european commissionec.europa.eu/europeaid/what/development-policies/... · assessing the impact of...

,––––

The European Union’s Framework Contract Commission 2011Lot

Assessing the impact of biofuels

production on developing countries

from the point of view of Policy

Coherence for Development

This project is funded by

The European Union

ean Union’s Framework Contract Commission 2011Lot 1 - Contract N° 2012/299193





Final report

February 2013

This project is funded by

The European Union

A project implemented by

AETS

ean Union’s Framework Contract Commission 2011





A project implemented by

Assessing the impact of biofuels production on developing countries from the point of view of Policy Coherence for

Development – Final Report

European Commission

Assessing the impact of biofuels production on developing

countries from the point of view of Policy Coherence for

Development

Contract N° 2012/299193

FWC COM 2011 - Lot 1 – Studies and Technical Assistance in all

Sectors

Final report

February 2013

Team composition:

Demba Diop

Maria Blanco

Alessandro Flammini

Michel Schlaifer

Magdalena Anna Kropiwnicka

Martin Mautner Markhof

The contents of this publication are the sole responsibility of AETS and can in no way be taken

to reflect the views of the European Union



AETS Consortium – February 2013

Table of Contents

EXECUTIVE SUMMARY ___________________________________________________________________ 1

INTRODUCTION _________________________________________________________________________ 7

SECTION 2: BACKGROUND _______________________________________________________________ 9

2.1 OUTLINES OF THE OBJECTIVES AND EXPECTED RESULTS OF THE PROJECT _________________________ 9 2.2 DESK STUDY PHASE _________________________________________________________________ 9 2.3 FIELD VISIT ______________________________________________________________________ 10

SECTION 3: THE GLOBAL CONTEXT OF BIOFUELS DEVELOPMENT AND IMPLICATIONS FOR

DEVELOPING COUNTRIES ___________________________________________________________ 11

3.1 BIOENERGY FEEDSTOCK PRODUCTION PRACTICES AND CONVERSION INTO BIOFUELS ______________ 11 3.1.1 Characterisation of the feedstocks ______________________________________ 11 3.1.2 Bioenergy feedstock production practices ______________________________ 13 3.1.3 Biofuel production methods ____________________________________________ 15 3.1.4 Biofuels blending _______________________________________________________ 18

3.2 BIOFUEL POLICIES WORLDWIDE ______________________________________________________ 20

3.3 CURRENT TRENDS AND STATISTICAL REVIEWS OF BIOFUEL PRODUCTION IN DEVELOPING COUNTRIES ___ 23

SECTION 4: EVALUATION OF THE ECONOMIC IMPACTS OF THE PRODUCTION OF BIOFUELS

IN DEVELOPING COUNTRIES ________________________________________________________ 26

4.1 TRADE PATTERNS OF BIOFUELS _______________________________________________________ 26 4.1.1 Trade flows for biofuels and related feedstocks: recent trends and

projections ____________________________________________________________ 26

4.1.2 Regional trade arrangements and South-South cooperation ______________ 29 4.1.3 Biofuels and food prices on an international, regional and local level _____ 29 4.1.4 Typology of the investors and business strategies behind biofuel

investments ____________________________________________________________ 34 4.2 POTENTIAL ECONOMIC GAINS FROM BIOFUELS IN DEVELOPING COUNTRIES ALONG THE VALUE

CHAIN _________________________________________________________________________ 38

4.3 STATE OF THE DEVELOPMENT OF THE AGRICULTURE AND INDUSTRIAL SECTOR _____________________ 39 4.3.1 State of the development of the biofuel industry and scenarios ___________ 39 4.3.2 The potential and the reality for a biofuels industry in Africa _______________ 45

4.4 IMPACTS OF BIOFUELS PRODUCTION AT LOCAL LEVEL ______________________________________ 47 4.4.1 Potential impacts at household levels and on small-scale farmers _________ 47 4.4.2 Economics of plantation scale and small holder approaches _____________ 51

4.4.3 Job creation ___________________________________________________________ 53 4.4.4 Tax and investment environment ________________________________________ 58

4.5. IMPACTS ON LAND TENURE SYSTEMS __________________________________________________ 59 4.5.1 Land Tenure Systems and Governance Challenges ______________________ 59 4.5.2 Large scale land acquisitions and land pressures _________________________ 61

4.6 ENERGY ACCESS AND SUPPLY SECURITY ________________________________________________ 67

SECTION 5: ENVIRONMENTAL IMPACTS OF THE PRODUCTION OF BIOFUELS IN DEVELOPING

COUNTRIES ________________________________________________________________________ 72

5.1 LAND DEGRADATION, DESERTIFICATION AND FERTILITY _____________________________________ 72 5.1.1 Biofuels and land degradation __________________________________________ 72 5.1.2 Impact of monoculture plantations _____________________________________ 75

5.1.3 Clearance of forest and use of new land for biofuels production __________ 76 5.1.4 Using degraded land for biofuels production ____________________________ 77




5.2 WATER USE, WATER ACCESS AND VIRTUAL WATER AND WATER FOOTPRINT ______________________ 77 5.2.1 Introduction ___________________________________________________________ 77 5.2.2 Impacts of large irrigation scheme ______________________________________ 78 5.2.3 Quantitative aspects and water footprint: production and processing_____ 79

5.2.3 Water pollution by intensive use of agrochemicals _______________________ 80 5.2.4 Water re-uses __________________________________________________________ 81 5.2.5 Management by watershed and water rights ____________________________ 82

5.3 RESOURCES DEPLETION ____________________________________________________________ 83 5.4 GENETIC RESOURCES, INVASIVE SPECIES AND BIODIVERSITY _________________________________ 84 5.5 GHG EMISSIONS AND INDIRECT LAND USE CHANGES (ILUC) ______________________________ 86

5.5.1 Direct and indirect land use change ____________________________________ 86 5.5.2 Biofuels production and CO2 emissions __________________________________ 88

SECTION 6: SOCIAL IMPACTS AND HUMAN RIGHTS CONCERNS RELATED TO THE

PRODUCTION BIOFUELS IN DEVELOPING COUNTRIES __________________________________ 90

6.1 LAND AND FOOD RIGHTS ___________________________________________________________ 90 6.2 CORPORATE SOCIAL RESPONSIBILITY __________________________________________________ 95

6.3 GENDER AND BIOFUELS ____________________________________________________________ 96 6.4 TECHNOLOGY TRANSFER AND CAPACITY DEVELOPMENT ___________________________________ 98

SECTION 7: OUTLINE OF THE RESULTS OF THE STUDY _______________________________________ 103

7.1 SUMMARY OF THE FINDINGS ___________________________________________________ 103 7.2 RECOMMENDATIONS _________________________________________________________ 107

7.2.1 Land issues ___________________________________________________________ 107

7.2.2 Environmental issues ___________________________________________________ 108 7.2.3 Transparency _________________________________________________________ 109 7.2.4 Business models for a biofuel value chain _______________________________ 109 7.2.5 Social and human rights issues _________________________________________ 110 7.2.6 Role of local governments _____________________________________________ 110 7.2.7 Role of EU and international institutions _________________________________ 111

7.2.8 Specific recommendations to EU institutions ____________________________ 112 7.2.9 Issues to be tackled by the Private sector _______________________________ 113

7.3 CONCLUDING NOTES _________________________________________________________ 115

BIBLIOGRAPHY________________________________________________________________________ 117

ANNEX 1: A CRITICAL REVIEW OF KEY SOURCES EXAMINED ___________________________ 122

ANNEX 2: HIGHLIGHTS - AFRICA BIOENERGY POLICY FRAMEWORK ____________________ 125 ANNEX 3: EXISTING CORPORATE RESPONSIBILITIES AND CERTIFICATION SCHEMES _______ 131 ANNEX 4: SENEGAL FIELD VISIT 3RD TO 14TH DECEMBER 2012, DEMBA DIOP AND MARIA BLANCO ____ 137 ANNEX 5: TANZANIA FIELD VISIT 2ND TO 15TH DECEMBER 2012, MAGDALENA KROPIWNICKA AND

MICHEL SCHLAIFER ______________________________________________________________ 150




List of Tables

Table 1: Good environmental practices applicable to bioenergy feedstock production ........ 14

Table 2: Overview on different biofuels’ blending characteristics .................................................. 19 Table 3: Land use efficiency of different biofuel production pathways and expected yield improvements............................................................................................................................................. 20 Table 4: Biofuel policies in major producing countries and regions ................................................ 21 Table 5: Biofuel policies in selected African countries ....................................................................... 22

Table 6: Transport fuel use in major biofuel producing countries..................................................... 41 Table 7: Major sugarcane producers in Africa .................................................................................... 44 Table 8: Current and planned fuel ethanol production in four African countries ........................ 44 Table 9: Land availability for rain-fed sugarcane cultivation in selected African countries ...... 46 Table 10: Number of workers per activity ............................................................................................. 55

List of Figures

Figure 1: Conversion route for sugar and starch feedstocks to ethanol ........................................ 16 Figure 2: Conversion route for oilseeds and animal fats to biodiesel .............................................. 16

Figure 3: Development status of common ‘Second generation’ biofuels and associated conversion technology............................................................................................................................. 18 Figure 4: Global ethanol production and projections to 2021 ......................................................... 23 Figure 5: Global biodiesel production and projections to 2021 ....................................................... 24 Figure 6: Ethanol production and trends in Africa .............................................................................. 24 Figure 7: Biodiesel production and trends in Africa ............................................................................ 25

Figure 8: EU ethanol imports (globally and originating from Africa)................................................ 26 Figure 9: EU biodiesel imports (globally and originating from Africa) ............................................. 27 Figure 10: Previsions for the development of the global biofuel markets ...................................... 27 Figure 11: Global biofuel output expansion since 2001 ..................................................................... 40 Figure 12: Trends in biofuels use in world regions. Biofuel use will increase in all regions, and biofuel demand is strongest in OECD countries - only until 2020 ..................................................... 41

Figure 13: Projected costs of biofuels from different production pathways and petroleum gasoline ....................................................................................................................................................... 42 Figure 14: Most targeted countries according to size of total reported acquisitions .................. 63 Figure 15: Key socio-economic and institutional indicators of target countries ........................... 63 Figure 16: Share of Projects by Commodity and Production Status of Capital ............................ 64 Figure 17: Large Scale Land Acquisitions by Category of Production ........................................... 65

Figure 18: Large scale land acquisitions by category of production, number of projects and size ................................................................................................................................................................ 66 Figure 19: Typologies of biofuel projects in ACP countries ................................................................ 67 Figure 20: Biofuels production and GHG emissions ............................................................................. 89 Figure 21: Former user land ...................................................................................................................... 92

Figure 22: Land owners ............................................................................................................................. 93 Figure 23: Involvement of communities in large scale land transfers .............................................. 94 Figure 24: Number of projects over 200,000 ha with reported evictions ........................................ 94 Figure 25: Proportion of women among the total number of title/holders .................................... 96




List of Boxes

Box 1: Bioenergy and Biofuels ................................................................................................................. 10 Box 2: Modern bioenergy and modern energy services ................................................................... 12 Box 3: Good practices in bioenergy feedstock production ............................................................. 13 Box 4: Exposure of a Cambodian community to shocks of the volatile cassava market ........... 33

Box 5: Business strategies .......................................................................................................................... 35 Box 6: Using the available capacity and advantages to develop biofuels .................................. 37 Box 7: Policy and biofuel value chain, an example in India ............................................................. 39 Box 8: Expectations in Brazil and Argentina ......................................................................................... 45 Box 9: Swaziland sugar protocol ............................................................................................................. 52 Box 10: Biofuel and job creation in Senegal ......................................................................................... 56

Box 11: Examples of wages in biofuel project in Ghana, Sierra Leone and Tanzania ................. 57 Box 12: Land degradation ....................................................................................................................... 73 Box 13: Oil palm cultivation ..................................................................................................................... 73 Box 14: Good environmental practices in bioenergy feedstock production ............................... 74 Box 15: Some case studies on biofuels and deforestation ................................................................ 76 Box 16: Expected impacts on water resources due to climate change ........................................ 77

Box 17: Water footprint of some biofuel feedstock ............................................................................ 79 Box 18: Water and energy nexus ............................................................................................................ 80 Box 19: Pollution from factories ............................................................................................................... 81 Box 20: Virtual water exchanges ............................................................................................................ 82 Box 21: Right to Food and Right to Land .............................................................................................. 90 Box 22: Voluntary Guidelines on Responsible Governance of Land, Fisheries and Forests within

the Context of National Food Security .................................................................................................. 91 Box 23: Human Rights and Impact Assessments. What questions should impact assessments ask? .............................................................................................................................................................. 94 Box 24: Different types of technology transfer ..................................................................................... 99 Box 25: Situation in Senegal ................................................................................................................... 101




Acronyms

AAPB African Association for the Promotion of Biofuels

ABC Brazilian Cooperation Agency

ACP African, Caribbean and Pacific countries

AEZs Agro-ecological areas

AMAD Agricultural Market Access Database

API American Petroleum Institute

ASEAN Association of Southeast Asian Nations

BEET Bio-energy Evaluation Tool

BEFSCI FAO’s Bioenergy and Food Security Criteria and Indicators project

BIO-DME Biomethanol Biodimethyl-ether

BP British Petroleum

BTL Biomass-to-liquids

CBD Convention on Biological Diversity

CCHP Combined Cooling Heat and Power

CGE Computable General Equilibrium

CIFOR Centre for International Forestry Research

CO2e Carbon Dioxide Equivalent

CSR Corporate Social Responsibility

DDGS Dried Distiller’s Grains with Soluble

DRC Democratic Republic of the Congo

DUATs Direito de Uso e Aproveitamento de Terra

EBA Everything-But-Arms Initiative (EU)

EC European Commission

ECOWAP West Africa Regional Agricultural Policy

ECOWAS Economic Community of West African States

ECREEE Regional Centre for Renewable Energy and Energy Efficiency

EIA Environment Impact Assessment

EIB European Investment Bank

EPA Economic Partnership Agreements

ESG Environmental, Social and corporate Governance

ETBE Ethyl Tertiary Butyl Ether, an octane improving additive to gasoline

EU European Union

FAEE Fatty Acid Ethyl Ester, biodiesel from esterification of fatty acids with ethanol

FAMAE Fatty Acid Methyl Ester, biodiesel from esterification of fatty acids with methanol

FAO Food and Agriculture Organization of the United Nations

FNR Agency for Renewable Resources

FQD Fuel Quality Directive




G20 The Group of Twenty Finance Ministers and Central Bank Governors from 20 major economies

GBEP Global Bioenergy Partnership

GDP Gross Domestic Product

GHG Greenhouse Gas

GIZ German Society for International Cooperation

GM Genetically Modified

GOS Government of Swaziland

GSP Generalised System of Preferences

GTAP Global Trade Analysis Project

HCV High Conservation-Value

HLPE FSN High Level Panel of Experts on Food Security and Nutrition

HVO Hydrogenated Vegetable Oil

IATP Institute for Agriculture and Trade Policy

IBEP International Bioenergy Platform

IBI International Bioenergy Initiative

IBRD International Bank for Reconstruction and Development

IBSA India, Brazil, South Africa

ICTSD International Centre for Trade and Sustainable Development

IEA International Energy Agency

IEEP Institute for European Environmental Policy

IFAD International Fund for Agricultural Development

IFC International Finance Corporation

IFES Integrated Food-Energy Systems

IFPRI International Food Policy Research Institute

IIASA International Institute for Applied Systems Analysis

IIEE Indonesian Institute for Energy Economics

IISD International Institute for Sustainable Development

ILUC Indirect Land Use Change

IMF International Monetary Fund

IPCC Intergovernmental Panel on Climate Change

IPM Integrated Pest Management

IPNM Integrated Plant Nutrient Management

IRENA International Renewable Energy Agency

ISRA Institut Sénégalais de Recherches Agricoles

LCA Life Cycle Assessment

LUC Land Use Change

MDGs Millennium Development Goals

MFN Most Favoured Nation

Mha Million hectares

Mt Million tonnes




MTBE Methyl tertiary butyl ether

NGO Non-Governmental Organisation

NR Natural Resources

OECD Organization for Economic Cooperation and Development

PCD Policy Coherence for Development

PRI Principles for Responsible Investment

R&D Research & Development

REC Regional Economic Community

RED Renewable Energy Directive

RME Rapeseed methyl ester

SEA Strategic Environment Assessment

SME Small and Medium Enterprise

SQC Scottish Quality Farm Assured Combinable Crops

SRR2F Special Rapporteur on the Right to Food

SSA Sub-Saharan Africa

SVO Straight Vegetable Oil

TOR Terms of reference

TPES Total Primary Energy Supply

UN The United Nations Organizations and its related Agencies

UNCTAD United Nations Conference on Trade and Development

UNESCO United Nations Educational, Scientific and Cultural Organization

UNU-IAS United Nations University - Institute of Advanced Studies

US United States

USA United States of America

USD US Dollars

WHO World Health Organisation

WTO World Trade Organisation

WWF World Wide Fund for Nature



AETS Consortium – February 2013 1

EXECUTIVE SUMMARY

Under the framework of the Policy Coherence for Development (PCD), this report,

commissioned by the European Commission, presents an analysis of the impacts of the EU

biofuel policies on developing countries with the aim of strengthening its knowledge on the

consequences of an increased biofuels demand in developing countries. In accordance with

the European Commission, during the inception phase the scope of the study has been

defined mainly on liquid biofuels with a specific focus on African countries.

After a review of more than 150 reports from various sources and origins (international

organisations, governmental institutions, academia, private sector and NGO), the main

findings of the desk review phase were confronted with the observations drawn from two field

visits (Tanzania and Senegal in December 2012) and a seminar in Brussels (February 2013).

The ranges of impacts that were investigated included economic impacts (food prices, land

tenure systems, investor’s strategies and business models), environmental impacts (land

degradation, deforestation, water resources management, biodiversity, GHG emission and

land use changes) and social impacts (land and food rights, gender and technology

transfer). In the following paragraphs, the report highlights the identified challenges,

opportunities, synergies and trade-offs of biofuels' production and development objectives in

developing countries, on the basis of different domestic contexts and production methods.

It is generally accepted that bioenergy has the potential of either increasing or reducing

food security (especially for smallholder farmers) depending on the policy behind its

development and the characteristics of the local agricultural sector. The effects of biofuels

development on national food security can be significantly different for a net exporter or a

net importer of food and agricultural commodities.

The general trend is that food is becoming more expensive and biofuels production is - with or

without EU blending requirements - becoming more prevalent. Besides biofuels, other factors

are driving up food prices. Stronger demand for food crops in conjunction with slow growth in

agricultural productivity, low stocks and high fossil fuel prices has resulted in upward pressure

on prices. In relation to the 2010/11 food crisis in the Sub-Saharan Africa (SSA) region for

example, low and declining productivity of agriculture, coupled with exceptionally

unfavourable weather conditions and rising international oil prices, seem to be more

prominent drivers behind rising food prices than the current biofuel production level. Even if

not the major driver food prices, an increase in biofuels production in the future will further

exacerbate the pressure on food prices.

Energy markets are a significant driver in the overall trend of large scale land acquisition. A

clear link can be established between the EU bioenergy policy and the strong interest of

European companies to acquire agricultural land in developing countries, especially in

Africa. This also entails that the development of conventional biofuel production has an

impact on access to natural resources, such as land and water and often leads to an

increase in land concentration to the detriment of smallholder farming practices.

Most land acquisitions are linked with free access to water sources and sometime exclusive

control over the water resources, when the increasing scarcity of water must be recognized.

Besides the high water requirements for the cultivation and processing, the supposed free




water use by biofuel investors leads to inappropriate water footprint (inefficiency, waste and

pollution). The uses of water to produce energy and the uses of energy in water supply and

sanitation (called water and energy nexus) are not sufficiently taken into consideration by the

policy makers.

There are many different systems of land tenure. Their complexity, especially in Africa, lies with

the existence of so called “legal pluralism” where customary tenure and customary justice

systems exist alongside formal state tenure and national justice systems.

The implementation of recent land laws, where present in ACP countries, is quite slow and

often relies upon the provision of technical assistance by NGOs and donor financing.

Registration and demarcation of community land titles has been slow in Africa. Local people

often lack knowledge of the formal legal system or how to seek redress in the event of

contested rights. Many countries do not have legal or procedural mechanisms in place to

protect local rights and take account of local interests, livelihoods and welfare amidst

increasing conflicts due to increasing land pressures and large scale land acquisition.

An increasing body of new studies have emerged covering the phenomenon of large scale

land acquisition; all point towards one commonly recognised problem: a lack of

transparency and availability or reliable data. Recent wide ranging studies undertaken by

the World Bank, and most recently by the Land Matrix Project, begin with introductory

remarks on the remarkable difficulties in obtaining reliable data from target country registries

as well as from investors. Data on large scale land acquisition is most difficult to obtain on the

actual implantation status of the announced contracts in terms of production being carried

out, previous land users and land use, the displacement of food production and land

evictions.

The evidence from a number of international studies points out that most large-scale land

investment is taking place in countries with weak land tenure governance structures and very

high foreign investment protection and incentives. According to the Land Matrix, Africa is the

most targeted region and investors are targeting countries that are poorly integrated into the

world economy with more than half of the deals over 200,000 ha taking place in countries

with high prevalence of hunger.

While it is difficult to precisely determine the final use of crops grown as part of deals in large

scale land acquisition, the growth of investors’ interests in “flex crops” and crops destined for

“multiple uses” i.e. either biofuels or food (sugarcane, soy, palm oil) in terms of area covered

in hectares points out that the potential of using crops for biofuel production is an important

consideration in investment strategies.

The right to adequate food is closely related to access to land and it implies protecting

existing rights of the most vulnerable groups to access land, water, grazing or fishing grounds,

or forests, all of which may be productive resources essential for a decent livelihood. The right

to adequate food is recognised under International Human Rights Law and States have a

responsibility to protect the right to adequate food, whereas investors have a responsibility to

respect existing legitimate land use rights. The recent adoption of the Voluntary Guidelines on

Responsible Governance of Tenure of Land, Fisheries and Forests within the Context of

National Food Security connects existing best practices and obligations in international

environmental and human rights law.




In terms of Europe’s own approach, the new EU Food Security Policy Framework, adopted in

2010, has recognised the Right to Food and has a focus on creating an enabling environment

for the smallholder sector as the single most effective instrument for increasing food security in

developing countries. The EU has also committed to focus on access to food by

implementing the Voluntary Guidelines to Support the Progressive Realisation of the Right to

Adequate Food in the Context of National Food Security (COM(2010)127 final).

The principal critique relative to agricultural investment in developing countries (including

biofuels) deals with the concerns and relevance of treatment of “unused” or “marginal”

lands. In most cases, land is already being used or claimed – yet existing land uses and claims

go unrecognised because land users are marginalised from formal land rights and access to

the law and institutions. The limits of the bio-physical survey approach in combination with ill-

defined and often unregistered land use rights lead to many conflicts within local

communities (i.e. between smallholders and pastoralists) and between local communities

and governments when it hastily allocates land to foreign or domestic investors. Pastoralists

and herders tend to be most vulnerable in such processes.

The threat of dispossession or eviction from land due to a government’s failure to offer

adequate protection of customary land rights and assure appropriate consultation based on

the principle of free, prior and informed consent is very real. Concerns relating to the

occurrence of human rights violations, such as evictions or displacement of local food

production, have led the office of the United Nations High Commissioner on Human Rights to

issue a news release in October 2012 with recommendations for biofuel impact assessments.

There are several instruments that aim to encourage corporate social responsibility among

companies. In terms of relevance to conventional biofuel production, the most relevant ones

can be found within commodity specific instruments, as well as general CSR instruments.

Compliance with such instruments or commodity certification schemes is voluntary and they

usually lack remedy mechanisms.

There is still relatively little research that is specifically dedicated to addressing the gender

impacts of production of biofuels in developing countries. Gender is one of the sharpest and

most visible forms of differentiation when it comes to access to natural resources as well as

ensuring an equal voice for women in decision making. Research has found that changes in

land tenure systems and the related changes in land use have often resulted in weakening

women’s land entitlements, particularly where women are poor and their access to land is

dependent on male relatives, as is the case in most customary land systems in Africa. Neither

large nor small scale farming has been demonstrated to be necessarily better for women, but

this is probably due to a lack of such comparative analysis. The very few positive cases found

to increase women’s income have tended to focus on Jatropha, used as a sharecropping

secondary income generation scheme and which did not result in land tenure changes or

competition with food crops.

The main environmental impacts of feedstock production for biofuel are caused by intensive

farming systems, cultivating crops with high input levels, which are both natural (land, soil,

water, native vegetation) and agrochemical. Large scale systems used for food crops

production may be efficient but not always sustainable: this situation applies also for crops

planted for energy. There is still a need to document the relationship between typologies of

biofuel projects and their socio-economic and environmental impacts in ACP countries.




The recognised norms and standards for sustainable agronomy include the requirements for

comprehensive studies of the site conditions where the crop will be grown such as pedology,

water availability, soil cover and landscape. Based on these analyses, the type of crop and

the most adequate mode of cultivation should be defined. From the review, it is clear that

many decisions for bioenergy crop plantations are driven by criteria based on short-term

returns, while sustainability issues play a second role.

National and international legislation usually require an Environmental Impact Assessment

(EIA) or Environmental and Social Impact Assessment (ESIA) to be conducted before any

implementation works begin. Even if some examples demonstrate the interest and the

positive effects of an EIA undertaken under a business-as-usual approach, in the majority of

cases reviewed, the EIA is considered as an administrative burden. A Strategic Environmental

Assessment (SEA) for biofuels development would constitute an important step to undertake,

even if examples of this were not identified during the study.

Land use planning is generally not undertaken at an adequate scale (local, regional and

national), especially in developing countries. A comprehensive inventory of the land

characteristics including the environmental and socio-economic specificities can facilitate a

mapping of the opportunities for crop plantation and feedstocks for biofuel development.

Climate change perspectives including adaptation and mitigation action plans at the

local/regional levels to strengthen a given territory’s resilience would guide such a process.

National bioenergy strategies should be developed together with land use planning, taking

into consideration the real land potential for bioenergy production, its environmental, social

and economic impacts, and encouraging sustainable practices.

A key factor in the analysis of the impacts of biofuels development is the type of production

system: large-scale plantations; small-scale liquid biofuel farms (contract farming); small-scale

local energy farms for local energy power needs; hybrid model (a mix of plantation and out-

grower). There is no “best” scheme because the conditions must be considered on a case-

by-case basis. According to the Tanzanian experiences analysed during the field study,

inclusive business models that involve smallholder farmers as active partners appear to be

more attuned than those based on large-scale plantations.

Solutions for sustainable agronomy and cultivation models exist and they can be applied

successfully to bioenergy crop production at farm and community level. Examples of good

practices worldwide demonstrate their potential benefits for soil quality, water availability and

quality, agrobiodiversity, climate change mitigation, productivity, income generation and

required inputs. There is a need for increased support, awareness raising, training and

dissemination efforts targeting the capacity of the national authorities to monitor projects

and for farmers and companies to adopt best practices.

Good examples exist targeting both biofuel production for export and stationery energy

generation for increasing local energy access. These projects offer a way to hedge the risks

of biofuels’ investment, while contributing to local development not only through creation of

jobs but also through provision of benefits in terms of environment (e.g. reducing

deforestation, land degradation, GHG emissions), economy (e.g. giving the opportunity to

develop new businesses or adopt production practices that would be impossible without

modern and cheap forms of energy) and society (e.g. reducing indoor air pollution as well as

time spent for collecting wood). However, these projects add complexity to the initial project




set up. Energy access is fundamental for developing new businesses, increasing food security

and incomes from agriculture through improved agro-processing and food storage.

For example, energy crop plantations can be coupled with electricity or CHP plant for

generating energy from the crop residues (e.g. after oil extraction, sugarcane or grain

processing) both with large biofuel processing plants or small applications. Alternatively,

residues can be used to produce biogas for household purposes providing a clean source of

fuel for cooking and space heating.

However, it should be noted that ACP countries, and Sub-Saharan Africa in particular, are

dominated by smallholder farmers possessing 2 hectares or less, who represent 80% of all

farms and produce up to 90% of the total agricultural output. These smallholder farmers are

those who usually lack modern energy services and could benefit the most from modern

bioenergy.

Unfortunately the idea of biofuels as a means to increase the national energy security, for

example through the adoption of Integrated Food-Energy Systems (IFES), is still limited as most

foreign investors generally target biofuel production for export and treat the domestic market

as a secondary target.

The size of the bioenergy project (in terms of area, capital invested, jobs created) alone does

not tell much about its ability to contribute to access to energy. The targeted bioenergy

market (or the end-users), the nature and the kind of contract arrangements between

farmers and the project initiator (i.e. small scale projects for local energy access, commercial

farmers producing biofuels for own consumption, outgrower farming schemes, large

plantations employing farmers directly) are more relevant for an appraisal of the direct

contribution towards energy access and security increase.

Jatropha emerges as a significant driver for some large-scale land acquisitions in the world.

According to the Land Matrix Database, a large majority of the “non-food” projects (73 %)

are exclusively dedicated to Jatropha production with most of them located in Africa,

particularly in East African countries (Ethiopia, Mozambique and Tanzania). EU private

investors are major actors involved in large scale land acquisitions aimed at the production of

Jatropha. Recent emerging data suggests that a number of large scale Jatropha investments

in Africa (with negative consequences for local people) are of a speculative nature. At the

same time, evidence is gained about the low Jatropha performance, with yields much lower

expected. It seems that viable projects are those that do not target just the international

biofuel market, but also local uses of Jatropha (e.g. for heat generation from residues or soap

making). This would also apply to other energy crops though.

One key conclusion of this study is that a policy focused on fulfilling an internal biofuel

blending target through certified biofuels alone cannot expect to develop a sustainable

bioenergy industry automatically, especially in poor developing countries, unless these policy

measures are backed with international support to strengthen the bioenergy policy

frameworks.. This includes supporting policy development in countries with weak policy

framework, or helping to enforce them, especially on land tenure and Natural Resource (NR)

management issues; it also includes providing training, sharing good (environmental and

socio-economic) agricultural practices, and facilitating technology transfer at the same time.




In term of Policy Coherence for Development, most of findings presented in this report are

insufficiently taken into consideration to review existing policies and shaping new orientations

for sustainable development of biofuels.




Introduction

In the last decade, bioenergy and notably liquid biofuels have emerged as a suitable, renewable alternative to co-exist with fossil fuels as their quality constituents match petroleum-based products while less polluting (at combustion) and, if managed correctly,

can contribute to rural development and economic growth. In this regard, the European Union (EU) Renewable Energy Directive 2009/28/EC sets a 10% target by 2020 which is expected to be met through (i) 8.5% of first generation biofuels (mostly based on food/feed crops and vegetable oils) (ii) 1% of second generation biofuels and (iii) 1% of renewable electricity1.

Currently, strong developments in the biofuels sector can be observed due to relatively low

oil prices and increased concerns about their impacts as it goes along with a marked and continuous increase of food price with relatively high volatility and pressure on agricultural land - especially in developing countries. The extent to which EU biofuels policies might have contributed to rising food prices, reduced availability, pressure on agricultural land and other adverse effects has not been fully measured.

