employment-creation programmes could be
pulled together to underwrite integrated and
synergic "agro-energy and rural development
programmes." In the short-term, it would be
essential to support pilot or demonstration pro|ects
in representative countries, through which key
implementation issues could be tested and Ine-
tuned, and to assist governments in the elaboration
Section 3: Key Sustainability Issues

Issue 2 - Imlcutons jor 4gro-InJustrul 0eveloment unJ job Creuton

oI the necessary multi-sector policy Irameworks (energy, agriculture, rural development, trade, etc.}. In the
subsequent scale-up phases, IIIs could play a key role in the mobilization oI Iexible "climate change" Iunding
instruments (Clobal Fnvironment Iacility, carbon Iunds, bilateral environmental programmes, etc.} to leverage
and support large private sector investments. 1hey could also use conventional concessional Inancing instru-
ments to underwrite public investments in new rural inIrastructure and capacity development, as well as
Inance support to the private sector (via the International Iinance Corporation, investment corporations, etc.}
UX 5.
0SIh6 IlA1fkAl CUUPfkA1IUh 1U fIhAhCf IUf0fl ufvflUPHfh1 Ih kALIl
x
0ne ructcul unJ nnovutve exumle oj usng bluterul cooeruton to nunce bojuel Jeveloment
s the cost-restructurng mechunsm JeveloeJ between 6ermuny unJ Bruzl to vulue ussocuteJ
greenhouse gus emssons reJuctons. In 2003, 6ermuny ugreeJ to contrbute 100 mllon Bruzlun
Reus jU5$32.5 mllonj over 10 yeurs to the Bruzlun Nutonul Vehcle Munujucturers 4ssocuton
j4NI4VF4j to nunce the roJucton oj 100,000 uJJtonul ethunol-Jrven curs, thereby helng to
reJuce curbon JoxJe emssons. The 6ermun government wll ulso suort the ejjorts oj Bruzlun
stute enttes to ucheve ths reJucton by uwurJng 1,000 Bruzlun Reus jU5$325j er ethunol-jueleJ
vehcle useJ. In exchunge, the 6ermun government wll receve u certcute jor the ussocuteJ ems-
sons reJuctons.

Issue 3 BeaIth and 6ender
ImpIcatons of Hodern oenergy
Ih1kUu0C1IUh
In most Iamilies worldwide, women are overwhelm-
ingly the primary caretakers oI the home. 1he
world's poorest households typically depend more
on basic energy services (such as heat Ior cooking
and power Ior processing Iood} than on energy
Ior transportation.
xi
8ecause traditional uses oI
bioenergy (e.g., direct burning oI wood and other
biomass} aIIect the health oI women more severely
than men, they contribute to the relative disem-
powerment oI women as a gender group. Cooking
and heating at the household level in impoverished
rural areas oI the developing world are two oI the
most critical technological and economic challenges
in the energy and poverty equation.
1he most dramatic gender-diIIerentiated and
health beneIts Irom modern bioenergy use relate
to household applications. uubbed the "kitchen
killer," smoke inhalation Irom cooking with tradi-
tional biomass indoors is one oI the leading causes
oI disease and death in the developing world, re-
sponsible Ior more Iatalities each year than malaria.
Cenerally, the poor in Southeast Asia and Sub-Saha-
ran AIrica suIIer the highest death toll, above that
in Latin America and the Caribbean, Fastern Furope,
and the Hediterranean.
Eousehold use oI traditional bioenergy locks people
in the developing world, particularly women, into
a cycle oI poverty and ill health. Access to more-eI-
Icient technologies and modern energy sources,
in contrast, can reduce health and saIety problems
associated with energy acquisition and use, help liIt
people out oI poverty, and enable women and girls
to live more productive and en|oyable lives.
ISS0fS 1BA1 hffu 1U f AuukfSSfu Ih
1Bf lUCAl CUh1fX1
4. 4blty to ReJuce InJoor 4r Polluton,
Iower Injunt Mortulty, unJ Ruse
Ije Fxectuncy
1he current deadly situation in poor households
dependent on traditional biomass could be
improved dramatically by: (1} promoting more
eIIcient and sustainable use oI traditional biomass;
and (2} enabling people to switch to modern
cooking Iuels and technologies.
1he appropriate strategy will depend on local
circumstances. Cenerally, where substitution Ior
modern alternatives is not (yet} Ieasible, and where
dependency on traditional Iuels will likely continue
(as in the next 23 decades in AIrica}, traditional
bioenergy use must be improved and made sustain-
able. hew Iuels must meet users' needs, and analy-
sis must be undertaken to assess whether there will
be competition between bioenergy Ior cooking and
Ior other purposes (such as use in the transport sec-
tor, in the case oI liquid bioIuels}.
Clean energy sources, including modern biomass-
derived cooking Iuels, can drastically reduce harm-
Iul indoor air pollution, leading to reductions in
respiratory diseases such as pneumonia in children
and chronic obstructive pulmonary disease in
adults, particularly women. 8iomass-derived cook-
ing Iuels provide one option Ior such energy up-
grading. It is critical to ensure that these Iuels and
associated technologies are designed to minimise
harmIul emissions and that their use is saIe. 1his
requires attention to saIe storage as well as the risk
oI burns and explosions.
Section 3: Key Sustainability Issues

Eealth risks associated with the production oI bio-
mass Ieedstock are similar to those oI modern ag-
riculture, including exposure to pesticides (iI used}
and the operation oI hazardous machinery. with
regard to decentralised liquid or gaseous bioIuel
conversion, small-scale plants need special concern
Ior labour saIety, as hazardous or explosive materi-
als such as methanol or methane are processed. See
Issues 7 and 8 Ior more on broader health risks oI
large-scale production, including risks associated
with genetically modiIed organisms (CHus} and
emissions, as well as potential beneIts including the
role oI sustainable bioenergy in minimizing health
harms Irom environmental shocks such as droughts
and Iash Ioods.
B. 4blty to ReJuce Tme, Fjjort, unJ Injury
4ssocuteJ Wth TruJtonul Iuel 6utherng
unJ Cookng
1he impacts, typically on women and girls, oI
walking long distances, carrying heavy loads, and
collecting Iuel in dangerous areas could all be
reduced iI physical and economic access to modern
bioenergy is provided. In the worst cases, women
and young girls have been the targets oI assaults
and rapes while collecting Iuel away Irom the saIety
oI their homes. while modern bioIuels Iree women
Irom collecting Irewood, however, they could also
generate additional work iI women produce the
biomass to make the Iuel (such as Ior biogas}.
women suIIer liIelong harm due to the literacy and
economic opportunities they Iorgo when they are
withdrawn Irom school to gather Iuel and attend
to other domestic chores. women who have access
to modern Iuels Iace a lighter cooking burden,
which Irees up more time to pursue educational,
social, and economic opportunities. 1hey are also
more likely to have the chance to partake in wider
networks and to seek opportunities Ior selI
improvement and social engagement through
enhanced access to radio, television, and other com-
munications technologies.
women who en|oy higher levels oI health, literacy,
and Iormal employment tend to give birth to Iewer
children. 1heir increased selI-esteem and ability to
make decisions about their own lives make
them more willing and able to postpone and
avoid reproduction.
C. 4blty to Mnmse Publc Heulth Rsks jrom
0xygenute Use n Trunsort Iuels
Airborne lead poses a serious yet tractable public
health risk, particularly to children. Phase-outs oI
tetra-ethyl lead additives in gasoline have reduced
public exposure to lead particles in most regions,
with the exception oI a handIul oI countries where
leaded gasoline is still common. Eigh lead
exposure can cause adverse neurological eIIects,
leading to concerns such as hypertension, high
blood pressure, heart disease, learning impair-
ments, and intelligence deIcits. 1he health beneIts
oI phasing out lead Irom gasoline Iar outweigh the
economic and other costs. Hodern bioIuels could
leverage social and macroeconomic co-beneIts that
do not accompany alternative additives and lead
phase-out strategies.
Hethyl tertiary butyl ether (H18F}, an alternative
oxygenate additive and possible carcinogen, can
threaten public health via leaks and spills into
groundwater, in which it degrades very slowly.
Issue 3 - Heulth unJ 6enJer Imlcutons oj MoJern Boenergy
EFAL1E RISkS ASSUCIA1FU wI1E 1EF
PRUUUC1IUN UI BIUVASS IFFUS1UCk ARF
SIVILAR 1U 1EUSF UI VUUFRN ACRICUL1URF,
INCLUUINC F\PUSURF 1U PFS1ICIUFS (II USFU
ANU 1EF UPFRA1IUN UI EAARUUUS
VACEINFRY.

Section 3: Key Sustainability Issues
In addition, raising the concentration oI aromatic compounds in gasoline can increase risks Irom
benzene exposure.
while the combustion oI pure ethanol does not pose any ma|or public health risk, a possible public health
disadvantage to the use oI ethanol as an alternative gasoline oxygenate is that in blends, ethanol Iuels may
bring about higher emissions oI acetaldehyde, a suspected carcinogen. 1o date, all gasoline blends appear to
have some kind oI health shortcoming, and the relative merits oI diIIerent blends continues to be sub|ect oI
scientiIc and policy debate.
xii

IHPlfHfh1A1IUh ISS0fS
Production capacity and distribution networks Ior cleaner-burning and more-eIIcient stoves and modern
bioIuels will need to be developed in many regions. women will also need greater access to credit, carbon
Iunds, inIormation, and other resources that enable them to learn about and decide to obtain modern
biomass resources and technologies. 1his could have a signiIcant impact on renewable energy markets while
also reducing the health and environmental impacts oI energy use.
In addition to access to Inance and better products and technologies, human capital development will be
vital. Public acceptance will require education and awareness-raising that is targeted to each speciIc group
in an appropriate way. uther implementation issues with regard to health and gender are similar to those
pertaining to Issue 1.

UX 6.
PBIlIPPIhf S1Uvf Ahu IUf0fl CUUPfkA1Ivf: Ah IhhUvA1Ivf P0lIC-PkIvA1f
PAk1hfkSBIP
x
4 new cookng stove thut cun run on kerosene us well us u number oj lunt ols jncluJng jutrohu,
eunut, sunower, unJ useJ cookng olj s beng JeveloeJ unJ JssemnuteJ n the Phlnes. The
stove s eusy to oerute unJ mostly munujuctureJ locully n orJer to ncreuse urchusng ower unJ
kee roJucton costs low. It s the result oj un nnovutve ublc-rvute urtnersh between the
Unversty oj Hohenhem j6ermunyj, the Bosch unJ 5emens Home 4lunces 6rou, the Furoeun
Nuture Hertuge IunJ jFuronutur, 6ermunyj, the 6ermun Mnstry jor Fconomc Cooeruton unJ
0eveloment jBMZj, unJ Ieyte 5tute Unversty jPhlnesj.
More thun 100 Phlne householJs unJ smull restuurunts huve testeJ the stove, whch sells jor
uroxmutely U5$38. The urtnersh exects the rce to go Jown us roJucton becomes more
cost-ejjectve. The stove oses no rsk oj exloson or uncontrolleJ burnng, unJ emssons ure 10
tmes lower thun those oj hgh-quulty kerosene stoves. Moreover, the cookng tme s 30-40 er-
cent shorter thun thut oj rewooJ stoves, substuntully reJucng women unJ chlJren's exosure to
nJoor ur olluton unJ jreeng u tme jor other roJuctve uctvtes.
The urtnersh ulso rovJeJ ntul nuncng jor u locul coconut ol roJucton cooerutve nvolv-
ng 400 Phlne jumles. 4 coconut gurJen smuller thun 25 by 40 squure meters cun suly ubout
two lters oj ol er week, enough to juel the stove jor the uveruge Phlne jumly j5.2 ersonsj.
Usng coconut ress cuke resJues us unmul joJJer, the cooerutve hus ucheveJ u 20-ercent
ncreuse n revenue unJ munugeJ to suly coconut ol ut u lower rce thun kerosene jU5$0.55 er
lter versus U5$0.69 er lter, ulthough ut leust urt oj ths Jjjerence cun be uttrbuteJ to u much
hgher tux rute on kerosenej.
Issue 3 - Heulth unJ 6enJer Imlcutons oj MoJern Boenergy

Issue 4 ImpIcatons for the
Structure of AgrcuIture
Ih1kUu0C1IUh
H
odern bioenergy in its many Iorms holds
promise Ior new |obs and income
creation opportunities Ior rural
Iarmers, Ioresters, and labourers, as well as
improved access to and quality oI energy services.
At the local level, enhanced access to energy is
important Ior improving agricultural productivity
and proItability. Fnergy is also required Ior post-
harvest value-added activities such as processing,
packaging, and transport.
1he beneIts to Iarmers are not assured, however,
and may come with increased costs Ior others. Iirst,
the demand Ior land to grow bioenergy crops could
put pressure on competing land uses Ior Iood crops,
resulting in a likely increase in Iood prices.
Second, as with many industrial activities,
signiIcant economies oI scale can be gained Irom
processing and especially distributing bioIuels on
a large scale, as illustrated by the prevailing trend
towards concentration oI ethanol ownership in
8razil and the united Statesthus Iavouring large
producers. 1he transition to liquid bioIuels can be
especially harmIul to Iarmers who do not own their
own land, and to the rural and urban poor who
are net buyers oI Iood, as they could suIIer Irom
even greater pressure on already-limited Inancial
resources. 1his is one oI the most signiIcant threats
associated with liquid bioIuel development and
calls Ior careIul consideration by decision-makers.
At their best, liquid bioIuel programmes can enrich
Iarmers by helping to add value to their products.
8ut at their worst, bioIuel programmes can result
in concentration oI ownership that could drive the
world's poorest Iarmers oII their land and into
deeper poverty. Host likely, the bioIuel economy oI
the Iuture will be characterised by a mix oI
production types, some dominated by large,
capital-intensive businesses, some marked by
Iarmer co-ops that compete with large companies
(possibly protected by supportive policies}, and
some where liquid bioIuels are produced on a
smaller scale and used locally. kegardless oI the
scale oI production, however, one thing is clear:
the more involved Iarmers are in the production,
processing, and use oI bioIuels, the more likely they
are to share in the beneIts.
1he second generation oI liquid bioIuel produc-
tion Iacilities will create a market Ior Iar greater
amounts oI agricultural biomass, and promises to
create higher-value co-products (and thus greater
wealth generation}. Eowever, it will also require the
development oI more capital-intensive, complex
production Iacilities, giving a Iurther edge to large
companies. Already, large investments are signalling
the emergence oI a new "bio-economy" in the com-
ing decades. 1hey also point to the possibility that
still-larger companies may enter the rural economy,
putting the squeeze on Iarmers by controlling the
price paid to Ieedstock producers in a given area
and owning the rest oI the value chain. II so, the
real proIts are likely to go not to those who can
produce large quantities oI Ieedstock, but to those
with the proprietary technology to ply this biomass
Section 3: Key Sustainability Issues
1EF VURF INvULvFU IARVFRS ARF IN 1EF
PRUUUC1IUN, PRUCFSSINC, ANU USF UI
BIUIUFLS, 1EF VURF LIkFLY 1EFY ARF 1U
SEARF IN 1EF BFNFII1S.

