Bogor, Indonesia — At the beginning of the 21st century, there was tremendous optimism about the potential of biofuels to boost energy security, reduce carbon emissions and improve rural livelihoods. But emerging research by the Center for International Forestry Research paints a less rosy picture - saying the social and economic impacts resulting from both industrial and small-scale production has been mixed.
In many parts of the world, only a small proportion of deforestation is actually attributable to the biofuel sector, because crops such as soy and palm oil actually mostly supply the food and feed markets.
"The portion of biofuel impacts on direct deforestation is difficult to measure and depends on the supply and demand conditions and the type of crop you are talking about," said Pablo Pacheco, a senior CIFOR scientist, during a presentation at the Second Global Conference on Agricultural Research for Development (GCARD2) held in Uruguay last month.
"This is because the biofuel feedstock crops do not necessarily grow under dedicated plantations for biofuel production and often only a small portion of that supply, targets the biofuel market."
However the environmental costs of biofuels in many parts of the world cannot be denied, he said.
"The impacts of biofuels are very different in different parts of the world depending on how developed the biofuel markets are and the land uses on which that production tends to expand. For example, we found the expansion of biofuel feedstock by industrial scale investment tends to place higher pressure on forests when related to oil palm in Indonesia than to soy in Brazil."
A recent CIFOR report summarises the findings from a three year research project looking for ways to address these new challenges, including putting in place stronger regulations on large-scale producers, more support for smallholder producers, legal protection of customary land users and helping poor rural communities gain better access to markets.
The research showed that workers on industrial-scale plantations in Brazil, Malaysia and Indonesia, generally reported improvements in their living conditions. They had steady work, access to social services and better incomes - but the total number of people employed remained low.
The lack of regular cash incomes in rural areas meant that the impacts of formal employment tended to be viewed as positive among those employed by industrial scale plantations. Benefits included increases in income, improved social services and regular incomes. However, in some cases employees faced declining livelihood conditions associated with the shift from traditional diversified livelihood activities to waged labor.
Households that lost land or resources to companies and contracted growers were hardest hit, the study found. In Ghana, Zambia and Indonesia, for instance, the lack of land tenure security meant they could not fall back on rice farming, harvesting fruit or other agricultural-based activities that had sustained them in the past. And no schemes were put in place to compensate them for the loss of these livelihood opportunities.
Small-scale feedstock growers also saw both gains and losses.
On the positive side, 55 to 79 percent of workers in Indonesia from selected plantations reported increased incomes that often resulted in improved access to food. In Malaysia, respondents also reported high economic returns, though they often suddenly found themselves dependent on oil palm as their main and sometimes only source of income.
Others fared less well.
In Zambia, growers of Jatropha - still an emerging industry - struggled because of uncertainties related to production, business models and an emerging market. They often had to bear the costs of expanding plantations.
And Jatropha farmers in Mexico struggled with some of the same issues.
Also hurting small-scale farmers were high transaction costs. The price of land also went up, and is increasingly being concentrated in the hands of a wealthy few (who have benefited most from the biofuel industry.)
Environmental costs of biofuel production
Energy insecurity together with commitments made by governments and regional authorities - including the European Union and the United States - to increase the consumption of renewable energy resources contributed to the biofuels boom some years ago.
"Bioenergy was perceived in the early days as providing opportunities to mitigate climate change by reducing green house gas emissions," said Andrew Wardell, Director of the Forest and Governance Programme at CIFOR.
"But over the last three, four, five years, with the early experience, many new challenges have emerged."
The biggest, perhaps, was the clearance of forests to make way for plantations for palm oil, soy, sugar cane and corn.
On October 17th, the EU released a series of new rules to account for these indirect greenhouse gas emissions.
"Climate-wise, some of the biofuels [receiving EU subsidies] are as bad as, or even worse than the fossil fuels that they replace" said Connie Hedegaard, EU Commissioner for Climate Action, adding that indirect land-use changes were largely to blame.
Measures are now being considered that would prevent the EU from providing incentives for the continued displacement of food crops for fuel.
But because most of the production relates to the conventional production of crops that can also be used for cooking, only a small proportion of deforestation is actually attributable to the biofuel sector per se, the study acknowledged.
"We are going to keep looking at this issue during 2013 to have more accurate estimates and understanding about the trends in the supply and demand side," Pacheco said.
The project "Bioenergy, sustainability and trade-offs: Can we avoid deforestation while promoting biofuels?" was financed by the European Commission. The research was conducted in Brazil, Mexico, Ghana, Zambia, Indonesia, and Malaysia.