Under the framework of the Policy Coherence for Development (PCD), the European

Commission aims to conduct a more in-depth analysis to assess the impacts of EU policies on developing countries. Regarding the bioenergy sector in particular, the European Commission wants to strengthen its knowledge on the consequences of an increased demand in biofuels in developing countries.

The present study aims to identify and -where possible- to fill the persistent gaps in the analysis

and readily available information with regard to the impact of increased biofuels demand in developing countries. The findings of the desk review have been checked thanks to two field visits in Senegal and Tanzania, two countries with quite different strategies regarding biofuel support policies. The results of the study highlight the identified challenges, opportunities, synergies and trade-offs of biofuels' production and development objectives in developing countries, on the basis of different domestic contexts and production methods.

However important the issue of impacts of biofuels production is, it is important to view the discussion in a larger context. Currently, biofuels occupy less than 1% of total agricultural land. Even from the 30 Mha used today, a considerable amount of by-products are produced, such as cattle-feed, bioelectricity and heat (IEA Bioenergy 2012). According to International Energy Agency (IEA) scenarios, 100 Mha are required in 2050 for biofuels, equivalent to 2% of total agricultural land. This does not appear to be substantial in absolute terms, but

nevertheless represents a three-fold increase in land-use, if biofuel production is multiplied by ten in the next forty years. All this is further constrained by the challenges linked to the expansion of crop production for food by 60% by 2050 (according to FAO figures), based on growth of world population to 9 billion in 2050. This will require around 60 Mha of additional arable land, in addition to considerable yield increases2 (FAO 2011).

To date, there is virtually no trade in biofuel products and feedstock from Africa to the EU.

Also, there is little scientific evidence linking the rising food prices in Africa to the EU biofuel policies. Many reports point out a cocktail of drivers for high food prices, such as increasing food demand due to an increasing world population, the change in dietary patterns, the new trends in finantial markets and the high climate variability (i.e. repeated droughts and flooding).

The massive land acquisition by Western companies and third states in African countries with

weak land tenure systems and practices raise concerns that need to be addressed together

1 Following a recent European Commission proposal – the first generation biofuels will be capped at 5%, see press release: http://europa.eu/rapid/press-release_IP-12-1112_en.htm?locale=en 2 Yield increases can increase output per area by 20-50% by 2030 for many crops according to Chum et al. (2011) and most improvement potential lays in Sub-Saharan Africa, Latin America, Eastern Europe and Central Asia, where advanced practices are not yet fully deployed and adapted




with the environmental and social impact of land use change and change of land

ownership. Developing countries should be empowered to act consequently in order to safeguard their own food security and environmental sustainability.

The set-up of this report is as follows:

Section 2 (Background) presents the study scope, objectives and methodologies.

Section 3 extensively reviews the global context of biofuel production (feedstock production practices and conversion practices; biofuels policies worldwide) and Section 4 presents the

economic impacts of the production of biofuels in developing countries by discussing: the trade patterns, the consequences of resources depletion, the impact on macro and micro levels, land tenure systems, food security, energy access and supply security.

Section 5 gathers information and analysis on the environmental impact of biofuel production in developing countries and provides a set of recommendations on good practices to be enforced. Issues such as land degradation, water use, biodiversity and natural resources and

GHG emissions are discussed.

Section 6 provides an overview of the social and human rights concerns related to the development of biofuels in developing countries. The section covers the issues of land and food rights, corporate social responsibility and gender.

The last section outlines the findings of the study and provides a set of recommendations to

different actors in order to address the sustainability of biofuels production in developing countries.




Section 2: Background

2.1 Outlines of the objectives and expected results of the project

The project aims to increase knowledge about the impact of biofuels development from the point of view of PCD as defined in Art.208.1 of the Treaty on the Functioning of the European

Union. According to the Terms of Reference (ToR), PCD has, since 2005, become a permanent and significant pillar of the EU effort to enhance the impact of external assistance and to better weight the direct and indirect effects of EU non-development policies in its partner countries. The ToR mention that, although the PCD work started before then, both in the OECD and in the EU, the Lisbon Treaty has strengthened the legal basis for PCD work; the TFEU's Article 208 now requires that the Union takes account of the objectives of development

cooperation in the policies that it implements which are likely to affect developing countries.

The drivers for strengthening EU action on PCD do not only lie in the effectiveness of aid or the potential gains both from eliminating the cost of incoherence and from harvesting the added value of synergies, but also, as the world’s largest donor, in its own accountability and credibility both inside and outside the EU.

Under the PDC perspective, the project seeks to (i) Illustrate the existing correlation between biofuels production in developing countries and several direct and indirect impacts; (ii) distinguish (as far as possible) and attribute impacts to EU policy and actors and to other non-EU’s actors and policies; and (iii) differentiate the impacts related to biofuels production for transport (and for export) compared to other drivers.

The following specific results are expected:

• Identification of the knowledge gaps on the links between biofuel linked investments and sustainable development in developing countries (economic, environment, social);

• Assessment of the relevant positive and negative impacts of biofuel ventures on development, which are categorised, prioritised and identified by stakeholders;

• Identification and substantiation of “common” opportunities (synergies), risks and

challenges related to bioenergy production, including a trade flow analysis, a typology by country context and production specificities;

• Conclusions and recommendations – based on the analysis and differentiated by levels and actors (public/private; international/European/national/local etc.) – and if possible - also linked to the upcoming EU and international agendas.

2.2 Desk study phase

This report deals with the desk phase review that consisted of:

• A review of the institutional literature, academic literature and complementary reports – classification by type and origin of the literature; the EC would like to specifically

identify the gaps in the literature review and map the main arguments and issues tackled (also by origin). There was a great need to expand and update the list of documents and sort through the Food and Agriculture Organisation (FAO) publications on bioenergy for instance3;

• Analysis and synthesis;

• Highlighting convergences and divergences;

3 See the critical review of the literature in the annex 1




• Identification of the relevant gaps, discrepancies and controversial opinions as they

appear in the literature review, taking into account the human rights based as well as other approaches;

• Presentation of the analysis regarding the regulatory systems and policy frameworks in developing countries, their vulnerability, biofuel related and/or general investment climate, the comparison between biofuels production for domestic consumption versus production for export including the type of crops and products.

2.3 Field visit

The desk review phase was followed by two field visits to Senegal and Tanzania respectively to identify the conditions and facts that will consolidate, validate or disprove the key findings of the desk review.

The final report integrates the findings of the field report, the desk review report and the comment and suggestions of the workshop held on 08th January 2013.

Box 1: Bioenergy and Biofuels

In this report, the term bioenergy refers to energy produced from biomass and biofuels refers to solid,

liquid and gaseous fuels produced from the processing of biomass (organic matter derived from plants

or animals). Biofuels include fuels and bioadditives such as bioethanol, biodiesel, biobutanol,

biomethanol, bioETBE (ethyl tert-butyl ether), bioMTBE (methyl tert-butyl ether), biogasoline, and

combustible oils produced by plants; gaseous biofuels such as biogas or syngas; and solid biofuels such

as charcoal and bio-char.

The most important biofuels today are ethanol (made mainly from sugar and cereal crops via

fermentation) and biodiesel (made mainly from vegetable oils via transesterification).

We distinguish two categories of biofuels:

Conventional (first generation) biofuels are fuels derived from sugars or starch via fermentation or from

vegetable oils through transesterification. They include biofuels produced from feedstock which can

also be used for food and feed, such as sugar, starch and vegetable oils. These biofuels include sugar-

and starch-based ethanol, and vegetable-oil-based biodiesel. Typical feedstocks used in these

processes include sugarcane and sugar beet, starch-bearing grains such as maize and wheat, and oil

crops such as rape (canola), soybean and oil palm. First generation biofuels are produced on a

commercial scale.

Advanced (second generation4) biofuels are fuels and additives that do not belong to the category

above and are produced through advanced technologies. They include biofuels produced from

feedstocks that do not compete directly with food and feed crops, such as waste and agricultural

residues (i.e. wheat straw, used cooking oils, municipal waste), non-food crops (i.e. miscanthus and short

rotation coppice) and algae. Most advanced biofuel technologies are still under research and

development (R&D), pilot or demonstration phases.

4 Some authors also include 3rd and 4th generation biofuels under this category (see paragraph 3.1.3)




Section 3: The global context of biofuels development and

implications for developing countries

Biofuels have a potential to contribute to a wide range of policy objectives: improving energy security by reducing dependence on fossil fuels, mitigating GHG emissions by substituting fossil fuels in the transportation sector, increasing rural employment and incomes. Motivated by the potential benefits of biofuels, many countries, both developed and developing, have adopted policies to support biofuel production.

3.1 Bioenergy feedstock production practices and conversion

into biofuels

3.1.1 Characterisation of the feedstocks

Broadly speaking, it is possible to identify three main categories of bioenergy resources: i) residues and wastes ii) natural vegetation and iii) energy crops. The last category includes

both food and non-food crops as well as specific production practices that can be adopted producing different impacts on the environment and yields.

Residues and wastes

‘Primary residues’ can be defined as residues produced on agricultural fields or in forests and include branches and twigs from logging, cereals straw from harvesting and dung from

livestock operations. ‘Secondary residues’ are residues resulting from the processing of wood or food and include sawdust/bark from wood processing and rice husks from rice milling.

Waste that can be used as a feedstock for bioenergy include waste streams derived from the food processing industry, the organic fraction of municipal waste and waste paper. Primary energy from municipal and industrial waste accounted to 1623 GJ in 2009 according to IEA statistics (this can be compared with 78 GJ for liquid biofuels). Residues and waste are used

mainly for heat and power and are usually consumed locally. This makes it particularly difficult to cover residues in official statistics, especially in developing countries.

Natural vegetation

Natural vegetation as bioenergy feedstock mainly refers to trees and shrubs in forests and

non-forests. Today the use of natural vegetation for bioenergy is severely limited by environmental sustainability constraints.

The use of natural vegetation for modern bioenergy (see box below) is negligible if compared with total energy supply; however, the use of natural vegetation for traditional bioenergy is usually not recorded in official statistics and difficult to estimate. The potential of bioenergy use from sustainable harvest levels of natural vegetation is controversial and vary from zero

dozen MJ. This bioenergy feedstock is usually not traded, and used by local poor communities to meet their basic energy needs.




Box 2: Modern bioenergy and modern energy services

The term ‘Modern bioenergy’ is often used to describe energy, for example when we need to quantify it or use the term in an abstract sense, which delivers modern bioenergy services. There is sometimes confusion about what is modern and what is not, and how to distinguish traditional use of bioenergy. The dinstintion can be made on the basis of the energy service delivered and this approach has also been adopted by the Global Bioenergy Partnership (GBEP 2011). In this sense, modern bioenergy

services are defined as modern energy services relying on biomass as their primary energy source. They include electricity delivered to the final user through a grid from biomass power plants; district heating; district cooling; improved cookstoves (including such stoves used for heating) at the household and business level; stand-alone or grid-connected generation systems for household or businesses; domestic and industrial biomass heating systems; domestic and industrial biomass cooling systems, biomass-powered machinery for agricultural activities or businesses; biofuel-powered tractors and other vehicles, grinding and milling machinery. Modern bioenergy services do not include for example biomass used for cooking or heating purposes in open stoves or fires with no chimney or hood or any other energy systems that release flue gases indoors or release high concentrations of air pollutants, irrespective of the feedstock or biofuel employed.

Energy crops

Energy crops can be distinguished into conventional energy crops (i.e. sugary, starchy feedstocks, oilseeds or animal fats) and lignocellulosic energy crops. Conventional energy

crops are also normally used to produce food for humans and feed for animals and include corn, wheat, barley, sugar beet, sugarcane, rapeseed, sunflower and soybeans, but also non-edible crops such as Jatropha. These energy crops are the main feedstock used for producing liquid biofuels for transport and their use has been controversial over the last few years because of the direct or indirect effects that they could have on food security. Conventional energy crops are traded internationally and their market is hardly

distinguishable from the food market.

Lignocellulosic energy crops refer to plants that can provide biomass rich in cellulose, lignocellulose and lignin that can be used as a feedstock for bioenergy. They include mischantus, switchgrass, poplar, willow, and eucalyptus. Lignocellulosic feedstocks are generally not supposed to compete directly with food crops and their cultivation requires

lower management and inputs; therefore, this biomass can be sourced significantly cheaper than conventional energy crops. Another important advantage compared with conventional annual crops is their higher tolerance to variable soil and climate conditions and the possibility of producing the biomass throughout the whole year.

The main barrier still remains the conversion of lignocellulosic biomass into liquid biofuels and their exploitation for this purpose is therefore restricted to a limited number of pilot plants and

a few commercial plants (with uncertain economic viability). Today their use is chiefly limited to heat and power applications via thermochemical conversion processes (mainly combustion, but also other conversion options are possible. See section 3.1.3) and their use is rapidly increasing worldwide. More than 10% of total biomass consumption is for power generation, leading to around 70 GW of electricity, mainly derived from solid biomass in the US, EU, Brazil and China (REN21, GSR2012 -preliminary data). Liquid biofuels produced from

lignocellulosic feedstocks are generally referred to as ‘second generation’ biofuels.

Lignocellulosic feedstock for biofuels are normally sourced and consumed locally, while woody biomass is internationally traded.

Bioenergy currently provides around 38 EJ of final energy per year, 28 EJ/yr by traditional biomass used inefficiently for heating and cooking, 8 EJ/yr of commercial heat and power and around 2 EJ/yr by liquid transport fuels (IEA 2012). This is comparable with REN21 statistics,

which provide a share of 1.6% of TPES for traditional bioenergy and 0.001% of TPES for transport biofuels.




3.1.2 Bioenergy feedstock production practices

The environmental, economic and social sustainability of bioenergy depends on a number of factors, including how biomass is sourced. Over recent years, various studies have focused on

the potential contribution of different types of biomass to the world’s future energy supplies, leading to a variety of results.

Production practices that can be implemented for growing bioenergy feedstock are the same that can be implemented to optimize production in the agro-forestry sector. Good practices in biomass production can improve both the sustainability and efficiency of land and water use as well as the efficiency of external inputs, leading to positive environmental

and socio-economic effects, including a reduction in competition with food production. Good practices can also minimise impacts of bioenergy feedstock production on the ecosystem, which is essential to provide a wide range of goods and services for poor rural communities. According to the FAO, these feedstock production practices can be grouped into i) agricultural management approaches, ii) integrated, sustainable agricultural and forestry management systems, and iii) field-level agricultural and forestry practices such as no

or minimum tillage, integrated pest management, integrated plant nutrient management that can be implemented on the ground by farmers.

Box 3: Good practices in bioenergy feedstock production

Good practices in feedstock production for bioenergy are similar to those associated with food crop production as far as environmental effects are concerned (sustainable agriculture management). These practices comprise a number of sustainable agriculture principles that can be implemented through the field-level practices, illustrated e.g. in FAO 2012. They include effects on soil quality, water availability and quality, biodiversity, agrobiodiversity, climate change mitigation, productivity/income and availability of inputs that can have natural spill-over effects in the agricultural and food sector.

At the same time, these approaches present some challenges that limit their adoption, including in terms of input and labour requirements, land tenure, access to finance, awareness, education, research and development and policies and institutions (FAO 2012).

However, good practices in bioenergy can also have a positive impact on socio-economic dimensions (that go beyond those of food crops) such as:

• Access to land;

• Employment, wages and labour conditions;

• Income generation and inclusion of smallholders;

• Local food security;

• Community development;

• Energy security and local access to energy;

• Gender equity.

These good socio-economic practices include (but are not limited to) the extensive public consultation and mapping of customary land rights undertaken by Addax Bioenergy in Sierra Leone, the retraining of sugarcane cutters coordinated by UNICA in Brazil, the promotion of intercropping of Pigeon Peas (stalk used as fuel) with the local staple food maize promoted by GIZ in Malawi, the creation of a technology centre and business incubator associated with the Markala Sugar Project in Mali, the a biogas project in the Casamance region and a rural electrification pilot project in the

Fatick region developed by NOVIS in Senegal. The German-funded FAO BEFSCI project addressed all these socio-economic good practices in detail (see www.fao.org/bioenergy/foodsecurity/befsci).

Impacts of bioenergy production associated with some socio-economic dimensions will be discussed in more detail in sections 4 and 6 of this report.




As far as agricultural production is concerned, these practices present some challenges that limit their adoption and important trade-offs exist especially in terms of achievable yields in the short-term. The main barriers to their adoption relate to input and labour requirements, access to finance for initial capital cost that translates into revenues in the medium or long-term, as well as awareness and education.

Table 1 summarises the main potential benefits associated with different good practices that

can be adopted in bioenergy feedstock production.

Table 1: Good environmental practices applicable to bioenergy feedstock production

Source: FAO 2012

Multiple cropping and crop rotation allows the cultivation of more than one crop, enabling

the farmers to spread market risks, and spread required labour and input more evenly during the year. Crop diversity can also mitigate the economic risks linked to adverse weather.

At the same time, farmers may reduce their reliance on chemical pesticides and nutrient inputs as most pests and diseases are plant specific and the extended cultivation of host plants allows for an increasing resistance of pests and pathogens. With crop rotation, the

interruption in the cultivation of the host plant, by growing non-host plants, leads to the eradication of pests and pathogens in the soil.

On the other hand, it could be difficult for farmers to adopt new crops, depending on the existing conditions, such as labour availability and skills, available equipment, field types and agreements in place. Furthermore, despite the benefits to soil fertility, some crops may be less profitable than others in a certain region. Rotation may reduce the yearly production of the

main cash crop, which may result in less profit in the short-term. However, the profitability of rotation systems tends to be higher than that of mono-cropping systems in the medium term, thanks to higher yields, more climate and market resilience and lower production costs.

MAIN POTENTIAL DIRECT BENEFITS Soil QualityWater availability and quality

Biodiversity AgrobiodiversityClimate Change mitigation

Productivity / Income

Availability of inputs

Access to energy

Sustainable agricultural managing approachesConservation Agriculture � � � � � �

The Ecosystem Approach and Sustainable Crop Production intensif ication, Agro-ecology and Eco-agriculture

� � � � � �

Organic Agriculture � � � � � � �

Sustainable Integrated Agricultural and Forestry Management SystemsAgroforestryIntegrated Food Energy SystemsMultiple Cropping Systems and Crop RotationSustainable Field Level Agricultural and forestry PracticesAlternatives to Slash-and-Burn � � � � � �

community Based Forest Management � � � �

Conservation and Sustainable use of Plant Genetic Resources and Seeds � � �

Forest Buffer Zone � � � � �

Integrated Pest Management (IPM) � � � � �

Integrated Plant Nutrient Management (IPNM) � � � �

No or Minimum Tillage � � � �

Pollinistation Management � � �

Precision Agriculture � � � �

Rainw ater Harvesting and Management � � � �

Rehabilitation of Degraded Lands � � � � �

Soil Cover � � � � �

Sustainable Forest Harvest � � � � � �

sustainable Irriation � �

Wild Biodiversity � � � � � � �

ENVIRONMENT SOCIO-ECONOMIC

� � ��




For example, the intercropping of cassava increases efficiency as the crop does not

efficiently use light, water and nutrients during its early growth stages, and legumes offer a suitable short-duration second crop as they also improve soil fertility through nitrogen fixation (as well as by providing fodder for livestock).

The intercropping practice adopted by dairy farmers in Thailand (FAO 2012) shows that, although cassava yields tend to decrease in the short term with intercropping, the land use efficiency and overall farm income tends to increase with the introduction of the second

crop, especially when edible seeds are used for food and crop residues are used as fodder. In a case study in the Mahasarakham province, land use efficiency was on average 72-76 per cent higher under cassava-cowpea intercropping than under cassava monoculture.

3.1.3 Biofuel production methods

Biofuels are mainly consumed in conventional internal combustion engines as a substitute of fossil fuels. Typically, they are commercialised in the form of ethanol (as a substitute for gasoline) or biodiesel (as a substitute for fossil diesel) or biogas (as a substitute for natural gas).

Furthermore, biofuels can be distinguished into ‘first’ and ‘second’ generation biofuels if

produced from conventional feedstocks through anaerobic fermentation5, distillation, dehydration, esterification or other conventional methods; or lignocellulosic feedstocks through advanced enzymatic hydrolysis6, BTL processes or other advanced processes respectively7.

‘First generation’ biofuels

The production of ‘First generation’ biofuels, produced mainly from crops also grown for food and feed purposes, has continued to increase significantly over recent years.

Ethanol is produced from sugar-containing crops or grains. Currently, ethanol substitutes 2-3% of total gasoline fuel supplies in spark ignition engines8. Ethanol is currently the largest biofuel produced globally and around four fifths are produced from corn and sugarcane, although it can also be produced from a wide range of energy crops.

The biological conversion routes for ethanol are well established and based on the extraction of sucrose and starch and their subsequent fermentation. From the fermentation onwards, both routes for sugar or starch feedstocks are basically the same. The overall efficiency and viability can be improved, adding value to by-products e.g. generating additional energy (heat and/or electricity) or finding other valuable uses.

5 The fermentation step is very similar to that used in beer and wine-making 6 Special enzymes free the sugar molecules from cellulose using steam heating or other pre-treatments. Then the process is similar to sugar fermentation of first generation biofuels 7 Some authors also make reference to ‘third generation’ biofuels for those fuels produced from algae, and ‘fourth generation’ biofuels for those fuels produced from direct hydrolysis (for bio-hydrogen production) or advanced bio-chemistry. However there is no clear agreement on these definitions 8 Although research is going for its application in compression ignition engines




Figure 1: Conversion route for sugar and starch feedstocks to ethanol

Biodiesel is produced from vegetable oils or animal fats after conversion into a range of fatty

acid methyl or ethyl esters (esterification). Biodiesel provides around 0.2% of total diesel supply and is used mainly in Europe (5.1 % on an energy basis according to OECD-FAO 2012). It is also possible to use raw vegetable oil directly (blended or not) in compression ignition engines, but the low quality of the fuel makes it unsuitable for its use in the general transport sector. One oil-yielding plant that has received particular attention over the last few years is Jatropha, as this plant cannot be used for food and can be cultivated in tropical and sub-

tropical regions. The conversion of vegetable oils into biodiesel is relatively simple and well established both at small and large scale level. It is important to note that biodiesel production is less sensitive to processing scale than ethanol. However, even if the basic esterification process at normal pressure and temperature can be easily reproduced, numerous unwanted reactions and chemical substances can develop during the reaction and contaminate the fuel. This can be

a problem in regions such as Europe where the quality standards for biodiesel are very stringent (see EN 14214 on fuel quality, involving 30 different criteria and thresholds), in order to be used as a reliable fuel in modern car engines.

Figure 2: Conversion route for oilseeds and animal fats to biodiesel

Possible improvements to this process relate to biodiesel yields (which can ideally reach 99%) but sometimes the cost of reaching very high yields is not justified by the additional production. Maximum biodiesel yields and the cost of the feedstock are the main factors determining economic viability.

Oil seeds or

animal fats Seeds

preparation

Chemical or

mechanical extraction

of oil/fat

Proteic meal for feed

Trans -esterification Separation

Methanol Catalyst

Distillation

Distillation

Glycerine

BIODIESEL

MethanolRecycling

Catalyst Recycling

Starch

feedstocks Pretreatment

/ crushing Hydrolysis

Yeast

Animal

feed

Fermentation

Sugar

feedstock Pretreatment

By-products for heat/power or

animal feed

Separation /

distillation

Enzymes

Co-products

ETHANOL




Biogas or landfill gas is produced by anaerobic fermentation of organic waste including

animal manure. The gas can be scrubbed and upgraded to a high quality methane-rich fuel with characteristics similar to natural gas. This high-quality fuel can be compressed and used in spark ignition engines (or in turbines for power). However, the cleaning of the gas, normally required for gas storage, entails extra costs for removing hydrogen sulphides and CO2 that should be duly considered. The use of bio-methane remains limited though in the world (little of the over 250 PJ/year produced in the EU in 200 facilities is used for transport), with the

exception of countries like Germany that are steadily spreading its use.

The anaerobic fermentation of wet organic waste and animal manure, food processing residues or sewage effluents is a well-established technology, both for small scale (e.g. in China and Vietnam) and large scale applications (e.g. in Germany, Italy and Denmark).

Biogas can be an important source of bioenergy, although modest if compared to other sources. Furthermore, it does not have relevance for international trade and an impact on

developing countries.

Lignocellulosic, advanced or ‘Second generation’ biofuels

Liquid biofuels can also be produced from lignocellulosic feedstocks through the so-called ‘second generation’ technologies. These biofuels are expected to be superior to

conventional biofuels in terms of GHG emissions, land use requirements and competition with food crops, natural resource requirements and the security ensured by the wide availability of lignocellulosic material at no (or even negative) costs. Despite all these positive aspects, the global production of lignocellulosic biofuels is still negligible due to the high conversion costs if compared with conventional biofuels that cannot be justified in economic terms.

The recent draft consultation paper on Biofuels and Food Security of the High Level Panel of

Experts on Food Security and Nutrition of the Committee on World Food Security confirmed the improbability of being able to count on second generation biofuels within the current decade; it also confirmed that the scale and logistics required to make these technologies was inappropriate for most developing countries today (HLPE 2013).

Several plants are at an early commercial stage and are mainly located in the United States and in Europe; they make use of locally sourced agricultural residues or energy crops such as

grass. The basic conversion technologies are not new and their full commercial development has been long awaited. The first European commercial plant for the production of transport ethanol from lignocellulosic feedstock (rice husks and giant cane) is located in Italy and is expected to become operational at the beginning of 2013.

Significant R&D development is required for low-cost solutions for the production and management of the enzymes or catalysts required for the process.

These processes can be grouped into biochemical or thermochemical processes and can make use of non-food crops, agricultural residues and woody biomass. Therefore, more biomass can be produced from the same amount of agricultural or non-agricultural land9. Total combustible renewables and waste consumption in 2009 is estimated at around 52 EJ; the vast majority of this being solid and lignocellulosic biomass.

The technical potential of second generation biofuels is highly uncertain. IRENA estimated that the biofuel potential for Africa would be around 50 billion litres, more than half of current total global biofuel production10 (IRENA 2011).

A major barrier for the exploitation of lignocellulosic biomass is related to the development of the supply chain, as dedicated biomass harvesting, storage and pre-processing systems need to be developed for the new bioenergy feedstock. In addition, its integration into existing

infrastructure and handling systems is not an easy task and may require a long time.

9 However, if residues or sustainable harvest of woody biomass (woody fallows) are the feedstock of choice, it can be expected that more productive land will be needed in comparison 10 Considering a 10 million hectare potential for Africa as a whole and an average yield of 5 t biofuels per hectare




Biochemical conversion routes use enzymes and micro-organisms to carry out a structured

deconstruction of lignocellulose into base polymers (cellulose and hemicellulose) and then into monomeric sugars. These sugars are then fermented into ethanol with a process similar to that of conventional ethanol. The difficulty is in breaking the strong bonds of lingo-cellulosic biomass, which requires pre-treatment so that the conversion can take place. Biotechnology advancements applied to enzymes and micro-organisms can provide sufficient activity for the commercial exploitation of these feedstocks.

Thermochemical conversion routes include gasification, pyrolysis or hydrothermal treatment to produce syngas (a gas rich in hydrogen and methane) to be further processed into liquid biofuels (or to be used directly as gas, after cleaning and upgrading) or bio-oils to be further upgraded to transport fuels quality. The syngas obtained can be further processed into biodiesel (through Fischer-Tropsch conversion) or into ethanol or bio-methanol.

Biochemical and thermochemical routes can be basically adapted to a large degree on the

basis of the characteristics of the bioenergy feedstock available and the final form of bioenergy to be obtained (this choice is normally dictated by the market). Biofuels that can be obtained include cellulosic ethanol, biodiesel, but also bio-methanol (methanol produced from biomass and/or the biodegradable fraction of waste), bioETBE (ethyl-tertio-butyl-ether produced from bioethanol11; and bioMTBE (methyl-tertio-butyl-ether produced on the basis of

biomethanol12), bio-coal and syngas.

Figure 3 summarises the different statuses of development (from basic R&D to commercial exploitation) of main liquid biofuels produced from lignocellulosic biomass.

Figure 3: Development status of common ‘Second generation’ biofuels and associated

conversion technology

Source: IEA 2011

3.1.4 Biofuels blending

In Europe, less than 30% of transport fuel is gasoline; therefore, the use of ethanol remains relatively limited. Hence, it is mainly biodiesel that should be looked at when examining the impacts of imports of biofuels to the EU and impacts of EU renewable energy policy on third

11 The percentage by volume of bio-ETBE that is calculated as biofuel is 47% 12 The percentage by volume of bio-MTBE that is calculated as biofuel is 36%




countries. The ability of different biofuels to be blended with conventional fuels and of

making use of the existing fuel infrastructure should be considered when establishing blending targets in order to offer a reliable estimate of how much biofuel could be used in the short-medium term. Table 2 provides an overview of different first and second generation biofuels’ blending characteristics.

Table 2: Overview on different biofuels’ blending characteristics

Source: IEA 2011

For a clear understanding of the issue, it is also important to put different biofuel pathways in relation with their land use efficiency. This is summarised in Table 3 along with expected yield improvements.

Biofuel Blending characteristics

Sugar-based ethanolE10-E15 (E25 in Brazil) in conv entional gasoline v ehicles; E85-

E100 in FFV or ethanol v ehicles

Starch-based ethanol same as abov e

Cellulosic-ethanol same as abov e

Conv entional biodiesel (FAME) up to B20 in conv entional diesel engines

Hydrotreated v egetable Oil (HVP)fully compatible with existing v ehicle and distribution

infrastructure

BtL-diesel same as abov e

Algae oil based biodiesel / bio-jet fuelafter hydrotreating: fully compatible with exxisting v ehicle

and distribution infrastructure

Biogasafter hydrotreating: fully compatible with exxisting v ehicle

and distribution infrastructure

Bio-SG same as abov e

Bio-butanol use in gasoline v ehicles in blends up to 85%

Dimethylether compatible with LPG infrastructure

Methanol 10%-20% blends in gasoline; blend up to 85% in FFVs

Sugar-based diesel/jet-fuelfully compatible with existing v ehicle and distribution

infrastructure




Table 3: Land use efficiency of different biofuel production pathways and expected yield

improvements

Biofuel type Current (nominal)

yields (litres/ha)

Expected

improvement

Main co-product (Kg/L

biofuel)

Conventional ethanol - sugar beet 4000 Low

Conventional ethanol – corn 2600 Low Beet pulp (0.25)

Conventional ethanol – cane 4900 Medium Bagasse (0.25)

Cellulosic ethanol – Short Rotation Coppice13 3100 High Lignin (0.4)

Conventional biodiesel – Rapeseed 1700 Medium Presscake (0.6)

Conventional biodiesel – Soybean 700 Medium Soybean meal (0.8)

Conventional biodiesel – Oil palm 3600 Medium Empty fruit bunches (0.25)

BtL14 – Short Rotation Coppice 3100 High Low temperature heat; pure CO2

Hydrogenated Vegetable Oil 2000 High Same as for conventional biodiesel feedstocks

Biomethane from anaerobic fermentation –

Corn

4000 Medium Organic fertilizer

Syngas – Short Rotation Coppice 3600 Medium Pure CO2 (0.6 L)

Source: Adapted from IEA 2011

Even if lignocellulosic biofuels can bear a promise in the medium term, their

commercialisation is still negligible and can only happen with strong economic support. The construction and operation of a ‘second generation’ biofuel plant requires skills and an availability of input that can be hardly found in developing countries. Furthermore, one of the big advantages of these biofuels is that they can rely on the wide availability of local biomass. In light of this, lignocellulosic biofuels are discussed only marginally in this paper.