into Iuels and products. 1hus, the entire bioenergy
chain needs to be analysed in order to identiIy
and overcome actual and/or potential barriers
and ineIIciencies.
Iorestry-based bioenergy, such as that derived
Irom wood pellets and wood chips, can create
new opportunities Ior small- and medium-sized
enterprises (SHFs}. In general, Iorest products and
perennials will play an important role in the Iuture
oI bioenergy.
ISS0fS 1BA1 hffu 1U f AuukfSSfu Ih
1Bf lUCAl CUh1fX1
4. Whch Cros 4re Most Promsng?
1he diversity oI potential liquid bioIuel Ieedstock is
both an advantage and a disadvantage. It enhances
the security oI supply and increases the resilience
and ecological beneIts oI biomass production
systems, compared with monocultures oI one or
a Iew crops. un the other hand, a range oI poten-
tial Ieedstock with diIIering physical and chemical
characteristics creates challenges Ior handling and
processing. It can also result in diIIering characteris-
tics oI the Inal bioIuel product.
3

Huch work remains to be done to determine which
crops and crop species are most suitable Ior diIIer-
ent liquid bioIuel applications, soil types, Iarming
systems, and cultivation contexts. Key Iactors to
be considered when selecting Ieedstock include:
economic viability, suitability Ior diIIerent bioIuel
applications, yield per hectare, input requirements,
yield increase potential, crop versatility, drought
and pest resistance potential, competing uses, price
volatility, and opportunity costs. (See 1able 1 Ior a
comparison oI various Ieedstock types.}
Issue 4 - Imlcutons jor the 5tructure oj 4grculture
3
1his highlights the
need Ior internation-
ally agreed-upon Iuel
speciIcations and
certiIcation/labeling
systems.
LkuP 1YP
less disruption oI soil;
very constant yield;
humus balance is
negatively inIluenced by
annual removal oI straw
deep soil with good water
supply, pE balance
between 6 and 7
undemanding, does not
require tillage
soil should be well-aerated
and well-drained
good water supply, brown
soils with high humus
percentage, optimum pE
between 5.5 and 7.5
good drainage; pE
between 4 and 7; soil Ilat,
rich, and deep
deep, moist soil, medium
texture, and high Ilood
tolerance
deep, well-drained, Iriable,
well-aerated, porous,
pE between 5 and 6
mild, deep loamy, medium
texture, well-drained
needs permeable layer
and good drainage
light-to-medium textured
soils, well-aerated, well-
drained, and relatively
tolerant to short periods
oI water logging
moist alluvial soils with
good organic content,
high water capacity, good
structure, loose soil
medium-to-slightly heavy
texture, well-drained,
tolerant to salinity
does not require a special
soil type, but preIerably
well-aerated with a total
available water content oI
15 percent or more
grown under rain-Ied
conditions on a wide
range oI soils
ranging Irom prairies to
arid or marsh
medium textures
sandy, clay, and silt loams

some moisture the

entire season
can be cultivated under
both irrigated and
rain-Ied conditions
eIIicient user oI water
crucial during the main
growing seasons
even distribution oI
rainIall between 1,800
and 5,000 throughout
the year
high; irrigation may
be needed
high; irrigation required
600 mm minimum
yearly precipitation.
very high, grown in
Ilooded Iields
shows a high degree oI
Ilexibility towards depth
and Irequency oI water
supply because oI drought
resistance characteristics
high
moderate, in the range oI
550 to 750 mm/growing
period
high and evenly
distributed through
the growing season.
varies Irom 600 to
1,000 mm, depending on
climate and length oI total
growing period
drought-resistant and
very-eIIicient water use
high
substantial quantities
oI water
medium
moderate, no pesticide needed
adapted to low Iertility sites
and alkaline soils, but better
yield can be achieved iI
Iertilisers are used
require high Iertility and should
be maintained continuously
low
low
high
high Iertiliser demand
similar to wheat
relatively high input oI Iertilisers,
very intensive systems
very high nitrogen Ieeding crop
optimum soil pE oI 6 to 6.5
adequate nitrogen is required to
ensure early maximum vegetative
growth, high Iertiliser demand
high nitrogen and potassium
needs but at maturity, the
nitrogen content oI the soil
must be as low as possible Ior a
good sugar recovery
moderate
low
high
signiIicant nutrient uptake
moderate
varied environmental conditions,
preIerably warmer climates
1ropical and subtropical but
also arid and semiarid.
temperate to tropic conditions
adapted to warmer climates but
Iairly cold-tolerant
tropical and subtropical climate
with temperature requirement
oI 2532C
arctic to temperate
optimum temperature oI 1820C
sensitive to high temperatures,
grow best between 15 and 20C
constant temperatures in tropical
areas, optimum around 30C
optimum temperatures Ior high
producing varieties are over 25C
tropical, subtropical, and
temperate climates
variety oI temperate climates

tropical or subtropical climate
climates ranging Irom arid under
irrigation to temperate under
rain-Ied conditions
warm-season plant
temperate climates, in the sub-
tropics with winter rainIall, in
the tropics near the equator, in
the highlands with altitudes oI
more than 1,500 m, and in the
tropics away Irom the Fquator
where the rainy season is long
and where the crop is grown as
a winter crop.
can tolerate very low temperatures
in winter, but Irost in late spring
or early autumn will damage the
top shoots.
LkuP kq0lkNN1S
5ourrc: 0aimlcr Clryslcr, wwl, Hinistry oj /grirulturc oj 8adcn wucrttcmbcrg, and uNLP.
SulL wA1k N01klN1S LLlNA1
LereaI
Bemp
jatrepha
Naize
Niscanthus
uiI PaIm
PepIar
Petate
kapeseed
kice
Serghum
Seybean
Sugarbeet
Sugarcane
SunfIewer
Switchgrass
wheat
wiIIew
1able 1. Preliminary Assessment
oI 8ioIuels Ieedstock

B. 5tructurul Imlcutons oj Vurous Cros
Some Ieedstock is better suited Ior large-scale
production while others are more appropriate
Ior small-scale applications. 1he inedible oilseed
|atropha, Ior example, must currently be harvested
by hand, making it a labour-intensive crop and
suitable Ior areas with underemployment problems
(although work is being done to develop mechani-
cal harvesters}. In many instances, the relatively
low energy density and bulky nature oI biomass
limit the distance that unprocessed Ieedstock can
be transported cost-eIIectively. while sugar cane
used Ior Iuel ethanol production is typically grown
on large plantations, the size oI the cane processing
plants is limited due to the Iact that the crop has to
be processed within 48 hours oI being harvested.
Fven variations oI the same crop can demonstrate
dramatically diIIerent agricultural structures. Ior in-
stance, grain sorghum's prevalence as a staple Iood
crop in AIrica (used Ior Iour and beer} lends support
to its consideration as an ethanol Ieedstock Ior the
region; however, agronomic research shows that
sweet sorghum varieties (used primarily Ior sugars}
in Iact have the most optimal characteristics Ior
ethanol production. Sweet sorghum grows rapidly,
even under sub-optimal conditions (enabling it to
be harvested multiple times in a year}, requires less
water than sugar cane, and is well suited to pooled
smallholder cultivation. Additionally, some sweet
sorghum varieties have biomass qualities compara-
ble to sugar cane (i.e., the sugar Irom its stems can
be extracted and Iermented, while the Ibrous resi-
dues can be used as a boiler Iuel, much like bagasse
Irom sugar cane}.
xiv
C. Hstorcul IunJ Tenure, ProJucton Chun
0wnersh, unJ CreJt 4vulublty
1he poorest members oI a society typically do not
have oIIcial title to their land, and in some cases
rely on alternative land tenure arrangements (e.g.,
utilizing resources on government-owned land or
participating in community ownership structures}.
while global market Iorces unleashed by the merg-
ing oI the agriculture and energy industries could
lead to new and stable income streams, they could
also increase marginalization oI the poor and
indigenous peoples and aIIect traditional ways oI
living iI they end up driving small Iarmers without
clear land titles Irom their land and destroying their
livelihoods. 1his scenario can be avoided in the bio-
Iuels sector iI strong legal structures are put in place
(including land title laws} and properly enIorced.
As mentioned previously, ownership oI value-added
parts oI the production chain is also critical Ior
realizing the rural development beneIts and Iull
economic multiplier eIIects associated with bioen-
ergy. where biomass producers have a stake in
these value-added segments (e.g., in the processing
stages}, the beneIts are maniIold. Iirst, producers
are buIIered Irom the risk oI Ialling agricultural
commodity prices, because while low prices hurt
Iarm incomes, they can serve to beneIt the bot-
tom lines oI bioIuel/bioenergy production Iacilities
and thus increase the income oI those who take
part in ownership. Second, Iarmer ownership oI the
processing Iacility reduces Ieedstock supply risk Ior
the plant, since Iarmers have a vested interest in
ensuring a high-quality supply oI Ieedstock Ior the
Iacility. Iinally, the economic multiplier eIIect in
rural communities is dramatically enhanced when
Iarmers receive a greater share oI the proIts Irom
value-added activities.
Issue 4 - Imlcutons jor the 5tructure oj 4grculture

Lack oI access to banking services is oIten a serious
impediment to development in poor areas. Com-
pounding this problem is the tendency Ior lenders
to be wary oI Inancing unIamiliar technologies and
new business models. (See Issue 1, Implementation
A Ior a discussion oI Inancing options.}
IHPlfHfh1A1IUh ISS0fS
4. 5houlJ Publc Polcy Iuvour 5muller-5cule
Boenergy ProJucton?
A variety oI bioenergy production scales and owner-
ship structures are possible. 1hese include but are
not limited to small-scale local production Ior local
use, small-scale production Ior local use with excess
Ior sale, smallholder production oI Ieedstock that is
processed in a central conversion Iacility, Ieedstock
purchasing Irom small-to-medium sized producers
with concentrated ownership oI processing and dis-
tribution, and concentrated ownership oI the entire
production chain.
Policies that aIIect the uncertainty oI bioenergy
markets are highly relevant to the scale oI bioenergy
production. Smaller Iarmers, even iI highly moti-
vated, tend to be less likely to shiIt their production
to bioenergy, particularly iI they live in marginal
areas and have Iewer options to counteract risks
and higher discount ratesunless price expecta-
tions are very high. kelative to small-scale Iarmers,
large-scale agricultural producers and other actors
are much more inclined to enter bioenergy markets.
Policy makers deciding whether or not to speciI-
cally encourage small-scale bioenergy production
might want to consider the implications oI scale Ior
public Inances. All else being equal, smaller-scale
bioenergy industries oIIer higher social returns
on public investments. uuantitatively, substantial
supplies and associated public revenues can still be
attained on a small scale by incubating the pooling
oI resources, Iacilitating collective ownership, and
enIorcing Iair pricing laws. Fxperience in 8razil,
Irance, Cermany, Hauritius, and the united States
has shown that bioIuel production Iacilities that are
small and locally owned tend to bring about higher
local revenues and lower social spending.
uualitatively, governments tend to get higher
returns on investments by Iostering small-scale
production due to the lowered demand Ior social-
welIare spending and the greater economic multi-
plier eIIects incurred where money is earned and
spent by community members who obtain new or
higher-paying |obs or businesses. kelative to large-
scale producers, small-scale Iarmers or labourers
generally buy more oI their basic necessities and
luxuries, and pay more oI their sales and other
taxes, near where they live and where they might
have originally obtained their credit, price supports,
etc. un the other hand, the social beneIts associ-
ated with small-scale production may come at the
cost oI lower production eIIciency. 1his means, all
else being equal, that smaller-scale production will
probably necessitate higher government subsidies
than larger-scale production. Consequently, deci-
sion-makers Iace an important trade-oII Ior the
allocation oI scarce government resources.
B. Role oj Co-os, 4grculture Fxtenson
5ervces, unJ Cuucty BulJng
Local beneIts can be enhanced by organizing small-
scale producers as a group to meet the Ieedstock
volume and reliability needs oI conversion Iacilities.
In areas where large corporations dominate the
bioenergy industry, Iarmer cooperatives play
a useIul role in linking these large Irms to
independent growers.
In Hauritius, a share oI the beneIts Irom large-scale
co-generation plants Iows to low-income Iarmers as
a result oI both direct policy interventions and an
Section 3: Key Sustainability Issues

innovative revenue-sharing mechanism.
xv
Similarly,
in the two largest ethanol-producing countries, 8ra-
zil and the united States, the industry is dominated
by large corporations but Iarmer cooperatives also
play a role and bring beneIts to smaller Iarmers.
Agricultural extension services play a critical role
as well in disseminating best practices, Iacilitating
Iarmer-to-Iarmer participatory learning, and en-
couraging and responding to small-Iarmer requests
Ior technical advice. International capacity-building
activities could help to build the know-how that is
a prerequisite Ior extension services, thus Iostering
more sustainable small-scale bioenergy production.
International capacity building is particularly criti-
cal at this early stage oI the bioenergy industry,
where the expertise unique to bioenergy cropping
practices, such as carbon-cycle cropping considera-
tions, is concentrated in only a Iew countries. 1his
remains true Ior low-level technologies as well as
more advanced ones. In Halawi, which has been
at the IoreIront oI bioIuels development in AIrica,
a technology transIer programme Iocusing on the
use oI biogas Irom stillage Iailed due to insuIIcient
training and capacity-building eIIorts. And in Kenya,
a Ioray into Iuel ethanol Iell prey to mistakes and
setbacks that included large Iacility cost overruns,
poor strategic planning and decision-making, and
insuIIcient understanding oI the economics oI etha-
nol production. Such experiences attest to the need
Ior international capacity-building eIIorts that are
consistent with broader institutional goals such as
good governance, administrative training, transpar-
ency, and accountability.
In this context, uh-Fnergy and uhFSCu are leading
a renewable energy review that is collecting inIor-
mation and organizing it into a matrix with support-
ing analytical text to be turned into a web-based
tool. In a similar vein, IAu has developed manage-
ment models aimed at increasing the competitive-
ness oI rural agro-industries via bioenergy and has
created renewable energy manuals Ior training
agricultural and Iorestry extension workers. At the
international level, IAu has launched the Interna-
tional 8ioenergy PlatIorm (I8FP} as a Iramework Ior
bioenergy cooperation. It Iocuses on assistance to
developing countries on inIormation and data Ior
decision-making and on methods and approaches
to assess bioenergy potentials and sustainability.
IAu also hosts the Clobal 8ioenergy Partnership
(C8FP}, which is active in the promotion oI multi-
stakeholder cooperation, bioenergy trade, and
bioIuel sustainability.
1echnical cooperation on a bilateral or trilateral
basis is also playing a crucial role, including South-
South partnerships between 8razil and the coun-
tries oI Cameroon, Chana, Cuinea-8issau, Hali, and
Hexico (Ior biodiesel production} as well as South-
South-horth partnerships linking 8razil, India,
Irance, and the united Kingdom to Eaiti, Halawi,
Hozambique, higeria, Senegal and South AIrica
(mainly Ior ethanol}.
xvi
IN1FRNA1IUNAL CAPACI1Y BUILUINC IS
PAR1ICULARLY CRI1ICAL A1 1EIS FARLY S1ACF
UI 1EF BIUFNFRCY INUUS1RY, wEFRF 1EF
F\PFR1ISF UNIUF 1U BIUFNFRCY CRUPPINC
PRAC1ICFS, SUCE AS CARBUN-CYCLF CRUPPINC
CUNSIUFRA1IUNS, IS CUNCFN1RA1FU IN UNLY
A IFw CUUN1RIFS.
Issue 4 - Imlcutons jor the 5tructure oj 4grculture