3.2 Biofuel policies worldwide

In recent years, many countries have adopted policies to promote biofuel production and consumption. Biofuel policies are motivated by one or more of the following objectives: to reduce energy dependence on imported fossil fuels (energy security), to reduce greenhouse gas emissions in the transport sector (climate change mitigation), and to create demand for surplus agricultural crops (rural development).

Four broad groups of biofuel policy measures can be distinguished: (1) budgetary support, such as direct support to biomass supply and fuel tax exemptions for biofuel producers; (2) consumption targets (nonbinding) or mandates (binding), which set a minimum market share for biofuels in total transport fuel; (3) trade measures, in particular import tariffs; and (4) measures to stimulate productivity and efficiency improvements at various points in the supply and marketing chain (Blanco et al. 2010).

In 2009, the European Union adopted the Renewable Energy Directive (RED), which sets a target of 10% of renewable energy in total transport fuel consumption by 2020. Both the RED and the Fuel Quality Directive (FQD) also establish environmental sustainability criteria that biofuels consumed in the EU have to comply with. In the EU, the RED provides the general framework while the implementation mechanisms (blending mandates, tax exemptions, and

production incentives) are decided at the Member State (MS) level.

13 Assuming average yield of 15 t/ ha for woody crops 14 Biomass-to-Liquid technologies, such as Fischer-Tropsch conversion




In the US, the Renewable Fuel Standard (RFS) program established the first renewable fuel

volume mandate in 2005, setting a minimum volume of biofuels to be used in the national transportation fuel supply. In 2007, the expanded RFS required the annual use of 9 billion gallons of biofuels in 2008 and expanded the mandate to 36 billion gallons annually in 2022, of which no more than 15 billion gallons can be ethanol from corn starch, and no less than 16 billion must be from cellulosic biofuels.

Whereas some countries have established blending mandates (i.e. Brazil, the EU, and the US),

others have set targets on biofuel consumption (i.e. Australia, China, India, Indonesia, and Malaysia). In addition to biofuel targets or mandates, some countries (the EU, the US, and Brazil) also provide production incentives (subsidies or tax credits) and tariffs for biofuels. The following table summarises biofuels policies in major producing countries and regions.

Table 4: Biofuel policies in major producing countries and regions

Country Current production

Mandate or target Production incentives Trade policy

United States

49.2 Bnl ethanol 3.7 Bnl biodiesel

Mandate: 36 billion gallons of biofuels by 2022, of which no more of 15 billion gallons come from conventional sources and no less of 16 billion gallons come from cellulosic ethanol.

Tax credit of US$0.45/gallon ($0.12/litre) for ethanol blenders and US$1.00/gallon ($0.26/litre) for biodiesel blenders from agricultural feedstocks.

Ethanol tariff of US$.54/ gallon ($0.143/litre) plus ad valorem duty of 2.5 %. Ad valorem duty of 1.9 % on biodiesel.

European Union

7.2 Bnl ethanol 10.9 Bnl biodiesel

Mandate: minimum of 10% of transport fuel from renewable fuels by 2020.

Member States can apply tax reductions on biofuels as well as provide production incentives.

Specific tariff of €0.192/litre of under-natured ethanol and €0.102/litre of denatured ethanol. Ad valorem duty of 6.5 % on biodiesel.

Brazil 22.7 Bnl ethanol (sugar cane) 2.5 Bnl biodiesel (soya)

Blending mandate for ethanol of 20–25%. Biodiesel use mandate set at 5% (B5) since 2010 (proposal to increase to up to 10% by 2020.

Tax incentives on fuel ethanol and biodiesel. Tax incentives on flex-fuel vehicles.

Ad valorem duty of 20% on ethanol imported from outside the Mercosur area (temporarily in the list of exceptions). Ad valorem duty of 14% for biodiesel.

India 1.08 Bnl of ethanol (molasses). 0.24 Bnl of biodiesel (Jatropha).

Indicative 20% target for blending for both ethanol and biodiesel by 2017.

Minimum price mechanisms for feedstocks Tax incentives for ethanol or biodiesel.

Ad valorem duty of 28.6% both on ethanol and biodiesel.

China 2.3 Bnl ethanol [corn and wheat]. 0.6 Bnl biodiesel [waste and residues].

E10 for 2020 (12.7 Bnl ethanol) Target of 2.3 Bnl biodiesel consumption in 2020 Target of 15 percent of fuel consumption to be nonfossil fuel by 2020

Production subsidies on ethanol and biodiesel.

Ad valorem duty of 5% on denatured ethanol (30% until 2009) and 40% on undenatured ethanol.

Thailand 0.5 Bnl ethanol [sugar cane, ] 0.7 Bnl biodiesel [palm oil]

Ethanol: E20 mandatory since 2008. Biodiesel: B2 mandatory since 2008 and B5 since 2012.

Tax exemption for ethanol. Investments subsidies for ethanol plants. Soft loans for biodiesel.

No export duties on processed palm oil or biodiesel.

Source: Compilation from several sources, including Mitchel 2011, Blanco et al. 2010, U.S. Department of

Agriculture, Global Agriculture Information Network (GAIN) biofuels reports, various countries and years.




Interest in biofuels in ACP countries is expanding. Climate change mitigation and energy security (i.e. reduced dependency on increasingly expensive oil imports) are frequent rationales behind biofuel policies; however, developing countries also emphasise the potential of biofuel production to stimulate rural development and generate employment opportunities. Furthermore, biofuels produced in tropical regions from sugar cane and vegetable oils have a considerable cost advantage over those derived from agricultural

crops in temperate zones (FAO 2007).

Although many African countries have developed national biofuel policies and strategies, as illustrated in the following table, the regulatory process from strategy and policy formulation to effective implementation and enforcement is very slow.

Table 5: Biofuel policies in selected African countries

Country Strategy Policy instruments Primary Feedstocks

Angola Biofuels Policy 2010 Investment incentives Sugarcane

Botswana Energy Policy 2009

Ethiopia Biofuels Strategy (2007) Blending target Sugarcane, Jatropha

Ghana National Bioenergy Policy (2005)

Jatropha

Kenya National Biofuels Policy (2011)

Pilot E10 blend Sugarcane, cassava, sweet sorghum, Jatropha

Malawi Malawi Energy Regulatory Authority 2009

Blending mandate Subsidies and tax exemptions

Sugarcane, Jatropha

Mali National Biofuel Development Strategy (2009)

Research and pilot studies

Jatropha

Mozambique National Biofuel Policy and Strategy (2009)

Biofuel targets Fiscal incentives

Sugarcane, Jatropha, sorghum

Nigeria Biofuels Policy and Incentives (2007)

E10 ethanol blend B20 biodiesel blend

Cassava, sorghum, sugarcane, Jatropha

Senegal National Bioenergy Strategy (2007)

Production and investment incentives

Sugarcane, Jatropha

South Africa Biofuels Industrial Strategy

Jatropha

Tanzania

Zambia National Energy Policy

Source: Compilation from several sources, including Mitchel 2011, Blanco et al. 2010 UNECA (2011).

According to UNECA (2012), by the end of 2010, about 40 African countries have implemented or are preparing biofuel policies. Policy development shows several gaps: i)

although national policies have been formulated, concomitant regulatory frameworks are lacking, and ii) capacities for land suitability analysis and processing (biodiesel and ethanol) are inadequate.

The New Partnership for Africa's Development (NEPAD) was adopted in Lusaka, Zambia, in 2001. NEPAD's objective is to enhance Africa's growth, development and participation in the global economy. In February 2010, NEPAD was integrated into the structures and processes of

the African Union (AU), with the establishment of the NEPAD Planning and Coordinating Agency (NPCA) as an implementing body of the AU to replace the NEPAD Secretariat.

The Africa Bioenergy Policy Framework and Guidelines provide principles and guidelines for RECs and African Union member states to guide policies and regulations that promote a viable sustainable bioenergy sector. It integrates previous efforts by NEPAD, UN and different Regional Economic Communities (REC) on bioenergy. For reasons of policy coherence and




harmonisation at regional and continental level, the African Union initiated a comprehensive

consultative process to define an Africa Bioenergy Framework that fosters the development of modern and sustainable bioenergy sector in Africa. The Africa Bioenergy Policy Framework and Guidelines were adopted by the CEMA (Conference of Energy Ministers of Africa) in November 2012 in Addis Ababa, Ethiopia.

3.3 Current trends and statistical reviews of biofuel production

in developing countries

Mainly driven by policy support and high crude oil prices, the production and use of both ethanol and biodiesel has increased significantly in recent years. Global production of biofuels has been growing steadily over the last decade from 16 billion litres in 2000 to more than 100 billion litres in 2011. Today, biofuels provide around 3% of total road transport fuel globally (on an energy basis) and considerably higher shares are achieved in certain countries. Brazil, for example, met about 23% of its road transport fuel demand in 2009 with

biofuels (IEA 2012).

Figures 4 and 5 depict global production data in main producing regions. According to the OECD-FAO Agricultural Outlook (OECD-FAO 2012), global ethanol and biodiesel production are projected to continue to expand over the next ten years but at a slower pace than in the past. Driven by policy mandates and renewable energy goals around the world, global ethanol and biodiesel productions are projected to reach respectively some 180 Bnl and 42

Bnl by 2021.

Figure 4: Global ethanol production and projections to 2021

Source: Based on data from OECD-FAO (2012)

The main ethanol producing countries are the United States, Brazil and the European Union. Today some 50% of Brazilian sugar cane, and about 40% of the United States’ corn production are used as feedstock for biofuel production (OECD-FAO 2012). Production and use in the United States and the European Union are mainly driven by the policies in place,

while in Brazil the growing use of ethanol is linked to the development of the flex-fuel vehicle industry. As shown in Figure 4, global ethanol production is projected to almost double over the next 10 years.

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With 46% of global production, the EU is the main producer of biodiesel, followed by the United States, Argentina, Malaysia and Indonesia. Currently some 65% of EU vegetable oil is

used for biodiesel production. Global production is projected to reach 42 Bnl in 2021 (from 24 Bln in 2011) and the EU is expected to remain the main biodiesel producer (OECD-FAO 2012).

As pointed out by several authors (e.g. Lamers 2011), assessing the exact amounts of biofuel production in developing countries is particularly challenging. Aiming at achieving energy security and increasing added value, several developing countries have implemented biofuel policies in recent years. In most cases however, biofuel production is far below

expected levels. Some of the reasons for the slow development of the biofuel industry in these countries are due to limited resources and high feedstock prices, which promote the exports of biofuel feedstocks instead of biofuels. According to the OECD-FAO (2012), except for Brazil and Argentina, biofuel production and use in developing countries are expected to remain below targets.

Focusing in particular on African countries, figures 6 and 7 show data on biofuel production

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Figure 6: Ethanol production and trends in Africa


Ethanol production in Africa reached 1.6 Bnl in 2011, representing less than 1.6% of global production. The main producing countries are South Africa, Ethiopia and Nigeria.

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Figure 7: Biodiesel production and trends in Africa


Biodiesel production in Africa is also very small and was around 0.3 Bnl in 2011; this is, less than 1.1%. Biodiesel production is concentrated in a handful of countries: South Africa, Mozambique, Tanzania and Ghana.

Figures 6 and 7 also show future trends. Projections for biofuel production in many developing countries are quite uncertain following little or no production increases in recent years. The production of fuel from new feedstocks, such as Jatropha or cassava, is still often in plans for large scale projects and being currently implemented on a small scale (OECD-FAO 2012).

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Section 4: Evaluation of the economic impacts of the

production of biofuels in developing countries

4.1 Trade patterns of biofuels

4.1.1 Trade flows for biofuels and related feedstocks: recent trends and

projections

Statistical data on trade in biofuels is very scarce. Tracing biofuel flows is not straithforward

because there are no specific codes identifying biofuels in international trade nomenclature. Both ethanol and biodiesel are classified under the HS-6 categories as defined by the UN15. Nevertheless, these codes refer to the product regardless of the final use and, therefore, it is not possible to get a close picture of biofuel trade volumes. Ethanol is classified as an agricultural product under HS code 2207, which covers un-denatured (HS 220710) and denatured alcohol (HS 220720). Biodiesel is an industrial product, classified under ‘other

chemical products, including biodiesel’ (HS 382490). Even though a new code for biodiesel was introduced in 2008 (FAMAE), other forms of biodiesel could still enter under other tariff classifications.

EU ethanol imports nearly reached 0.5 Mt in 2011. Brazil is the main exporter of ethanol to the EU, while imports from Brazil are decreasing in other countries, such as Guatemala, Egypt, Pakistan and Bolivia who are increasing their exports. In 2011, 18% of EU ethanol imports came

from Africa (Eurostat). Egypt, Sudan and South Africa are the main exporters of ethanol into the EU. Developing countries under preferential trade agreements can export ethanol to the EU without paying any tariffs. Two preferential trade schemes apply:

• The Generalized System of Preferences (GSP), for Bolivia, Colombia, Costa Rica, Ecuador, Guatemala, Honduras, Panama, Peru, El Salvador, Venezuela, Georgia, Sri

Lanka, Mongolia, Moldova, and under the EBA initiative for the Least Developed Countries;

• The Cotonou Agreement, for the African, Caribbean, and Pacific (ACP) countries excluding South Africa.

Figure 8: EU ethanol imports (globally and originating from Africa)

Extra EU imports (kt) Imports from Africa (kt)

Source: Based on data from EUROSTAT

15 See: http://comtrade.un.org/db/

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With a global consumption share of around 56% in 2011, the EU is a major biodiesel consumer, but a minor consumer of ethanol, globally. EU biodiesel imports went above 2.5 Mt in 2011, representing nearly 90% of total biodiesel trade. At present, Argentina, Indonesia and Malaysia are the major biodiesel exporters to the EU. Imports from African countries are not significant. EUROSTAT has not reported on any imports originating from African countries in the

last years (only small volumes from South Africa and Morocco before 2008 were reported).

Figure 9: EU biodiesel imports (globally and originating from Africa)

Extra EU imports (kt) Imports from Africa (kt)

Source: Based on data from EUROSTAT

Global biofuel trade is projected to increase strongly to reach 7% of global production, from 4% of global production currently (OECD-FAO 2012).

Figure 10: Previsions for the development of the global biofuel markets


Biofuel mandates in the United States and the EU are blamed to have impacts on markets for

agricultural commodities (Mitchell 2008). Since biofuel feedstock competes for land with other food/feed uses, impacts on global land use could also be significant. The link between biofuels and food prices has been widely recognized. However, estimates on the contribution of biofuels to recent rises in food prices are very variable (FAO 2009, UNCTAC 2012).

Recent investigations based on the FAPRI model (Fabiosa et al., 2010) estimate the impact of various scenarios of biofuel expansion in the United States on prices and land use. In this

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partial equilibrium model, yields are assumed as constant and most of the production

changes occur through land allocation changes, overstating the land and price effects. There is no explicit modelling of land markets. Despite these rigidities, global land expansion and agricultural price effects are surprisingly moderate, partly because supply adjustments are substantial via stock adjustment, flexibility in existing land use and a world market response to higher prices.

Rosegrant et al. (2008) uses the IMPACT model to analyse several biofuel scenarios. The

IMPACT model incorporates land area and yield responses to prices. Rosegrant suggests that biofuel demand contributed about 30% of the food price increases during the period covering the early 2000s until 2007. The latter figure refers to the effect on the weighted average grain prices, with the largest effect on corn prices (39%) but lesser effects on rice and wheat prices (21% and 22%, respectively).

General equilibrium analyses provide a more encompassing assessment of the implications of

biofuels development, because linkages across economic sectors are explicit in the model. The main disadvantage of these analyses is the aggregation of crops in a few sectors.

Keeney and Hertel (2009) propose a model incorporating land, yield, and trade responses to the biofuel expansion. Aggregate land supply is fixed but land can move across uses according to relative returns. The yield response to prices is a much-needed addition. Keeney

and Hertel make the yield response explicit. It depends on the substitution between land, labour, capital, and other factors. Keeney and Hertel assume that United States imports of ethanol from Brazil increase proportionally to the total U.S. ethanol demand, irrespective of price levels, a questionable assumption as explained later in the modelling section and with important consequences for land allocation.

Birur et al. (2008) use the Global Trade Analysis Project (GTAP) database developed by Lee et

al. (2005, 2008) to analyse the impact of biofuel production on global agricultural markets. The latter authors decompose land into 18 agro-ecological zones (AEZs). Birur et al. consider three biofuels: ethanol from grains, ethanol from sugar crops, and biodiesel from vegetable oils. They treat the two ethanol productions as imperfect substitutes. The crops considered are coarse grains, oilseeds, sugarcane and other grains.

Banse et al. (2008a) use a modified GTAP-E model to analyse the impact of the EU biofuel

directive on agricultural markets.

Hertel et al. (2010) conduct an ex-ante analysis of future biofuel mandates in the United States and the EU, focusing on the impacts on third countries. They use a CGE model (GTAP) that incorporates by-products, particularly DDGS (distillers dried grains with soluble), the main by-product of maize-based ethanol which is used as animal feed. The results for 2015 show a decrease in EU exports and an increase in imports, particularly for oilseeds. Impacts on global

land use include an increase in oilseed areas in Africa as well as a rise in sugarcane areas in Brazil.

Timilsina et al. (2012) use a dynamic CGE model to simulate biofuels mandates and targets for both developed and developing countries. Their model presents more detailed representation of land-use change than the existing studies and differentiates between

ethanol and biodiesel, further classifying ethanol into three categories by type of feedstock (i.e., corn ethanol, sugar ethanol, and other grains ethanol). This study only accounts for first generation biofuels. They analyse the impacts of implementing the announced targets of biofuel usage by 2020. Changes in world agricultural prices vary from 2.3% (wheat) to 9.7% (sugarcane).

There is a strong agreement between the studies in the direction of the changes. The output

of cereals, sugar crops and oilseeds increases and so do prices. However, the magnitudes of these effects differ between the studies reported above, mainly because the modelling approach (partial or general), model specification and representation of biofuel by-products.




4.1.2 Regional trade arrangements and South-South cooperation

EU biodiesel trade regimes have continuously evolved in recent years to reflect changes in product definition. Until 2007, biodiesel was traded as ‘other chemicals’. From 2008, a new

code for fatty-acid mono-alkyl esters (FAMAE) was created. In 2009, with the establishment of the anti-dumping and countervailing duties against United States biodiesel imports, five additional biodiesel categories were created. In 2010, the tariff lines were revised again. Preferential access is given for developing countries under the Generalized System of Preferences (GSP) and bilateral or multilateral agreements such as the Cotonou Agreement (for ACP countries), the Everything-But-Arms Initiative (for least developed countries) or the

Economic Partnership Agreement (EPA).

In the case of ethanol, fuel ethanol is traded under the classification of denatured and under natured ethanol. Tariffs were set via Regulation 2204/99 and have been applied since 2000. Due to the various end-uses (industrial, pharmaceutical, and beverage) it remains difficult to identify the final use of the imported ethanol. Preferential access is given to developing countries under the GSP and the EPA.

Therefore, most African developing countries benefit from preferential access to the EU markets for ethanol and biodiesel. Recent initiatives on South-South and triangular cooperation are playing an increasing role in the development of a biofuel industry in Africa. Brazil is one of the leading countries in South-South cooperation projects on biofuels and has signed a number of regional cooperation agreements which usually include technology and

knowledge transfer, research and development, trade and investments.

A number of South–South cooperation projects on biofuels are currently under development in Africa. In the framework of the IBSA (India, Brazil and South Africa) Dialogue Forum, South Africa has established an important cooperation agreement with Brazil to cooperate in first and second generation biofuels. In the case of Mozambique, important initiatives have been undertaken in the framework of the Community of Portuguese Speaking Countries with the

signature of cooperation projects and investments by Brazil and Portugal. In Western Africa, the Economic Community of West African States (ECOWAS) is also promoting cooperation on biofuels and has recently established the Regional Centre for Renewable Energy and Energy Efficiency (ECREEE). A number of countries have signed agreements on South–South cooperation with Brazil, as in the case of Senegal, for developing small-scale biofuel production.

Japan has been very active in triangular cooperation initiatives, implementing bilateral and triangular projects with the Association of South-East Asian Nations (ASEAN). Furthermore, the Japan International Cooperation Agency has recently signed an agreement with the Brazilian Cooperation Agency (ABC) to implement projects in Mozambique. The EU and Brazil signed an agreement to promote the implementation of triangular cooperation projects between the EU, Brazil and interested developing countries.

4.1.3 Biofuels and food prices on an international, regional and local

level

Even if exports of biofuels from Africa are negligible in terms of trade flows, the production of

biofuels for national, African and international markets outside the EU is affecting global food prices. This chapter tries to gather the opinions on the impact of biofuel production for transport compared to other driver factors, especially the increased global demand for food and feed. This point is very controversial, depending on the sources.

Biofuel markets and food price volatility

Volatility refers to variations in economic variables – especially variations in agricultural prices over time. The variations in prices become problematic when they are large and cannot be




anticipated and, as a result, create a level of uncertainty which increases risks for producers,

traders, consumers and governments16.

Schmitz (2012) writes that the high volatility over the last five years for agricultural commodity

prices is not an exception if one looks over a long period of time. Therefore, there is no increased upward trend for volatility and on the other hand, he does not see any reduced risk of volatility in the future. However, the price level for agricultural raw products will continue to grow and will be 20 – 40 % higher in the next decade, compared to the last

decade17.

According to FAO (2011), stronger demand for food crops and animal products in

conjunction with slow growth in agricultural productivity and low stocks results in upward

pressure on prices18. Furthermore, agricultural commodity prices are becoming increasingly

correlated with oil prices. Oil prices affect agricultural input prices directly and indirectly (through the price of fuel and fertiliser, for example). In addition, depending on the relative

prices of agricultural crops and oil, biofuel production may become profitable (without government support) in some OECD countries19. If the trend towards high and rising oil prices persists, this could make biofuels competitive with fossil fuels and encourage their expansion even if biofuel policies are phased out20.

Financial investment in commodities may also have contributed to an increasing correlation

between oil and non-oil commodity prices because of the significant share of such investment that tracks indexes containing a basket of different commodities. High and volatile oil prices (if that is what is expected) could therefore contribute to higher and more volatile agricultural prices, through higher input costs, higher demand for the commodities used in the production of biofuels (sugar, maize, vegetable oils), through competition for land with commodities that are not used directly for the production of fuel, and possibly through

financial investments in commodity baskets21.

The financial market is blamed for the high volatile agricultural commodity prices, but eventually there was not enough attention given by all governments to stocks. The level of international stocks in agricultural commodities is a major decisive factor on the extent to which markets can deal with, for instance, weather related supply shortfalls. In other words, stock levels affect the availability of supplies and therefore can have a major impact on

prices especially in the short run. Stock levels can be affected by one-off events such as a particularly bad harvest but also by persistent demand growth that exceeds the growth of crop production. Another important factor is strategic decisions by countries to build up or reduce stocks. A frequently voiced concern is that information on international stock levels is

poor and non-transparent, implying uncertainty about stock that may have repercussions for

price expectations. Indeed, falling stock levels have been suggested by many as an

important influence for recent price spikes (FAO et al, 2011). Purchasers are naturally alarmed if stock levels are seen to be low and will tend to bid up prices to ensure they can satisfy their market. Partly as a response to these concerns, the report prepared for the 2011 G20 meeting of agricultural minsters by several international organisations (FAO et al, 2011) calls for an Agricultural Market Information System (AMIS) to improve information on stocks22.

The EU – but also the US - biofuels policies make the consumption of biofuels obligatory; if petrol stations are enforced to sell just blended fuel then a certain biofuels percentage has to be added regardless of the price of biofuel. In a free market the price is established by

16 FAO Price Volatility in Food and Agricultural Markets - Policy Responses, 2011; p 5 17 SCHMITZ, Michael Justus-Liebig-University Giessen: Reasons for the level and the volatility of agricultural commodity process on international markets (summary), 2012. This study was written for the Union zur Förderung von Oel- und Proteinpflanzen e.V. (Ufop; Union to support the oil- and protein-crops) and the Verband der Deutschen Biokraftstoffindustrie e.V. (VDB; Association of the German Biofuels Industry) 18 FAO Price Volatility in Food and Agricultural Markets - Policy Responses, 2011; p 11 19 FAO Price Volatility in Food and Agricultural Markets - Policy Responses, 2011; p 10 20Kretschmer, B, Bowyer, C and Buckwell, A (2012) EU Biofuel Use and Agricultural Commodity Prices: A Review of the Evidence Base. Institute for European Environmental Policy (IEEP): London; 2012; p 25 21 FAO Price Volatility in Food and Agricultural Markets - Policy Responses, 2011; p 10 22 Kretschmer, B, Bowyer, C and Buckwell, A (2012) EU Biofuel Use and Agricultural Commodity Prices: A Review of the Evidence Base. Institute for European Environmental Policy (IEEP): London; 2012; p 28 ff




balancing demand and supply; if prices rise, then the demand should reduce. However, if

the demand is enforced, then there is no need to reduce prices. Prices might go down if too many suppliers enter the market.

Oxfam (September 2012) reports that the severe drought in the United States during the summer of 2012 has reduced the amount of corn and soy expected to be harvested and caused a sudden rise in prices. Oxfam argues that the EU and the United States biofuel mandates create a constant demand for soy and corn. As a result, soy and corn prices have

risen sharply and famers have turned to other commodities - including wheat - to feed livestock. This increased demand came on top of forecasts of poor wheat harvests in Russia and the Black Sea region in 2012, sending wheat prices soaring, which affected the price of everyday essentials such as bread.

According to the World Bank, biofuel production costs will be volatile, as 80 % of ethanol and

90 % of biodiesel costs are variable costs 23 and many papers and experts agree that biofuels

and food prices will remain volatile – and generally prices will be higher than in the past

decades.

Biofuels and rising food prices

In terms of the relationships between biofuel mandates and the rise in global food prices a lot of authoritative reports have been written, including the widely mentioned study by IFPRI as

well as the most authoritative report written by 10 inter-governmental organisations including the World Bank, WTO and the FAO for the G20 which concludes “projections encompass a

broad range of possible effects but all suggest that biofuel production will exert considerable

upward pressure on prices in the future” 24. This is also confirmed by other authors such as Flammini (2008). The evidence of the contribution of biofuel policies to rising and increasingly

volatile food prices on international markets is compelling and led these 10 international

organisations, including World Trade Organization, to recommend in 2011, that G20 governments (including the EU) should abolish biofuel mandates and subsidies.

The High Level Panel of Experts on Food Security and Nutrition (HLPE FSN), called on by the UN to investigate causes of food price volatility concluded in 2011: “After some initial debate, hardly anybody today contests the fact that biofuel production was a major factor in the recent food price increases” (…) “Indeed limiting the use of food to produce biofuel is the first

objective to be perused to curb demand. Mandated incorporation of biofuel in liquid fuel and financial support should be abandoned (HLPE FSN 2011 p. 40)25.

However, the extent to which biofuels contribute to rising food prices is highly debated. More and more authors suggest that growing population, incomes and demand for food have had

a more important impact on food prices than biofuels production26.

Assuming that biofuels have some limited impact on agricultural commodity prices on the

world market, even then, inland market prices in developing countries will not necessarily react in the same way as world markets and there is no causally determined relation to hunger and poverty in developing countries27.

In this sense, in relation to the 2010/11 food crisis in the SSA region, low and declining

productivity of agriculture, coupled with exceptionally unfavourable weather conditions and

rising international oil prices, seems to be more prominent drivers behind rising food prices (PANGEA 2012).

23 Donald Mitchell, Lead Economist Africa, The World Bank, Dar es Salam 2009 24 See FAO et all 2011 http://www.fao.org/fileadmin/templates/est/Volatility/Interagency_Report_to_the_G20_on_Food_Price_Volatility.pdf 25 http://www.fao.org/fileadmin/user_upload/hlpe/hlpe_documents/HLPE-price-volatility-and-food-security-report-July-2011.pdf 26 http://www.globalaginvesting.com/news/NewsListDetail?contentid=1400 27 SCHMITZ, Michael Justus-Liebig-University Giessen: Reasons for the level and the volatility of agricultural commodity process on international markets (summary), 2012




Some local food staples (maize, millet and sorghum) are mainly produced and consumed

locally and, in general, local markets for such crop appear quite isolated from the global markets as a recent analysis from PANGEA (2012) highlights.

This is due to the low integration of these markets with global commodities markets, as a result of the lack of access to “real time” information but also of the poor state of infrastructures, key to understanding the very limited extent to which these crops are traded and exported (lack of proper storage and preservation of the agricultural produce, including facilities for

chilling, freezing, drying, transport, etc. instrumental to extend the markets, Practical Action 2012).

This is particularly evident when analysing the low correlation between prices of some African

staple crops (wheat, rice and millet) and their prices on global markets over the last ten

years. Price increases in poor African countries were generally, significantly lower than the relative rises in global food prices.

Food access and affordability

Bioenergy has the potential of either increasing or reducing food availability for smallholders depending on the policy behind its development and its impacts28. On the one hand, the development of modern bioenergy technology and application can provide some positive answers as in the case of dissemination of domestic and institutional biogas units (such as

biogas for services and businesses such as hospitals, schools, farms etc.) that convert agricultural and human residues to meet both the energy needs (cooking and heating) and provide powerful natural fertilisers (affluent of the bio-digesters) to increase yields. SNV (2011) reports that the large-scale domestic biogas programmes currently under implementation in Kenya, Uganda, Ethiopia, Tanzania, Burkina Faso, Senegal and Rwanda with the support of the Netherlands Government will increase agricultural output by 25% at least for small

growers. Such results help to increase food production and availability. Sustainable liquid biofuels production enables a motorisation of traditional farming, or the feeding of multifunctional platforms currently disseminated mainly in Burkina Faso, Mali and Senegal by the UNDP, and which contributes to increased food security and overall availability in the Sahel.

Food access and affordability is directly related to food prices. Food is becoming more

expensive, and biofuels production is - with and without EU blending requirements -

becoming more prevalent. Studies on the correlation of these two trends found that the

effect of biofuels production upon food costs varies across crops and locations; and that certain types of biofuels production do not compete with food production for water or land, such as second generation biofuels feedstocks grown on non-agricultural land resulting in a lower impact on commodity prices.