UX 7.
BflPIh6 SHAll 0SIhfSSfS PkUu0Cf IUf0flS fkUH A6kIC0l10kAl Ahu IUHASS
wAS1fS
The UN Fnvronment Progrumme's Rurul Fnergy Fnterrse 0eveloment Progrumme jRFF0j s
ojjerng enterrse Jeveloment servces unJ sturt-u nuncng to "cleun energy" enterrses n ve
4jrcun countres, Bruzl, unJ Chnu. 5nce 2000, RFF0 hus nunceJ 44 enterrses thut ure now
returnng cutul euch yeur to un nvestment junJ thut s then renvesteJ n new enterrses. These
nuncul returns ure mutcheJ-unJ n muny cuses exceeJeJ-by the non-nuncul returns oj
economc Jeveloment, envronmentul mrovement, unJ better uccess to moJern energy servces
jor oorly serveJ communtes. 4lthough quuntjyng these returns s Jjcult, un nterm evuluuton
oj non-nuncul mucts oj RFF0 nvestments wus Jone on eght RFF0 enterrses n 2004.
0ne oj the enterrses covereJ n the stuJy s the Tunzunu's Bomuss Fnergy Technology ImteJ
jBFTIj. The comuny coorJnutes the sourcng unJ suly oj ugrculturul unJ other bomuss wustes
us juel jor Tungu Cement Comuny ItJ. jTCCIj, u colluboruton thut Jsluces u to 15 ercent oj the
44,000 tonnes oj heuvy juel ol TCCI uses yeurly to rovJe heut jor ts cement klns. The substtuton
suves TCCI money, reJuces greenhouse gus emssons, unJ generutes u 43-ercent gross rot murgn
jor BFTI on monthly Jelveres oj u to 1,200 tonnes jut $40-$60 er tonnej.
Income jrom collectng unJ trunsortng bomuss hus been the most sgncunt socul muct oj
BFTI's uctvtes. Fuch tonne oj bomuss suleJ to TCCI ulso generutes ncome jor u locul rovJer oj
trunsort servces. 4t the comuny level, BFTI hus emloyeJ one new stujj member who s currently
unJergong rojessonul uccountuncy trunng. Women n urbun ureus eurn U5$60 u month collect-
ng 40 bugs oj churcoul resJues u Juy jor the wuste contructor useJ by BFTI. Ths s 25-ercent more
thun the mnmum wuge n Tunzunu unJ consttutes low-level job creuton wth u genune muct
on overty. Postve envronmentul mucts jrom BFTI oerutons ncluJe locul benets ursng jrom
u wuste Jsosul mechunsm unJ the globul benet oj reJuceJ greenhouse gus emssons thut woulJ
otherwse be roJuceJ jrom the combuston oj heuvy juel ol ut the cement rocessng juclty.
Section 3: Key Sustainability Issues

Issue 5 ImpIcatons for

food Securty
Ih1kUu0C1IUh
1
he Iurther development and expansion oI
bioenergy will aIIect Iood security in a variety
oI ways. 1he current "Iood, Ieed, or Iuel" de-
bate tends to be overly simplistic and Iails to reIect
the Iull complexity oI Iactors that determine Iood
security at any given place and time. 1he substantial
near- to medium-term impacts on Iood security will
be driven largely by current-generation liquid bio-
Iuels Ior transportation, which depend almost exclu-
sively on Ieedstock Irom Iood crops. 1he purpose
oI this section is to provide a broad Iramework that
could guide initial analyses oI the key relationships
between liquid bioIuels and Iood security.
1he expansion oI liquid bioIuel production could
aIIect Iood security at the household, national and
global levels through each oI Iour ma|or dimen-
sions: availability, access, stability, and utiliza-
tion. 1hese eIIects may be positive or negative,
depending on the situation. Ior instance, whether
a country or household is a net buyer or seller oI
energy services and Iood products will Iundamen-
tally inIuence whether bioIuels will be beneIcial or
detrimental to their welIare.
lI0Iu IUf0flS Ahu 1Bf fU0k
uIHfhSIUhS Uf fUUu SfC0kI1
1he availability oI adequate Iood supplies could
be threatened by bioIuel production to the extent
that land, water, and other productive resources are
diverted away Irom Iood production. Similarly, iI
bioIuel production drives up commodity prices, as
appears to be the case Ior maize in 2006 and early
2007, Iood arrcss could be compromised Ior low-
income net Iood purchasers. un the other hand,
the market Ior bioIuel Ieedstock oIIers a new and
rapidly growing opportunity Ior agricultural produc-
ers and could contribute signiIcantly to higher Iarm
incomes. Hodern bioenergy could make energy
services more widely and cheaply available in
remote rural areas, supporting productivity growth
in agriculture or other sectors with positive implica-
tions Ior Iood availability and access.
Stability reIers to the time dimension oI Iood secu-
rity, which could be aIIected by the growth oI bioIu-
els because price volatility Irom the petroleum sec-
tor would be more directly and strongly transmitted
to the agricultural sector. Iinally, utilization reIers
to peoples' ability to absorb the nutrients contained
in their Iood and is closely linked to health and
nutrition Iactors such as access to clean water and
medical services. II bioIuel Ieedstock production
competes Ior water supplies, it could make water
less readily available Ior household use, threaten-
ing the health status and thus the Iood security
status oI aIIected individuals. un the other hand, iI
modern bioenergy replaces more polluting sources
or expands the availability oI energy services, it
could make cooking both cheaper and cleaner, with
positive implications Ior Iood utilization.
1o the extent that increased demand Ior bioIuel
Ieedstock diverts supplies oI Iood crops (Ior exam-
ple, maize} and diverts land Irom Iood crop produc-
tion, global Iood prices will increase. Analyses are
under way to quantiIy the impact oI expanded bio-
Iuels production on global commodity prices, and
in turn, the poor and Iood insecure. Considerations
will vary depending on the type oI Iuel, country-
speciIc policies, setting (urban or rural}, Iarming
system, and Iood security context.
Issue 5 - Imlcutons jor IooJ 5ecurty

Characteristics oI land use associated with poverty,

such as low intensity oI Inancial capital, high use oI
natural and human capital, narrow natural resource
bases, low returns to land and labour, Iew oII-Iarm
opportunities, and, as a result, low opportunity
costs, must be considered in the analysis oI bioen-
ergy and Iood security. Ior instance, in the absence
oI comprehensive analyses and policies,
commercial production oI bioIuels may target
high-quality landsdue to better proIt margins
and high soil requirements oI Irst-generation
cropssuch that bioIuels as the "next big cash
crop" will be grown on the best lands, leaving
cereals and subsistence crops to the low-quality
lands. Fxpanded bioIuel production adds Iurther
uncertainty to other pressures related to Iood
security, such as population growth, changing diets,
rising demand Ior biomaterials, expanding organic
agriculture, climate change, and extreme climatic
events.
1o an extent, the Iood security risks associated with
bioIuels are the mirror image oI the opportunities.
Agricultural commodity prices have long been inIu-
enced by energy prices, because oI the importance
oI Iertilisers and machinery as inputs in commod-
ity production processes. kising commodity prices,
while beneIcial to producers, will mean higher Iood
prices with the degree oI price rise depending on
many Iactors, including energy prices, with negative
consequences Ior poor consumers. Fxpanded use
oI agricultural commodities Ior bioIuel production
will strengthen this price relationship and could
increase the volatility oI Iood prices with negative
Iood security implications.
ISS0fS 1BA1 hffu 1U f AuukfSSfu
4. Who 4re the Hungry?
According to IAu data Ior 200103, there are
approximately 854 million undernourished people
in the world. An estimated 820 million are in
developing countries, 25 million in countries in
transition, and 9 million in industrialised coun-
tries. Eunger claims up to 25,000 lives every day,
two thirds oI them children under the age oI Ive,
and it is currently the leading threat to global
health, killing more people than AIuS, malaria, and
tuberculosis combined. Although the proportion
oI undernourished in the world has declined Irom
20 percent to 17 percent since the mid 1990s, the
absolute number oI hungry people has remained
the same.
ligurc 1. Ilc world's undcrnourislcd
(200103, millions
Section 3: Key Sustainability Issues
Latin America/
Caribbean: 52
hear Fast &
horth AIrica: 38
1ransition
Countries: 25
Industrialized
Countries: 9
* excludes China and India
Asia/PaciIic*:
162
India: 212
China: 150
Sub-Saharan
AIrica: 206
0cvcloping
Countrics: 820
world: 854
ACCURUINC 1U IAU UA1A IUR 200103,
1EFRF ARF APPRU\IVA1FLY 8S4 VILLIUN
UNUFRNUURISEFU PFUPLF IN 1EF wURLU.

Any analysis oI the impact oI bioenergy on Iood

security should highlight diIIerences between devel-
oping, least developed, and low-income Iood deIcit
countries (LIIuCs}. 1hese two latter groups are
typically the most Iood insecure, given high depend-
ence on imports oI primary staple Ioods and exports
oI primary tropical commodities. 8ecause hunger
in developing countries tends to be concentrated in
rural areas, little sustained progress in Iood security
is possible without paying particular attention to
agriculture and rural development.
ligurc 2. /grirultural Lmploymcnt and
undcrnourislmcnt (200103
Approximately 30 percent oI world grain sup-
plies are currently used to Ieed livestock (and only
indirectly to Ieed people}; thus, the implications
oI bioIuels development on Iood security will also
be linked to changes in dietary patterns. une third
oI the pro|ected increase in Iood demand over the
next three decades is expected to come Irom dietary
changes as more people are able to aIIord calorie-
intensive meat and dairy products. Producing these
items requires relatively large resource inputs,
including additional land and water to grow crops
Ior animal Ieed. A continued rapid rise in world de-
mand Ior meat and dairy will reduce the availability
oI supplies to satisIy both bioIuel and Iood security,
exacerbating the tension between these two ends.
B. Imuct on IooJ 4vulublty
Liquid bioIuel production could threaten the avail-
ability oI adequate Iood supplies by diverting land
and other productive resources away Irom Iood
crops. Hany oI the crops currently used as bioIuel
Ieedstock require high-quality agricultural land and
signiIcant inputs oI Iertilisers, pesticides, and water.
Currently, on a global scale and under the current
state oI liquid bioIuel production, Iood production
and bioIuel production are substitutes. 8ut well-de-
signed modern bioenergy systems may in Iact aug-
ment local Iood production. Ior example, iI legu-
minous nitrogen-Ixing crops Ior bioIuel production
are rotated with cereals, the overall productivity oI
the system may be enhanced. 1he degree oI poten-
tial competition will hinge on a variety oI Iactors,
including agricultural yields and the pace at which
second-generation bioIuel technologies develop. As
second-generation technologies based on lignocel-
lulosic Ieedstock become commercially viable, this
will lessen the possible negative eIIects oI land and
resource competition on Iood availability. Still, a
risk could Iollow these technologies: they might
increase the likelihood oI a greater push to plow up
"waste lands" (including rangelands and savannas}
to plant switchgrass and other hardy bioIuels as well
as displaced cereals and subsistence crops.
uverproduction oI Iood in industrialised countries,
where supply has long exceeded demand in part
due to domestic subsidies, has depressed agricultur-
al commodity prices. Ior decades, these low prices
have been a ma|or cause oI economic stagnation
in rural areas. As bioIuels absorb crop surpluses in
industrialised countries, commodity prices will rise,
increasing income Ior Iarmers in poor countries and
perhaps reducing the political pressure Ior other
Iorms oI agricultural subsidies in industrialised na-
tions, albeit with several possible costs: high budg-
etary subsidies in industrialised countries, higher
Issue 5 - Imlcutons jor IooJ 5ecurty
P
e
r
c
e
n
t
a
g
e

o
I

p
o
p
u
l
a
t
i
o
n

u
n
d
e
r
n
o
u
r
i
s
h
e
d
Agricultural employment as a share oI total employment (percent}
07
>35
20-34
5-19
5
57 107 157 207 257 307

Iood prices Ior poor consumers worldwide, and

higher costs Ior emergency Iood relieI. Eowever, the
expected price increases due to greater demand Ior
bioIuel crops may induce Iarmers to increase pro-
duction and thereby mitigate some oI these price
eIIects in the longer term.
C. Imuct on IooJ 4ccess
Iood prices are one oI the most important determi-
nants oI Iood access. As mentioned earlier, global
Iood commodity prices are expected to increase in
the near- to medium-term due to expanded bioIuel
production. Price increases have already occurred
in ma|or bioIuel Ieedstock markets, Ior example,
sugar, maize, rapeseed oil, palm oil, and soybean.
In addition to raising Ieedstock prices, increased
demand Ior energy crops might elevate the prices oI
basic Ioods, such as cereals, which comprise the ma-
|or proportion oI daily dietary intake oI the poorest
and least Iood secure. 1hus, possible income gains
to producers due to higher commodity prices may
be oIIset by negative welIare eIIects on consumers,
as their economic access to Iood is compromised.
1here are indications that increased production
oI bioIuels may link petroleum prices and those
oI bioIuel Ieedstock. Prices oI sugar and molasses
already show high correlations with world oil prices.
Increased production oI bioIuels adds another layer
oI uncertainty and risk to volatile price relation-
ships by linking Iood and oil prices. with inelastic
demand (through bioIuel consumption mandates}
comprising an increasing share oI a given crop's
market, this also gives rise to greater price variabil-
ity and market volatility. Increased price volatility
may be more detrimental to Iood security than
long-term price trends, to the extent that the poor
are usually less able to ad|ust in the short term.
Increased trade in bioIuels has the potential to
mitigate some oI this price volatility. Appropriate
trade policies could potentially minimise tensions
between bioIuel and Iood production by allowing
trade to Iow internationally in response to Iuctua-
tions in domestic supply and demand, thus helping
to stabilise prices.
IHPlfHfh1A1IUh ISS0fS
4. 0evelo un 4nulytcul Irumework jor IooJ
5ecurty unJ Boenergy
Hore research and analysis is needed to Iully under-
stand the long-term impacts oI expanded bioenergy
production and use on Iood security. Such under-
standing is necessary to guide the design oI inter-
ventions aimed at promoting the positive eIIects
and averting or compensating the negative eIIects.
1he eIIects oI bioenergy on Iood security will be
context-speciIc, depending on the particular tech-
nology and country characteristics involved. Liquid
bioIuels derived Irom Iood crops will have diIIerent
Iood security implications than modern bioenergy
systems based on lignocellulosic or waste materi-
als. An analytical Iramework based on country
typologies should be developed to Iacilitate the
understanding oI country-speciIc eIIects. 1he Iour
dimensions oI Iood security discussed above should
provide the starting point Ior the development oI
this analytical Iramework.
B. Fnhunce 4grculturul ProJuctvty
unJ 5ustunublty
Agricultural research aimed at improving
productivity, conserving water, and building soil
Iertility can lessen the tension between Iood,
Ieed, and Iuel production by increasing overall
agricultural output in a sustainable manner.
Planting arid, semi-arid, degraded, and marginal
lands that are unsuitable Ior Iood production with
inedible bioIuels crops such as |atropha would not
compete directly with current Iood production and
Section 3: Key Sustainability Issues

could help rehabilitate such soils.