The effects of biofuels development on national food security can be significantly different for a net exporter or a net importer of food and agricultural commodities. As a reference, in 2010 an average of 10.46% of food merchandised in the SSA region was imported, ranging from 4.71% in Zambia to 31.10% in the Gambia (World Bank 2012). Developing countries that rely

on importing basic food stuffs from the international market become vulnerable. The food

crisis of 2008 was at the origin of food riots across several African countries that rely heavily on food imports, including Burkina Faso, Senegal, Cameroon and Egypt.

A recent World Bank study (June 2012) confirms that the current biofuel promotion targets set by 40 countries within the context of presently commercially available technologies that compete for raw materials used in food production put pressure on food supply and food prices with pronounced implications for global poverty in terms of income distribution. The

study analysed effects of large scale expansion in biofuels using global computable general equilibrium and a global income distribution dynamics model implying that it will result in higher food prices which will be more pronounced in developing then in developed countries. In terms of the effects on the GDP per capita, countries with already advanced

28 D Diop, Draft Pan African Biofuels Policy Framework and Guidelines, October 2012




biofuel production will experience an increase whereas countries which have ambitious

targets but low level of current production will experience a decline. “Countries such as India, Sub-Saharan Africa, Middle East and North African regions, Russia and China would bear the highest losses in their per capita GDP.” The study notes the potential positive effects of higher wages of unskilled rural labour in terms of reduction of migration out of agriculture. However, in terms of poverty increases due to the large scale expansion of biofuels, it notes an increase in poverty whether measured at 1.25$ PPP per day or 2.50$ PPP in South Asia (India) and Sub-

Saharan Africa. The study concludes that the increase in food prices especially in developing

countries is of major concern and that “from the perspective of global poverty the

development of a biofuel technology that uses less food crops is critical” (Coraraton and Timilsina 2012).

On the other hand, when food crops are diverted to biofuel production, there may be a

direct impact on food availability. Change of land use implies that land used to growing

traditional food crops is converted to large-scale sugar cane and Jatropha plantations; there is a risk of reducing local food availability.

The Special Rapporteur on the Right to Food argues that a drop in local or regional food

production has a far more pronounced impact than international commodity prices on local

retail prices, especially in regions that are relatively isolated from international markets, such

as sub-Saharan Africa. For example, the expansion of sugarcane and Jatropha production for biofuels in Mozambique has resulted in the subsequent displacement of cultivation of food for household use as well as bananas for sale on regional markets. Hence, people were forced to buy food on the market while at the same time reduced supply pushed up local prices (Oxfam 2012 p 14).

While it is clear that small-holder farmers can improve their incomes through diversification

and the access of the biofuel market, as an alternative to the food market, there could be important drawbacks, linked to the different patterns of interaction of biofuel expansion policies with food markets depending on the commodity and locality in question. A bad example is reported in the box below.

Box 4: Exposure of a Cambodian community to shocks of the volatile cassava market

The growing demand for cassava as biofuel feedstock in Thailand and China has incentivised farmers in Banteay Meanchay, Cambodia29, to move from traditional agricultural patterns to the cultivation of cassava. Prior to 2006, only 4 of 32 households in the two surveyed villages reported having any cassava under cultivation; however, by 2009, only two of them did not cultivate cassava. Clearing forests and adopting a new crop type demanded considerable

investment; therefore, 17 out of 32 surveyed households borrowed money for this purpose.

In late 2008, cassava prices crashed as world agricultural commodity prices plunged, and the Thai/Cambodian border closed due to on-going border tensions. Cassava growers from Banteay Meanchay lost their market, which has had severe consequences for their livelihoods and food security. By the time of the cassava price crash, many farmers only cultivated this crop and no food. Therefore, their options of buying food and repaying debts

were thus limited to selling a portion of land, selling livestock or for the (already) landless, to migrate in search of wage labour (wages for unskilled labour are below the subsistence level).

29 Hought, J., Birch-Thomsen, T., Petersen, J., de Neergaard, A., & Oelofse, M., 2012). Biofuels, land use change and

smallholder livelihoods: A case study from Banteay Chhmar, Cambodia




4.1.4 Typology of the investors and business strategies behind biofuel

investments

Generally, the primary concern of an investor is to minimise risk while maximising return, as opposed to a speculator, who is willing to accept a higher level of risk in the hopes of collecting higher-than-average profits30.

In the biofuels sector, there are the following types of investors:

• Institutional investors: these are local and international investment promotion bodies such as sovereign funds, other government funds aimed to unlock investments in the biofuels sectors, multilateral funds such as the African Development Bank, International Finance Corporation (IFC) and the European Investment Bank (EIB). These institutions are likely to provide soft loans and attractive packages to mitigate

the risks of the equity providers. Institutional investors focus less on short-term return but on sustainability and overall long-term economic and financial gains. A success case presented in many reports is the ADDAX ethanol (from sugar cane) project that is supported by a large group of development banks;

• Private equity funds. For instance the ECOWAS Bank for Investment and Development has established the FABER/ABREF funds since 2008 (http://faber-abref.org/). Some EU

pension funds, such as the Dutch railway pension fund have invested in biofuels in Africa (Mali Biocarburant). To date, very little biofuels projects have been supported by the traditional private equity investors and local banking institutions. There is a need to educate or raise awareness on the opportunities of sustainable biofuel projects;

• Traditional agribusiness and energy companies. These companies constitute the bulk

of the investors: CSS (Senegal), Diligent and Sunbiofuels (Tanzania).

There are also other ways of differentiating among investors:

a) Local or foreign investors; b) Active (driving an investment project/strategic investor) or passive (benefiting

financially from a project without having much influence on it/financial investor) investors;

c) Private (individuals or group of people, companies) or public (governments, state funds) investors.

The differentiation between local and foreign investors might be important for political discussions but does not influence investment projects, as both are following the same goals, to maximise the return. Private as well as public investors could invest actively in investment projects as strategic investors who push for value-adding over a longer time period or

participate more passively, focusing on high returns without much intervention; the latter type of investor is usually called a financial investor.

In case of active or passive investments one could distinguish between the active investor who supplies firms with capital and the passive or strategic investor who brings in know-how, technology, management skills, marketing techniques, intellectual property, clientele, a vision and a sense of direction.

In case public investments by governments are not primarily profit driven, these investments have to be profitable in the long term in order to become sustainable. Besides achieving a return on the investment, public goals could be employment generation and others (see below).

Government investments could be indirect investments to improve the business environment such as building channels and drainage systems or also infrastructure, such as paved roads to

conversion plants. Tax havens or exemption of biofuels from mineral oil taxation31 could also be considered as form of indirect government’s investment. Also in the European Union biofuels are often completely or at least partially exempted from mineral oil taxation; in

30 http://www.investorwords.com/2630/investor.html 31 ELSEVIER Peters J., Thielmann S.: Promoting biofuels - Implications for developing countries; 08; p 1539




Austria for example, the biofuels component is completely exempted and in Germany it was

the same; however, this is now changing towards partial taxation.

Biofuels business strategies are often long-term strategies as plants for feedstock crops (Jatropha, palm, eucalyptus and others) need several years before enabling a first

commercial harvest (Jatropha = 4 years, palm = 40 months after seed planting in the nursery32, eucalyptus = 7 years) and also have a long life cycle of more than 20 years if the investor want to make full use out of the plantation33. This means that the risk is also higher –

this makes Jatropha not a very suitable crop for small-holders as main crop for income generation.

The chosen crops require preparation for planting and a few years to reach their maximum annual yields. The planning and construction of large conversion plants requires a period of several years before becoming operational.

Box 5: Business strategies

Business strategies behind biofuels investments could focus on:

� Production of an exportable product to market outside the country � Diversification of agribusinesses; e.g. large soya farms invest in a biodiesel plant; sugar

companies diversify into bioethanol � Reduction on energy imports by building up own production and local distribution

(and also eventually having fodder e.g. cakes as a by-product); consequently, there is an improved trade balance

� Reduction of national fuel wood consumption and the widespread practice of charcoal burning34

� Poverty reduction35 also through encouraging foreign direct investment � Combination of all (e.g. Brazil).

When biofuel projects are driven by foreign direct investment, then the business climate of the potential countries where investment should take place is crucial. As the World Bank has noted, there are many developing countries that have “suitable land available” that is either not cultivated or produces yields that are well below its potential36. The issue is about

attracting investors for biofuel feedstock production or for cultivation of other commodities.

Business and investment environments in the developing countries

Through public action, developing country governments could encourage substantial improvements in business and investment. “Improve the investment climate!” is the dominant policy advice in addition to informal relationships that should be replaced with governance

through formal rules. Above all, this means the legal protection of property rights and the legal enforceability of contracts37.

In 2011, many countries therefore continued to liberalise and promote foreign investment in various industries to stimulate growth. At the same time, new regulatory and restrictive measures continued to be introduced. They became manifest primarily in the adjustment of

entry policies for foreign investors (in e.g. agriculture, pharmaceuticals), in extractive

32 Oil Palm Immature; p 2

33 Sugarcane, sugar beet, wheat, maize and others could be used in the same year when planted 34Aubry S., "(Bio)fuelling injustice? Europe's responsibility to counter climate change without provoking land grabbing and compounding food insecurity in Africa", The EuropAfrica 2011 Monitoring Report on EU Policy Coherence for Food Security, FIAN, 2011; p 45

35Amezaga, J. M., G. von Maltitz and S. Boyes (Editors, “Assessing the Sustainability of Bioenergy Projects in Developing Countries: A framework for policy evaluation”, Newcastle University, 2010; p 16 36 Significant discrepacies exist in estimates of agricultural land availability, as it will be shown in section 4.4. 37 Moore M. and Schmitz H., Institute of Development Studies: Idealism, Realism and the Investment Climate in Developing Countries; 2008




industries, including nationalisation and divestment requirements and in a more critical

approach towards outward FDI38.

However, in the poorest developing countries, businesses frequently operate in investment climates that undermine their incentive to invest and grow. Businesses seek to maximise the risk adjusted rate of return to investment after taxes. The literature highlights seven investment climate constraints that affect the rate of private investment and the survival and growth of firms:

• Macro level stability: macro instability (economic, social and political) deters investment by making future rewards more uncertain or undermining the value of assets. Studies show that the greater the level of instability, the lower the rate of private investment and growth. Instability also increases the risk of firms going bankrupt, suffering slower growth or contracting if political conflict ensues. Fiscal and monetary policies that reduce inflation, polices that help to establish a competitive

exchange rate, and political and social stability are needed to sustain high rates of investment and growth;

• Good Governance: crime and corruption remain a substantial risk for attracting required investments to create jobs and growth. Greater transparency and accountability, the simplification of administrative procedures and merit‐based

human resource management in public administration makes it possible to curb corruption;

• Business regulation and licensing: whereas firms need to be regulated and licensed, if the costs they incur in complying with regulation are unnecessarily high, business entry and firm growth will be lower. The literature points to faster growth when countries

improve their rank in the World Bank’s Doing Business Index, especially if they move from being one of the worst performers to being amongst the best. There is some evidence also of poor licensing and regulation leading to low entry rates of new firms and lower productivity and the growth of established firms. However, by itself, better business regulation may not result in faster economic growth;

• Institutions and the legal system: there is strong cross-country evidence in the literature

that weak institutions, particularly for the protection of property rights, and an ineffective judiciary that is unable to enforce contracts, reduce investment and growth. This is supported by firm level evidence which shows that secure property rights and better contract enforcement enable firms to grow: they increase their incentives to invest in the longer term, feel secure in trying out new suppliers and enter into more complex contracts. Better systems of registering property, improved security

of land tenure and reforms that reduce the cost of contract enforcement, such as promoting alternative dispute resolution, are policies that support better institutions and legal systems;

• Taxation: excessively high rates of tax exact a high cost in terms of lower private investment and growth. They reduce the incentive to invest because the after tax returns to investors are lower. In addition, the cost of compliance with the

administration of taxes can be high. The literature shows that lower rates of tax can increase investment and growth. Higher rates of tax can decrease business entry and the growth of established firms, with the medium sized firms hit hardest, as the small can trade informally, and the large avoid taxes. As well as reducing tax rates, policies that broaden the tax base, simplify the tax structure, improve administration and give

greater autonomy to tax agencies help to reduce this constraint;

• Financial constraints: firms need to be able to access external finance to invest more. Moreover, the higher the cost of capital, the lower the expected rate of return to the

38 UNCTAD: World Investment Report 2012; p VII




entrepreneur. There is a robust body of literature that shows that financial deepening,

measured by the ratio of private credit to GDP, results in higher rates of growth and faster growth in the incomes of the poor, especially in the poorer countries with less well developed financial sectors. Studies show that firms able to access external finance are more likely to survive, invest and grow than those denied access;

• Infrastructure: access to infrastructure (roads, electricity and communication) allows firms to become more productive, reduce transaction and transportation costs (roads,

railways) and expand their businesses by reaching markets further afield. There is ample evidence to show that greater investment in infrastructure leads to faster growth. Studies also point to higher levels of investment, greater productivity and faster growth of firms that have better access to infrastructure, especially in the poorer countries where infrastructure is less developed. Greater investment in infrastructure, public and private and higher expenditure on maintenance are needed to reduce

this constraint39.

Besides these seven arguments, there might be another which is worthwhile mentioning.

• Reputation: besides objective indicators, there is also a certain image that developing countries produce individually. An example might be Paraguay which does not attract so much international investment (investment from outside Latin America) as

Argentina, Uruguay or Chile even if important indicators show a much better investment climate.

Box 6: Using the available capacity and advantages to develop biofuels

For developing economies, where project finance for capital intensive industries is a major

barrier to investment, it makes practical sense to develop the biofuels sector using the backbone of already existing industries. This goes a long way to reducing the overall investment costs of a project.

A typical example is found in first generation biofuels - the establishment of annexed ethanol

distilleries on existing sugar mills. An autonomous distillery would cost significantly more as there is still need to invest in a sugar processing plant40.

Developing countries usually want to create jobs, attract foreign money because of limited local financing opportunities, assist in the establishment of prosperous companies which will also later pay taxes; concurrently, the developing countries want to retain certain controls over land resources for example. This requires an operable balance between the investors and the investment seeking developing countries to create a win-win situation.

The role of oil companies

When it comes to the future of renewable energy, oil companies claim to be the biggest investors in the race to create green fuels. During the last decade, the industry argues to have invested USD 71 billion on zero and low emission and renewable energy technologies. However, the American Petroleum Institute (API) reports that that only USD 9 billion of the USD 71 billion was spent on renewable energy whilst the rest was attributed to greening up the

fossil fuel business41.

Therefore, it may be argued that the oil companies are aware of the positive image of renewable energy but as their business models are built on fossil fuels, it does not seem to

change their business strategy but rather absorb substantial funds to green-wash fossil fuels.

39 SINHA S. et FIESTAS I., Nathan Associates. Inc.: Literature review on the constraints to investment in developing countries Department for International Development - Final REPORT, February 2011; p 2 ff 40 UNEP: Global Assessments and Guidelines for Sustainable Liquid Biofuels Production in Developing Countries: A GEF Targeted Research Project, 2012; p 115 41 http://www.businessweek.com/articles/2012-05-10/big-oils-big-in-biofuels#p1




For example, British Petroleum (BP) changed its logo to a sunflower in 2000 and its slogan to

“Beyond Petroleum”. It started promoting “thinking outside the barrel”. However, this did not mean in any way that the company was abandoning oil and gas - quite the opposite: it denoted “exploring, developing and producing more fossil fuel resources to meet growing demand”42.

When looking at many of the failed biofuel investment projects, it becomes obvious that the calculation was often not done properly and that investors were frequently undercapitalised;

this is accompanied by the long start-up phase until initial revenues could be expected. Many projects simply run out of money like Ethanol Africa in South Africa or biofuel companies that have been legally sanctioned by a court for deliberately misleading the public, such as Greenleaf Global PLC (London) who had a Jatropha project running in Togo. There have also been problems stemming from cases of investors and adventurers collecting money on the free market without being entitled to do so; this is equally considered as

another means of misleading the public.

4.2 Potential economic gains from biofuels in developing

countries along the value chain

The development of biofuels, worldwide, offers both opportunities and challenges for developing countries. For non-oil producing countries, biofuel production has the potential to provide at least a partial substitute for costly oil imports. Biofuels also have the potential to

provide an additional source of agricultural income and the development of a biofuel industry could contribute to improve local infrastructures and rural development. High crop prices may be beneficial for rural poor who will receive a better price and offer new export opportunities but this may also be met by a corresponding challenge for food security, notably for poor, urban populations.

High agricultural commodity prices may provide longer-term potential opportunities for

agriculture and rural development. Raising agricultural supply in the medium and longer-term will require new investment support to producers in the form of better access to technologies and better production techniques (FAO 2009). Technical and institutional constraints prevalent in developing countries, such as rural financial services constraints, may hamper efforts to boost agricultural supply.

While in the short-term biofuels could have negative impacts on food security, in the long-term, the development of a sustainable biofuel industry could promote access in rural areas to cheaper and safer energy supplies, supporting economic growth and long-term improvements in food security (FAO 2009).

In the determination of biofuel economic impacts, the entire value chain comprising the production of feedstocks, their processing, blending, distribution and marketing will have to

be taken into account. The extent to which the value chain is developed and the challenges for its development are the main questions addressed. In Africa, it is frequently observed that the value chain is only developed up to the production level. In Senegal, for example, while Jatropha production is encouraged, the rest of the value chain is undeveloped with no stable market for seeds.

Furthermore, rising biofuel feedstock prices provide strong incentives for exports, undermining

the development of a domestic biofuel industry. The viability of the biofuel sector will depend on developments in oil prices as well as international biofuel policies. In Africa, there is a need to implement policy measures to motivate the private sector to invest in the value chain, ranging from producers to consumers of bioenergy (farmers, processors, traders and consumers).

42 Balamir S.: Fueling green capitalism: Big Oil and greenwashing; May 2011.




Box 7: Policy and biofuel value chain, an example in India

A recent study in India (Altenburg et al. 2009) also shows that biodiesel production offers promising opportunities to create additional sources of income for rural populations, but effects differ, depending on the way in which biodiesel value chains are organised.

Value chains can be grouped into three different categories: • Government-centred cultivation; • Farmer-centred cultivation; • Corporate-centred cultivation. The study distinguishes between these categories on the basis of the two questions: Who owns the land on which oil-bearing trees are cultivated and who bears the risks of cultivation,

as these two questions are highly relevant for the developmental impacts of biodiesel production. The study concludes that whether or not positive effects materialise depends to a large extent on policies. Policies can design subsidies in ways that stimulate or inhibit the economic sustainability of plantations; they can promote a functioning free market or monopolies and

they can increase or reduce participation by local villagers and thereby increase or reduce the risk of displacement.

4.3 State of the development of the agriculture and industrial

sector

4.3.1 State of the development of the biofuel industry and scenarios

Bioethanol and biodiesel are the most common liquid biofuels used in transport worldwide.

Other biofuels are also in use, such as ETBE43, pure vegetable oil, hydrogenated vegetable oil (HVO) and biomethane, although with a more limited market penetration.

Rapeseed is the main raw material for biodiesel production in the EU, soya bean in the US and Brazil and palm oil in Malaysia and Indonesia. The biodiesel productivity per land area from different oil seed crops in the EU amounts to 0.8 to 1.2 toe biodiesel/ha, while oil palm yields about 3.8–4.0 toe biodiesel/ha. Bioethanol is produced from a wide variety of

feedstock, but is mainly produced from sugarcane (Brazil), wheat and sugar beet (EU) and maize (US). The ethanol productivity per land area in the EU is 1.0–1.5 toe ethanol/ha for cereals as feedstock and 3-4 toe ethanol/ha for sugar beet, while ethanol productivity from US maize and Brazilian sugar cane is about 1.5 and 3.5 toe /ha respectively (JRC 2011).

The low-cost and efficient sugarcane ethanol production of Brazil is not easily replicated in

Africa and other developing countries suitable for sugarcane due to higher costs of land labour, machinery and conversion facilities. However a big expansion of biofuel production is expected in all regions, especially in Eastern Asia; furthermore, the potential of cane-to-ethanol expansion is high, more than ethanol from sugar beet, corn, cereals, sorghum and cassava. Biofuel demand is expected to increase significantly in OECD countries until 2020, while by 2050, according to the IEA, non-OECD countries are expected to account for 70% of

total biofuel consumption. This expansion in demand can only be met with appropriate trade to supply biomass feedstock and fuels to regions with a strong demand.

Coarse grains are projected to remain the dominating ethanol feedstock, but the relative share of grain used for ethanol is projected to decrease over the next decade. Sugarcane ethanol on the contrary is projected to increase over the same period (from 23% to 28% according to OECD-FAO projections). Ethanol produced from wheat and molasses is

expected to decrease, while cellulosic ethanol will increase. OECD-FAO projections also indicate that around 16% of global vegetable oils will be used for biodiesel in 2021, while second generation biodiesel is expected to increase slightly, mainly in the EU.

43 Ethyl-tertiary-butyl-ether




Biodiesel accounts today for just 27.5% of global biofuel output; nevertheless, over the last

year, it accounted for all of the growth in global biofuel output (BP 2012). Recent expansion of biofuel production has been registered in North and South America (with bioenergy feedstock mainly produced within the region) and, to a lesser extent, in Europe and Eurasia (see figure 11).

Figure 11: Global biofuel output expansion since 2001

Source: BP 2012

Biodiesel production has sharply increased in several countries and world regions, such as Argentina, Brazil, Malaysia, Singapore and the Philippines; the contribution from the EU countries has mainly derived from palm oil and soybean.

Growing biofuel demand in the US, the EU and Japan has led to considerable flows of Brazilian ethanol to these markets, as well as vegetable oils and biodiesel from the US, Latin America (mainly Argentina, Brazil) and South East Asia (IEA 2011). Around 3 Mt of bioethanol (or around 4% of global production44) and 3 Mt of biodiesel45 were traded globally in 2010 (in addition to approximately 4 Mt of wood pellets) (Junginger et al., 2009), with China being the main producer and consumer of ethanol in the developing world (OECD-FAO 2012).

With a global production share of about 50% in 2011, the US is currently the largest ethanol producer and the development of the US biofuel market necessarily implies important effects on global markets46. The US mandate for biodiesel defined in the RFS2 is extended from 3.8 billion to 4.8 billion litres to be used by 2012; this will determine the initial growth of biodiesel in the US (biodiesel from tallow or other animal fats will be an important component).

44 This share is expected to increase to 7% by 2021 mainly due to trade intensification between Brazil and the US (OECD-FAO 2012) 45 Given the expected price ratio over the next decade, biodiesel trade is expected to increase only slightly, with Argentina remaining the main exporter 46 It should also be noted that the US produces ethanol mainly from corn and, at the same time, is a global price setter of corn




Table 6: Transport fuel use in major biofuel producing countries

Source: OECD-FAO 2012

There are different scenarios envisaged over the forthcoming decades and, depending on policy drivers for main biofuel consumer regions (mainly the US and EU) different implications for developing countries can be drawn. Two policy scenarios have been identified in an UNCTAD study (UNCTAD 2009): the first one aimed at increasing regional energy security (giving priority to domestic produced biofuels), and a second one pursuing the expansion of

biofuels as a means to maximise environmental benefits and GHG mitigation. While both

scenarios offered opportunities for developing countries, the first one highlighted more limited

opportunities for exports than a policy strategy based on pursuing environmental benefits.

Figure 12: Trends in biofuels use in world regions. Biofuel use will increase in all regions, and

biofuel demand is strongest in OECD countries - only until 2020

Source: IEA 2012




Important R&D in algal oil (mainly to be refined into biodiesel through esterification, although

not exclusively) is taking place in the EU and the US. However, this option still seems to be at an early phase with major technology bottlenecks (mainly in the cultivation and algae separation phase) that render this pathway unviable at present - especially for large-scale production - leading to negative energy balances47. Small-scale algae facilities for the production of bioenergy (e.g. biogas, syngas, biocoal) and other valuable co-products seem to be the only viable option in the short-term (Van Iersel et al. 2010).

Biofuel production from promising feedstocks such as Jatropha or cassava are currently still on a project or small-scale level, far below the envisaged production levels (OECD-FAO 2012). Jatropha biodiesel production globally is very modest when compared to other biofuels such as rapeseed/soybean biodiesel and sugarcane/corn ethanol. A report (Dimpl et al. 2011) reviewed projects around the world that have been using vegetable oil for small-scale electricity generation. The review highlights the difficulty in transforming Jatropha from

local, small-scale produce into a major global export commodity. One of the most significant issues highlighted was the unreliability of supply (in terms of quantity and quality of oilseeds) to allow penetration into global export markets for biofuels. Problems relating to quality control and supply flow are therefore key factors that need to be addressed before Jatropha can become a major export item (UNU-IAS 20112). In the African context Jatropha production is

expected to remain relatively modest in the short or medium-term.

On a smaller-scale, a market analysis of 15 case studies in 12 countries in Latin America, Africa and Asia (FAO, 2009) confirmed that biomass arising from on-farm residues, with sustainable management of soil fertility can be used to produce useful heat, power and biofuels for local use48, contribute to rural livelihoods, reduce imported fossil fuel dependence and offer new opportunities for rural communities without impacting on local food supply security. The

uptake potential of biofuels is also closely linked to their envisaged cost decrease. Concerning the conversion technology industry, modern combustion, gasification and pyrolysis thermo-chemical conversion technologies are largely mature, although improvements in performance and conversion efficiencies are continually being sought. This is also the case for bio-chemical conversion processes such as anaerobic digestion and ligno-cellulosic enzymatic hydrolysis. The analysis results from demonstration and commercial plants

highlight that costs are wide ranging and site-specific but, on the basis of current costs and projected efficiency improvements, it is possible to draw-up scenarios about future costs of different production pathways (see figure 13).

Figure 13: Projected costs of biofuels from different production pathways and petroleum

gasoline

Lge = liter of gasoline equivalent

Source: IEA 2011

47 Interest in using aquatic plants, macro-algae and micro-algae as feedstocks for liquid biofuels production has developed recently, mainly because of their theoretic very high yields, the possibility of using and capturing CO2 directly and the possibility of using non-arable land for their growth. Harvesting of aquatic plants can help reduce excessive eutrophication levels in lakes and coastal waters. Algae-based bio-refinery systems and algae production combined with intensive fish or shrimp culture in integrated aquaculture systems can offer a viable option 48Examples include electricity generation from Jatropha oil-fuelled engines; charcoal briquette production; afforestation; ethanol production and stoves; wood-fired dryers; biogas from sisal fibre production residues




Biofuels development and global agricultural land

Currently biofuels occupy less than 1% of total agricultural land (total agricultural land

includes 1.5 billion hectares of arable land, and 3.5 billion hectares of meadows and pasture). Even from the 30 Mha used today, a considerable amount of co-products are produced, such as cattle-feed, bioelectricity and heat (IEA Bioenergy 2012). According to International Energy Agency (IEA) scenarios, 100 Mha are required in 2050 for biofuels, equivalent to 2% of

total agricultural land. It doesn’t seem to be a lot in absolute terms, but this means a threefold increase in land use, if biofuel production grows 10times in the next 40 years. All this is further constrained by the challenges to expand crop production for food by 60% to 2050 (according to FAO projections), based on growth of world population to 9 billion in 2050. This will require around 60 Mha of additional arable land, in addition to considerable yield increases49 (FAO 2011).

Biofuels development in developing countries

Over the last few years, a number of developing countries have implemented ambitious biofuel targets and mandates, aimed at improving their national energy supply security and/or increasing the domestic value added of fuels. Several countries, including Kenya,

Mozambique, South Africa and Zambia, plan to expand domestic biofuel production in the coming years.

In 2011, the whole African continent produced less than 29,000 tons of biofuels, constituting

0.01% of the total global supply (BP 2012); furthermore, the production and consumption of

biofuels mostly coincide geographically (PANGEA 2012). In Africa for example, ethanol is

almost entirely produced from molasses (the residue from sugarcane processing into sugar)

and is readily available at the same sugar factory.

Given the comparably low crop yields achieved today, a considerable potential to increase grain production exists. This could free up land for sustainable biofuel production without compromising food security. There may be potential to use currently unused land, but it is

difficult to identify what is actually “unused land”50. Reliable field data is lacking on current land use through smallholders and rural communities (IEA 2011). Biomass and biofuel trade

from ACP countries has been growing, driven by increasing and volatile oil prices, minimum renewable thresholds in power generation and by fuel blending targets (Junginger et al., 2010); however, it is significantly lower than trade from other developing countries in absolute terms.

Large parts of ACP countries are suitable for sugarcane cultivation, which is still very modest (5.4 of global production in Africa – see table 7) if compared to India or Brazil, in spite of the

relatively high yields achievable. Today, only small quantities of ethanol are shipped from

some African countries to the EU due to preferential access to the EU market, but in general,

African biofuels are not (yet) competitive on the global market (Aidenvironment 2008).

49 Yield increases can augment output per area by 20-50% by 2030 for many crops according to Chum et al. (2011) and most improvement potential lays in Sub-Saharan Africa, Latin America, Eastern Europe and Central Asia, where advanced practices are not yet fully deployed and adapted 50 Complex land tenure structures and lack of infrastructure in rural areas are additional challenges for the expansion of biofuel production in many African countries




Table 7: Major sugarcane producers in Africa

Source: FAO 2010

Malawi, Tanzania and Zambia have national sugarcane yields of over 100 t/ha, and market regions such as the SADC or Mauritius are net sugar exporters, with a long history of sugarcane (and ethanol) production. However, despite several trials to blend ethanol for the

local transport sector, the ethanol produced in the region is normally used in the industry or exported as more economically rewarding. Exceptions are countries like Malawi which have been blending ethanol with gasoline (E10-15) since 1982 (UNU-IAS 2012). In addition to Malawi, countries such as Burkina Faso, South Africa and Zimbabwe have a long tradition of biofuel production (starting in 1920 in South Africa, and in the 1970-80s in the other countries); however, it has never really reached a large scale. The reasons behind this limited

development can be rooted in the lack of appropriate policy frameworks, in the relative

value of ethanol in different markets (PANGEA 2012).

Table 8: Current and planned fuel ethanol production in four African countries

Source: UNU-IAS 2012, adapted from Batidzirai and Johnson 2012

Area

(1000 ha)

Production

(1000 t)

% of global

production

Yield

(t/ha)

South Africa 267 16 016 0,95 60,0

Sudan (former) 67 7 527 0,45 112,0

Kenya 69 5 710 0,34 83,1

Swaziland 52 5 000 0,30 96,2

Mauritius 59 4 366 0,26 74,4

Zambia 39 4 050 0,24 105,2

Zimbabwe 39 3 100 0,18 79,5

Madagascar 95 3 000 0,18 31,6

Mozambique 215 2 800 0,17 13,0

Tanzania 23 2 750 0,16 119,6

Malawi 23 2 500 0,15 108,7

Ethiopia 19 2 400 0,14 126,9

Uganda 40 2 400 0,14 60,0

DRC Congo 40 1 827 0,11 45,7

Côte d'Iv oire 22 1 650 0,10 75,0

Middle Africa 232 5 012 0,30 21,6

Western Africa 157 5 764 0,34 36,6

Southern Africa 319 21 016 1,50 65,9

Northern Africa 212 23 868 1,42 112,6

Eastern Africa 657 35 415 2,10 53,9

Africa, Total 1 577 91 075 5,40 57,8

India 4 200 277 750 16,48 66,1

Brazil 9 081 719 157 42,67 79,2

World 23 815 1 685 445 10,8

Status Distillery capacity (M/yr)

Malawi Existing 30

south Africa Planned (maiez-based) 155

Zambia Planned (maiez-based) 37

Szimbabwe Existing 40




Rising biofuel feedstock prices also provide strong incentives for the export of agricultural

products and this hampers the development of a domestic biofuel industry significantly. Further limited available resources limit governments’ abilities to implement policies supporting domestic production and the use of biofuels through financial incentives. Subsequently, the blending mandates and targets in several developing countries remain low. It is very likely that in the medium-term, except for Brazil and Argentina, biofuel use in “developing countries” will remain significantly below the targets/mandates and an export-

oriented biofuel industry will not develop anywhere (OECD-FAO 2012).