4
uther
agronomic practices that minimise soil disturbance
and enhance the accumulation oI soil organic
matter, such as conservation agriculture, are
improving soil Iertility and water-use eIIciency.
1he incorporation oI crops Ior energy production
in rotation with Iood crops could improve
productivity and disease and pest resistance while
diversiIying income opportunities Ior producers.
1hese and other productivity-enhancing measures
should be promoted.
C. UnJerstunJ the Polcy Nexus jor
IquJ Bojuels
At least Iour distinct policy domains are shaping
development oI the liquid bioIuels sector: energy,
environment, agriculture, and trade. Similarly,
policies at the national, regional, and global levels
are highly relevant and may interact in unexpected
ways. Policy makers need to understand the
interactions among these various policy domains
and levels and to ensure that Iood security
considerations are given priority. Integrated policy
analysis that considers the eIIects and interactions
oI the relevant policy domains at diIIerent levels is
required. 1he Iood security impacts oI these policies
on developing countries are highly contingent on
local circumstances, but also depend on the global
Iood situation.
8oth agricultural and energy markets are highly
distorted, making it is diIIcult to predict the net
eIIect oI reIorms in either sector. Although existing
agricultural subsidies clearly depress commod-
ity prices, making liquid bioIuels more competi-
tive with petroleum-based Iuels, additional direct
subsidies Ior bioIuels are still required in most
cases to overcome the cost advantage en|oyed by
petroleum products. whether such subsidies may
be |ustiIed in the short term to enable an emerg-
ing bioIuel industry to become established needs to
be evaluated in a rigorous cost-beneIt Iramework.
In any case, subsidies could be wasted unless the
country is or can become a competitive producer
oI the necessary Ieedstock and achieve the techno-
logical capacity and economies oI scale required to
produce bioIuels eIIciently.
Fthanol or biodiesel blending requirements man-
dated on environmental grounds may be incon-
sistent with trade barriers erected against imports
oI those products. 8y impeding imports oI more
eIIciently produced bioIuels Irom abroad, the
combination oI the two policies may divert more
land Irom Iood production than would have been
necessary to meet the blending requirement alone.
Similarly, investments based on expected export
opportunities that themselves depend on preIeren-
tial market access, large consumption subsidies in
the importing countries, or bothwhich could be
erodedmust be careIully evaluated.
1here are examples oI investment and policy
support to small-scale, labour-intensive bioIuel
production systems aimed at providing employment
and income Ior smallholders. Ior instance, 8razil
recently introduced a "social biodiesel" programme
Iocused on small rural cooperatives, which is tar-
geted speciIcally at poverty reduction. 1he 8razilian
government is now providing Iamilies oI labourers
with a new market Ior their oilseed crops with the
aim oI improving socio-economic conditions. 1he
results oI the programme remain to be evaluated.
Issue 5 - Imlcutons jor IooJ 5ecurty
4
1hat said, it
seems unlikely that
signiIcant quantities
oI bioIuel Ieedstock
can be produced
on marginal lands;
some oI this land
is already used Ior
livestock grazing,
competing with Iood
production.

Issue 6 ImpIcatons for

6overnment udget
Ih1kUu0C1IUh
H
odern bioenergy runs the gamut Irom
being commercially competitive today (as
with biomass waste Ior heat and elec-
tricity in some situations} to requiring signiIcant
government subsidies. 1o date, large government
subsidies have been universally provided to liquid
bioIuels.
5
1he most commonly used instrument Ior
this purpose is a reduction in Iuel taxes and charges.
1his is oIten coupled with consumption mandates,
production subsidies, and, especially in the case oI
ethanol, import restrictions.
Import restrictions are trade distorting and discour-
age eIIcient producers Irom selling to the global
market, but they are Iscally cheap and used liber-
ally by governments. Consumption mandates need
not have government Iscal implications, although
consumption mandates have been paired with tax
incentives to date because oI the generally higher
production costs oI liquid bioIuels. uirect subsi-
dies and all Iorms oI tax incentives have budgetary
implications, which should be careIully assessed by
governments considering bioIuel programmes.
ISS0fS 1BA1 hffu 1U f AuukfSSfu
4. Tux ReJuctons jor IquJ Bojuels
Iuel taxation typically seeks to satisIy multiple
ob|ectives. In the case oI transport Iuels, Ior which
ethanol and biodiesel substitute, these ob|ectives
include raising government revenue Ior general
(non-transport} expenditure purposes; eIIciently
allocating resources to and within the transport
sectors; Inancing road provision and maintenance;
reducing congestion; reducing the environmental
externalities oI road transport; and
redistributing income. Some oI the ob|ectives apply
equally to all Iorms oI transport Iuels and, as such,
there should be no tax diIIerentiation Ior these
ends. Ior example, two externalities oI road
transportcongestion and damage to roadsdo
not depend on the Iuel type. Fxempting bioIuels
Iully Irom the Iuel excise tax to make them cost-
competitive, as some countries have done, is not
appropriate Ior this reason. Accounting Ior environ-
mental externalities is one area where diIIerent lev-
els oI Iuel excise taxes should be applied depending
on the environmental characteristics oI each Iuel.
1axes on petroleum products are a critical source
oI government revenue Ior low-income countries
because collecting Iuel taxes is relatively straight-
Iorward compared to other Iorms oI taxation such
as income tax. Casoline tax is progressive because
rich households spend a higher proportion oI their
budgets on gasoline than do poor households.
8ecause ethanol is used largely as a substitute Ior
gasoline, providing a large tax reduction Ior ethanol
blended into gasoline reduces government revenue
Irom this tax, targeting mainly the non-poor.
1ax reductions are possible iI Iuel taxes are high
to begin with. In many developing countries, the
tax rate on dieselwhich is used economy-wide in
goods and public passenger transport, and which
many governments seek to keep relatively inexpen-
siveis low compared with the tax rate on gasoline.
In these situations, it would be diIIcult to use tax
reduction alone as a Iscal instrument to promote
biodiesel consumption.
5
Subsidies here
Iollow the deIni-
tion provided by
the world 1rade
urganization and
include not only
direct payments to
producers, but also
reductions in taxes
and other charges
that reduce govern-
ment revenues
otherwise due.
Section 3: Key Sustainability Issues

B. 5ze oj 5ubsJes unJ Tux ReJuctons

A detailed study oI subsidies Ior ethanol in the
united States calculated that these subsidies to-
talled uS$5 billion in 2006, about halI oI this in the
Iorm oI Iuel tax credits and reductions. 1he subsidy
amounted to more than 40 percent oI the market
price (Koplow 2006}. 8razil also provides large tax
reductions. In }une 2005, the tax diIIerence between
pure ethanol and the gasoline/ethanol blend in the
state oI So Paulo, which accounted Ior more than
one halI oI total hydrous ethanol consumption in
the country, amounted to uS$0.30 per litre oI etha-
nol (Ko|ima and }ohnson 2005}. In 1hailand in April
2006, ethanol en|oyed a tax advantage oI as much
as uS$0.65 a litre, against the Asia-PaciIc premium
gasoline price oI uS$0.51 a litre in that month
(Ko|ima, Hitchell, and ward, "Considering 1rade
Policies Ior Liquid 8ioIuels," Iorthcoming}.
1hese subsidies are considerably larger than the
beneIts oI potentially lower greenhouse gas emis-
sions that arise Irom switching to liquid bioIuels:
a Cu
2
-equivalent price range, expected Ior the
Ioreseeable Iuture, oI between uS$8 and uS$20 per
tonne would generally provide about $0.010.04
per litre oI bioIuel (the upper end oI the range Ior
biodiesel}.
C. When Iscul 5uort Mght Be 4rorute
Iuel taxes are not very eIIcient in reducing exter-
nalities Irom emissions that contribute to urban air
pollution. 1his is because local pollutant emissions
and their environmental externalities depend not
only on Iuel choice, but also on vehicle technology,
maintenance, driving patterns, and the location and
time oI emissions.
uther emissions oI high relevance to local air pollu-
tion, such as carbon monoxide and hydrocarbons,
are also reduced by increasing the ethanol content
oI transportation Iuel. (See 1able 2.}
Iablc 2. lmpart oj lnrrcascd Ltlanol Contcnt on
C0 and hC Lmissions
5crgic \. 8ajay ct al., Lncrgy jrom 8iomass in 8razil," in lranl kos
illoCallc, 5crgic \. 8ajay, and harry kotlman, cds., lndustrial uscs
oj 8iomass Lncrgy (London and Ncw orl: Iaylor lranris, 2000
8ut Iuel taxes are eIIcient Ior reducing externalities
associated with carbon dioxide emissions because
these emissions are linked directly to Iuel consump-
tion. Ior eIIcient taxation, tax rates on Iuels that
have external costs should be ad|usted upward to
reduce their consumption to a social optimum; it is
ineIIcient to subsidise "cleaner" Iuels. A carbon tax
based on each Iuel's liIecycle Cu
2
emission charac-
teristics would be appropriate.
8ecause the magnitude oI the subsidies historically
and currently provided to maintain a domestic
bioIuel market is very large, governments should
examine alternative uses oI the budget set aside
Ior subsidizing bioIuels to ensure that the ob|ective
oI welIare maximisation is not seriously compro-
Issue 6 - Imlcutons jor 6overnment BuJget
Percentage ef thaneI in the 6aseIine Nixture
PeIIutant 0 12 18 22
Cu 200450 150 120 100
EC 140 110 105 100
...SUBSIUIFS ARF CUNSIUFRABLY LARCFR
1EAN 1EF BFNFII1S UI PU1FN1IALLY LUwFR
CRFFNEUUSF CAS FVISSIUNS 1EA1 ARISF IRUV
SwI1CEINC 1U LIUIU BIUIUFLS....

mised. In general, it is important that government

incentives be designed to promote development
eIIciently. 1his means promoting speciIc energy
technologies primarily when it can be reasonably
concluded that the chosen technology is a cost-eI-
Iective way oI achieving policy and social goals (such
as rural development}. under all circumstances,
the social beneIts oI promoting a given technology
should outweigh the social costs associated with the
subsidies. 1his is especially important in low-income
countries where limited government resources
compete Ior basic needs, ranging Irom the provision
oI clean water and primary health care to primary
education.
IHPlfHfh1A1IUh ISS0fS
II a speciIc modern bioenergy source is commer-
cially viable, the proper role oI government is to
establish a transparent and stable regulatory Irame-
work with eIIective enIorcement, and to properly
account Ior externalities by diIIerential taxation. II a
bioenergy source is not yet commercially viable and
government support is required, then the govern-
ment should careIully consider the trade-oIIs in-
volved through economic analysis to weigh upIront
the social costs and beneIts oI the bioenergy being
considered Ior subsidies, as well as when, where,
and how to embark on the bioenergy programme.
Fconomic analysis can also be a valuable tool Ior
reshaping planned or existing energy programmes
to maximise their eIIciency and their net beneIts
to society, although monetary valuation oI some
non-market eIIects can be controversial.
1he economics oI bioenergy are site and situation
speciIc, and each country will produce diIIerent
results. upportunity costs (including those oI land,
water, and labour}, rather than the prices paid,
should be used to ensure that the costs oI subsi-
dised inputs and alternative uses oI resources are
properly reIected. It is also important to examine
who captures most oI the subsidies. 1he welIare
consequences will diIIer, Ior example, depending
on whether the subsidies are going to large
agri-business establishments or smallholders.
1he application oI these criteria to other parts
oI the energy sector would help in creating a more
level playing Ield between diIIerent technologies
and Ieedstock.
Applying diIIerent tax rates to liquid Iuels presents
administrative and regulatory challenges in the
Iorm oI commercial malpractice, including mis-
labelling, adulteration, and illegal sales. 1axing
bioIuels can also be more administratively challeng-
ing because there are more points oI tax collec-
tion, especially iI the Iuels are produced on a small
scale by numerous producers. understanding these
challenges, learning Irom the experience oI other
countries, and involving the tax authorities Irom the
outset is essential.
Section 3: Key Sustainability Issues

Issue 7 ImpIcatons for 1rade,

foregn fxchange aIances, and
fnergy Securty
Ih1kUu0C1IUh
1
rade in energy and agriculture is marked by
wide disparities. In the case oI energy, a rela-
tively small number oI countries dominate
exports, while most countries import mostand in
some cases alloI the Iuels they consume. uecades
oI direct and indirect subsidies to the energy sector
as a whole and Ior electricity inIrastructure and tar-
iIIs have contributed to the current energy system.
world agriculture is also marked by extensive distor-
tions, many oI which are harmIul to poor countries
that depend heavily on agriculture.
1he early development oI the bioIuels market is in-
evitably shaped by these existing trade distortions
and indeed, bioIuels also receive direct subsidies
and trade protection oI their own, which aIIect the
energy and agriculture markets with which they
intersect. une oI the great challenges Ior bioIuels
policy development is to eIIectively navigate the
chaotic and oIten manipulated markets in which
they operateproviding initial subsidies where
appropriate, but minimizing their size and resulting
market distortions. In the Iuture, large-scale devel-
opment oI bioIuels will likely raise agricultural com-
modity prices, increasing income Ior those in poor
countries who are net sellers oI Iood and reducing
the political pressures Ior other types oI agricul-
tural subsidies in industrialised nations. Eowever,
this will occur at the dual costs oI high budgetary
subsidies in industrialised countries and higher Iood
prices Ior poor consumers around the world.