Box 8: Expectations in Brazil and Argentina

Brazil is, and is supposed to remain in the near future, the second largest producer of ethanol.

According to OECD-FAO projections, it is expected to represent 28% of total ethanol production in 2021. A very important characteristic of the Brazilian biofuel industry if compared with others is that it is very flexible, as it can quickly switch from producing sugar to producing ethanol, on the basis of market drivers. This is possible not only because of a

flexible industry from the production side, but also at the adoption of the flex-fuel technology, that allows domestic vehicles to run unconditionally with any blend of ethanol and gasoline.

In Latin America a special mention is reserved for Argentina that, despite a modest biodiesel blending target of 7%, is expected to become the largest biodiesel producer in the developing world, thanks to generous tax incentives available for exports. The EU is a primary target for Argentinean vegetable oil. According to OECD-FAO projections, Argentina is

expected to reach a production of 4.2 billion litres in 2021, which can be compared with Brazilian production - expected to reach 3.2 billion litres by the same year.

4.3.2 The potential and the reality for a biofuels industry in Africa

It has been calculated that at least 6 million ha of land would be readily available in six

African countries (Angola, Malawi, Mozambique, Tanzania, Zambia and Zimbabwe) for sugarcane (Watson 2011), which can be compared with around 9 million ha used in Brazil today for sugarcane cultivation. In order to reach this figure, from all agricultural land, the following were excluded: i) all categories of protected areas, closed canopy forests, wetlands, ii) all areas under food and/or cash crop production, iii) areas unsuitable because of climate, terrain and soil constraints.

On this basis, due to high sugarcane yields in countries like Zambia, it seems possible to meet existing blending mandates (E5 in this case) with relatively low amounts of land (3000 ha in the case of Zambia). High costs of transport fuel in some countries make it easier to meet existing targets/mandates with biofuels (UNU-IAS 2012).

It should be clarified that this and other similar studies are attempts to give an idea of “suitable” and “theoretically” available land. Our experience as well as findings from the field

missions confirm that the process of full land registration and demarcation as well as land rights are very weak; therefore, estimates about land “available” for biofuels cannot be validated in countries with a weak land tenure regime and allocation process. A lot of support to local governments is needed in order to ensure transparent information on this issue51.

51 For example GBEP indicator 9 on Allocation and tenure of land for new bioenergy production provides useful

information that can be applied to the development of a national bioenergy sector, i.e. Percentage of land – total and by land-use type – used for new bioenergy production where:

• A legal instrument or domestic authority establishes title and procedures for change of title; and • The current domestic legal system and/or socially accepted practices provide due process and the

established procedures are followed for determining legal titles.




Table 9: Land availability for rain-fed sugarcane cultivation in selected African countries

Source: Watson 2011

However the “potential” has to be confronted with “reality”, i.e. the current very low baseline

of the agricultural sector in several developing countries and the challenges it faces, which impede it from reaching its full potential.

This is partly linked to a lack of appropriate policy frameworks, for environmental reasons and in the different and relative value of ethanol in different markets as aforementioned; however, it is not only limited to these factors. For example, in Zimbabwe, where a heavy

drought in 1992 forced the country to give up production for the next two years, ethanol was then worth more in the alcohol industry than as a transport fuel; this was also due to the availability of cheap and abundant oil (IIED 2007).

More structural characteristics of the agricultural sector should be taken into account too in order to justify such a difference between the potential and the reality: these structural limits

are associated with very low yields, underuse of land, and an extremely vulnerable

agricultural sector. Three quarters of existing farmland is heavily depleted as continuous farming has not been offset by an appropriate replenishment of nutrients. Furthermore, the use of fertilisers in the region is extremely low (3% of global fertiliser consumption; 7 kg/Ha versus over 150 kg/Ha in Asia): market failures on the demand side – poor price incentives, lack of financial resources or information about fertilisers – hence an inability of the producers to reach economies of scale are among the reasons identified (PANGEA 2012). Fertilisers in

Sub-Saharan Africa are the most expensive in the world (FAO 2012) and the use of irrigation systems is still limited. Likewise, the most advanced good environmental practices in farming and farming techniques often do not reach rural areas (PANGEA 2012). As a result, land productivity is low and stagnant, as is highlighted by the fact that increases in production throughout the last 50 years have closely followed, and sometimes even gone below the rate of an increase in inputs (PANGEA 2012, IFPRI 2011a).

The bulk of investments in the biofuels sector in developing countries is however made by

foreign investors, which reflects the region’s fundamental lack of local finance that hampers

the development of its agricultural sector. Yet, investments in biofuels can have positive spill-

over effects in the agriculture and food production sector. However, these positive results can

be achieved only through support to these countries in strengthening the policy framework for

bioenergy (both for framework development and policy enforcement) and also providing

them with training, sharing best practices and facilitating technology transfer at the same

time.

Angola Malaw i Mozambique Tanzania a Zambia ZimbabweCountry land area 124 670 6 408 78 409 87 869 74 339 38 667 Potentially suitable 1 626 742 4 906 1 694 3 546 2 935 Protected areas 1 395 595 4 602 1 223 2 433 1 860 Slopes > 16% 1 389 580 4 530 1 217 2 427 1 855 Available and suitables 1 127 206 2 338 467 1 178 620 % of counrty land area potentially suitable 1,30 7,89 6,26 1,93 4,77 7,59 % of country land area available and suitable for sugarcane 0,90 2,19 2,98 0,53 1,58 1,60 % of country land area is arableb 2,40 25,30 3,70 4,70 7,10 7,00 % of arable land available and suitable for sugarcane 37,70 8,70 80,10 11,30 22,30 22,90

a Excluding Zanzibar and Pembab Ravichandran (1999)




4.4 Impacts of biofuels production at local level

4.4.1 Potential impacts at household levels and on small-scale farmers

The recent surge in biofuel investments and production volumes is driven by the promise of

multiple social, economic, ecological benefits and geopolitical advantages which have

brought key producer and consumer countries alike to establish policies to incentivise the industry. While industry stakeholders and some analysts continue to declare the social and ecological benefits of biofuels, an increasing number of reports from civil society and research organizations have begun to question these benefits. It is noteworthy that the

benefits and costs tend to vary across commodities, business models, and landscapes, making findings from industrial-scale bioethanol production in Brazil, for example, different

from the impacts associated with oil palm in Indonesia or Jatropha cultivation in sub-Saharan Africa, each of which is expanding through both smallholder and industrial-scale production models52.

Such differences are often obscured in the controversial discussions that have characterised this emerging industry. There are key arguments made for and against biofuel expansion, with

a focus on the local social and environmental impacts especially for small-scale farmers’ households.

Positive impacts include:

• Job as an employee of biofuels project either in the processing plant or in the field; • Income due to producing and selling feedstock; • Job in a related service industry (e.g. tractor repair shop);

• Additional sales opportunities for farm products to the employees of the biofuel conversion plant;

• Large agribusiness investments that might be accompanied by improved social infrastructure, such as hospitals, schools and water wells;

• Better road or railway infrastructure if new infrastructure is established to facilitate biofuels transport;

• Better access to agro-input supplies, such as seeds, machinery, agro-chemicals and even agro-financing;

• Technology and knowledge transfer and training53; • Achievement of energy security and stimulation of rural economic development

through employment and smallholder market integration54.

Negative impacts include:

• Risk for smallholders to lose their land due to unclear land tenure systems and the increased interest in agriculture production;

• Increased food insecurity; • Acquisition of large agricultural areas often causes changes in land property relations

favouring the (re)concentration of wealth and power in the hands of the dominant

classes, especially landed groups, capitalists, corporate entities, state bureaucrats and village chiefs; such changes are happening and have given rise to the dispossession and displacement of smallholders, indigenous peoples and the poor in general55;

52 GERMAN L. et al: The Social and Environmental Impacts of Biofuel Feedstock Cultivation. Evidence from Multi-Site Research in the Forest Frontier; E&S; 2011 53

For example stakeholders of the TAHA, the Tanzania Horticultural Association, have been provided with technical

training and support – for their crops, quality production, market access and also business skills; facilitation with setting up a reliable market for their produce from the outset; and being assisted with start-up costs, whether directly or through negotiations within the value chain, so that they do not need cash up front when they lack capital. 54 GERMAN L. et al: The Social and Environmental Impacts of Biofuel Feedstock Cultivation. Evidence from Multi-Site Research in the Forest Frontier; E&S; 2011 55 RAHMATO D. (Forum for Social Studies): LAND TO INVESTORS: Large-Scale Land Transfers in Ethiopia; 2011; p 4




• In large-scale agricultural projects involving contract farming in Sub-Saharan Africa

“women are generally not involved in contracting with agro-industrial firms and are disadvantaged in contract schemes”56;

• Increased vulnerability of farmers without any more land and unsecure and often seasonal employments;

• Destructuration of the local communities and traditional balances of power; • Depletion of water resources due to production and processing of biofuels;

• Pollution from overuse of agro-chemicals for feedstock production and chemicals for the conversion process;

• Failed biofuel investment projects have negative impacts on farmers; often farmers lose their land during the preparation of the investment, the landscape is no longer available for local agriculture and pastoralism; finally – due to the failure of the project – no potential benefits occur, such as jobs, revenues or infrastructure. Unfortunately, the

list of failed projects is long: Greenleaf Global Plc, one of Africa's largest Jatropha plantation companies with 2,700 ha in Togo, collapsed after 201157; Sun Biofuels (T) Ltd, Kisarawe, Tanzania; Bioshape, initiated by a Dutch investor failed with its envisaged 31,000 hectares Jatropha project in the southern district of Kilwa, Tanzania; SEKAB, a Swedish company involved in sugarcane production for bioethanol in Tanzania)58.

In a recent study (Bergius 2012)59 the impact of large-scale agro-investments for biofuel production on rural households was analysed in Tanzania. The study examined the case of Sun Biofuels, which collapsed in the meantime60 and addressed the following issues:

a) Land acquisition and power; b) Compensation: an insufficient practice; c) Impact on land access: de-diversification and water grabbing;

d) Employment: producing poverty and vulnerability.

Land acquisition and power

After a relatively cumbersome land acquisition process, Sun Biofuels was one of few biofuel companies having finalised the process of obtaining the derivative title to the targeted land. As most land in Tanzania is under the jurisdiction of approximately 12 000 villages, agricultural investment-related land deals targeting these land areas require community consultations.

Although land legislation in Tanzania is perceived as one of the most progressive in Africa due to this requirement, the community consultation process is often seen as unsatisfactory, while also being embedded in asymmetric power relations. This was a case of a wealthy investor and the uneducated smallholders who do not know their rights.

Bergius (2012) mentions that at no point villagers were informed about the potential risks of giving away their land and indirectly blamed Sun Biofuels for not having informed the farmers

correctly. The government has to do its homework by setting investment or land acquisition guidelines and by informing smallholders accordingly. Only if both stakeholder groups are well informed, a win-win deal can be concluded. However, a community consultation process itself does not yet guarantee that the interests of rural communities are secure. Monitoring of practices and respect of the agreements are key elements.

56 DALEY E. (Mokoro Ltd) and MI-YOUNG PARK C. (FAO): The Gender and Equity Implications of Land- Related Investments on Land Access and Labour and Income-Generating Opportunities - A Case Study of Selected Agricultural Investments in Northern Tanzania; 2012; p 5 57 http://wn.com/greenleaf_global_Jatropha_plantation_march_2011/bbc 58 for more information see also Land Deals Politics Initiative (LDPI): Land Grabbing and Political Transformation in Tanzania; 2012; www.cornell-landproject.org/download/ landgrab2012papers/ nelson.pdf 59 Bergius M.: Large Scale Agro Investments for Biofuel Production in Tanzania – Impact on Rural Households; 2012; p 60 Sun Biofuels shuts down in Tanzania; October 31, 2011: In Tanzania, Sun Biofuels has shut down its biodiesel project south of Dar es Salaam city after financing did not come through. Earlier this month, droughts forced huge layoffs for the project, but this week nearly 600 workers were given notices of termination. Although the company indicated to the workers that the project may reopen, officials refused to comment on the situation of financing. www.biofuelsdigest.com/bdigest/2011/10/31/sun-biofuels-shuts-down-in-tanzania/




Compensation: an insufficient practice

Tanzania’s Village Land Act states that no village land shall be transferred to general land until the issue of compensation has been agreed upon by all the involved parties. This section is thought to provide some safeguards against the expropriation of village land. However, identifying the multiple interests and uses of land is a difficult process, as rights to land are often held “through diverse blends of individual to collective rights”. The compensation is intended to cover all investments made in relation to the land and the loss of future profits,

while the value of the land itself is not accounted for. A key issue which emerges is who should be entitled to receive compensation and how much. Most of the land acquired by Sun Biofuels in Tanzania was village land set aside for common use. In cases where investors acquire common village land, compensation is to be paid directly to the village council but also direct payments to land owners have been made. At the end, the compensation was too little for the affected rural community. The reason was that the compensation calculation

was poorly executed - under the pressure of time. There have been many other mistakes too, such as including local graveyard areas into the foreseen plantation sites and more.

However, the question again arises as to what governments have done to guide and protect their citizens. There are numerous books and studies about how to address compensation; an example is the FAO Land Tenure Studies about “Compulsory acquisition of land and

compensation” (2009). Two major things can be highlighted:

1. “Land compensation (must) reflect the profit potential of the land to be acquired. So government – eventually through extension services - must inform their farmers about the potential of agricultural land in certain parts of the country. If the land will be rented for a long time by the investor, then there is another level of compensation to be paid in comparison with a permanent acquisition;

2. The other crucial point is that developing country governments have to analyse – upfront - if correctly compensated farmers could start another equivalent income generation activity in the area (or eventually also somewhere else in the country). If this is not the case, then even the highest compensation packages are not enough as farmers can end up spending the received money until this comes to an end. If there is no other (and better) income generating opportunities, then land should not be sold

at all.

Impact on land access: de-diversification and water rights

One of the main reasons for Tanzania’s attractiveness to foreign investors is based on the perceived abundance of underutilised and suitable land for large-scale biofuel production. However, there are discrepancies in estimates of the actual area considered to be available

for investments. The concept of land availability thus requires critical analysis as even where land is currently underused and seems abundant, it is still likely to be claimed by somebody party. As witnessed above, “underused” land is often the collective asset of rural communities. Conflicts over land are thus likely to occur when the state seeks to expropriate village land for investment in the name of “kilimo kwanza” and “public interest”. Most of the

land targeted for biofuel production is comes under the Land Act’s definition of “unoccupied”, but as the case of Sun Biofuels in Kisarawe reveals, it was certainly not unused.

After the arrival of Sun Biofuels in the area, households reported that losing access to the common village land negatively affected their household economies and led to a subsequent de-diversification of income sources. Households were affected in both direct and in-direct ways. Directly, as losing access to land (including bushes and forests) also

means losing income from the sale of charcoal, firewood, building materials and food such as game, meat and wild fruits. These products were also important resources for domestic use. To substitute land inaccessibility, households are now required to buy the products or travel to more distant areas to collect them, if possible. As the resources are now found a relatively long distance from the village, households without opportunities to buy the products spend a significant amount of time collecting the products.




Increased time for transport had a subsequent negative impact on farm productivity as less

time is spent doing agricultural activities, which implies that a smaller share of the agricultural production is available for sale, thus lowering household income. Losing land access affected households indirectly as the some forest products now have to be transported from more distantly located areas leading to an upward pressure on prices.

The most urgent concern stressed by all households interviewed was the water situation, which deteriorated after the arrival of Sun Biofuels. The Environmental Impact Assessment

(EIA) undertaken by Sun Biofuels actually recommended that due to the area’s limited water resources, the plantation should not cover any key water sources to be used by the local community; however, the recommendation was not followed.

Due to greater absorption potential with regards to increased distances and a relatively diversified household economy, high income households are not as heavily affected by reduced land access. In addition to agriculture many of these households have small food

vendors or shops where they sell basic food items. With lower local agricultural productivity, and increased traffic through the area following the investments, some of these households experienced positive linkage effects as they tend to sell more from their business. A similar trend was also witnessed regarding the sale of agricultural products among those households with farms located close to and accessible from the road running through the village.

Employment: producing poverty and vulnerability

A central feature of the win-win discourse is rural development and the diversification of rural economies through the creation of employment opportunities which in the long rung run is believed to be “bringing welfare to what is often disadvantaged people” (Sun Biofuels, 2009). When Sun Biofuels acquired land from the 11 villages, one of the promises given to the villagers was to create new employment and income opportunities. Great expectations were

held among the villagers who envisioned a better quality of life and brighter futures.

While operating, the company had approximately 750 people employed at the plantation. It was the prospect of securing a safer and more reliable income which attracted many villagers to work at the plantation. Moreover, as a consequence of the impacts created by land inaccessibility, some households were forced to find additional sources of income. The majority of these were just casual labourers doing regular plantation work, with no pension or

medical aid and no possibilities of unionisation. In most cases found during this research, employment negatively affected household economies, or at best, did not have any affect at all due to low wages. In most households where one or more household members went to work at the plantation, their own agricultural activity was either reduced or completely stopped leading to a subsequent decrease in productivity and income.

Thus one household member stated that: “Work at the plantation is just a waste of time. It did

not improve our situation anything. It is better to keep on with farming. Income from farming is safer than the income from the plantation”.

Wages at the plantation did not offset a loss of income from agriculture and forest activities. While household income decreased, expenditures on food and other products they no longer produced themselves, increased. This left households worse off economically.

Furthermore, previous employees reported that most of their salaries were used at the plantation site to meet their own needs in terms of food and water, leaving little money to bring home.

The arrival of Sun Biofuels in Kisarawe had a completely different impact than what was stipulated within the win-win discourse. Instead of increased welfare, the experience suggests increased vulnerability and poverty; a local government official in Kisarawe has claimed that

every day the families of plantation workers were becoming poorer.

World Bank statistics comparing the income from small-scale farming to plantation wage labour show that a sugar cane producer in Zambia can earn six times more on one hectare smallholding than what he could earn as wage labour. For maize producers in Cameroon the five hectare farm income to wage labour ratio is close to ten. This illustrates that if the point is




to “bring” welfare to poor people, the evidence points firmly away from large-scale

plantations and towards stimulating smallholder agriculture. The households in Kisarawe have not only lost access to land areas important to their livelihoods, but now also their employment; that refers to the short statement above that failed investment projects seem to be the most disastrous ones.

This study (Bergius, 2012) does not indicate if in this area there live landless people; most likely the picture would look much better if landless people get employed in plantations than if

farmers give up their farming activities to become plantation workers. The situation is well summarised by the World Bank’s Managing Director, Ngozi Okonjo-Iweala who said: "These large land acquisitions can come at a high cost. The veils of secrecy that often surrounds these land deals must be lifted so poor people don’t ultimately pay the heavy price of losing their land".

Regarding the positive economic impacts of investment in agricultural production by

transnational companies, a FAO paper61 about FDI in African agriculture divides the microeconomic level in the host country into ‘Pull’ and ‘Push’ factors:

• Pull factors lead to the involvement of semi commercial farmers into the business of transnational corporations, which in turn contributes to the creation of employment opportunities and improved access to finance and markets for smallholder farmers;

• Push factors include technology transfer, training and knowledge sharing along with the enforcement of production standards.

4.4.2 Economics of plantation scale and small holder approaches

Economies of scale are saying that bigger farms are more profitable as the overhead costs (indirect expenses) are distributed on more hectares, animals, tons of sugar (units). Even if negative aspects of ‘getting bigger’ have been more frequently discussed in recent years, it is clear that biofuel conversion plants are more profitable when feedstock is grown on nearby

large-scale plantations; this remains true at least to a certain level which is always far above the size of smallholder farms (2 ha on average).

The production of bioethanol from sugarcane in Brazil is maybe the most efficient example worldwide; however, sugarcane yields are higher in Mozambique due to the more suitable climate62; ethanol based on maize in the USA costs twice as much and wheat, sorghum and sugar beet in Europe four times as much as sugar cane63. Consequently, sugarcane is the

most suitable plant for bioethanol production. The smallest biofuels conversion plants require feedstock from around 15,000 hectares annually while for soybeans, the planted area must cover at least 30,000 ha.

Bioethanol projects have very often a set-up that foresees a big part of the raw material production by the company itself. Usually these fields are located around the mills and they provide the best returns by maximum yields and minimum costs. Therefore the most profitable

feedstock comes from within the land managed by the conversion plant. This is good for the profitability of the company but also to make sure that sufficient raw material/feedstock is available.

Large-scale farming is cost efficient and when situated near to the conversion plants, grants cheap transport costs. Sugar mills/biofuel conversion plants encourage smallholders to

provide additional sugarcane or other relevant feedstock partly to enable access to additional feedstock and partly because of political pressure.

61A-C.Gerlach and P. Liu, "Resource-seeking Foreign Direct Investment in African Agriculture: a review of country case studies", FAO Commodity and Trade Policy Research Working Paper No. 31FAO (September 2010); p 10 f 62 UNEP: Global Assessments and Guidelines for Sustainable Liquid Biofuels Production in Developing Countries: A GEF Targeted Research Project, 2012; p 43 63 Zuurbier J; van der Vooren J.: Sugarcane Ethanol, Wageningen Academic Publishers, 2008; p 11




Smallholders come in to provide additional raw feedstock; for example the out-growers

produce sugarcane and their only input is labour, whereas almost all other inputs such as seeds, fertilisers and chemicals are provided by the central processing mill64. Out-growers usually deliver it to a central processing unit – in most cases on less suitable land and at higher transport costs - as the smallholders land is more remote. In the literature, this dual approach is referred to as a hybrid.

Sugar companies are usually owned by shareholders and they have a strategic interest to

add value; financial investors who buy a stake with the aim of selling this on for a better price soon after are not typical. There are also other set-ups such as in Swaziland where there are also two sugar mills which belong to the King or to a holding which is relatively close to the King.

Box 9: Swaziland sugar protocol

Governments assisted by the European Union under the Sugar Protocol have been trying to let smallholders participate in the profitable sugar business (regardless if used for sugar or

bioethanol and push sugar mills to accept additional raw material) for several years.

For example, the Government of Swaziland (GOS) has identified the development of smallholder agriculture from subsistence farming to commercialisation and intensification farming as the main element in its policy is to alleviate poverty. As the GOS cannot influence sugar prices, it intends to assist smallholders to manage their investment and working capital costs in order to ensure that their farms are competitive. Furthermore, it provides irrigation

channels and other infrastructure but the business is not overly attractive for smallholders because they cannot achieve the same level of yields as sugar estates with their corresponding large-scale farming technologies. In addition, the smallholders are also confronted with higher transportation costs. Therefore, perspectives for smallholders are not promising when it comes to sugarcane or more precisely to the extension of sugarcane plantations.

The attempts to establish local Farmers’ Associations for smallholders have not been very promising, as these associations lack agricultural equipment due to insufficient financing. In addition, there is not enough workforce demand if each smallholder brings around 2 ha of land and himself as worker into the association. Table 5 shows that in Brazil, 100 ha sugarcane plantations required 10 workers and in the Swaziland case, there would be 50 per 100 ha (50 smallholders x 2 ha).

Another issue is that sugarcane requires aircraft spraying and in cases where the fields surround farm buildings, such spraying may simply not be feasible. Often, certain chemicals are applied to sugarcane in commercial fields to accelerate ripening and improve sugar content on a fresh weight basis, as well as on the profitability of sugar production65.

Furthermore, it also has to be taken into consideration that smallholders try to produce a broad range of products out of their small acreages, including food for household

consumption. For example, if a family owns five hectares they diversify the production and even if they would grow exclusively sugarcane than they could not compete with the estate plantations.

The situation might be different when it comes to less perishable products such as Jatropha, corn, soybeans, sorghum, wheat and others. The seeds that form the input for biofuel production can be stored for considerable periods after harvesting, enabling systemised collection over longer periods and cancelling the need for immediate shipment to the

64 UNEP: Global Assessments and Guidelines for Sustainable Liquid Biofuels Production in Developing Countries: A GEF

Targeted Research Project, 2012; p 42 65 Morgan T.E.: Effects of ripeners on early season sugar production in sugar cane; Master Thesis, James Cook University; 2003; p II




conversion plant66. Typically, these plants grow just one crop out of several which a typical

smallholder family grows. Assuming that a smallholder has between 5 and 10 ha he will grow a mix of biofuel feedstocks and crop plants but never focusing exclusively on “biofuels-plants”. Therefore the small holder might grow some Jatropha as a cash crop in addition to maize, which would be sold in the case of a surplus67.

Processing technology is another aspect worthy of consideration. Oilseeds, for instance, could be processed by smallholders using a mechanical method - a press that squeezes the

oil out. Mechanical extraction of the oil is accomplished by exerting sufficient force on the confined seed. Under these conditions, the pressure is high enough to rupture the cells and force oil from the seed to ‘escape’. Extraction is accomplished by compressing the material in a container that has small perforations, either round or slotted, that allow the liquid component to leave. This operation may be done in either a batch process or a continuous process68. Applying small-scale technology consequently does not require large scale

farming for biofuel crops any longer and reduces the necessary minimum plantation size to a few hectares.

For small scale farmers’ products such as Jatropha, maize and soybeans could be regarded as side products which increase the diversity of product ranges and therefore minimise failures which might be caused by weather or crop diseases. From another perspective, one

could say that the damage would be very limited for smallholders, if such a biofuels project fails.

Economic benefits also depend on the type of production system used:

• Monoculture cropping; • Organized small producers; • Monoculture with out-grower schemes69.

Monoculture cropping is possible for all crops under consideration and may be necessary for sugarcane and oil palm. These are voluminous crops, which therefore have to be produced near a crushing unit or an ethanol plant. These plants require large inputs in order to achieve sufficient economies of scale. Monocultures generally have lower labour input than small-scale farming. The labour input is provided by employees who receive a fixed salary per day or, more often, get paid according to their harvest. Monoculture farming is often associated

with poor labour conditions, particularly if it concerns low-skilled migrant workers.

Small producers can be organised to produce biofuels crops on a large scale. They can form cooperatives or their individual supply can be organised by a biofuels producer. The latter are often referred to as out-grower schemes. The out-grower schemes have high failure rates due to poor mechanisation and a lack of economies of scale. Small farmers can incorporate biofuel crop production within their regular production as a cash crop. Depending on the

nature of the deal between the farmer (or cooperative) and the client, this can represent the equivalence of a day labour on a plantation. Often, the client would supply farmers with seeds, fertilisers and agronomic advice, as farmers cannot make these investments themselves. After harvesting, they are often supposed to pay back those investments made by their clients. Examples of this type of production system are common for certain crops in

Africa and most notably include cocoa and cotton; they prove that it is not automatically

beneficial for farmers, as it may create strong farmer dependence on their clients.

4.4.3 Job creation

The efforts undertaken by governments to attract foreign investments are often explained by the intention to create jobs. In 2008, an enthusiastic FAO study70 mentioned that the

66 Wetlands International: Biofuels in Africa. An assessment of risks and benefits for African wetlands; May 2008; p 22 67 Ecoagriculture Policy Focus: Evaluating Biofuel Opportunities from a Landscape Perspective; 2008; p 2 68 http://www.extension.org/pages/26911/mechanical-extraction-processing-technology-for-biodiesel 69 Wetlands International: Biofuels in Africa. An assessment of risks and benefits for African wetlands; May 2008; p 37 70 FAO: The state of food and agriculture in Asia and Pacific Region; 2008; p 29




production of biofuels will generate employment at both farm and factory levels, and this

increase in employment will help to improve food security if it is targeted at the poor. However, alternative uses of the land and capital necessary for biofuel production would have generated employment as well and this alternative employment needs to be considered in assessing the impact of biofuel production on employment and food security. In other words, a critical issue in measuring the impact of biofuels production on employment

and food security is the relative labour intensity of biofuel production. Much of the

employment that is likely to come with increased biofuel production, at least in developing

countries, will be because of potentially increased labour use at the farm level to grow the

feedstock. It is therefore crucial to understand the labour requirements of biofuel feedstocks

per unit of area-time (e.g. per hectare per year) compared to the labour requirements of

alternative land uses. If the land was previously unused, then clearly the planting of biofuel feedstock will create new employment. However, if the biofuel feedstock is less labour-

intensive than the crops planted previously, then biofuel production will reduce net employment at the farm level. The ultimate outcome will vary depending on what crop is used as feedstock and what crops were grown previously. In addition, any increased employment in feedstock production will likely be biased toward unskilled labour.

In terms of fuel production from feedstock, small-scale bio-energy production seems likely to

generate more employment for the poor than large-scale bio-energy production, which will probably be more capital intensive and less labour intensive. Indeed, current bioethanol and biodiesel factories in Brazil and the USA require huge investments of capital, often in the range of USD 100 to 200 million. Furthermore, the labour employed in these factories may favour relatively skilled workers (who are usually food secure).

Although small-scale bio-energy production may be better at creating employment, it is

important to consider the ability of small-scale bio-energy production to compete with large-scale bio-energy production. Smaller plants may in general not be very competitive, and if they are not, then any increased employment is likely to be short-lived. However, if the bio-energy production is used to enhance access to energy in small villages with poor infrastructure, then competition with large-scale factories is probably not an important issue. Employment created at such small-scale processing plants is likely to have a positive impact

on food security at the local level and be more sustainable in the long term.

Job creation in agriculture

If smallholders start producing feedstock for biofuels on a small scale, they usually make use of their own land. If the workload becomes heavier, more family members have to work, but smallholders do not usually employ other persons. Hence, in such cases, one could speak

about the creation of additional income, but not about additional job creation.

With regards to large-scale biofuels projects, investors have to prepare the land and hire staff to work on it. For example, sugarcane estates need field managers and advisors (usually employees) and seasonal workers for harvesting and other work. Such seasonal workers are often paid by the task. In other words, large scale biofuel plantations also create agricultural

jobs.

An important consideration relates to the use of land prior to the commencement of large-scale biofuel farming activity. In case the area used for biofuel production was abandoned or not in use, each of the biofuel jobs created could be considered as an additional job. In cases where the land has been used by smallholders for the production of other agricultural products, such as vegetables, conversion to biofuel production may lead to a loss of sources

of income for potentially few new jobs.

Type of feedstock and agricultural mechanisation

The production of crops for biofuels will lead to the creation of rural employment. The magnitude of this effect depends largely on two factors:

• The type of feedstocks grown;




• Agricultural mechanisation.

Although labour productivity is much higher in Brazil, the table below gives a sense of required labour input. In general, biofuels have a lower labour input than food crops. As is the case with corn in the US and sugarcane in Brazil, production is highly mechanised. Figures for Africa would probably look slightly different. Jatropha is more comparable to castor beans, a related species of oil producing seeds, but its harvest is difficult to mechanise.

Table 10: Number of workers per activity

Source: Wetlands International: Biofuels in Africa. An assessment of risks and benefits for African

wetlands; 2008; p 37

As shown in the table above, livestock and forests provide the fewest jobs, even if the African

livestock sector with pastoralism is not as efficient as the Brazilian model. Besides the loss of traditional jobs, there is an additional loss of grazing areas.

The employment benefits depend strongly on the degree of mechanisation of biofuel crops in terms of cultivation and harvesting. A high degree of mechanization leads to low labour inputs. The biofuels crops differ in terms of mechanization potential. Maize, sugarcane and sweet sorghum are crops that are produced in a highly mechanized way outside Africa. This

is not yet common in Africa and in many places not very likely, first, because labour input is still cheap in Africa and, second, because mechanization requires the availability of qualified labour. In addition, the maintenance of machinery is a challenge in most of Africa as there is a lack of spare parts and service agents.

Oil palm production can never be fully mechanised. The harvest of fresh fruit bunches

requires precision work because the fruits do not ripen together and therefore require weekly picking and make the harvest labour intensive and difficult to mechanise. The palms are harvested every 10 to 15 days. Given this high frequency, mechanization has never been either technically or economically viable. The cutter, equipped with the necessary implement, inspects the bunches to see which are ripe, cuts them and takes them away, along with any fallen fruits.

The mechanization rate of cassava production is also likely to remain limited. Although it is imaginable that planting and harvesting of Jatropha (by machines similar to grape harvesters) can be mechanised, this will only happen in the long-term. As this crop has only been cultivated commercially for a few years, almost no mechanical equipment has yet

Activity in Brazil Number of jobs per 100 ha

Cattle for meat 0.24Orange 16Eucalyptus 1Castor Bean 24Soy 2Potato 29Maize 8Manioc 38Sugarcane 10Coffee 49Bean 11Rice 16Tomato 245




been developed. Its development would require serious investments; one option would be to

increase the synchronicity of flowering and ripening of the seeds71.

The potential for job creation is directly related to the type of feedstock. In agriculture, most

jobs are created if labour intensive raw materials are grown, such as Jatropha72. Large scale

farming of sugarcane tends to create fewer jobs as the level of mechanization increases.

Direct employment is generated in the agricultural sector by cultivation, harvesting and processing of the biofuel feedstock; not just the jobs created in the production of feedstock

but also including the jobs in the industry. For example:

• Sugarcane in Brazil and Mozambique = 0.11 – 0.27 jobs/ha/yr; • Palm in Malaysia and Indonesia = 0.30 – 0.38 jobs/ha/yr; • Jatropha in Indonesia = 0.11- 0.28 jobs/ha/yr; • Cassava in Thailand and Mozambique = 0.11 – 0.37 jobs/ha/yr.73

Job creation in conversion plants and further indirect employment

Besides the newly created jobs in the agricultural sector, there are more jobs created in the conversion process from feedstock to biofuels as this process generally takes place close to where the feedstock is produced. Direct jobs in biofuel production are usually created through processing activities (land preparation for the factory, building and running of the factory, etc.). Furthermore, indirect jobs are generated within the economy as a result of

expenditure related to above mentioned direct jobs.

According to Vogelbusch, an average bioethanol plant employs around 300 persons74. Additionally, there are around 50 % indirect employment opportunities in the linked service industry75.

Box 10: Biofuel and job creation in Senegal

The authors learned from their field trips to Senegal that no statistics have been made available; however, according to observations in Senegal, very few jobs have been created by biofuel investments. There might be a few thousand farmers involved in small plantations

but not as their main commercial activities. In total, there have been less than 100 Industrial jobs created in the Ethanol plant and the newly established Jatropha oil processing plant.

From 2007 to 2010, nine biofuel projects were registered at the APIX (Agence de Promotion des Investissements et des Exportations). In theory, these projects would have created 10 271 jobs all together (9 697 of them seasonal jobs). In practice, most of these projects have been discontinued. It seems that big projects encountered more difficulties and currentrly just one

or two small-scale project are still active.

Other papers state that indirect job creation could be much higher; for instance, the Markala

Sugar Project in Mali is expected to create 5 000 direct jobs and 20 000 indirect jobs76. However, projects frequently look different several years down the line in comparison with the initial business. Ethanol is only a by-product of the Markala project that mainly targets sugar production.

Possible adverse effects

71 IFAD / FAO: Jatropha - A Smallholder Bioenergy Crop; 2010; p 56 72 The harvesting of Jatropha is not mechanized mainly because its fruits reach maturation at different times 73 UNEP: Global Assessments and Guidelines for Sustainable Liquid Biofuels Production in Developing Countries: A GEF Targeted Research Project, 2012; p 96 74 Interview Vogelbusch GmbH, Dr. Torsten Schulze, CEO, 22 October 2012 75 see also UNEP: Global Assessments and Guidelines for Sustainable Liquid Biofuel Production in Developing Countries: A GEF Targeted Research Project, 2012: p 95 76A-C.Gerlach and P. Liu, "Resource-seeking Foreign Direct Investment in African Agriculture: a review of country case studies", FAO Commodity and Trade Policy Research Working Paper No. 31FAO (September 2010); p 9




Generating more jobs in cultivation, harvesting and processing is an integral aim of

sustainable agricultural development and crucial for poverty alleviation. Employment creation, in particular in rural areas, is often presented as an expected advantage of international investment in agriculture, regardless of whether this concerns biofuels or other agricultural activities. Nevertheless, even if it is feasible to create jobs, there might be disadvantages affecting indigenous peoples.

While governments try to attract investments in the agricultural sector and hope that the

primary benefit is increased employment opportunities for rural people, some cases show that there might be negative aspects when indigenous people are displaced. Displaced people often lose their fertile fields and hence their primary source of income. These former smallholders might become low-paid seasonal workers and have difficulties earning their living during the off-season. Sometimes, farmers are only compensated by a certain share of output for leasing their fertile land, but fail to find new jobs.

Therefore, the main arguments for officially granting tax incentives (and even providing land for free to investors) often fail. It should also be noted that the investment code in Senegal aims at fostering investment in key economic sectors and the same advantages apply for foreign and domestic investments.

Wages

Income earning opportunities are created by biofuel projects if farmers supply biofuel feedstocks or if smaller or larger businessmen provide services; these can range from machinery services, to consulting and restaurants. Wages are paid by biofuel conversion plants if people are employed.

Salaries in the conversion plants depend on the required qualifications. Whereas one might find agricultural engineers with US university degrees and consequently good salaries in the

Swazi sugar industry, the majority of unskilled workers are poorly paid.

Box 11: Examples of wages in biofuel project in Ghana, Sierra Leone and Tanzania

It is hard to provide detailed data as only companies that pay above minimum wages

publish their average salaries. For example, Solar Harvest SA, a Norwegian company, operates in poor regions in Ghana where people earn between USD 30 and USD 50 a month, below both the country's official minimum wage and the World Bank-defined poverty line of USD 2 a day. The company claims that they do not only pay workers 70% higher than the country's minimum wage, but also provide nearly year-round employment, including during

the dry season when employment and income are scarce77. The daily minimum wages were USD 3.11 in 2010 and USD 4.48 in 201278; a 70% increase would result in USD 7.62 per day in 2012.

Addax Bioenergy, a Geneva-based company, manages a biofuels project based on sugarcane in Sierra Leone. An independent evaluation report done by Sierra Leone Network on the Right to Food (SiLNoRF) in August 2012 and SiLNoRF confirmed that salaries are higher

than the minimum wage in Sierra Leone which is USD € 4.64 (=SLL 25,000). In addition, Addax workers have written work contracts79.

Furthermore, other international agro-companies such as MOUNT MERU FLOWERS LTD in Tanzania pay at least around 30 – 50 % above the minimum salary. Generally, they do not piece work but extra hours according to legislation (similar like in Europe); workers can get a

77 http://www.iptel.com/index.php?txt=employment-opportunities 78 http://www.africapay.org/ghana/home/salary/minimum-wages/minimum-wage-timeline 79Annual Monitoring Report on the Operations of Addax Bioenergy By Sierra Leone Network on the Right to Food (SiLNoRF) For the Period June 2011 – June 2012; Aug 12; p 3




bonus which will not exceed 20 % of their wages. As the company is working according to

FairTrade standards more social benefits are granted – as required by FairTrade80.

The official minimum wages in Tanzania are TZS 70,000, equivalent to Euro 35 per month. MOUNT MERU FLOWERS LTD has an agreement with the labour union to pay TZS 73.000 per months plus additional allowances so that unskilled worker get TZS 95,000 – 100,000 per month plus medical treatment, working clothes, food at the farm etcetera; taking this into account, expenditures for workers reach almost 100 % above the minimum salary. Managers with their

own responsibilities are earning between TZS 800,000 and TZS 4,000,000, equivalent to Euro 2 000 per month. The company declares that it is very difficult to find an experienced and reliable work force, especially for the management81.

Many investors when asking for subsidies, tax havens and other gratifications are willing to give big promises to host governments; at the same time, experienced investors do not sign binding obligations; an excellent example was the privatisation process of the former German Democratic Republic (DDR) where many enterprises were transferred to the buyer

who promised the most jobs instead of selling them at the highest price. Equally, Sun Biofuels in Tanzania presented populist promises of benefits through employment generation and the construction of water wells, roads, schools and health clinics which never materialized82 at the end. Too often, governments want to spread good news and then “foreseen” employment figures and other benefits for the country are circulated; when looking at these promises; often they have not been achieved.

Finally, the new jobs created by an investment project may not always be sustainable. In some cases, it was observed that projects are labour-intensive during the initial phase but become increasingly mechanised later on, thus reducing future labour requirements.83 In Eastern Europe many people have been involved in land purchasing contracts, in restoring and building new premises such as silos and in cleaning and preparing the fields. When the set-up was done, just a few highly specialised tractor drivers remain employed. The situation is

not so different in developing countries.

4.4.4 Tax and investment environment

Worldwide, farmers are often exempt from paying taxes. The soya export tax in Argentina is one of the exceptions from this rule. Investments should at least, in the long run, bring tax revenues so that the host country benefits directly (and not just indirectly) from the investment. Since biofuels are a rather new business sector, many governments from developing countries are investing or encourage investments in biofuel production via special

tax incentives, duty exemptions, freedom of international capital flows, subsidies for biomass and biofuel production or by providing relevant infrastructure.

Financial incentives could be provided in the form of tax credits. Governments can use tax credits in order to promote investments in, and production of, renewable energy, including biofuels, especially during the initial stages of development of the related industry. Even though these instruments, unlike direct payments, do not require financial disbursements by

the government, nonetheless there are opportunity costs associated with them, in the form of foregone tax revenues84.

80 Correspondence with Mr. Herwig Tretter, Director of MOUNT MERU FLOWERS LTD, P.O.Box 285 Arusha, TANZANIA; 4th January 2013 81 Correspondence with Mr. Herwig Tretter, Director of MOUNT MERU FLOWERS LTD, P.O.Box 285 Arusha, TANZANIA; 4th

January 2013 82 Bergius M.: Large Scale Agro Investments for Biofuel Production in Tanzania Impact on Rural Households; 2012; p23 83A-C.Gerlach and P. Liu, "Resource-seeking Foreign Direct Investment in African Agriculture: a review of country case studies", FAO Commodity and Trade Policy Research Working Paper No. 31 FAO (September 2010); p 10 f 84 FAO BEFCI Policy Instruments to Promote Good Practices in Bioenergy 12, p 6




Tax incentives are tax credits which are used among others to foster social sustainability

objectives, such as the inclusion of smallholder farmers in biofuels supply chains. Under Brazil’s Social Fuel Seal, for instance, biodiesel producers are granted tax credits, as well as preferential access to credit, if they purchase a minimum share of feedstock from smallholder farmers, which vary depending on the regions of origin. In order to be eligible for the tax credit, biodiesel producers will also enter into legally binding agreements with smallholder farmers setting specific income levels and guaranteeing technical assistance and training.

In Tanzania, the government provides an exemption of paying taxes for the first years so that investors just have to pay taxes on wages and value-added taxes; the spent added value taxes will be reimbursed around one year later. The main obstacle is the import tax (25%) which is a burden for all kinds of investments85.

One exception could be on land tax. Land rent in Mozambique is assumed to be 22.05 $/ha/yr. Depending on the type of land (bare land, agricultural etc.) this price can vary. F for

example, agricultural land that is leased from the government only has a tax fee of around 0.5 $/ha/yr. (MZM 15/ha/yr.). Having the total investment volume in mind, this land tax is negligible86.

Investors take advantage of tax havens and all other forms of financial incentives which are

often granted during the first years and most likely they will calculate the sales price of their

biofuels produced in developing countries in such a way as to ensure that no taxes will be

paid in developing countries.

4.5. Impacts on Land Tenure Systems

4.5.1 Land Tenure Systems and Governance Challenges

There is a general agreement among academics and international organisations of an increasingly growing pressure on natural resources, especially land, due to projected scarcities of food, water and energy as well as due to climate change related shocks. It is within this context of increased land pressure and land degradation that we need to assess the importance of land security in developing countries against competing interests,

including the production of biofuels on agricultural lands.

Land tenure is the way land is held or owned by individuals or groups. A number of individuals can hold different tenure claims and rights to the same land. These claims may be formal,

informal, customary or religious and can include leasehold, freehold, user rights and private ownership. The definition of land tenure rights mostly depends on national legislation and the degree of recognition of customary or informal user rights which in turn are governed by

social conventions and multiple other factors. “Land tenure security is a degree of confidence that land users will not be arbitrarily deprived of the bundle of rights they have over particular lands. Tenure security is the reasonable guarantee of on-going duration of land rights, supported by the certainty that one’s rights will be recognized by others and protected by legal and social remedies when challenged” (Knight, 2010)87.

The core of the complexity of land tenure systems in developing countries, especially in Africa, lies with existence of the so-called “legal pluralism” where customary tenure and customary justice systems exist alongside formal state tenure and national justice systems. In addition, the history of colonisation has put pressure on newly formed states to address grievances regarding land concentration and/or the need for formal recognition of customary land use. As a result, many developing countries in Latin America and Africa tried

to address land tenure problems through land reforms and a wave of new land legislation,

85 Correspondence with Mr. Herwig Tretter, Director of MOUNT MERU FLOWERS LTD, P.O.Box 285 Arusha, TANZANIA; 4th January 2013 86 UNEP: Global Assessments and Guidelines for Sustainable Liquid Biofuels Production in Developing Countries: A GEF Targeted Research Project, 2012; p 43 87 See R. Knight, Statutory recognition of customary land rights in Africa. An investigation into best practices for lawmaking and implementation FAO (2010) p. 3




with varying degrees of success. While an analysis of land tenure reforms is beyond the scope

of this study, it is important to mention a growing trend towards statutory recognition of customary land rights, especially in Africa but also in some countries of South-East Asia. As Knight points out, it is critical to distinguish and understand that “customary” does not mean “communal”. “Custom is the system under which land is held, and communal is the way in which some of this land is used”88. “Customary domains are territories over which the community possesses jurisdiction and often root title (...). Within the domain, a range of tenure

arrangements typically apply. These include estates owned by individuals or families, and estates owned by special interest groups in the community (such as) ritual societies or women’s groups”89.

The evolving concept of land tenure places a stronger focus on security of use rather than

outright ownership and a number of countries such as Indonesia, Benin, Ghana, Mali, Mozambique, Namibia, Tanzania, Uganda or Mexico, among others, have taken steps to

explicitly strengthen protection and recognition of customary rights in national legislation. Most of the relevant laws further recognize that the community’s relationship with land also extends to land based resources used in common, such as pastures, forests, and water. For example, the Tanzanian 1999 Village Land Act establishes local land management structures through certificates of village land which in turn allows the issuance of certificates of

customary rights of ownership to individual landholders within the village. Similarly, land legislation in Mozambique (1995 Land Policy, 1997 Land Law and 1998 Regulations and Technical Annexes) provide voluntary mechanisms for the registration of customary rights and the issuance of land certificates (direito de uso e aproveitamento de terra, or DUATs) in the name of the community (ODI, DIE, ECDPM 2012 and Deininger et al 2011). Nonetheless, the implementation of these laws proves challenging as it is dependent on investment in the

creation of strong, transparent and participatory governance systems that record and register such rights. In fact, in the case of Sub-Saharan Africa, the implementation of these innovative yet often very complex laws is extremely slow and more often than not relies on the need for technical assistance by NGO’s and donor financing90. Deininger points out in the World Bank study “(...) more than decade after passage of the Tanzanian’s Land Acts, only 753, or 7 per cent of the country’s 10, 397 registered villages have received a certificate of

village land. Even where such certificates were issued pastoralist rights continue to be neglected. In Mozambique, only some 12% of the 70 million ha estimated to be controlled by communities have been mapped, almost all with technical assistance from NGOs and donor financing.”

Cotula concludes in the study undertaken for FAO, IFAD and IIEE: “although on paper some

countries have progressive laws and procedures that seek to increase local voice and

benefit, big gaps between theory and practice, between statute books and reality on the

ground result in major costs being internalised by local people – but also in difficulties for

investor companies. (…) Many countries do not have in place legal or procedural mechanisms to protect local rights and take account of local interests, livelihoods and welfare”91.

88 Ibid. page 24. 89 Ibid. Knight citing Alden Willy on p. 24 90 For analysis of the challenges faced by Tanzania in implementation of its land law reform please see R.S. Pedersen “Tanzania’s Land Law Reform: The Implementation Challenge.” DIIS Working Paper 2010:37. Pedersen argues that “With few exceptions, implementation has been project-driven, largely controlled by donors and implanting agencies. At the same time the responsible ministry retains some control through its know-how, which is shared with other stakeholders in bits and pieces only. The paper concludes that more resources, more commitment and freer flow of information is required if reform objectives are to be achieved.” http://www.diis.dk/graphics/Publications/WP2010/WP2010-37.rhp.web.pdf. The challenges in implementation of the new Land Law in Mozambique and Botswana are further discussed by Knight (FAO 2010). The work of International Land Coalition and many NGOs in Sub Saharan Africa on implementation and raising of local awareness about existing laws is further evidence to the key role played by non-governmental actors in offering technical assistance to communities in order to be able to claim their rights. See for example, http://letstalklandtanzania.com and www.landportal.info 91 See Cotula et al. “Land grab or development opportunity: Agricultural investment and land deals in Africa” FAO, IFAD and IIED (July 2011): 7




The reality of either incomplete land law reforms, under-funded or under-staffed government

bodies responsible for land demarcation and registration as well as serious challenges faced with record keeping, transparency and functioning of the justice systems is the background against which many ACP countries after years of neglect of agricultural investment throughout 1990s, have become a target of the new wave of land investments and the phenomenon of large scale land acquisitions.

4.5.2 Large scale land acquisitions and land pressures

Last years have witnessed growing investor interest in land and agriculture, with pressure from both foreign and domestic investors, although the two are often linked (HLPE FSN)92. The

dramatic rise of large scale land acquisitions (and resulting control of water resources) over the past few years, due to the sheer scale of the phenomenon, has led to a production of many authoritative papers by a range of international organisations such as the World Bank, IMF, IFAD and FAO, as well as by the academic community and institutes (i.e. IIED, International Land Coalition) and international non-governmental organisations (ActionAid, FIAN, Oxfam, Oakland Institute). GRAIN has been one of the first non-governmental

organisations to begin regular tracking of the media reports around the world announcing large-scale land acquisitions and resulting land conflicts or evictions93. There are differences between authors in terms of approach, from those calling for an immediate moratorium to “land grabs” in developing countries until appropriate governance systems are in place (civil society and NGOs) to those seeking to channel the new interest in agricultural investment so

that it can assure developmental benefits (World Bank and FAO). This can be added to academia which is seeking to have a clearer picture on the scale and type of contractual deals involved; it should be noted that one commonly recognised problem exists: that of transparency and reliable data availability. Even though much more data increasingly emerges from wide ranging studies done by the World Bank94 and most recently by the Land Matrix Project95, virtually all of such attempts at qualifying the types of large scale land

acquisitions begin with long introductory remarks on the remarkable difficulties in obtaining

reliable data from target country registries as well as from investors. In fact, the World Bank

and IMF as well as the Land Matrix utilize information from press articles which then they try to

cross-reference with other academic research material or country level data when available. The Land Matrix Database seeks to systemise available data by qualifying it with “reliable” and “reported” but states that information on the factual implementation status of

announced and verified contracts is often limited. The High Level Panel of Experts on Food Security and Nutrition (HLPE FSN) that has been asked by the Committee on World Food Security in 2011 to produce a report on “Land tenure and international investments in agriculture” also pointed out that “data is poor in part because of secrecy from both investors and host governments over the scale of allocations and the terms on which land is acquired96”. The authors of this paper during the field mission in Tanzania have also

encountered the same problem with regards to the access to updated information on the operational status of large-scale biofuel ventures in the country. For example, by December 2012 the Tanzanian Investment Centre (TIC), a one stop foreign investment facilitation institution, has had 10 registered biofuel companies. At the same time, officials at TIC have not been able to give any information as to which of the companies are still operational

given that some of the listed companies were well known to have ceased their operations,

92 HLPE FSN “Land tenure and international investments in agriculture: A report by the High Level Panel of Experts on Food Security and Nutrition of the Committee on World Food Security” HLPE CFS (July 2011). 93 See: http://farmlandgrab.org/ Deininger et al states that “GRAIN deserves credit for having recognized that, without information, it will be impossible to either understand the phenomenon of land acquisitions of to take action to improve outcomes. To provide such data, GRAIN launched an open blog for global surveillance of large scale land acquisitions.” 94 See See: K. Deininger, D. Byerlee et al “Rising Global Interest in Farmland. Can it Yield Sustainable and Equitable Benefits?” The World Bank (2011), p. 15 95 The Land Matrix Partnership is made of ILC, CIRAD, The GIGA German Institute of Global and Area Studies and GIZ (The Deutsche Gesellschaft fur Internationale Zusammenarbeit): http://landportal.info/landmatrix 96 Land tenure and international investments in agriculture: A report by the High Level Panel of Experts on Food Security and nutrition of the Committee on World Food Security, HLPE CFS (July 2011)




while at least one other sugar cane venture that was visited by the consultants, has not been

listed with TIC97.

In conclusion, the findings of the studies are still based on the limits of available data and may not grasp the true scale of the global ‘land rush’ in developing countries or may be limited by geographic considerations i.e. by not taking into consideration the extent of large-scale land investment in the countries of the Commonwealth of Independent States (ex-Soviet Republics).

There is a general agreement that the current wave of interest in large-scale land leases and purchases abroad picked up during the 2007-2008 commodity and food price crisis creating renewed interest in agricultural lands by investors, including sovereign wealth and private equity funds, agricultural producers and key players from the food and agri-business industry. The studies undertaken for the IMF98, World Bank and the HLPE FSN report99 agree that speculation has played (is playing) some role i.e. “since the financial crisis of 2007-8, caused

in large part by speculation in a range of financial instruments, there has been concern that international investment in land has become just another strand in the portfolios of financial institutions” (HLPE FSN 2011). Nonetheless, in part due to lack of transparent data, it is difficult to say how much international investment in land can be classed as speculative. Even faced with evidence that suggests that only 20 per cent of investments that have been announced

are actually being followed through with agricultural production on the ground (Deininger et al. 2011), the HLPE FSN concludes that this can also be due to other reasons then speculation. Reasons other than speculation include: “consultation of affected people may increase project costs or delay implementation (Cotula 2011), absence of bilateral investment treaties to secure investors assets and the right to repatriate profits (…), long delays on the part of the state in transferring the land and releasing grant funding”, credit restrictions and failure to

carry out investments as detailed in the land contract, or long time lapse between land acquisition and drafting or carrying out of the business plans among other factors (HLPE FSN 2011)100. Nonetheless, the data from the Land Matrix confirms that despite some evidence that the global land rush has lost some of its initial pace, it is likely due to continue into long term because of the trends that are driving it. “Among the main drivers, we find population growth, growing consumption and market demand for food, biofuels, raw materials and timber and carbon sequestration, all of which drive speculation on long-term price rises for land and agricultural products”(Land Matrix)101.

The evidence from the studies carried out so far points out that most large-scale land

investment is taking place in countries with weak land tenure governance structures and that

the expansion of crops suitable for 1st generation biofuels is also a significant driver for such

large-scale land investments.

The study undertaken by Arzeki et al for the IMF is surprised by the extent to which weak land governance has made countries more attractive for large scale land investors, contrary to the expectation of secure land governance being a reasonable driver for long-term large scale investment. “The effect of land governance is striking. Instead of land acquisition projects being contingent on good land governance and the associated strong protection

of rights, we find that weak land governance makes a country more attractive for land-related investment. Furthermore, the effect is quantitatively important: a one standard deviation deterioration in land governance index (equivalent to the difference between Angola and Brazil) would be predicted to increase the number of investment project by 33% even with other factors held constant (such as land abundance which would be associated with weaker land governance)” (Arzeki et al 2011)102. These findings are further validated by

the Land Matrix Project, the widest study so far performed on large scale land acquisitions.

97 See Annex 5 related to Tanzanian Field Visit 98 R. Arezki, K. Deiniger, H. Selod. “What drives the global land rush?” IMF Working Paper WP/11/251 (2011) 99 Ibid. HLPE CFS (July 2011) 100 Ibid. 101 “Transnational Land Deals for Agriculture in the Global South: Analytical Report based on the Land Matrix Database.” April 2012. http://landportal.info/landmatrix/media/img/analytical-report.pdf 102 R. Arezki, K. Deiniger, H. Selod. “What drives the global land rush?” IMF Working Paper WP/11/251 (2011)




Figure 14: Most targeted countries according to size of total reported acquisitions

Source: Land Matrix database

Figure 15: Key socio-economic and institutional indicators of target countries

Source: Land Matrix database




Figures 14 and 15 from the Land Matrix study demonstrate that despite

between countries targeted for largecharacteristics. Investors target poorest countries with least developed economiagricultural economies. 66% of the deals hunger. Data on governance suggests that investor protection is an important factorthe same time, investors are targeting poorer countries with weak land tenure security. “Investors are interested in count

that protects their investment and allows them to smoothly operate their business, with low land tenure security that gives them easy and possibly cheap access to land”it allows the Land Matrix to conclude that the poorest, are poorly integrated into the world economy and tend to

of hunger. The emerging data from both the World Bank as well as from the Land Matrix,points out that energy crops (or crops suitable for

are a significant driver in the overall trend of large scale land acquisitions or “land grabs

turn, this means that the development of 1

on access to natural resources such as land and water and hence leads to an increase in

land concentration in a number of developing countries.

According to the World Bank analysis, with a median project size of 40,000 ha,

projects involve more than 200,000 ha and only a quarter involve less than 10,000 ha. Of the 405 projects with commodity data, 37 per cent focus on food crops, 21 per cent on industrial or cash crops, and 21 per cent on biofuels, with theconservation and game reserves, livestock, and plantation forestry (See Figure these projects, most have still not yet acquired land or fail to use the land they acquired as intended although no clear pattern across

started implementation. In sum however, “a larger share of food crops relative to industrial or cash crops and a focus on investments for biofuels are evident in SubLatin America and the Caribbean

Figure 16: Share of Projects by Commodity and Production Status of Capital

Source: Deininger et al 2011105

103 “Transnational Land Deals for Agriculture in the Global South: Analytical Report based on the Land Matrix Database.” (April 2012):p.26 See: http://landportal.info/landmatrix/media/img/analytical104 See Deininger et al 2011 p. 51-53 105 See Deininger et al 2011 p. 53

iofuels production on developing countries from the point of view of Policy Coherence for

from the Land Matrix study demonstrate that despite

between countries targeted for large-scale land investments, it is possible to idenInvestors target poorest countries with least developed economi

of the deals are attributed to countries with a hunger. Data on governance suggests that investor protection is an important factor

investors are targeting poorer countries with weak land tenure security. “Investors are interested in countries that combine a strong general institutional framework

that protects their investment and allows them to smoothly operate their business, with low land tenure security that gives them easy and possibly cheap access to land”

Land Matrix to conclude that investors are targeting countries that are among

the poorest, are poorly integrated into the world economy and tend to have high incidences

. The emerging data from both the World Bank as well as from the Land Matrix,energy crops (or crops suitable for the development of 1st generation biofuels)

are a significant driver in the overall trend of large scale land acquisitions or “land grabs

the development of 1st generation biofuel production has a great impact


land concentration in a number of developing countries.

According to the World Bank analysis, with a median project size of 40,000 ha,

projects involve more than 200,000 ha and only a quarter involve less than 10,000 ha. Of the 405 projects with commodity data, 37 per cent focus on food crops, 21 per cent on industrial or cash crops, and 21 per cent on biofuels, with the remainder distributed among conservation and game reserves, livestock, and plantation forestry (See Figure these projects, most have still not yet acquired land or fail to use the land they acquired as intended although no clear pattern across commodities is evident for projects that have

started implementation. In sum however, “a larger share of food crops relative to industrial or cash crops and a focus on investments for biofuels are evident in Sub-Saharan Africa and

ribbean”104.

Share of Projects by Commodity and Production Status of Capital

“Transnational Land Deals for Agriculture in the Global South: Analytical Report based on the Land Matrix

http://landportal.info/landmatrix/media/img/analytical-report.pdf


64

from the Land Matrix study demonstrate that despite many differences

scale land investments, it is possible to identify some key Investors target poorest countries with least developed economies and

a high prevalence of hunger. Data on governance suggests that investor protection is an important factor, while at

investors are targeting poorer countries with weak land tenure security. ries that combine a strong general institutional framework

that protects their investment and allows them to smoothly operate their business, with low land tenure security that gives them easy and possibly cheap access to land”103. In addition,

investors are targeting countries that are among

have high incidences

. The emerging data from both the World Bank as well as from the Land Matrix, generation biofuels)

are a significant driver in the overall trend of large scale land acquisitions or “land grabs”. In

uel production has a great impact


According to the World Bank analysis, with a median project size of 40,000 ha, a quarter of all

projects involve more than 200,000 ha and only a quarter involve less than 10,000 ha. Of the 405 projects with commodity data, 37 per cent focus on food crops, 21 per cent on industrial

remainder distributed among conservation and game reserves, livestock, and plantation forestry (See Figure 16). Out of these projects, most have still not yet acquired land or fail to use the land they acquired as

commodities is evident for projects that have

started implementation. In sum however, “a larger share of food crops relative to industrial or Saharan Africa and

Share of Projects by Commodity and Production Status of Capital

“Transnational Land Deals for Agriculture in the Global South: Analytical Report based on the Land Matrix report.pdf




These findings were further strengthened by the Land Matrix project, which records

transactions that entail a transfer of rights to use, control or own land though sale, lease or concession that cover 200 hectares (ha) or larger and that have been concluded since the year 2000. The Land Matrix contains reports of 1217 agricultural land deals, amounting to 83.2 million ha of land in developing countries. Land Matrix admits that while it is difficult to determine precisely the final use of crops grown as part of large scale land acquisitions, or whether they will be for food or biofuels, the growth of investors’ interest in “flex crops” and

crops destined for “multiple uses” in terms of area covered in hectares points out that the potential of using crops for biofuel production is an important consideration in investment strategies. The Land Matrix uses four categories of production: food crops, non-food crops, flex crops and multiple uses. “Food crops are crops that do not have a likely non-food usage, while “non-food crops” do not have a likely food use. “Flex crops” are those that are

commonly used as both food and for biofuel production. The main ones are soybean,

sugarcane and oil palm. Depending on different factors (world price, opportunity of commercialisation) the investor can choose whether to sell the product on the food or on the biofuel market”106. Figure 17, from the Land Matrix Database, shows the relative importance of the different types of production in terms of their shares of the number of deals as well as the total surface area affected.