ISS0fS 1BA1 hffu 1U f AuukfSSfu

4. Rumcutons jor Ioregn Fxchunge Bulunces
uI the world's 50 poorest countries, 38 are net
importers oI petroleum and 25 import all oI their
petroleum requirements. kecent oil price increases
have had devastating eIIects on many oI the world's
poor countries, some oI which now spend as much
as six times as much on Iuel as they do on health.
uthers spend twice the money on Iuels as on
poverty reduction. And in still others, the Ioreign
exchange drain Irom higher oil prices is Ive times
the gain Irom recent debt relieI. At a time when
energy analysts predict a period oI unpredictable oil
markets, with prices dependent on developments
in some oI the world's least stable regions, Iossil
Iuel dependence has become a ma|or risk Ior many
developing economies.
uiversiIying global Iuel supplies could have ben-
eIcial eIIects on the global oil market. 8y some
estimates, rising production oI bioIuels could meet
most and perhaps all oI the growth in liquid Iuel
demand in the next Iew decades, particularly iI
second-generation technologies are available and iI
simultaneous investment in more-eIIcient transport
limits the amount oI growth. At a time when oil
production is already in decline in many nations,
greater bioIuel use could help bring the oil market
into balance and greatly reduce oil prices.
Issue 7 - Imlcutons jor TruJe, Ioregn Fxchunge Bulunces,
unJ Fnergy 5ecurty
IN 1EF CASF UI FNFRCY, A RFLA1IvFLY
SVALL NUVBFR UI CUUN1RIFS UUVINA1F
F\PUR1S, wEILF VUS1 CUUN1RIFS IVPUR1
VUS1ANU IN SUVF CASFS ALLUI 1EF
IUFLS 1EFY CUNSUVF.

uiversiIed Iuel portIolios would also have beneIts

at the national level. Analysis has shown that in
the case oI electricity markets, diversiIcation has
substantial value even iI the added energy source
has a surIace price signiIcantly above its dominant
competitorbecause oI the ability to mitigate Iu-
ture price risks. In the case oI bioIuels, this beneIt
may be mitigated by the Iact that in the early years,
bioIuel prices will tend to rise and Iall in line with
the much larger world oil market.
1he united States and Furope have coupled sub-
sidies Ior bioIuels with import tariIIs that ensure
that these subsidies will beneIt domestic Iarmers
rather than those in other countries. 1his has led
to the strange irony oI virtually unimpeded trade
in oil, while trade in bioIuels is greatly restricted.
Host experts agree that opening international mar-
kets to bioIuels would accelerate investment and
ensure that production occurs in locations where
the production costs are lowest. Poor countries in
Central America and sub-Saharan AIrica are among
those likely to beneIt. heedless to say, this greatly
accelerated investment and production should be
assessed closely at the national and international
levels to avoid potentially irreversible sustainability
impacts.
B. Imucts on 4grculturul TruJe Polcy
Agricultural commodities dominate the export
earnings oI many poor countries, but these earnings
are limited by the Iact that agricultural subsidies
and other protectionist policies in industrialised
countries have reduced international agricultural
prices and limited access to the world's wealthiest
markets. In the united States, the government pro-
vides 16 percent oI total Iarmer income, in Furope,
32 percent, and in }apan, 56 percent. unlike with
energy, most agricultural commodity prices today
are well below the real price oI 20 years ago. 1rade
agreements such as hAI1A have provided develop-
ing countries with new trade opportunities but also
Iooded poor countries with cheap grain, while eI-
Iorts to reduce industrial-country price supports and
other subsidies have largely Iailed.
Some economists argue that bioIuels producers
are now beneIting Irom low Ieedstock prices that
are themselves the product oI agricultural subsi-
dies. 1his depends on the Ieedstock, and applies
importantly to sugar. Prices oI other Ieedstock,
such as maize, would be less aIIected, although, as
discussed below, maize prices have risen sharply
in the last year. while it is true that iI trade barri-
ers were removed, some agricultural commodity
prices would rise, this eIIect would be moderated as
producers responded to new incentives.
kapidly rising demand Ior ethanol has already had
an impact on the price oI two agricultural commod-
ities, sugar and maize, in 2005 and 2006, bringing
substantial rewards to Iarmers not only in 8razil
and the united States but around the world, since
both commodities are widely traded internationally.
In the case oI maize, the Iutures market suggests
that prices will be sustained at their highest levels
in more than two decades. 1his is also a concern
because in some regions oI the world, particularly
in AIrica and parts oI Latin America, maize is the
staple Iood among the poor.
1he linking oI agricultural commodity prices to
the vicissitudes oI the world oil market clearly
presents risks, but it is an essential transition to
the development oI a bioIuels industry that does
not rely on ma|or Iood commodity crops.
kising prices Ior maize and sugar are a ma|or new
incentive to develop second-generation cellulosic
Section 3: Key Sustainability Issues
UNLIkF wI1E FNFRCY, VUS1 ACRICUL1URAL
CUVVUUI1Y PRICFS 1UUAY ARF wFLL BFLUw
1EF RFAL PRICF UI 20 YFARS ACU.

technologies that convert grasses, trees, and waste

products into ethanol, as well as other technologies
that allow the conversion oI biomass into a variety
oI synthetic Iuels.
IHPlfHfh1A1IUh ISS0fS
1he development oI bioIuels industries requires
substantial government intervention, giving policy
makers ample opportunity to both advance and
thwart a variety oI development goals. une thing is
clear: bioIuels policy should not be considered in a
vacuum, but rather in the context oI wider energy
and agriculture policies.
4. Bojuel 5ubsJes
while subsidies might be necessary Ior the early
development oI bioIuel industries, their use should
be careIully modulated and reduced over time so
they do not become the kind oI long-term subsidy
that has occurred with the oil industry in many
countries. It has been suggested that these incen-
tives be made countercyclical so that they decline as
oil prices rise, making subsidies less necessary.
B. BlenJng Requrements
8y requiring that ethanol and biodiesel be blended
with Iossil Iuels in minimal amounts to achieve air
quality goals, market development can be acceler-
ated. In some cases, however, this may result in the
shiIting oI costs Irom taxpayers to consumers. 1hese
mandates can easily be increased over time while
taxpayer subsidies are reduced, as has happened in
8razil or Cermany. ShiIting costs to consumers, es-
pecially in the case oI diesel, can have a signiIcant
welIare-reducing eIIect. uiesel is used economy-
wide, both Ior passenger and goods transport.
Policy changes must be implemented thoughtIully
to avoid problems. In the 1990s, when 8razil transi-
tioned Irom subsidies to blending requirements and
oil prices decreased, the scale oI 8razilian subsidies
needed to supply ethanol at competitive prices
became commensurately prohibitive. As the govern-
ment became unable to deliver subsidies at a scale
that would make ethanol competitive, bioIuel prices
increased as ethanol production declined, and the
values oI ethanol-only vehicles plummeted, leading
owners to suIIer ma|or Inancial losses. Hemories
oI this ma|or historical Iailure are in part driving
the current 8razilian enthusiasm Ior Iexible-Iuel
vehicles, which do not make their owners depend-
ent upon a speciIc Iuel, subsidies, or blending
requirements. In Cermany, the reduction in tax
incentives Ior biodiesel has resulted in higher prices
and subsequently lower demand Ior the Iuel.
C. Cuucty BulJng
kealizing the Iull economic beneIts oI bioIuels
development, and minimizing the risks, will depend
on building the human and inIrastructure capacity
to support it at the national level. while strong
agricultural economies are prerequisites to a strong
bioIuels industry, the bioenergy sector could beneIt
Irom eIIorts that take its speciIcities into account. A
Iew international initiatives are already seeking to
realise such beneIts:
Ilc lntcrnational 8iocncrgy Partncrslip (l8LP
sccls to cnsurc tlc dclivcry oj sustainablc,
cquitablc, and arrcssiblc biocncrgy sourrcs and
scrvircs in support oj sustainablc dcvclopmcnt,
cncrgy scrurity, povcrty rcdurtion, and rlimatc
rlangc mitigation;
Ilc 6lobal 8iocncrgy Partncrslip (68LP las tlc
mandatc oj jarilitating a global politiral
jorum to promotc biocncrgy and to cnrouragc
tlc produrtion, marlcting, and usc oj grccn
jucls, witl partirular jorus on dcvcloping
rountrics;
Issue 7 - Imlcutons jor TruJe, Ioregn Fxchunge Bulunces,
unJ Fnergy 5ecurty

Ilc 8iolucls lnitiativc oj uNCI/0 was ronrcivcd

to ojjcr a jarilitating lub jor biojucls
programmcs alrcady undcr way in a numbcr
oj institutions. lt aims to providc arrcss to sound
cronomir and tradc poliry analysis, raparity
building artivitics, ronscnsusbuilding tools, and
asscssmcnts oj tlc potcntial oj individual
dcvcloping rountrics to cngagc in tlc cmcrging
biojucls marlct;
Ilc 6lobal \illagc Lncrgy Partncrslip (6\LP las
bccn supporting and lclping dcvcloping
rountrics sct up cncrgy artion plans and assisting
witl tlc assoriatcd studics and dcmand analyscs.
lt las also startcd to providc nanrial support,
raparity building, and tcrlniral assistanrc to
cncrgy 5HLs in dcvcloping rountrics.
Section 3: Key Sustainability Issues
RFALIINC 1EF IULL FCUNUVIC BFNFII1S UI
BIUIUFLS UFvFLUPVFN1, ANU VINIVIINC 1EF
RISkS, wILL UFPFNU UN BUILUINC 1EF EUVAN
ANU INIRAS1RUC1URF CAPACI1Y 1U SUPPUR1 I1
A1 1EF NA1IUNAL LFvFL.

Issue 8 Impacts on odversty

and haturaI kesource Hanagement
Ih1kUu0C1IUh
u
ne oI the greatest beneIts oI using biomass
Ior energy is the potential to signiIcantly
reduce the greenhouse gas (CEC} emissions
associated with Iossil Iuels. (See Issue 9.} une oI the
greatest risks, however, is the potential impact on
land used Ior Ieedstock production and harvesting
(particularly virgin land or land with high conserva-
tion value}, and the associated eIIects on habitat,
biodiversity, and water, air, and soil quality. Ad-
ditionally, changes in the carbon content oI soils, or
in carbon stocks in Iorests and peat lands related to
bioenergy production, might oIIset some or all oI
the CEC beneIts.
un the other hand, bioenergy production oIIers the
potential to reduce the environmental load relative
to conventional industrialised agricultureiI, Ior
instance, Iarming practices are ad|usted to maxim-
ise total energy yield (rather than the oil, starch, or
sugar contents oI crops}, diversiIy plant varieties,
and reduce chemical inputs. 8ioenergy applications
in transportation, electricity, and combined heat
and power (CEP} also hold promise Ior reducing the
negative environmental impacts oI Iossil Iuel use in
these areas. where households have access to mod-
ern bioenergy (or any modern energy Ior that mat-
ter}, the phasing out oI traditional biomass energy
use can prevent the depletion oI natural resources
associated with wood burning and other activities.
8iogas applications also avoid pollution in the Iorm
oI organic waste that would otherwise overIow, or
Iow untreated, into the environment, aIIecting lo-
cal biodiversity and natural resources.
"8ioenergy provides us with an extraordinary
opportunity to address several challenges: climate
change, energy security and development oI rural
areas. Investments, however, need to be planned
and managed careIully to avoid generating new
environmental and social problems, some oI which
could have irreversible consequences. Heasures to
ensure sustainability oI bioenergy include match-
ing oI crops with local conditions, good agricultural
management practices and development oI local
markets that provide the energy poor with modern
energy services." Achim Steiner, Fxecutive
uirector oI uhFP
ISS0fS 1BA1 hffu 1U f AuukfSSfu
4. IeeJstock Choce, IunJ Use, unJ 5ol Heulth
uepending on the type oI crop grown, what it is re-
placing, and the methods oI cultivation and harvest-
ing, bioenergy can have negative or positive eIIects
on land use, soil and water quality, and biodiversity.
uedicated energy crops that are appropriate to the
regions where they are plantedsuch as native
perennial trees and grassescan minimise the need
Ior chemical inputs, thus avoiding some oI the
pollution associated with Ieedstock production
while also reducing water needs and providing
habitat Ior birds and other wildliIe. Perennial
grasses and short-rotation Iorestry could also
increase the soil carbon content as compared to
annual agricultural crops.
Issue 8 - Imucts on BoJversty unJ Nuturul Resource Munugement

In the Iuture, second-generation technologies that

rely on agricultural and Iorestry residues or other
Iorms oI waste could signiIcantly reduce land
requirements Ior bioIuel production. At the same
time, it is important to recognise that such residues
are necessary Ior maintaining soil and ecosystem
health, and that a certain amount must remain
on the ground. Logging residues are an important
source oI Iorest nutrients and help protect the
soil Irom rain, sun, and wind, lowering the risk oI
erosion; agricultural residues play a similar role in
Iarm Ields.
xvii
Hore research is needed to determine
how much residue can be removed saIely to avoid
degrading soil quality and reducing yields.
uepending on the Ieedstock choice and what it
is replacing, good Iarming methods can achieve
increases in productivity with neutral or even
positive impacts on the surrounding environment.
A variety oI management practices, such as the use
oI bio-char
6
, intercropping, crop rotation, double
cropping, and conservation tillage, can reduce soil
erosion, improve soil quality, reduce water con-
sumption, and reduce susceptibility oI crops to pests
and diseasethereby reducing the need Ior chemi-
cal Iertilisers and pesticides. It is important to note
that while conservation agriculture techniques
can minimise and even reverse negative
environmental impacts by stemming soil erosion
and building new soil, these beneIts are gained
only iI suIIcient soil cover, mostly Irom crop
residues, is leIt on the ground.
In addition to stemming soil erosion, conservation
agriculture techniques can help address climate
change concerns by capturing carbon in the Iorm
oI new soil organic matter. 1he potential Ior carbon
sequestration in large areas would be reduced, how-
ever, iI most oI this organic matter were converted
into bioenergy, resulting in the re-release oI the
carbon into the atmosphere. Fspecially Ior second-
generation Iuels where the entire Ieedstock product
(including crop residues} can be utilised, it might
be diIIcult to convince Iarmers to leave a certain
percentage oI the harvest on the Ield.
using perennial crops as protective buIIers or
wildliIe corridors can bring environmental beneIts
as well, including reducing chemical runoII and
providing habitat Ior birds and other wildliIe. Some
crops, such as |atropha, can actually reverse deser-
tiIcation by helping to improve the condition oI
degraded lands.
xviii
Eowever, even more-sustainable
energy crops cannot substitute Ior natural Iorests or
prairies.
xix
B. Imuct on 6russlunJs, Trocul Iorests,
unJ 0ther BoJverse Fcosystems
ultimately, the problems associated with bioen-
ergy land use (particularly oI virgin land}, including
deIorestation, biodiversity loss, soil erosion, and
nutrient leaching, will remain the most vexing and
deserve the most attention. In India, Sri Lanka, and
1hailand, wood harvesting by the urban poor has
produced a halo oI deIorestation around roads,
towns, and cities, while an estimated 400-kilom-
eter radius oI land has been cleared Ior Iuelwood
around Khartoum, Sudan.
xx
where crops are grown
Ior energy purposes, use oI large-scale mono-crop-
ping could lead to signiIcant biodiversity loss, soil
erosion, and nutrient leaching. Host models oI
environmentally sustainable agriculture are based
on multi-cropping rather than mono-cropping.
Fven varied and more-sustainable crops grown Ior
energy purposes could have negative environmental
impacts iI they replace wild Iorests or grasslands.
uther potential impacts include the eutrophication
oI water bodies, acidiIcation oI soils and surIace
waters, and ozone depletion (all oI which are as-
sociated with nitrogen releases Irom agriculture},
as well as the loss oI biodiversity and its associated
Iunctions.
xxi
Iinally, the loss oI pastoral liIestyles
Section 3: Key Sustainability Issues
6
8io-char, or
black carbon, is
generally derived
Irom charcoal
generated through
the incomplete
combustion oI
biomass