Figure 17: Large Scale Land Acquisitions by Category of Production

Source: Land Matrix Database

While the Land Matrix advocates caution with regards to the interpretation of the results, the study concludes that “the fact that large-scale land acquisitions for flex crop production account for a larger surface than the other types of production indicates the important role played by these crops, as well as a research bias towards flex crops in general and biofuel production in particular. The importance of non-food crops (i.e. Jatropha) shows that the development of particular market, such as biofuels and other traditional “high value crops”

(i.e. rubber) attracts investors“107.

106 “Transnational Land Deals for Agriculture in the Global South: Analytical Report based on the Land Matrix Database.” (April 2012):p.27 See: http://landportal.info/landmatrix/media/img/analytical-report.pdf 107

Ibid. page 28




Figure 18: Large scale land acquisitions by category of productio

size


The data on importance of flex crops is further evidenced by the study done by the Centre for International Forestry Research (CIFOR) on development trends and investment patterns in the production of biofuels in a range of America. CFIOR’s data points out that crops used for production of biofuels now cover

extensive areas worldwide, ranging from an estimated 1 million ha for some 40% of it in India) to mucproduction from Indonesia and Malaysia), soybean (97 million ha worldwide, with Brazil as leading producer accounting for 26% of production), and sugar cane (24 million ha in all, with 32% of output from Brazil) (Van Gelder et al., 2011)Matrix study breakdown of deals for non

driver for large-scale land acquisitions in the world. projects (73 %) are exclusively dedicated to

in Africa, particularly in East African countries (Ethiopia, Mozambique and Tanzania).

companies registered in United Kingdom and the Netherlaninvolved in Jatropha production in Africa

Recent data began to land investments aimed for the production of Jatropha for export markets has not taken shape, consolidation and concentration of land (and water rights) has already occurred through a few cases (i.e. EU-based companies such as Sun Biofuels, Bioshape, Prokon) and information on the future use of the land under these projects is not yet available though

most likely it will be sold off to new investors through thpossible to induce that given the role of the EU companies in these deals, the pexports for the EU markets has been among the key drivers for investment in largeJatropha plantations, although this type of investment has been highly speculative in nature and often lacked proper agronomic, financial feasibility or tsocial impact assessment studies and monitori

108 Van Gelder et al. 2011 as cited in Van Vlerken et al. 2012 backg2012 “Investors in Land: Perspectives on Investors engaged in Transnational Land Acquisitions in Developing Countries.” See: http://erd-report.eu/erd/report_2011/documents/devwesten.pdf 109 See Page 30 in http://landportal.info/landmatrix110 See annex 5 related to Tanzanian Field Visit


Large scale land acquisitions by category of production, number of projects and

The data on importance of flex crops is further evidenced by the study done by the Centre for International Forestry Research (CIFOR) on development trends and investment patterns in the production of biofuels in a range of developing countries in Africa, Asia and Latin

CFIOR’s data points out that crops used for production of biofuels now cover

extensive areas worldwide, ranging from an estimated 1 million ha for Jatrophasome 40% of it in India) to much larger surface areas for oil palm (15 million ha, with 86% of production from Indonesia and Malaysia), soybean (97 million ha worldwide, with Brazil as leading producer accounting for 26% of production), and sugar cane (24 million ha in all, with

output from Brazil) (Van Gelder et al., 2011)108. This is further compoundedMatrix study breakdown of deals for non-food crops, confirming that Jatropha

land acquisitions in the world. A large majority of t

projects (73 %) are exclusively dedicated to Jatropha production with most of them located

in Africa, particularly in East African countries (Ethiopia, Mozambique and Tanzania).

companies registered in United Kingdom and the Netherlands were among major actors production in Africa109.

Recent data began to emerge by the end of 2012 regarding the failure of largethe production of Jatropha, as evidenced in Tanzania.

for export markets has not taken shape, consolidation and concentration of land (and water rights) has already occurred through a plantation model in

based companies such as Sun Biofuels, Bioshape, Prokon) and on the future use of the land under these projects is not yet available though

most likely it will be sold off to new investors through the Tanzanian Investment Centre. possible to induce that given the role of the EU companies in these deals, the pexports for the EU markets has been among the key drivers for investment in large

plantations, although this type of investment has been highly speculative in nature and often lacked proper agronomic, financial feasibility or thorough environmental and social impact assessment studies and monitoring110.

Van Gelder et al. 2011 as cited in Van Vlerken et al. 2012 background study for European Report for Development

2012 “Investors in Land: Perspectives on Investors engaged in Transnational Land Acquisitions in Developing report.eu/erd/report_2011/documents/dev-11-001-11researchpapers_vlerken

http://landportal.info/landmatrix/media/img/analytical-report.pdf Tanzanian Field Visit


66

n, number of projects and

The data on importance of flex crops is further evidenced by the study done by the Centre for International Forestry Research (CIFOR) on development trends and investment patterns in

frica, Asia and Latin CFIOR’s data points out that crops used for production of biofuels now cover

Jatropha (a new crop, h larger surface areas for oil palm (15 million ha, with 86% of

production from Indonesia and Malaysia), soybean (97 million ha worldwide, with Brazil as leading producer accounting for 26% of production), and sugar cane (24 million ha in all, with

compounded by the Land Jatropha is an important

A large majority of the “non-food”

production with most of them located

in Africa, particularly in East African countries (Ethiopia, Mozambique and Tanzania). Private ds were among major actors

failure of large-scale , as evidenced in Tanzania. While the

for export markets has not taken shape, consolidation and plantation model in

based companies such as Sun Biofuels, Bioshape, Prokon) and on the future use of the land under these projects is not yet available though

e Tanzanian Investment Centre. It is possible to induce that given the role of the EU companies in these deals, the promise of the exports for the EU markets has been among the key drivers for investment in large-scale

plantations, although this type of investment has been highly speculative in nature horough environmental and

round study for European Report for Development 2012 “Investors in Land: Perspectives on Investors engaged in Transnational Land Acquisitions in Developing

11researchpapers_vlerken-wal-




4.6 Energy access and supply security

Typologies of bioenergy feedstock production operations

Depending on the driver for feedstock production and the scale of production, four distinct production typologies can be identified in ACP countries.

Figure 19: Typologies of biofuel projects in ACP countries

Source: adapted from UNU-IAS 201

Type 2 and 4 are typical of large-scale plantations of several hundreds of hectares (100s–1,000s ha), typically owned by foreign corporations or funded through foreign direct investments. The energy crops are used either for own fuel consumption or for commercial purposes. Owners of large plantations buy or rent large areas exclusively for feedstock

production for several years, which can change or displace previous land uses.

In Africa, the experience of large-scale plantations intended for export is noted for example in Mozambique (Ecomoz, ESV, Sun Biofuels, D1 Oils), Zambia (D1 Oils), Tanzania (D1 Oils, Sun Biofuels), Madagascar (GEM Biofuel Plantations) and other parts of Africa (UNU-IAS 2012).

Type 1 and 3 projects are normally owned by smallholders and their size can vary from a few hectares to tens of hectares. The produce is consumed locally (small-scale energy access

projects) or sold to the market as a cash crop. These projects are normally promoted by environmental NGOs and financed through development and multilateral agencies as a way to foster rural development. They are aimed at improving local livelihoods deriving from the local production and consumption of renewable energy carriers that can either allow mechanisation (allocating productive time to more rewarding activities) or in enhanced local incomes. In relation to this, it should be considered that agriculture in ACP countries and Sub-

Saharan Africa in particular is dominated by smallholder farmers, i.e. possessing 2 hectares or less, who represent 80% of all farms and produce up to 90% of the total agricultural output (IFAD 2011).

Examples in ACP countries include rural electrification projects in Mali, Mozambique and Uganda using straight vegetable oil (SVO) or the production of transport biodiesel from sunflower in South Africa (FAO, 2009) or FACT Foundation project in Mozambique that offered

Type 1

Small-scale biofuel

projects for rural

electrification

Type 2

Commercial farmers

producing biofuel for

own consumption

Type 3

Outgrower schemes for

commercial plantations

Type 4

Large-scale

commercial

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Project scale

1-10 ha 100-1000 ha

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assistance to farmers to grow Jatropha in hedgerows for soap-making and pure plant oil

which could be used for local power generation (de Jongh and Nielsen, 2011; UNU-IAS 2012).

Type 3 projects entail feedstock production for commercial purposes using out-grower schemes. These projects include the examples of Addax in Sierra Leone and Marli Investment’s Jatropha plantations in Zambia. The latter contracted farmers to allocate to half of their 10 ha landholdings to Jatropha. Marli provided initial inputs and was supposed to provide finance until the Jatropha plants started seeding. In return, the farmers were

contracted to grow Jatropha and harvest the seeds, which they were then contractually obliged to sell to Marli (UNU-IAS 2012). A similar approach has been successfully adopted by Mali Biocarburants in Mali, with the support of IFAD111.

It is fundamental to distinguish between the different roles of biofuels and bioenergy at large

in the broad market system in order to establish the impact on livelihoods, including on

access to energy. The FAO, for example, distinguished the role of bioenergy as follows

(adapted from FAO 2009):

• Bioenergy as the main output of the chain – This is the case for biofuels initiatives established to serve household cooking, mobility and electrical applications. Energy demand is relatively constant in that people cannot do without energy and must find it somewhere to serve their basic needs. In this respect it forms a stable demand with

growth potential in response to better, cheaper and more convenient sources, while in some markets the environmental impact of the fuel is also a relevant criterion;

• Bioenergy as a productive input to another chain – In this case the bioenergy chain is reliant for its end market on the other productive chain and the bioenergy market chain is governed by the requirements and success of that chain;

• Bioenergy as a by-product of another chain - In these cases the likely extent of the

bioenergy market chain is also limited by the size of the main market chain which governs the amount of residue by-products available.

All these roles can involve small and large scale biofuel projects as well as modern bioenergy used as energy end-use in rural communities making a direct contribution to rural energy access and livelihoods. Improved access to modern energy is a pre-requisite for sustainable development (Practical Action 2012) as it allows new business and therefore the creation of

new jobs and incomes.

Biofuel effects on energy security and access

The impact of biofuel production and use on energy security can be manifested on different scales (e.g. household, community or national level)112. The majority of large-scale and several smallholder-centred biofuel projects in ACP are aimed at meeting national or international blending targets (Types 3 and 4). In this way, little fuel benefits are returned to

the local communities where the feedstock is grown.

The idea of biofuels as a means to increasing the national energy security of ACP countries is

limited, as most foreign investors generally target biofuel (or biofuel feedstock) production for

export while the domestic market usually remains only a secondary target. In some countries this is because biofuel hardly competes with locally available fossil fuel sources, which are

sometimes cheaper than in Western countries and are less subjected to heavy taxation and quality requirements in comparison with the EU. Sometimes fossil fuels are heavily subsidised, hampering the development of other energy sources. In other countries, biofuels can be

111 Mali Biocarburants is also the first biodiesel company in Africa, which works sustainably with more than 8,000 smallholders who also hold company shares and which was mentioned as a positive example by the UN Special Rapporteur on the Right to Food, Olivier De Schutter, at the UN General Assembly despite his traditional negative stance on biofuels (Mali Biocarburants S.A. 2012) 112 It is still unclear how to define energy access at the household and community level. A group of international

organizations (including UNIDO, FAO, UNDP, led by Practical Action) recently developed the Total Energy Access Index (see Practical Action 2012, now being refined for community level in the 2013 forthcoming edition) as a practical way to measure access at the household, business and community level.




competitive in certain areas, however the inability to develop the market and the lack of

technological and financial capacities doesn’t allow their development.

Brazil is one of the few countries where biofuel use (sugarcane ethanol) has significantly boosted national energy security113. The Brazilian blending mandate is the highest in the world, but its fulfilment has also been possible thanks to the parallel development of an industry for ethanol utilization, such as flex-fuel cars. This has in turn increased the share of renewable energy produced by bagasse (a by-product of sugarcane ethanol production)

used as heat and power in sugar mills and fed into the national electricity grid. As for biofuels as a way to improve EU’s energy security, it is still uncertain whether, and to what extent, the EU's energy independence might be improved by its biofuel policies, particularly when reliance on imported feedstocks is taken into account (Blanco et al. 2010).

ACP countries are very well endowed in terms of natural resources and sun irradiation to replicate the Brazilian experience but, at present, only Mauritius island (around 1/5 of total

electricity is generated from bagasse) and Malawi have been significantly exploiting the potential of sugarcane for electricity generation. In Mauritius, however, sugarcane is becoming less attractive as wages for sugarcane workers must be very low (in comparison with the tourism and service sectors) in order to make sugarcane bioenergy competitive for local use or for export to international markets.

For local consumption, in order for vegetable oils to be competitive with crude oil, the price of oilseeds, and therefore of the labour, must be low. This however translates into low prices received by farmers for their products. This is a constraint for the viability of biofuels as a way to increase national energy security of ACP countries. Exceptions exist such as in the land-locked Zambia where biofuel has proved to be more competitive in rural areas (UNU-IAS 2012).

At the same time, biofuel projects can contribute significantly to local and household energy security in remote areas. Small-scale biofuel projects (Type 1) in particular can bring an

important benefit in this context where traditional energy sources are particularly costly, not

only in terms of market price but also in terms of amount of time needed for collecting energy

source. Time saved here is another opportunity cost. These projects can encompass the use of biofuel or SVO for generating electricity or be used in multi-platform applications such as

electricity generators, mills and water pumps. The viability of Jatropha SVO for electrification has been debated in several forums and it is now a common understanding, as also confirmed by Bouffaron et al. 2011, that these projects have a high degree of sensitivity to several parameters, especially seed yields, oil prices, geographical locations and labour costs, that usually put Jatropha SVO-based electrification projects on the threshold of economic competitiveness. Small-scale biofuel projects are seen as more suitable and

compatible with sub-Saharan Africa context because they are able to provide more opportunities for local farmers (CIFOR 2011). Examples of this application can be found in Mali (Folkecentre project) and Tanzania (TaTEDO)114. It is well recognized that access to modern energy services can have important benefits on development (Practical Action, 2012) and contribute to the achievement of the MDGs. Many investments in the sector come also from

European companies, such as Novozymes, working with CleanStar Mozambique, developing a sustainable biofuel supply chain that would also increase local energy access through electricity co-generation and clean fuels for stoves, or Scania, who is working on the introduction of ethanol-powered buses in South Africa.

Mapping the biofuels market

Linking small-scale producers from developing countries into more formal markets to sell their

goods can be difficult115 (IIED 2012). The same is true for enabling low-income consumers to

113 17% of total final energy consumption was met by sugarcane ethanol or bagasse in 2009 (Source: National Energy Balance 2009 – EPE). This was a result of blending mandates (E18-25) and long lasting government support 114 See Project N. 195 985: Up scaling access to modern energy (Tanzania) in the report “Evaluation of EC funded Biofuel Projects in ACP Countries”, EC, forthcoming 115 IIED 2012 Sustainable energy for all? Linking poor communities to modern energy services




buy innovative sustainable goods and services, such as biofuels or biofuel-based household

appliances. Small-scale bioenergy projects, even those with a commercial orientation towards a wider market in the longer run, focus on providing improved energy services in the producer regions. FAO mapped the market and analysed livelihood benefits that flow from the use of the improved energy within the local communities in 15 case studies in developing countries. The study highlighted livelihood benefits through improved energy services in

households, communal spaces, public buildings, services and enterprises concluding that

direct uses contribute to an improved quality of life and are important for building human and social capital. This is particularly evident when enterprises for productive uses have the added benefit of developing new financial capital within communities which supports ability to pay tariffs for the energy services which in turn support the viability of the small-scale bioenergy initiatives (FAO 2009). In this way, virtuous circles of development are shown to develop within communities enabling access to the energy services needed for

development without money flowing out of the community for fossil fuels (or impoverishing local natural resources). The cases covered focused on local markets first, which appeared more stable in general and less open to distortion by foreign governments and firms. A strategy oriented at the development of small-scale bioenergy production with a local energy access component appeared to develop more cyclic and evenly distributed benefits

to livelihoods than projects with export orientation116.

However, a removal of subsidies on kerosene in Ethiopia drove an increase in unimproved fuelwood use in the country (FAO 2009). In general, bioenergy investments driven by energy security drivers have fallen by the wayside when fossil fuel prices dropped, with the notable exception in Brazil which persevered in bioethanol development with government’s support.

Biofuels effects beyond national energy security

Small-scale bioenergy projects seem to have wider benefits in the form of human, social,

natural and physical capital gains, which are not seen by communities or priced in fossil fuels. In this respect a strong argument is made in several initiatives for partial insulation of the market chain and this has been done at local level through co-operatives, social structures or local by-laws. This has especially been the case in emerging technology sectors to enable community biofuel projects protected from the relatively unstable fossil fuels markets (in any

case only partially accessible in poor rural communities) (FAO 2009).

Successful rural electrification bioenergy projects in ACP countries include KAKUTE in Tanzania and MFC Mali Garalo. In addition, in Tanzania, TaTEDO works with village smallholder farmers to produce transport biofuels and is implementing electrification projects using SVO as energy source with an approach similar to the MFC Mali project (E. N. Sawe - TaTEDO, presentation at Biofuels Conference, Dar Es Salaam, September 2008).

The use of liquid biofuels is more easily justified in economic terms for (off-grid) electricity generation or for mechanical power, rather than for space heating and cooking at the household level. For these latter applications less valuable fuels may be preferred (e.g. charcoal or sustainable firewood). Biofuels could also be used directly for lighting, and in this case ethanol fuel is preferable to vegetable oil as it is cleaner and less viscous.

Ethanol cooking stoves also hold the promise of providing clean fuel to improving modern energy services in developing countries in certain areas with scarce resources or endangered natural ecosystems. Examples exist in Malawi (Millennium Gelfuel Initiative) and in Ethiopia (Project Gaia) but the cheaper price of fossil kerosene made this solution unattractive for local population (Dioha et al. 2012)117. Cultural habits and lack of proper communication

116 Market mapping for bioenergy was also addressed by Practical Action in the context of its work on agricultural market chains, showing market actors (implementers, including supply chain partners and contractors), the enabling environment (including socio-cultural factors) and the supporting services. This approach proved effective in the analysis of bioenergy markets in the context of the PISCES energy access programme, and has been adapted for broader analysis of energy delivery models in the book Delivering Energy for Development (Bellanca et al., forthcoming) (IIED, 2012) 117 In general an energy end use is a very reliable demand and the only instance in which a consumer will switch is if another source i) becomes available at a competitive price, and ii) is considered as good value in terms of utility for




contributed to the failure of the use of ethanol gel for cooking. In Mozambique, the CleanStar

launched a project a year ago to introduce a new cooking model for households in the country to substitute charcoal for cooking (which produces smoke that carries major risks for human health) with ethanol. The company has designed a low-cost ethanol stove. The ethanol is produced from cassava grown by out-grower farmers. Over the last year, they have sold 3000 stoves and plan to sell thousands more in 2013. This project seems to be successful so far but it is still at an early stage118.

By-products of biofuel production, oil extraction or other farming activities119 can also be used for additional electricity generation, using the biogas resulting from their fermentation.

However, several examples of unsuccessful bioenergy projects to increase energy access can be found in the literature. GIZ reports for example a plan for 25 rural communities to produce Jatropha on 250 ha that as of 2011 did not manage to generate any electricity and a similar destiny was reserved for the GIZ ‘Sustainable Biomass Electrification’ project aimed

at providing electricity to 3000 people by using locally produced vegetable oils (GIZ, 2011). The establishing of a reliable supply chain for the biofuel feedstock able to ensure the quality

of the biofuel over a long time are usually the main impediments for successful energy access projects.

Electricity generation from bagasse is a viable option to improve national energy security in

southern African countries. It has been estimated that, depending on conversion technologies, the potential for electricity generation in the region from bagasse burning can be as high as 600 GWh. This suggests an excellent potential to expand bagasse cogeneration plants, particularly in South Africa, Mauritius, Swaziland, and Zimbabwe (UNU-IAS 2012).

The production of liquid biofuels has the potential to improve income for producers and net-sellers of agricultural commodities. However, these tend to be larger and richer producers

and price risks from such production often fall on the most vulnerable consumers.

Production to date has been heavily dependent on policy intervention and care must be

taken to coordinate energy and food security objectives. While caution should be exercised

in using food products for the production of energy, the use of some agricultural outputs, such

as crop residues, forestry residues, biogas, woody biomass and dedicated energy crops in a

multi-cropping system broaden the options for producers to stabilise farm income. The

production of renewable energy may also help mitigate the negative effects of volatility in

fossil fuel markets.

the extra money. There is a continuum between the most basic wood energy burnt in a three stone fire to the most flexible, clean to use and convenient source of energy i.e. electricity, at the top. Barriers to switching to steps up the ladder, such as charcoal, biogas or liquid biofuels, usually involve also important capital costs for appliances that should be carefully considered 118 It must be mentioned that this project is a 20 million dollar investment, heavily relying on communication and stakeholder involvement. It is backed by major investors such as the Soros Fund, the Danish Industrialization Fund for Developing Countries and Novozymes 119 A farmer can take innovative approaches to energy production and distribution for example by turning pig manure into biofuel. An example from Cuba of a farmer putting biogas resulting from pig manure fermentation into recycled bags and sharing it with his neighbours is available at http://www.trust.org/alertnet/multimedia/video-and-audio/detail.dot?mediaInode=09e64c1b-5397-4cc9-a9a0-d624d32d599c




Section 5: Environmental impacts of the production of

biofuels in developing countries

For developing countries, the development of bioenergy presents both opportunities and challenges for economic development and the environment. Like any crop and plantation, the environmental impacts of planting feedstock for biofuels will depend on the bioclimatic conditions of the site used, on the biofuel crop characteristics and the agriculture practices applied, including socio-economic factors, the scale of production and the previous use of

the land.

It is recognised by all agronomists that fundamental rules (such as equilibrium and positive synergies between soil - plant – air) must be respected to get a sustainable model generating positive benefits from an economic, social and environmental point of views. Some of the environmental issues associated with crop production for biofuels have already been observed for other commercial agricultural production systems. They are indistinguishable

from those of increased agricultural production in general. Therefore, it is necessary to guarantee a transition from food and agriculture systems that deplete natural resources (soil, water, land, air) to sustainable practices that reduce the direct and indirect use of fossil energy and pollution

120. During the field study in Tanzania, it appeared very clearly that

impacts on land and water are associated with unsustainable intensive cultivation of large-scale feedstocks for biofuels, as well as in high intensive farming systems.

Environmental impacts are part of the impact assessment guidelines used by the European Commission (EC) to prepare policy proposals

121. Inter alia, items to be analysed include

biodiversity, flora, fauna and landscapes; water quality and resources; soil quality and resources and land use. These criteria are reviewed regarding the impacts of biofuels on developing countries.

5.1 Land degradation, desertification and fertility

5.1.1 Biofuels and land degradation

In 2004, an estimated 14 million hectares worldwide were being used to produce biofuels. Most first-generation feedstocks (maize, sugarcane, rapeseed and palm oil) cannot be distinguished by end-use at the crop production stage. Evidence remains limited on the impacts specifically associated with intensified biofuel production. Most of the problems are similar to those already associated with agriculture production for food122. The necessary

agricultural growth is directly threatened by the depletion of the resources that have sustained it. Soil is one of the fundamental resources. Physical (loss of land, loss of soil structure) and chemical erosion (loss of fertility) represent key concerns. Land degradation is defined as the diminution of the productive potential of the land, its farming system and its economic value123. Researchers from IFPRI124 mention that land degradation and desertification were often used interchangeably, whereas desertification refers to land

degradation in arid and semiarid zones.

120 Price volatility and food security, Committee on World Food Security High Level Panel of Experts on Food Security and Nutrition, 2011 121 Impact assessment guidelines, European Commission, 2009 122 The State of Food and Agriculture, Biofuels : prospects, risks and opportunities, FAO, 2008 123 FAO, 2002 124 The Economics of Desertification, Land Degradation and Drought, IFPRI, 2011




Box 12: Land degradation

Recognised causes of land degradation include overgrazing of rangelands, over-cultivation of crop lands, mechanical tillage, waterlogging and salinization of irrigated agricultural land, deforestation, pollution and industrial causes.

The main crops currently used as feedstock in liquid biofuel production require high quality

agricultural land and major inputs in terms of fertilisers, pesticides and water to generate

economically viable yields. The adverse impacts of bioenergy crops on soils depend critically on farming techniques used. Soil cover is a key for soil conservation. For example, wheat, rapeseed and corn require significant tillage which could increase the erosion because of the loss of soil cover. Inappropriate cultivation practices can reduce soil organic matter and increase soil erosion by removing permanent soil cover. Any form of mechanical tillage causes the loss of soil structure and soil organic matter, leads to soil compaction, decrease in

infiltration and drainage, loss of soil biodiversity and soil health125. The removal of plant residues can reduce soil nutrient. Intensive production systems using a high level of agrochemicals inputs must be carefully assessed from a sustainability point of view. Large-scale biomass production can cause soil compaction of heavy equipment is used for harvesting. Intensive production of energy crop, such as short-rotation coppice, energy grass

and intensive production of feedstock requires use of agrochemical inputs on a regular basis to reach the expected yields.

Box 13: Oil palm cultivation

For example, oil palm, traditionally used in a sustainable way in Africa for centuries, can

cause huge negative impacts when planted in monoculture. Several scientific works corroborate the main findings: the development of oil palm with linkages to biofuel in Indonesia has caused deforestation, removed the original land cover and eroded soil, particularly in riparian areas where increased water flows during raining season caused

abrasion. Other negative impacts mentioned air and water pollution as well as flooding126.

The energetic use of wastes and agricultural residues has been considered to provide double

benefit of waste management and energy provision. Second-generation of biofuels, when technologies become available, may make use of residues. The positive point is that no direct additional land-use would be required. But it is uncertain what fraction of residues

could be sustainably removed from forests and fields. Agricultural and forest residues provide protection again erosion, contribute to soil biodiversity and maintain soil carbon content. They contain nutrients and contribute to the soil fertility. Using these residues for bioenergy

production will require an adequate management of the soil fertility and its physical quality.

Potential solutions

Good environmental practices can improve the efficiency and sustainability for bioenergy

production, minimizing the impacts on biodiversity and ecosystems. The FAO’s Bioenergy and

Food Security Criteria and Indicator (BEFSCI) Project has compiled these recognised practices into three groups: agricultural management approaches, integrated sustainable agricultural and forestry management systems and field-level agricultural and forestry practices127. The document describes the key features of each practice and the potential benefits for example regarding soil quality, water availability, biodiversity and climate change mitigation.

125 Good Environmental Practices in Bioenergy Feedstock Production, FAO, 2012 126 See for example Environmental and social impacts of oil palm plantations and their implications for biofuel production in Indonesia. Ecology and Society 17(1):25, 2012 127 ibid., FAO, 2012




Examples of implementation in bioenergy feedstock production coming from different

regions of the world are provided.

Box 14: Good environmental practices in bioenergy feedstock production

The main sustainable agricultural management approaches include conservation agriculture,

ecosystem approach and organic agriculture. Sustainable integrated management systems refer to agroforestry, integrated food-energy systems (IFES) and multiple cropping systems. The sustainable field-level practices are specific to agriculture (such as alternative to slash-and burn, integrated pest management – IPM or integrated plant nutrient management - IPNM) and to forestry (community-based forest management, forest buffer zone, and

sustainable forest harvest).

Considering woody biomass for energy, a potential benefit can be the prevention from soil

erosion due to afforestation, the physical soil stabilisation by their roots and leaf litter, the reduction of water runoff and sediment loss. Trees and bioenergy crops can help fixing nitrogen improving soil organic matter, soil structure as well as water and nutrient-holding capacity. Planted as shelterbelts and in agroforestry systems, they can reduce also wind erosion. The adequate management system must be by rotational harvesting, as clear-

cutting will produce a large increase in water erosion, especially on mountainous slopes128.

Jatropha, like other bioenergy crops (willow or grasses), has the potential to grow in marginal

land with little rainfall requirements and can help revive certain areas. However, it is important

to distinguish between plantation for land rehabilitation (long-term dimension) and an

objective for production: when Jatropha is able to cover marginal land does not mean that

the production will be high enough for biofuel production. Experiences from Tanzania are a

good example where investors will seek to grow Jatropha on fertile land, applying irrigation129.

Sustainability frameworks

Due to the rapid growth of biofuel production and consumption, many actors (governments, multilateral institutions, industry groups, NGOs) have created sustainability frameworks. With the exception of the EU RED, these frameworks are voluntary certification schemes in which

certified operators agree to a set of principles and guidelines, or frameworks to guide and inform policy-making about sustainable bioenergy development (e.g. the GBEP set of indicators). A comparative study undertaken by CIFOR130 illustrates the advantages and shows the limits to the application of these frameworks. They all mention criteria regarding soil management and soil protection. The report advocates a common definition of criteria and indicators, regarding land degradation, they include: reduced use of agrochemicals;

maintenance of soil quality and fertility; sustainable resource use (land use efficiency, secondary resource use efficiency); soil quality (avoidance of erosion, maintenance of soil organic carbon). Based on this common set, standards would remain flexible depending on the geographical situation, the crops used and the local bioclimatic conditions. Some authors argue that as the impacts of land expansion for fuel and food crops are virtually

indistinguishable from each other, equal or uniform standards should be applied for all agricultural commodities traded internationally.

128 Impact of EU bioenergy policy on developing countries, European Parliament, 2011 129 Implication of biofuels production on food security in Tanzania, ActionAid Tanzania, 2010 130 A review on environmental issues in the context of biofuel sustainability frameworks, CIFOR, 2011; the frameworks analysed are the European Union Renewable Energy Directive (EU RED), Roundtable on Sustainable Biofuels (RSB), Roundtable on Sustainable Palm Oil (RSPO), Round Table on Responsible Soy Association (RTRS), Better Sugarcane Initiative (BSI) and the Forest Stewardship Council (FSC)




5.1.2 Impact of monoculture plantations

Large biofuel plantations are grown usually under monoculture cropping systems. Over time, continuous intensive monoculture cropping systems may lead to pest and pathogen build-

up, declining soil fertility, loss of biodiversity and ultimately, land and natural resource degradation.