associated with shrinking grasslands, and the loss oI

Ieed production Ior domesticated and wild herbiv-
ores that depend on these lands, could have signiI-
cant negative economic and social impacts.
C. Imuct on Wuter quulty unJ 4vulublty
IAu expects that no ma|or water crisis will aIIect
irrigated agriculture at the global level by 2030, by
which time there will be a relatively small increase
in irrigation water withdrawal compared to a 1998
baseline. Eowever, severe water shortages are
already occurring at the local level, particularly in
the hear Fast and horth AIrica. Agriculture currently
uses 70 percent oI the world's (and 85 percent oI the
developing world's} available Iresh water, primarily
Ior the production oI Iood and non-Iood raw mate-
rial. kain-Ied agriculture is practised on 83 percent
oI all cultivated land and supplies more than 60
percent oI the global Iood supply, although research
indicates that use oI irrigation could more than
double the highest yields Irom rain-Ied agriculture.
1hree-quarters oI the world's irrigated land is in de-
veloping countries, where it accounts Ior about 20
percent oI all agricultural land and provides about
40 percent oI all crop production.
xxii
Hany oI the existing concerns about water use
and quality can be addressed by using water more
eIIciently, recycling more oI it Ior Iertiliser, and
digesting it Ior biogas. Although such changes take
time, IAu pro|ects that over the next 30 years, the
eIIective irrigated area in developing countries
can increase by 34 percent while relying on only
14 percent more water. 1his is possible due to the
declining shares oI water-intensive crops in agricul-
tural consumption, and the Ieasibility oI increasing
the average eIIciency oI irrigation water use over
the next 30 years.
xxiii
while this addresses concerns
about potential water availability to meet Iood and
material production needs, however, it does not ac-
count Ior bioenergy uses.
xxiv
Indeed, problems with
water availability and use may represent a limita-
tion on agricultural bioenergy production.
1he physical availability oI water as well as legal
rights and access to water will be vital issues Ior
both biomass cultivation and processing (depending
on the conversion processsome, like gasiIcation,
will use very little water}. water availability will
inIuence Ieedstock choice, the siting oI conversion
Iacilities, and other bioenergy business decisions. In
turn, these variables could inIuence the availability
oI water and associated human security.
0. Imuct on 4r quulty
Air quality problems associated with bioenergy
Ieedstock production are relatively minor and can
be reduced through such measures as shiIting Irom
petroleum diesel to biodiesel Ior operating Iarm
machinery and adopting regulations that limit or
eliminate Ield burning and other polluting prac-
tices. 1he air quality and health problems associ-
ated with traditional biomass burning Ior heating
and cooking are well known and the Iocus oI many
eIIorts around the world, as discussed in Issue 1.
Air pollution impacts Irom the use oI ethanol and
biodiesel in transportation are lower than those
Irom Iossil Iuels, and this has been one motiva-
tion Ior turning to bioIuels. 8iogas contributes to
improved air quality as well, although this occurs
more locally (e.g., reducing odours Irom human and
animal waste near waste disposal sites and residen-
tial areas}. 1he beneIts to global air quality and
climate are discussed in Issue 9.
F. Imuct oj 5econJ-6eneruton Technologes
uver time, the environmental advantages oI bioen-
ergy relative to Iossil sources will likely increase
as new and more eIIcient Ieedstock sources and
conversion technologies are developed and as crop
Issue 8 - Imucts on BoJversty unJ Nuturul Resource Munugement

yields increase. It is important to get to this Iuture

as soon as possible by moving quickly to commer-
cialise second-generation technologiessuch as
cellulosic ethanol, torriIcation, and Iischer-1ropsch
synthetic Iuels Irom gasiIed biomassthat rely
on less resource-intensive Ieedstock. 8io-power
based on second-generation technologies is also
likely to be increasingly advantageous relative to
Iossil sources.
IHPlfHfh1A1IUh ISS0fS
4. Fjjectveness oj IunJ-Use Controls
uespite the considerable challenges, models do
exist Ior mitigating many oI the risks associated with
large-scale biomass production, particularly with
regard to bioIuel Ieedstock. 1o address concerns
about biodiversity loss, Ior example, the 8razilian
state oI So Paulo requires that sugar cane produc-
ers set aside 20 percent oI their total planted area
as natural reserves.
xxv
In India, which has more
than 300 species oI oil-bearing trees, a multi-spe-
cies biodiesel programme may help to ensure
plant genetic diversity.
xxvi
And at least some palm
oil industries in Southeast Asia have promoted
wildliIe sanctuaries and green corridors to enhance
biodiversity.
xxvii
1hese eIIorts are supported at the
international level by the koundtable on Sustain-
able Palm uil, Iormed in 2004 in response to rising
concerns about the environmental impacts oI oil
palm plantations.
hevertheless, there is still a dire need Ior envi-
ronmental policies and regulations at the local,
national, and regional levelsparticularly in devel-
oping countriesto ensure that bioenergy's impacts
on land, wildliIe, and water, air, and soil quality are
minimised. uevising and enIorcing such regulations
will be a challenge, especially iI there are perceived
or real trade-oIIs between environmental sustain-
ability goals and economic viability.
B. NeeJ jor Iurther Reseurch
Hore research is needed to determine which crops
and management practices can best minimise im-
pacts and maximise beneIts. 1o date, most studies
on the impacts oI Ieedstock production have been
species and context speciIc; there is less under-
standing oI which practices are most eIIective and
least harmIul to wildliIe and surrounding ecosys-
tems under diIIerent and broader circumstances. In
addition, more research is needed on: the potential
Ior using natural pesticides and Iertilisers; the po-
tential impacts oI large-scale plantations oI oil-bear-
ing trees, such as |atropha; the potential to increase
crop yields while reducing inputs; the impacts oI
residue removal Irom cropland and Iorests (and
how much can be saIely harvested}; and the options
Ior perennial Ieedstock suitable Ior arid regions. It
is also critical to better determine iI the beneIts oI
genetically modiIed (CH} crops can outweigh their
costs. As mentioned earlier, although eIIorts are
under way, Iurther research on second-generation
biomass conversion technologies is urgently re-
quired. Any research conducted should be available
to all countries through ambitious and internation-
ally supported technology transIer schemes.
C. Potentul jor Voluntury or
MunJutory Certcuton
As global use oI biomass Ior energy increases, im-
pacts on the environment will likely also rise in the
absence oI the development and early introduction
oI standards, regulations, and eIIcient supply and
conversion technologies. International standards
and certiIcation/assurance systems are critical to
ensure that bioenergy is produced using the most
sustainable methods possible. (See 8ox 8.}
Section 3: Key Sustainability Issues

Issue 8 - Imucts on BoJversty unJ Nuturul Resource Munugement

UX 8.
BflPIh6 SHAll 0SIhfSSfS PkUu0Cf IUf0flS fkUH A6kIC0l10kAl Ahu
IUHASS wAS1fS
The 6lobul Boenergy Purtnersh j6BFPj, whch emergeJ jrom u commtment muJe by the 68 ut
the 6leneugles 5ummt n 2005, s jocusng ntully on two mun ureus: truJe unJ the sustunublty
oj boenergy. To ensure thut boenergy cun ucheve ts otentul benets, sustunublty oj the entre
ljecycle jroJucton, converson, unJ enJ-usej must be ussureJ. Thus, 6BFP urtners, n urtculur
UNFP, ure n the rocess oj Jenng sustunublty crteru unJ suggestons jor Jecson-mukers n
both nJustry unJ government thut um to reJuce rsks us the boenergy murket Jevelos. Issues jor
whch crteru wll be JeveloeJ ncluJe clmute chunge, locul ur olluton, boJversty, wuter, sol,
lunJ use, jooJ securty, unJ lubour ssues.
Ior some bioenergy sources, such as wood, existing certiIcation systems (e.g., the Iorest Stewardship Council}
can be a good starting point and reIerence Iramework. Important eIIorts are also under way by IAu, uhFP,
uhIuu, uhC1Au, and the w1u to advance the design and approval oI bioenergy certiIcation standards and
modalities. uI particular importance are criteria being developed by IAu in close cooperation with uh-Fnergy,
academia, industry, and hCus to advance understanding oI bioenergy-Iood security linkages and to help as-
sess bioenergy options quantitatively. uI particular interest Ior Iuture certiIcation and labelling schemes is the
impact oI large bioenergy pro|ects on small-scale Iarmers, employment, equity, and gender.

Issue 9 ImpIcatons for

CImate Change
Ih1kUu0C1IUh
u
ne oI the ma|or drivers oI bioenergy devel-
opment worldwide is concern about global
climate change, caused primarily by Iossil
Iuel burning, land use changes, and agriculture. 1he
use oI modern biomass Ior energy production has
the potential to signiIcantly reduce anthropogenic
greenhouse gas (CEC} emissions. 1ransportation, in-
cluding emissions Irom the production oI transport
Iuels, is responsible Ior about one quarter oI global
energy-related CEC emissions, and that share is
rising.
xxviii
Looking |ust at carbon dioxide (Cu
2
} emis-
sions in recent decades, Iossil Iuel burning (mainly
in industrialised countries} has accounted Ior 7585
percent oI global Cu
2
emissions, while deIoresta-
tion and other land-use changes (mainly in tropical
developing countries} accounted Ior 1525 percent.
1o assess the CEC balance associated with diIIer-
ent Iorms oI bioenergy, it is essential to consider
emissions throughout the Iull liIe-cycle. A better
understanding is needed to Ill gaps in knowledge
regarding liIe-cycle CEC emissions (including nitrous
oxide emissions} and other heat-trapping emissions
associated with biomass production and use.
4. Iuctors 4jjectng Net 6H6 Fmssons
Iull liIe-cycle CEC emissions oI bioenergy vary
widely based on: land use changes; choice oI Ieed-
stock; agricultural practices; reIning or conversion
process; and end-use practices. II, Ior example,
prairie grassland is converted to maize or soy,
treated with chemical Iertilisers and pesticides,
and reIned with coal and natural gas, the resulting
bioIuel could have a greater impact on the climate
over its liIe cycle than Iossil Iuels. Alternatively, iI
perennial crops replace annual crops (such as maize
now grown to produce ethanol} and are processed
with biomass energy that oIIsets coal-Ired power,
the resulting bioIuel can signiIcantly reduce CEC
emissions compared to Iossil Iuels.
In general, crops that require high Iossil energy
inputs (such as conventional Iertiliser} and valuable
(Iarm} land, and that have relatively low energy
yields per hectare, should be avoided. It is also criti-
cal to reduce iI not eliminate the harvesting oI non-
renewable biomass resources, a problem in much oI
the developing world. Eowever, even the planting
and harvesting oI "sustainable" energy crops can
have a negative impact iI these replace primary
Iorests, resulting in large releases oI carbon Irom
the soil and Iorest biomass that negate any beneIts
oI bioIuels Ior decades.
xxix
B. 6H6 ReJucton Potentul
kesearch on the net liIe-cycle CEC emissions
associated with bioenergy production and use is
still under development, and estimates vary widely
due to variations in circumstances. kesults are
highly sensitive to assumptions about land use
changes, the eIIects oI Iertiliser application, and
by-product use.
with regard to transport Iuels, the vast ma|ority
oI studies have Iound that, even when all Iossil
inputs throughout the liIecycle are accounted Ior,
producing and using bioIuels Irom current Ieed-
stock results in some reductions in CEC emissions
compared to petroleum Iuels.
xxx
1his is provided
that there is no clearing oI Iorestland or virgin cer-
rado, or draining oI peat lands that store centuries
oI carbon Irom biomass.
In the case oI electricity generation, biomass com-
bustion to displace coal can reduce CEC emissions
even Iurther than using biomass Ior transport Iuels.
Section 3: Key Sustainability Issues

Horeover, the use oI biowastes destined Ior landIlls

to generate biogas Ior heat and power production
reduces the amount oI organic waste that would
ultimately decompose and release methane, a CEC
that is 21 times more potent than carbon dioxide.
In the Iuture, "cascading" biomass over timethat
is, using biomass materials Ior various uses and
then recycling the wastes Ior energywill maximise
the Cu
2
-mitigation potential oI biomass resources.
It is possible to displace more Iossil Iuel Ieedstock,
and thus derive a Iar greater carbon beneIt, by
Irst using biomass to produce a material (such as
plastic} and subsequently using that material (at the
end oI its useIul liIe} Ior energy production. Studies
oI the climate and economic impacts oI cascading
biomass have concluded that this practice could
provide Cu
2
beneIts up to a Iactor oI Ive compared
to biomass used Ior energy alone.
xxxi
C. TruJe-ojjs: Costs unJ ImteJ Resources
Current research concludes that using biomass Ior
combined heat and power (CEP}, rather than Ior
transport Iuels or other uses, is the best option Ior
reducing CEC emissions in the next decadeand
also one oI the cheapest.
xxxii
1hus, the greatest
potential Ior reducing emissions comes Irom the
replacement oI coal rather than petroleum Iuels.
Analyses Irom many countries indicate that bioIu-
els are currently a relatively expensive means oI
reducing CEC emissions relative to other mitigation
measures, with the cost oI Cu
2
-equivalent emissions
reductions exceeding uS$163 per tonne.
xxxiii
1he one
exception is 8razil, where ethanol Irom sugar cane
is competitive with gasoline when oil prices are
above uS$50 a barrel.
xxxiv
At the same time, the Cu
2
avoided by using bioIuels
is only a part (albeit a signiIcant part} oI the societal
beneIt derived Irom transitioning to these Iuels.
while many renewable options exist to substitute
Ior coal in the generation oI heat and electricity,
bioIuels oIIer the only realistic near-term renew-
able option Ior displacing and supplementing liquid
transport Iuels. et even within the transport sector
there are more cost-eIIective options Ior reducing
carbon emissions, including investments in and
promotion oI public transportation, increased use
oI bicycles and other non-motorised vehicles, im-
provements in vehicle Iuel-eIIciency, and changes
in urban planning and land use.
xxxv
IHPlfHfh1A1IUh ISS0fS
1o minimise the CEC emissions associated with
bioenergy production, policy makers need to saIe-
guard virgin grasslands, primary Iorests, and other
lands with high nature value, and to encourage
the use oI sustainable production and manage-
ment practices Ior biomass Ieedstock. Indeed, such
policies should extend beyond biomass production
Ior energy to the agricultural and Iorestry sectors in
general.
An international certiIcation scheme needs to be
developed that includes CEC veriIcation Ior the
entire liIecycle oI bioenergy products, particularly
bioIuels. In some countries today, biomass is con-
sidered "carbon neutral" because assessments Iail to
account Ior upstream emissions. while developing
and implementing a widely accepted certiIcation
scheme will be a challenge, this should not deter
governments, industry, and other actors Irom
making the eIIort. 1he united Kingdom is now
contemplating a scheme Ior imported bioIuels
that includes the entire supply chain in emissions
Issue 9 - Imlcutons jor Clmute Chunge
1EF USF UI VUUFRN BIUVASS IUR FNFRCY
PRUUUC1IUN EAS 1EF PU1FN1IAL 1U
SICNIIICAN1LY RFUUCF AN1ERUPUCFNIC
CRFFNEUUSF CAS (CEC FVISSIUNS.

accounting, and 8elgium has already put such a

scheme into legislation.
xxxvi
Intense work is ongoing to Ill gaps in the Iull
understanding oI liIe-cycle emissions, as well as
studies that cover the Iull range oI Ieedstock and
processing pathways (e.g., biodiesel Irom palm oil
or |atropha}.
xxxvii
4. Imrovng ProJucton Fjcency
Fnergy-eIIciency improvements across the board
are essential. 1o the extent possible, particularly
in the industrial world, biomass should be used to
replace (rather than simply supplement} Iossil Iuels
Ior energy production. Substituting bioIuels Ior
petroleum can provide a Iar greater beneIt to the
global climate than producing and burning the Iuels
merely to oIIset the pro|ected increase in global
energy demand. where people still lack access to
modern energy resources, providing access to mod-
ern bioenergy is preIerable to using Iossil Iuels and
(combined with energy-eIIciency improvements}
can help reduce Iuture growth oI CEC emissions.
B. Cellulosc Fthunol ProJucton unJ 0ther
4JvunceJ Technologes
In the case oI liquid bioIuels, the greatest potential
Ior reducing CEC emissions and their associated
costs lies in the development oI second-generation
Ieedstock and Iuels, due to their potentials Ior both
large-scale production and emissions reduction.
In particular, advanced technologies that convert
lingocellulosic Ieedstock to Iuel oIIer signiIcant po-
tential to reduce transport-related CEC emissions.
Assuming oil prices remain high and ma|or break-
throughs in reducing production costs occur, it may
even be possible to achieve negative Cu
2
-abatement
costs, while providing a host oI other environmental
and social beneIts.
C. Curbon Cuture & 5toruge Potentul
8ioenergy production and use oIIer signiIcant
potential Ior carbon capture and sequestration. Ior
example, one possible by-product oI the bioIuel
conversion process is bio-char, which has been
shown to help store carbon in the soil while also
reducing soil emissions oI nitrous oxide or methane
and providing valuable Iertiliser. Conservation ag-
riculture, too, oIIers the potential to sequester sub-
stantial amounts oI carbon in the soil in the Iorm oI
organic matter; however, this practice might conIict
with bioenergy production, as this would require
converting much oI the organic matter to energy.
xxxviii
(See Issue 8 Ior more on these issues.}
Section 3: Key Sustainability Issues

A
s discussed in the previous chapters, the
bioenergy Ield, with its varying biomass
sources, conversion technologies, and
contexts (ecological, social, and institutional}, is
complex and requires a range oI criteria and
approaches. 8ut this complexity should not restrain
action. 1he movement towards more sustainable
energy systems that draw Irom all potential
renewable sources, including bioenergy, is a
matter oI urgency.
uver-generalising about the Iuture oI bioenergy
would be both Iutile and disrespectIul to readers, in
particular decision-makers. 1his concluding section
does not attempt to provide prescriptive actions,
but rather to point to key areas that merit attention
at the national and international levels. It suggests
a Iramework Ior decision-makers to encourage the
sustainable production and use oI modern bioen-
ergy in order to achieve maximum beneIts to the
poor and to the environment.
8ecause the point oI convergence oI the work oI
uh-Fnergy members is at the country level, this
chapter Iocuses Irst at the national level, with the
understanding that national actions have global
impact. 1he chapter then addresses action at the
international level, since uh-Fnergy recognises
the importance oI international eIIorts such as the
CSu and is aware oI the potential global impact oI
bioenergy.
hA1IUhAl lfvfl
At the national level, knowledge and policies are key
in providing and sustaining a solid base Ior action in
the bioenergy Ield. 1he Iollowing points are critical:
knowIedge
kesource 8ase: 1o be in a position to develop
bioenergy actions and programmes, it is critical to
understand the potential oI biomass energy in a
particular country or region. 1his is not an easy task,
however, as it involves envisioning Iuture agronomic
opportunities, agricultural practices, and conversion
technologies. while some assessment methodologies
are available, others are being developed that allow
Ior a clearer vision oI the type and scale oI Ieedstock
at hand. Key areas oI knowledge include:
Currcnt produrtion oj agrirultural produrts witl
biocncrgy potcntial, as wcll as asscssmcnt oj
possiblc cncrgy usc and cxpansion oj produrtion;
Currcnt land uscs, obtaincd witl tlc lclp oj
survcys, mapping, and 6l5;
Produrtion potcntial in rclabilitatcd marginal
and dcgradcd lands;
/ltcrnativc uscs oj jccdstorl as wcll as rurrcnt
dcmand and uscs oj agrirultural and jorcstry
rcsiducs and byprodurts; and
/vailability oj watcr and otlcr rcsourrcs.

1echnoIogies: uetermining the best bioenergy
production, conversion, and utilization technologies
is complex (and potentially increasingly restricted
inIormation}. 8uilding a national research and
technical capacity can save expensive imported
knowledge, and collaboration among countries
can bridge inIormation gaps. Key areas oI
knowledge include:
/vailability and arrcssibility oj modcrn
tcrlnologics jor biocncrgy ronvcrsion and usc;
Lijcryrlc analysis mctlodology and tools to
asscss biocncrgy systcms, inrluding tlcir
cronomirs, cncrgy balanrc, rarbon ows, and
lcalagc cjjcrts.
Section 4: Looking Iorward

5takehoIders and Capacities: Haintaining the

interdisciplinarity oI bioenergy systems is very
important. Actors in this Ield include the energy,
agriculture, Iorestry, environment, rural develop-
ment, and industry and trade sectors. within these,
there are players related to local and national gov-
ernments, Iarmer organizations, and hCus and civil
society. Key areas oI knowledge include:
kcy stalcloldcrs in national biocncrgy cjjorts;
lnjormation gcncration and ow among
tlcsc varying scrtors;
Caparitics rclatcd to carl stalcloldcr to lclp
promotc injormation ow, raparity building
(scc bclow, and rourscs and rurrirula.
Lconomics of Production and Consumption:
Assessing the relative economic competitiveness oI
bioenergy at the local, regional, and national levels
is criticalbased on the resource base, available
technologies, and stakeholder capacities. Key
aspects include:
Iypc oj biocncrgy and tcrlnology;
Costs arross tlc supply rlain: raw matcrial
produrtion or gatlcring, prorcssing, transport,
and injrastrurturc modirations (ij any;
\aluc oj byprodurts;
Loral rosts oj altcrnativc cncrgy sourrcs;
0pportunity rosts oj land, labour, and
watcr uscd;
Honctizing cnvironmcntal cxtcrnalitics.
1he above set of information and knowIedge is
the backbone to decision-making since it pro-
vides the physicaI, sociaI, and economic basis for
action. lt is cIear that the dynamics of the energy
and agricuIture contexts and the resuIts of poIicy
and technicaI decision-making wiII require the
revisiting and updating of this materiaI reguIarIy.
PoIicy
AgricuIture and lood 5ecurity: Fxpanded bioen-
ergy use could aIIect household and national Iood
security in positive or negative ways, depend-
ing on the situation. All Iour dimensions oI Iood
securityavailability, access, stability, and utiliza-
tionrequire policy attention. Key agriculture and
Iood security issues to consider when establishing
the policy Iramework Ior bioenergy include:
kisls to jood scrurity oj various biocncrgy
srcnarios and possiblc ways to avcrt tlcm;
Positivc imparts oj cxpandcd biocncrgy duc to
divcrsiration, ncw rural injrastrurturc,
and jobs;
Potcntial bcncts or larm to ajjcrtcd
populations;
Prcscnt and juturc prircs, marlcts, and subsidics;
Potcntial cxport marlcts jor possiblc surpluscs;
lmparts oj scrondgcncration systcms on tlc
strurturc oj agrirulturc;
lntcrnational roopcration opportunitics in
biocncrgy produrtion and tradc.
Lnergy: Ior most oil-importing developing coun-
tries, bioenergy represents a real option to reduce
Ioreign exchange needs; Ior tropical nations, it may
represent the opening oI new and diversiIed mar-
kets. 8ut these opportunities will not happen unless
policies are in place to eliminate barriers and pave
the way to social, environmental, and economic
beneIts Ior all stakeholders. Key energy issues to
consider when establishing the policy Iramework Ior
bioenergy include:
8iocncrgy's viability as an cncrgy option and its
prcscnt rolc in tlc national cncrgy balanrc;
luturc rolc oj biocncrgy undcr various srcnarios;
Icrlnologiral options in tlosc srcnarios;
knowlcdgc and cxpcrtisc availablc in tlc
rountry;
Section 4: Looking Iorward

8iocncrgy's rolc in cncrgycjricnry polirics;

Costs and prircs oj biomassbascd cncrgy rarricrs;
Currcnt taxation and subsidy situation in liglt oj
juturc biocncrgy srcnarios.
5upport to 8ioenergy [lncIuding liscaI|: Ior
bioenergy sources that require government
supportmost prominently liquid bioIuels
Iscal and other implications should be careIully
considered. Key issues to consider include:
Lronomir and sorial rosts and bcncts oj
dijjcrcnt typcs oj support: subsidics, import
tarijjs and otlcr import rcstrirtions, and
ronsumption mandatcs;
Hagnitudc and typcs oj subsidics: tax rcdurtion,
tax rrcdits, loan guarantccs, subsidiscd rrcdits,
inromc tax rcdurtion, tax lolidays, and rasl
subsidics linlcd to produrtion lcvcls;
Nct loss in govcrnmcnt rcvcnuc and wlat otlcr
govcrnmcnt programmcs will bc rut as a rcsult,
wlcrc additional taxcs may bc lcvicd to ojjsct tlc
loss in rcvcnuc, and altcrnativc uscs oj govcrn
mcnt subsidics;
lmpart oj a ronsumption mandatc on domcstir
jucl prircs in timcs oj supply slortagc duc to
wcatlcr or pcstrclatcd rrop jailurcs;
wcljarc impart ij cncrgy prircs risc as a rcsult;
Lronomir and sorial bcncts oj inrrcascd
biocncrgy produrtion and/or ronsumption as
a rcsult oj govcrnmcnt support.
kuraI beveIopment: 8ioenergy should open new
opportunities Ior rural development, but not at
the cost oI Iood security or environmental damage
that would undermine that development. Key rural
development issues to consider when establishing
the policy Iramework Ior bioenergy include:
lntcgration oj biocncrgy dcvclopmcnt into
cxisting rural dcvclopmcnt polirics and
programmcs;
Numbcr oj jobs to bc rrcatcd undcr tlc various
biocncrgy srcnarios;
uality, sajcty, and lcaltl rlarartcristirs oj
tlcsc ncw jobs;
lmpart on rural dcvclopmcnt (dctcrmincd by
cstablisling basclincs and indirators;
lnrorporation oj tlcsc indirators into widcr
cjjorts to asscss sustainability oj biocncrgy
artivitics;
Honitoring and asscssmcnt oj ncw invcstmcnts
duc to biocncrgy cxpansion.
Land 0se: using biomass Ior energy production is
only diIIerent Irom other agricultural land uses in
that it is expanding at a rapid rate and involves new
actors. Key land-use issues to consider when estab-
lishing the policy Iramework Ior bioenergy include:
Protcrting smallsralc jarmcrs jrom loss oj land
duc to prcssurcs jrom largcsralc produrcrs;
kcspcrt jor and protcrtion oj land tcnurc riglts;
usc oj injormcd dcrisionmaling" and jull
partiripation oj stalcloldcrs wlcn dctcrmining
landusc rlangcs;
/sscssing cxisting landusc polirics in liglt oj
potcntial cxpandcd biocncrgy usc.
Lnvironment: Critical natural systems could
either be greatly enhanced or Iurther degraded by
expanded modern bioenergy production; it is thus
vital to assure sustainable production practices. Key
sustainability issues to consider when establishing
the policy Iramework Ior bioenergy include:
lmpart asscssmcnts;
Lmissions monitoring and rcdurtion;
8iodivcrsity protcrtion;
watcr usc managcmcnt;
5oil lcaltl maintcnanrc.

lndustry: 1he private sector will play a central role

in the development oI new and expanded bioenergy
sources. Key industry players include:
/groindustry, wlirl will gain in importanrc as
it transitions to providing cncrgy in addition to
jood and jccd;
lorcstry industry, wlirl will gain ncw marlcts,
ncw valucrrcation opportunitics jor its wastcs
and lowvaluc timbcr, and cnlanrcd srrutiny as
jorcsts arc morc intcnsivcly managcd;
Lncrgy industry, inrluding cstablislcd
clcrtririty and jucl providcrs wlo arc rcntral to
cncrgy distribution, as wcll as largcsralc
invcstors in ncw cncrgy and jucl gcncration
raparity;
5mall and mcdiumsizcd cntcrpriscs, wlirl will
bc rritiral to tlc arlicvcmcnt oj dcvclopmcnt
goals assoriatcd witl biocncrgy provision.
kesearch and beveIopment: An appropriate role
oI the government is to Iund research and develop-
ment that has public-good aspects, including basic
scientiIc research with no immediate commercial
applications. Policy questions include:
ldcntijying biocncrgy nccds in tlc spcrir rountry
rontcxt;
ldcntijying wlcrc tlc k0 rommunity in tlc
rountry las romparativc advantagc;
kanling prioritics so as to bring onlinc as rapidly
as possiblc tlosc tcrlnology options witl tlc
grcatcst cnvironmcntal and sorial bcncts, as
wcll as tlc bcst rlanrcs oj bcroming
rommcrrially rompctitivc;
ldcntijying poliry nccds and arcas jor poliry
rcscarrl.
whiIe the above areas for poIicy deveIopment are
highIy reIevant, even more important is the inter-
action and integration of these poIicies. 8ioener-
gy can give rise to important trade-offs between
different poIicy goaIs. unIy by carefuIIy assessing
these trade-offs and integrating poIicies for Iand
use, agricuIture, and energy-and aIigning them
with poIicies for ruraI deveIopment, transport,
and hnance-can bioenergy poIicies be effective-
Iy designed. And onIy through a convergence of
biodiversity, 6B6 emissions, and water-use poIi-
cies can bioenergy hnd its proper environmentaI
context and agricuIturaI scaIe.
Action - 5ome uptions
beveIop intersectoraI pIans and programmes on
bioenergy. 1his includes:
ldcntijying biocncrgy options suitablc jor tlc
rountry and ranling tlcm in ordcr oj grcatcst
cnvironmcntal and sorial bcncts and potcntial
rommcrrial rompctitivcncss;
ldcntijying k0 nccds jor botl poliry and
tcrlnology innovations
cstablisling normativc and lcgislation
jramcworls;
lormulating projcrts, wlirl arc rritirally
important at tlis stagc in tlc dcvclopmcnt oj
biocncrgy. 0ntlcground cxpcricnrc in a varicty
oj rontcxts and tlc disscmination oj lcssons
lcarncd arc ncrcssary to jostcr tlc sustainablc
growtl oj tlcsc industrics;
0cvcloping intcrscrtoral roopcration among
all scrtors involvcd and ajjcrtcd by biocncrgy.
5upport k&b for bioenergy, incIuding:
Carrying out poliry rcscarrl jor biocncrgy,
inrluding appropriatc jorms oj govcrnmcnt
support, idcntiration oj barricrs to uptalc, and
poliry rcsponsc to tlc barricrs;
ldcntijying arcas oj uniquc intcrcst in tlc
dcvclopingrountry rontcxt (jor cxamplc, usc oj
straiglt plant oil in stationary cngincs in rcmotc
Section 4: Looking Iorward

arcas jor clcrtririty gcncration and junding k0,

as appropriatc;
larilitating rollaboration among rcscarrlcrs
nationally and intcrnationally.
laciIitate transfer of technoIogies and sharing of
information, incIuding:
kcduring bordcr barricrs to imports oj
tcrlnologics and matcrials nccdcd;
Iapping into modcrn tcrlnology injormation
sourrcs.
8uiId capacity of and educate participating deci-
sion-makers, incIuding:
kural organization mcmbcrs and jarmcrs/
produrcrs;
Poliry malcrs;
lnvcstors and nanricrs;
Ilc publir and ronsumcrs;
/radcmir and rcscarrl rommunitics;
Lntrcprcncurs;
N60s.
8uiId capacity in the foIIowing areas:
Hanagcrial slills;
Icrlniral slills;
Iradcrclatcd issucs;
Harlcting and publir outrcarl;
Ncgotiation and invcstmcnt.
Provide hnanciaI support, incIuding:
linanrial srlcmcs at various lcvcls, inrluding
jor smallsralc produrcrs;
utilizing mirronanrc and otlcr innovativc
mcrlanisms;
Providing publir scrtor loan guarantccs and otlcr
rislmitigation mcrlanisms to cnablc morc
privatc invcstmcnt in ncw tcrlnologics;
Lnabling publirprivatc partncrslips.
Ih1fkhA1IUhAl lfvfl
1he International 8ioenergy PlatIorm (I8FP} has not-
ed that, "8ioenergy requires a multidisciplinary and
global approach iI it is to play the key role expected
by stakeholders Irom the energy, agriculture, and
environment sectors." with this in mind, uh-Fnergy
proposes the Iollowing steps towards sustainable
bioenergy development at the global level:
ldcntijy, dcvclop, and monitor tlc qualitativc and
quantitativc implirations oj cxpandcd biocncrgy
dcvclopmcnt jor lcy scrtors, inrluding agrirulturc,
industry, lcaltl, cnvironmcnt, and tradc;
Promotc intcrnational rcscarrl on tlc sorial,
sricntir, tcrlnologiral, cronomir, poliry, and
cnvironmcntal issucs guiding biocncrgy
dcvclopmcnt;
Lnrouragc additional rcscarrl and grcatcr
slaring oj tcrlnology dcvclopmcnt by tlc
ronrcrncd stalcloldcrs, inrluding privatc
scrtor cntitics, and maling grcatcr usc oj cxisting
intcrnational ronsultativc arrangcmcnts,
inrluding tlc Consultativc 6roup on lntcrnational
/grirultural kcscarrl;
Promotc tlc sound dcvclopmcnt and roordination
oj rurrcnt injormation systcms on biocncrgy;
Lnrouragc tlc Partics to tlc Convcntions on
8iologiral 0ivcrsity and on Combating
0cscrtiration to ronsidcr opportunitics jor
sustainablc rultivation and utilization oj
cncrgy rrops;

Lstablisl intcrnationally agrccd standards and

otlcr rcrtiration modcls jor produrtion,
ronvcrsion, usc, and tradc oj biocncrgy systcms
to protcrt botl soricty and tlc cnvironmcnt;
xxxix
0cvclop sustainability rritcria and analytiral
tools to bc mainstrcamcd into projcrts and
programmcs;
Lstablisl mctlodologics undcr tlc kyoto
Protorol's Clcan 0cvclopmcnt Hcrlanism jor
tlc asscssmcnt oj biocncrgy systcms, inrluding
scrondgcncration tcrlnologics; and
Promotc intcrnational transjcr oj tcrlnologics,
cxpcrtisc, and cxpcricnrc in biocncrgy bctwccn all
rountrics, in botl tlc industrialiscd and
dcvcloping worlds.
1he importance and uniqueness oI bioenergy, the
array oI issues it brings together, and the relatively
limited knowledge on how to tackle these, plus the
combination oI political, economic, and environ-
mental interests in bioenergy development and
expansion, have resulted thus Iar in a rather elusive
consensus at the national and international levels.
It is hoped that the present uh-Fnergy publication
can contribute to the Iurther mapping oI a
multi-stakeholder approach to bioenergy Ior
sustainable development.
Section 4: Looking Iorward

i International Fnergy Agency, world Lncrgy 0utlool 2006

(Paris: 2006}.
ii A. Kumar and }.P. Painuly. 8ased on discussions
with stakeholders during work on the approach paper,
"Catalyzing Iinancing Harket Ior 8ioIuel uils in South
India," 2005.
iii world Eealth urganization, lucl jor Lijc: housclold
Lncrgy and hcaltl (Ceneva: 2006}; Shv, "8iogas Program
hominated Ior the Fnergy Clobe Award," 12 uecember
2006; Shv, "Hinister veerman visits 8iogas Iarmers in
vietnam," 29 uctober 2006.
iv K. Fricsson et al., "8ioenergy Policy and Harket
uevelopment in Iinland and Sweden," Lncrgy Poliry,
vol. 32 (2004}.
v Ibid.
vi S. Kartha et al., /dvanring 8iocncrgy jor 5ustainablc
0cvclopmcnt. 6uidclinc jor Poliry malcrs and lnvcstors.
\olumcs l, ll, and lll (washington, uC: world 8ank Fnergy
Sector Hanagement Assistance Program (FSHAP}, April
2005}, p. 160; 8iomass users hetwork, /n 0vcrvicw oj
5ugarranc Cogcncration in 5ix Ccntral /mcriran Countrics
(San }ose, Costa kica: 8uh kegional uIIce Ior Central
America, 1997}.
vii S. Kartha and F.u. Larson, 8iocncrgy Primcr.
Hodcrnizcd 8iomass Lncrgy jor 5ustainablc 0cvclopmcnt
(hew ork: uh uevelopment Programme, 2000}, p. 26.
viii I.u. Licht, world Ltlanol 8iojucls kcport, 28
Iebruary 2007 and 2 Harch 2007; v. 1homas and A.
Kwong, "Fthanol as a Lead keplacement: Phasing uut
Leaded Casoline in AIrica," Lncrgy Poliry, vol. 29 (2001}.
ix Kartha and Larson, op. cit. note 7, p. 160.
x I.u. Licht, world Ltlanol 8iojucls kcport, 24 Iebruary
2003.
xi uh-Fnergy, Ilc Lncrgy Clallcngc jor /rlicving tlc
Hillcnnium 0cvclopmcnt 6oals (hew ork: 2005}.
xii F. 8urnes et al., "Fconomic and Policy Implications oI
Public Support Ior Fthanol Production in CaliIornia's San
}oaquin valley," Lncrgy Poliry, vol. 33 (2005}.
xiii 8osch and Siemens Eome Appliances Croup, "8osch
and Siemens Eome Appliances Croup Presents an
Fcological Plant uil Stove Ior ueveloping and Fmerging
Countries," press release (Hunich: 4 uctober 2006}; 8osch
and Siemens Eome Appliances Croup, "Protos: 1he Plant
uil Stove" (Hunich: 2006}; F. uherek, "A Plant uil Stove Ior
ueveloping Countries," 6lobal Clangc Hagazinc jor 5rlools
10 September 2006; v. Labro, "Stove Iueled by '1uba-tuba'
Launched in Leyte," Plilippinc 0aily lnquircr, 21 April 2006.
xiv }. woods, "1he Potential Ior Fnergy Production using
Sweet Sorghum in Southern AIrica," Lncrgy jor 5ustainablc
0cvclopmcnt, Harch 2001, pp. 3138.
xv S. Karekezi et al., "1raditional 8iomass Fnergy:
Improving Its use and Hoving to Hodern Fnergy
use," 1hematic 8ackground Paper Ior the ConIerence
kenewable Fnergies, 8onn, Cermany, 2004.
xvi }. Sacerdote and u. Herli, "Irum Social vai mostrar
impactos sociais do biodiesel para a Irica," /gnria
8rasil, 19 }anuary 2007; "8iodiesel no Eaiti," Lstado dc
Hinas, 2 }anuary 2007; 8iopact, "8razil and uK to develop
ethanol pro|ect in AIrica," 6 September 2006; 8iopact,
"Irance signs bioIuel cooperation pact with 8razil,
Caribbean and AIrica," 11 }une 2006; "8razilian 8lueprint
Ior higerian 8ioIuels Sector," /jriran kcvicw oj 8usincss
and Icrlnology, }uly 2006; "Covernment oI Halawi
announces increased cooperation with India and 8razil to
develop bioIuel industry in search Ior oil independence,"
0aily Iimcs Halawi, 25 uctober 2006.
xvii Kirsten wiegmann and uwe k. Iritsche, with 8erien
Flbersen, Lnvironmcntally Compatiblc 8iomass Potcntial
jrom /grirulturc (uarmstadt: ko-Institut, 2006}.
xviii Hali-Iolkecenter, "1he }atropha Plant as a 1ool
Ior Combating uesertiIcation, Poverty Alleviation, and
Provision oI Clean Fnergy Services to Local women"
(8amako, Hali: Hay 2004}.
xix worldwatch Institute, 8iojucls jor Iransport: 6lobal
Potcntial and lmplirations jor Lncrgy and /grirulturc
(London, uK: Farthscan, 2007}.
xx India, 1hailand, and Sri Lanka Irom Fmily Hatthews
et al., Ilc Pilot /nalysis oj 6lobal Lrosystcms: lorcst
Lrosystcms. (washington, uC: world kesources Institute
(wkI}, 2000}; Khartoum Irom 8usiness in AIrica, "Fnergy in
AIrica: Is 1here Fnergy Ior All?" 4 hovember 2005, p. 1.
xxi See, Ior example: Harkus uuirin et al., "Cu
2
Hitigation
through 8ioIuels in the 1ransport Sector: Status and
Perspectives, Hain keport" (Eeidelberg: Institute Ior
Fnergy and Fnvironmental kesearch, August 2004} and
}. Calzoni et al., "8ioenergy Ior Furope: which unes Iit
8est? A Comparative Analysis Ior the Community," Iunded
by the Furopean Commission in the Iramework oI the
IAIk Programme (Eeidelberg: Institute Ior Fnergy and
Fnvironmental kesearch, hovember 2000}.
xxii water and irrigation data Irom uh Iood and
Agriculture urganization (IAu}, Crops and 0rops: Haling
tlc 8cst usc oj watcr jor /grirulturc (kome: 2002}.
Section 5: Source Haterial and
Iurther keading

xxiii Ibid.
xxiv 1heodor Iriedrich, Crop and Crassland Service (ACPC},
uh Iood and Agriculture urganization (IAu}, reviewer
comments, 13 }anuary 2007.
xxv worldwatch Institute, op. cit. note xix.
xxvi Ibid.
xxvii Ibid.
xxviii Kevin A. 8aumert, 1imothy Eerzog, and }onathan
Pershing, Navigating tlc Numbcrs: 6h6 0ata and Climatc
Poliry (washington, uC: wkI, 2005}; Intergovernmental
Panel on Climate Change, working Croup III, lPCC Ilird
/sscssmcnt kcport, Climatc Clangc 2001: Hitigation
(Cambridge: Cambridge university Press, 2001}.
xxix worldwatch Institute, op. cit. note xix.
xxx H.A. Flsayed, k. Hatthews, and h.u. Hortimer,
"Carbon and Fnergy 8alances Ior a kange oI 8ioIuels
uptions," prepared Ior uK uepartment oI 1rade and
Industry Sustainable Fnergy Programmes (London: Harch
2003}; worldwatch Institute, op. cit. note xix.
xxxi v. uornburg and A.P.C. Iaai|, "Cost and Cu
2
-Fmission
keduction oI 8iomass Cascading: Hethodological Aspects
and Case Study oI SkI Poplar," Climatir Clangc, August
2005.
xxxii worldwatch Institute, op. cit. note xix.
xxxiii Ibid; L. Iulton et al., 8iojucls jor Iransport: /n
lntcrnational Pcrspcrtivc (Paris: International Fnergy
Agency, 2004}.
xxxiv H. Ko|ima and 1. }ohnson, Potcntial jor 8iojucls jor
Iransport in 0cvcloping Countrics (washington, uC: world
8ank FSHAP, uctober 2005}.
xxxv worldwatch Institute, op. cit. note xix.
xxxvi Ibid.
xxxvii Ibid.
xxxviii Iriedrich, op. cit. note xxiv.
xxxix uhC1Au uivision on International 1rade
and Commodities (uI1C}, 1rade, Fnvironment and
uevelopment 8ranch (1Fu}, Ilc Lmcrging 8iojucls Harlct:
kcgulatory, Iradc and 0cvclopmcnt lmplirations (hew
ork and Ceneva: 2006}.
Section 5: Source Haterial and
Iurther keading

hotes

hotes
61 61
UN-Energy
uNLncrgy is tlc prinripal intcragcnry mcrlanism in tlc cld oj cncrgy tlat lclps cnsurc (a
rolcrcnrc in tlc uN systcm's multidisriplinary rcsponsc to w550; and (b rollcrtivc cngagcmcnt
on nonuN stalcloldcrs.
1he Iollowing agencies, programmes and organizations
constitute the membership oI uh-Fnergy:
Fconomic Commission Ior AIrica ................................................................. www.uneca.org
Fconomic Commission Ior Furope ............................................................... www.unece.org
Fconomic Commission Ior Latin America and the Caribbean .......................... www.eclac.cl
Fconomic and Social Commission Ior Asia and the PaciIc ....................... www.unescap.org
Fconomic and Social Commission Ior western Asia ................................. www.escwa.org.lb
Iood and Agriculture urganization oI the united hations ............................... www.Iao.org
International Atomic Fnergy Agency ............................................................... www.iaea.org
united hations Euman Settlements Programme (EA8I1A1} .................. www.unhabitat.org
united hations ConIerence on 1rade and uevelopment ............................ www.unctad.org
united hations uevelopment Programme .................................................... www.undp.org
united hations Fducational, ScientiIc and Cultural urganization ............. www.unesco.org
united hations Fnvironment Programme ..................................................... www.unep.org
united hations Iramework Convention on Climate Change ........................ www.unIccc.int
united hations Industrial uevelopment urganization ................................. www.unido.org
united hations International kesearch and 1raining Institute
Ior the Advancement oI women (IhS1kAw} .........................................www. un-instraw.org
world Eealth urganization .............................................................................www.who.org
world Heteorological urganization ................................................................ www.wmo.ch
world 8ank .......................................................................................... www.worldbank.org
uepartment oI Fconomic and Social AIIairs ................................................ www.un.org/esa
ChieI Fxecutives 8oard Secretariat ............................................................ ceb.unsystem.org