Before the introduction of synthetic fertilisers and pesticides, farmers used to maintain nitrogen supply in the soil for crop uptake by cultivating nitrogen fixing crops and pests were often controlled biologically by changing or diversifying the crops cultivated on the farm. This was generally achieved through the application of multiple cropping systems and crop

rotation (FAO 2012).

Soil is fundamental to crop production and without soil, no food could be produced on a large scale, nor would livestock be fed. As it is finite and fragile, it is important to maintain soil

quality through good farming practices (see section 3.1.2) for example ensuring that biological diversity in the landscape is maintained or improved. Many soil and crop management systems used for large-scale bioenergy feedstock plantations are

unsustainable131.

A number of farming practices aim at limiting the damages of monoculture. These include: Multiple cropping, Sequential cropping, Intercropping and Crop rotation. A full discussion about the benefits and drawbacks of each of these practices applicable to bioenergy feedstock production can be found in (FAO 2012).

In general, monoculture cropping puts more pressure on soil as each crop has its specific nutritional needs and extended cultivation on the same plot of land may lead to depletion of nutrients from the soil, leading to reduction in yields in the medium term, which then needs to be integrated by (chemical) fertilisers. This is a catch-22 situation. Rotating and diversifying energy crops on the other hand would give the soil time to recover, especially if nitrogen-fixing plants are used.

In biofuel projects, the potential for the reduction in natural capital is in general greater as with any agricultural activity; however, the small-scale biofuel cases addressed in FAO 2009 did not highlight that this was taking place and that instead, benefits of natural resource management were not achieved. In the case of Kenya Afforestation for example, the energy crop growth served to increase forest cover by 200 hectares while trees are leguminous fixing nitrogen and improving soils compared with when the areas were bare or covered by

thickets. In this case, as well as in Jatropha cases, using indigenous trees served to avoid upsetting ecological imbalances while the micro-climate is improved by forests and a new carbon sink is created.

If crop selections are suited to marginal non-forested lands and are used on these or intercropped with other food crops to avoid conflict with existing natural capital or food production, no relevant negative impacts are registered.

Additionally organic fertilisers produced as by-products of oilseed pressing can be reintroduced to the soil which increases fertility and soil health (and also reduces polluting run-off into rivers).

Alternating energy crops, such as maize, wheat, barley and millet also conserves soil due to their different root systems, which extract nutrients at different layers in the soil.

Crop rotation and diversification increases aggregate soil stability, thus reducing the tendency of the soil to crust, improving soil pores but also the rate of water infiltration, increasing water and nutrient availability for plant uptake.

131 An interesting case study is summarized in FAO, 2008, “From subsistence farming to sugar-cane monoculture: impacts on agrobiodiversity, local knowledge and food security”, describing the changes prompted by the “Komati Downstream Development Project” in local farming systems (e.g. their reduced diversity) and assessing their socio-economic impacts on rural livelihoods, with particular emphasis on food security and the loss of local knowledge




5.1.3 Clearance of forest and use of new land for biofuels production

Investigators from CIFOR132

make clear that the relationship between biofuel production and

deforestation is very complex and difficult to quantify: no global deforestation data and global biofuel feedstock plantation data are available of sufficient resolution. Estimates can be made for particular areas, based on case studies.

Box 15: Some case studies on biofuels and deforestation

Biodiesel from oil palm may have been responsible for up to 2.8% and 6.5% of direct

deforestation in Indonesia and Malaysia.

Biodiesel from soybean in the Brazilian state of Mato Grosso may have been responsible for up to 5.9% of the direct annual deforestation over the last few years.

The direct deforestation resulting from sugar-based ethanol in Brazil and Colombia appears to be negligible.

The impacts of biofuels on deforestation depend on the particular feedstock used. In Latin America, sugarcane is generally expanding on lands cleared for agriculture a long time ago and is unlikely to cause direct deforestation; it may nevertheless cause indirect land use change by displacing crops or livestock into forests or grasslands. This can create potential conflict over land use as a result of feedstock production

133. Soya is in general a pioneer crop,

frequently produced on the agricultural frontier in forestlands, cleared for this purpose or in areas cleared for pasture and beef production. In Malaysia and Indonesia, oil palm

plantations are often found in rainforest areas specially cleared for this purpose, or in areas that had been cleared earlier for rubber or coconut production. It seems that oil palm’s expansion is driven by global demand for edible oil more than by biofuels. Elsewhere in the world, increases in agricultural production were achieved through the intensification of land

use and fertiliser applications. In Sub-Saharan Africa, its production increased not by increasing yields per hectare, but mainly by expanding the areas under cultivation at the expense of forests and grasslands

134. In sub-Saharan Africa, dry secondary forests have often

been affected by the establishment of Jatropha’s ; expansion plans for Jatropha plantations are very important and a significant portion of the land acquired for that purpose are located within or surrounding closed forests.

Industrial-scale business models are directly associated with deforestation. Even if the

proportion of deforestation attributable to biofuels sector may be less for oil palm and

soybean because the multipurpose natures of these crops, all data coincide to indicate that

biofuel feedstock expansion at the expense of forests ranged from 13 to 99%, the highest

rates are observed for oil palm in Indonesia. Direct and indirect land-use changes are also

observed under smallholder feedstock cultivation, caused by the displacement of permanent

cropland, fallow and mature forest. It is the cases assessed by CIFOR for Jatropha plantation in Zambia and in Ghana

135.

132 A global analysis of deforestation due to biofuel development, CIFOR, 2011 133 Bioenergy development, Issues and impacts on poverty and natural resource management, World Bank, 2010 134 Sustainable bioenergy development in UEMOA Member-Countries, 2008 135 Local social and environmental impacts of biofuels: global comparative assessment and implications for governance. Ecology and Society 16(4): 29, 2011




5.1.4 Using degraded land for biofuels production

Growing any crop on marginal land with lower levels of water and nutrient inputs will result in

lower yields. Jatropha and sweet sorghum are no exception. High Jatropha yields necessary

for competitive transport fuel production require favourable growing conditions for plantation, including sufficient nutrient and water availability. Another scheme could be a small-scale biofuel on degraded land, as experimented in Mali where 1000 ha Jatropha planted provide oil for a local power plant. In Senegal, ISRA recommends intercropping with 4 meters distance and the association with Jatropha is possible only the first 2 years

136.

Another option that is gaining ground recently is the possibility of producing biofuels from

contaminated land that cannot be used for other purposes. For example it is possible to use radioactive land to produce biodiesel.

Even if the so called “marginal” lands cannot support marketable production of crops, they

may supply, in particular for poorer households, food, feed, medical plants, building material,

or fuel to local people, not to mention sociocultural dimensions. Rural poor are largely dependent on natural resources for their food security. Often, nomadic pastoralists depend

on these lands to maintain their activities. Furthermore, some of these areas may harbour high levels of biodiversity and constitutes biological corridors. Hence, producing bioenergy on marginal and degraded lands is not always the most sustainable solution

137.

5.2 Water use, water access and virtual water and water

footprint

5.2.1 Introduction

The world population is now 7 billion and will reach 9 billion in 2050. This will require an adapted management of water to accompany this strong growth. In such a context, water

should be carefully allocated in the best possible way taking into account socio-economic

situations of the countries and their regions. Often the poorest countries with high population growth are the most vulnerable in terms of water stress. It is particularly the case for some sub-Saharan African countries and Asian regions. In addition to that, the Intergovernmental Panel on Climate Change (IPCC)

138 put in evidence that fresh water resources are vulnerable and

would strongly be impacted by climate change.

Box 16: Expected impacts on water resources due to climate change

Significant changes have been observed in large-scale hydrological cycle and decrease in

natural water storage. Precipitations would probably increase in high latitudes and some tropical regions. However, these precipitations would decrease in some sub-tropical latitude regions. It would be registered decreases on annual river runoff and water availability over some dry regions also in mid-latitudes and dry countries.

In parts of the world, probable risks of flooding and drought present high degree of occurrence. By the 2050, the lands subject to increasing water stress are expected to be significant. That will also generate changes in water quality and quantity and render water access and utilisation more complex.

136 Impacts des investissements agricoles italiens dans les biocarburants au Sénégal, 2012 137 ibid., FAO, 2008; ibid., World Bank, 2010; Towards sustainable production and use of resources: Assessing biofuels, UNDP, 2009 138 Climate change and water, IPCC, 2008




The situation to water management will accentuate priorities that will indisputably impose

revised policies in related sectors of the economy. Such a situation has to be considered for both the energy and food sectors, including their interlinkages and competitive uses of the same natural resources. The growing demand of biomass for the bio-chemical industry further adds complexity to the picture. This concerns are calling for the need to address all these issues simultaneously in a so-called “Nexus” perspective (see box 17). The part allocated for

biofuel production in the energy mix has to be carefully analysed and almost always on a

case by case basis, based on water scarcity. It is necessary to systematically take into account climate change trends that will exacerbate existing situations.

Water resources for agriculture are becoming increasingly scarce in many countries as a result of increased competition with domestic or industrial uses. The increased production of agricultural feedstocks has raised concerns related to the competition for water resources in water scarce regions and the impacts on water quality where water pollution is a concern

(OECD-FAO 2011). Overall impacts on water resources from cultivation of agricultural feedstocks to produce biofuels can be difficult to trace.

Biofuels accounted for about 100 km3 (1%) of all water transpired by crops worldwide, and about 44 km3 (2%) of all irrigation water withdrawals (De Fraiture et al. 2007). Many of the

crops currently used for biofuel production – such as sugarcane, oil palm and maize – have

relatively high water requirements and, therefore, are mainly cultivated in high-rainfall areas rely on irrigation. Rapeseed in Europe, for example, requires no irrigation. In Brazil, 76% of sugarcane production is under rainfed conditions. In the United States, 70 % of maize production is rainfed, with only about 3% of national irrigation water withdrawals devoted to biofuel crops (Hoogeveen et al. 2009).

The amount of water needed to produce each unit of energy from lignocellulosic biofuel

feedstocks is three to seven times lower than the water required producing ethanol from maize, rapeseed, etc. Second generation feedstocks, such as woody biomass, can capture a greater share of annual rainfall, compared to annually sown crops, in areas where much of the rainfall occurs outside the normal crop growing season, and also help reduce soil erosion and bring flood control benefits. While second generation feedstocks offer the potential for reducing irrigation water demand, it is not necessarily a clear outcome, as this may depend

on the feedstocks grown, location of production and the reference first generation feedstocks (OECD-FAO 2011).

While investors may be keen to demonstrate their commitment to sustainable water management in their chains of custody, at present, many retailers that import palm oil products into Europe have postponed the adoption of specific standards. The recent SEI report “Competing Water Claims in Biofuel Feedstock Operations in Central Kalimantan”

indicate that such retailers do not see these standards as sufficiently robust from a scientific perspective, or adequately supported by the relevant governing bodies and stakeholder forums, leaving their companies potentially vulnerable to criticism. With regards to public regulation, many producer countries in the South are well known to be struggling with inadequately resourced, decentralised governmental agencies (SEI 2012).

Although all biofuels consume water, it is mostly liquids which have a significant impact on the resource, quantitatively and qualitatively. Solid and gaseous biofuels are consuming less water and therefore liquids biofuels are more specially analysed.

5.2.2 Impacts of large irrigation scheme

The growing demand for water resources to meet the demand and use of biofuels will become a limiting factor for their production in many parts of the world. Globally, 70% of

fresh water139

is devoted to agriculture including feedstocks dedicated to produce biofuels.

Water conflicts will intensify in many areas highlighted by expected effects of climate change

139 All references confirm this data




in terms of declines of rainfalls, for example, in North Africa and in some sub-Saharan African

countries that are already living levels quite low.

Many agricultural products require huge flows of good quality water to get economic rentable yields. Crops cultivated for bioenergy are in the same situation. Such conditions are frequently founded in tropical and other favoured regions with abundant and regular rainfalls: the Convention on Biological Diversity (CBD) notes that many current biofuel crops are well suited for tropical areas

140. Having recourse significantly to irrigation can be very

costly and not always physically or economically possible. The real economic cost of irrigation, including the externalities, are not always internalised in cost of production.

Foreign investment projects studied by FAO141

in Egypt, Ghana, Madagascar, Mali, Morocco,

Uganda, Senegal and Sudan are commonly located within fertile areas with most potential for irrigation. As a consequence, limited water remains available for local farmers.

5.2.3 Quantitative aspects and water footprint: production and

processing

Water is already intensely developed and physically scarce in a number of emerging economies, and also in parts of Eastern and Southern Africa. Many low-income countries

have enough water to meet their needs, but it is economically scarce because there is insufficient financial, human and technical capacity to provide and sustain the infrastructure to enable access

142. The concept of water security in a country refers to its ability to have

access to drink water. UNESCO143

considers that “water security involves protection of

vulnerable water systems, protection against water related hazards such as floods and

droughts, sustainable developments of water resources and safeguarding access to water and services”. Food security is totally linked with water security.

It is difficult to ascertain the amount of water consumed by specific crop for biofuel production. One reason is that production is growing rapidly and statistics available from most recent years are outdated. On the other hand, the producers decide last minutes to sell their products based on spot prices without considering the future uses (food or biofuel). The

worldwide consumption of water for agriculture (without possibility to distinguish food products and bioenergy feedstocks) is estimated to represent 70% of total water when the consumption for domestic uses represents 10%.

Globally, the water footprint of biofuels144

is large compared to other forms of energy: some

biofuels are very water-intensive, and the average water footprint of biomass is 70 times bigger than that of oil. However, the water footprint of biofuels (e.g. from ethanol) also varies widely across countries and contexts, which underlines the need to monitor the effects of

biofuel production on water and land use. Specific consumptions of water for the production of feedstock vary considerably from one product to another. In addition the statistics and results on the same product present wide limits.

Box 17: Water footprint of some biofuel feedstock

The water footprint of bioethanol from sugar cane or maize (100 to 150 m3/GJ, equivalent to 2 500 litters of water for one litter of biofuel) appears quite advantageous compared to

sorghum (400 m3/GJ, equivalent to 10 000 litters of water for one litter of biofuel). Regarding the cultivation of feedstocks for biodiesel, soybean and rapeseed show to be the most interesting with a water footprint of 400m3/GJ.

140 COP – CBD, The potential impacts of biofuels on biodiversity, 2008 141 FAO, Resource-seeking foreign direct investment for African agriculture, 2010 142 European Report on Development: Confronting scarcity: Managing water, energy and land for inclusive and sustainable growth, 2012 143 Cited in The bioenergy and water nexus, UNEP, 2010 144 ibid., ERD, 2012




Regarding Jatropha, several works conducted by the University of Twente from The

Netherlands (2008 to 2011) indicate that to reach its economic profitability, it is necessary to irrigate it. Under these conditions, its water footprint became consequently quite higher than one could expected (238 m3/GJ, equivalent to 6 000 litres of water for one litre of biofuel).

The volumes of water used in plants processing feedstocks for biofuels are not very significant compared to the production of raw materials. For example, the water consumed per litre of

ethanol produced is estimated from 2.5 to 30 litres (large range, depending of products and processes) which are used for:

• Preliminary washing of raw products;

• The process itself (hydrolysis and fermentation;

• Cooling water (distillation).

Innovative processes have been developed in recent years, such as cooling water (500 to

700 litres consumed), totally restored and more and more recycled to reduce the consumption of fresh water

145. In the most modern factories, water consumption can reach

less than 5 litres per litre of bioethanol produced.

Box 18: Water and energy nexus

The water and energy nexus illustrates the growing consideration of the links between their respective cycles. The uses of water for energy include the production of biofuels; the extraction and processing of petroleum and gas products; the individuals and collective

heating; the manufacture of equipment for all energy production modes; and many other activities related to the energy domain. The main uses of energy for water services are the operations for potable water: pumping, transport, treatment, and distribution; the operations for wastewater collection and treatment; the desalination of seawater in countries with limited water resources; and the manufacture of equipment for all other water operations. Decisions-makers

146 are not always conscious of the close links between energy and water

implications when launching major projects, including the production of biofuels.

5.2.3 Water pollution by intensive use of agrochemicals

Pollution on crop production

It is not possible to accurately classify the damage to the environment and particularly to

water and soils from feedstocks cultivated for biofuel as the effects depends on many factors such as climate and location, soil type, farm size, types of feedstock, mode of operation and practices, irrigated or rained.

The fertilisation of the soils consists in an important addition of nutrients (mainly nitrogen and phosphorus). When wrongly used, these products degrade the quality of groundwater and surface waters. This also generates significant additional costs in the treatment of freshwater.

An excess of these products causes especially eutrophication of rivers, natural water storages and even marine environment: the production of algae and other aquatic species is accelerated with an overall reduction of the biodiversity. Large coastal areas and estuaries are dramatically affected, called “dead zones”.

Another disadvantage appears with the pesticides that are used to fighting pests. Some

products have been banned in Europe, the United Sates and developed countries. This has led to the development of more efficient and normally less aggressive products. The homologation processes for phytosanitary products are severe. At the same time, stocks of

145 Impacts sur l'eau du développement des biocarburants à l'horizon 2030, IFP Energies Nouvelles, 2009 146 ibid., UNEP, 2010




“old” products banned in developed countries have been transferred and are used in

developing countries.

FAO has intensively worked on these concerns and makes available tools for disseminating issues, limitations and good practices. Good environmental practices, including water management and availability are extensively summarised, specifically for bioenergy feedstock production

147. Simultaneously, scientific researches in many countries are enabled

to better target the nature and the quantities as well as the application modalities of these

products. The awareness raising and training of farmers must be intensified for all crops, including feedstock for biofuels.

A report from the Stockholm Environment Institute148

illustrates the current situation in the oil

palm sector in Central Kalimantan, Indonesia. Local communities have severe grievances about impacts of oil palm plantations on water resources. Plantations affect both water quantity and quality, by polluting drinking water and drying community wells: turbid, murky

water caused by land clearance, erosion and run-off; toxins released into water bodies via spray of pesticides on plantations; decline in fish stocks and aquatic wild plants; palm-oil mill effluent and other palm-oil waste released into rivers and streams; and drying of community land adjacent to plantations, where traditional rice was produced. The provincial environmental agency reports that the government is only able to investigate less than 1% of

the complaints. Legally required, river basin management is not yet implemented. District and provincial agencies struggle to apply basic environmental protection schemes, such as riparian zones around water bodies.

Box 19: Pollution from factories

At the industrial production level, the problems encountered are related to chemical and

biological pollution as well as thermal degradation. In the production of ethanol manufactured for spark ignition engines and oil products for diesel engines water is fully used for washing. The “vinasse” is produced from alcohol plants. In certain cases, it can be used

as fertilizer after preliminary treatment, in well-definite and appropriated conditions of application. The experience of the Brazilian sugarcane bioethanol is very developed in this matter

149. The advantage of using vinasse include increased pH and cation exchange

capacity, improved soil structure, increased water retention and development of soil’s micro flora and micro fauna.

For mitigating the thermal pollution it is necessary to adopt industrial processes having high

degree of recirculation. For organic and chemical pollutants adapted treatments must be applied such as clarification, sedimentation, mechanical recompression and when possible re-use could be done, leading to an interesting optimisation of the resource.

Regarding the water directly used in industrial processes, it is not possible to present a simple typology of effluents densities and their quantitative levels. However, the corresponding volumes are relatively low compared to the production of feedstock.

5.2.4 Water re-uses

Water re-use after reclamation is an option for extending water resources increasing the sources and constituting an alternative of supply that could substitute important bulks of

freshwater. Such practice is particularly interesting for water uses that do not require high quality standards. Adapted treatments will make it reusable by meeting quality criteria required by the plants or uses to be irrigated. This will also allow a reduction in reducing infrastructure needs and particularly storage if this resource is used near its production.

147 ibid., FAO, 2012 148 The oil palm sector: community grievances and water governance in Central Kalimantan, Indonesia, SEI, 2012 149 Sugarcane ethanol, contributions to climate change mitigation and the environment, Wageningen, 2008




Water re-use is particularly interesting in areas of limited resources or hydric stress and globally

facilitate an increase in supply possibilities. A lot of countries and regions in the world rely on water re-use such as: United States, Spain, Israel, Australia, Singapore, Argentina, Tunisia, Japan and other Asian countries. The World Health Organisation (WHO) has issued guidelines and recommendations for water re-use and some experiences have negatively impacted these practices: for example, domestic or industrial wastewaters have irrigated crops with bacteriologic problems as well as poisonous components. However, biofuel as non-food

product can take advantages of such situation with the needed preliminary treatments adapted to the feedstocks

150.

5.2.5 Management by watershed and water rights

The management of water resources is more efficient when it is done at the watershed level. This principle was adopted by the EU Water Directive (2000/60/EC, 23 October 2000). This institutional organisation has facilitated knowledge acquisition of water statuses in terms of quantity and quality and introduced management plans for the use of water resources.

Several countries outside Europe have adopted similar water management principles of. In South Africa, for example, the State determines user rights and water allocations. It promotes efficient, sustainable and beneficial use of water while maintaining privileged accesses to the most disadvantaged. In this context, quotas have been allocated to crops based on physically and economically accessible criteria. The South Africa mechanism is highly

oriented towards socio-economic situations with public authorities fully involved.

However, this approach does not exist always in sensitive water countries and trade-offs between uses are not always made by considering socio-economic parameters as well as the interest of their inhabitants. Trade-offs must be made at the basin or sub-basin levels, which become complicated and complex with different countries where resources (rivers, groundwater, and coastal areas) are commonly shared. It is therefore necessary to set up

strong institutional organisations that can manage resources at a large scale and prevent conflicts.

The investors on large-scale land acquisition are acquiring land as well as water rights151

.

Depending of the orientations of the markets, they speculate for food or biofuel production. Usually, they directly extract the quantity of water required for the feedstock cultivation without payment. Therefore, the cost of water represents a small part of total production cost

of the whole process. In fact, the “real economic costs” of water resources (rain-fed, groundwater, surface waters) are not included in the total costs of production. This “free” use of the resource means that solution for more water efficiency and optimisation will probably not increase without regulations and adequate willingness.

Box 20: Virtual water exchanges

All industrial and food products imported by European countries and by other developed regions have required quantities of water in their production and eventual processing. This is particularly true for biofuel productions that ‘export’ large amounts of water to Europe, mentioned as ’virtual water’. It is difficult to quantify the amount of “virtual water”

152 given the

variety of products manufactured in developing countries and due to the fact that no reliable data are available.

150 Water re-use, Issues, technologies, and applications, Metcalf & Eddy, 2007 151 Transnational land deals for agriculture in the global south, analytical report based on the Land Matrix Database, 2012; A thirst for distant lands, IISD, 2009 152 ibid., ERD, 2012; ibid, UNEP, 2010




5.3 Resources depletion

The growing demand for agricultural biofuel feedstocks (e.g. cereals and oilseeds) has raised

concerns about the pressure this may have on natural resources, particularly water. As the cultivation of feedstocks for biofuels production is no different than the same crops destined for food, fibre or feed purposes, their environmental consequences should be similar. Nevertheless, they are of particular concern with respect to biofuels because of the rapid expansion of biofuel feedstock production and its potential impacts on land use and production intensification.

Even if it is recognised that we live with limited resources, the cost of natural resource depletion due to biofuel production has not been widely studied and there is little analysis available.

Increased agricultural production will be met through improved land productivity or through expansion of cultivated area. Both factors influence soil degradation. On the one hand,

improved technology and yield increases allow for increasing production without land expansion but environmental impacts of intensification might be non-negligible. On the other hand, the expansion of agricultural production may require cultivation on marginal land and/or conversion of land not currently in crop production, such as grassland or forest land, placing additional pressure on the natural resource base.

Over the past five decades, most of the increase in global agricultural commodity

production (around 80 per cent) has resulted from yield increases (FAO 2003, Hazell and Wood 2008). The rate of growth in feedstock demand for biofuels over the past few years far exceeds historic rates of growth in demand for agricultural commodities and in crop yields. This suggests that land-use change – and the associated environmental impacts – may become a more important issue.

Of the world’s 13.5 billion hectares of total land surface area, about 8.3 billion hectares are

currently in grassland or forest and 1.6 billion hectares in cropland (Fischer 2008). Much of the land in forests, wetlands or other uses provides valuable environmental services, including carbon sequestration, water filtration and biodiversity preservation; thus, the expansion of crop production in these areas could be detrimental to the environment. Estimates of the amount of land potentially available for expanded crop production lie between 250 and 800 million hectares, most of which is found in tropical Latin America or in Africa (Fischer 2008).

In 2004, an estimated 14 million hectares, worldwide, were being used to produce biofuels, representing about 1 per cent of global cropland (IEA 2006). Today, some 65% of EU vegetable oil, 50% of Brazilian sugarcane and about 40% of US maize production are used as feedstock for biofuel production (OECD-FAO 2012).

While area expansion for biofuel feedstock production is likely to play a significant role in

satisfying increased demand for biofuels over the next few years, the intensification of land use will most likely also be important. Historically, improved technologies and management practices have led to crop yield increases in Asia and Latin America and to a much lower extent in sub-Saharan Africa.

Despite significant gains in crop yields at the global level and in most regions, actual yields are still below their potential in most regions, suggesting that considerable scope remains for

increased production on existing cropland. While there are a number of studies assessing the impacts of increased biofuel demand on land-use, little empirical evidence is yet available on expected effects on yields.

Both land-use change and intensification of agricultural production on existing croplands can have significant adverse impacts on soils, but these impacts depend critically on farming techniques. Inappropriate cultivation practices can reduce soil organic matter and increase

soil erosion by removing permanent soil cover. The removal of plant residues can reduce soil nutrient contents and increase greenhouse gas emissions through losses of soil carbon (FAO). Fresco (2007) points out that increased demand for biofuels could divert agricultural residues




to the production of biofuels, with potentially detrimental effects on soil quality, especially on

soil organic matter.

5.4 Genetic resources, invasive species and biodiversity

Potential impacts

The expansion of monoculture of crop production for biofuels in large areas could be detrimental to the wild biodiversity. Plantations in tropical countries are more likely to affect high conservation-value forests (HCV), which is critical for biodiversity. When area under crop

production is expanded, loss of habitat may occur and agricultural biodiversity can decrease as it leads to reduced use of traditional varieties. The establishment of large-scale plantations for biofuel is based on a narrow pool of genetic material and would cause, at a local level, a reduction in the variety of plants and animals. This would make farming systems less stable, robust and sustainable, reducing the resilience of rural livelihoods to both biophysical and

socioeconomic shocks, such as pathogen infestations, adverse weather conditions and fluctuations in the price of cash crops. At the same time, the extensive knowledge and the traditional skills of small farmers in the management, selection and storage of local crops might be reduced

153. Loss of natural habitats through land conversion for biofuel feedstock

production has been reported by investigation studies.

In Brazil, for example, land-use changes caused by increased biofuel demand endanger areas rich in bird species diversity

154. Specific investigations

155 on the impact of the spread of

oil palm plantations in Southeast Asia explored the biodiversity decrease: species richness of birds, lizards and mammals was always lower in oil-palm plantation than in forest and flora was impoverished compared with natural forest. In Sumatra, iconic species such as the Orang-utan (Genus Pongo), the Sumatran tiger (Panthera tigirs sumatrae) and the clouded leopard (Neofelis nebulosa) were absent from oil palm sites. In Malaysian oil palm plantations,

most bees’ species, which are important forest pollinators, were lacking. Trees, lianas, epiphytic orchids and indigenous palms were absent from oil palm plantations.

There are some risks for African wetlands to be converted into biofuel production. Sugarcane requires large amounts of water and is therefore often grown in wetlands, palm oil expansion threatens native forests and peatlands (in Nigeria, the Democratic Republic of Congo and Ivory Coast). Other biofuels crops (cassava, sweet sorghum, maize) grow on drier soils but to

reach the expected yields to be commercially attractive, irrigation may be required. The reduced wetland area caused by biofuel crop cultivation can lead to biodiversity loss and ecosystem damage. Reports from Tanzania (the Wami Basin), Uganda and Kenya (the Tana River Delta) illustrate how wetlands are under the threat of large-scale sugarcane expansion

156.

Another major pathway in the loss of biodiversity is induced by the intensification on croplands, generating crop genetic uniformity. Low levels of genetic diversity in crops used as feedstocks increase the susceptibility to pests and diseases. Genetically modified (GM) tree species and crops are often grown in large-scale plantations. The impacts of growing GMs on the environment have been controversially discussed for many years, partly due to the lack of long-term studies and the different perception of risks in growing them without a higher

level of certainty. Among the major concerns are unexpected mutations of genetically engineered plants and trees that can spread across large areas, establish themselves in native forests and open lands, and/or cross-fertilise with native trees and other corps that might lead to unknown consequences to other organisms

157. NGOs mention that there is a

153 Making sustainable biofuels work for smallholders farmers and rural households, FAO, 2009; ibid, FAO, 2008; COP – CBD, The potential impacts of biofuels on biodiversity, 2008 154 Green gold or green wash: environmental consequences of biofuels in the developing world, Conference paper, Review of Agricultural Economics (Boston) 2008 Vol. 30 No. 3 pp. 517-529, cited in ibid, FAO, 2008 155 Biofuel Plantations on Forested Lands: Double Jeopardy for Biodiversity and Climate, Conservation Biology, 2008 156 Biofuels in Africa, Wetlands International, 2008 157 ibid., European Parliament, 2011; ibid, FAO, 2008




real fear that contamination with GM may happen with the cassava plantation realized in Nigeria with the direct investment of Shell Petroleum Development Company

158.

In the literature, some authors mentioned biofuel crops as invasive species where they are planted: Jatropha, nypa palm, oil palm, pongamia and sorghum are cited. However, this does not appear to be identified as a main concern regarding the other impacts reviewed in the literature.

Potential solutions

Biofuel sustainability frameworks include criteria related to areas with significant biodiversity. A good overview is presented in the recent previously cited CIFOR publication

159. All

frameworks emphasize the conservation of native ecosystems and natural habitats and they prohibit the conversion of HCV areas for biofuel feedstock production. The EU RED sustainability framework requires that land with high biodiversity value or high carbon stock

(wetlands, peatlands and forested areas) is not used for biofuels and bioenergy production. The RTRS plans to develop national-level biodiversity maps. Some frameworks (BSI, RTRS, RSPO, and RSB) refer to international conventions such as the Convention on Wetlands (Ramsar Convention), Convention on Biological Diversity, the Rotterdam Convention on pesticides and industrial chemicals and the Stockholm Convention on Persistent Organic Pollutants. With

the exception of the EU RED and the FSC, all the frameworks give due consideration to ecological connectivity, which is an integral part of land use planning for conservation purposes.

The means to sustainably implement biofuel feedstock production is not consensual. Hence, the effectiveness of the existing sustainability frameworks remains unfinished.

International and national rules require that an Environmental Impact Assessment (EIA) is

realized at the early stage of the project before its implementation. This is the rule for large-scale bioenergy plantations. The experiences reviewed demonstrate that when the EIA is efficiently conducted, real mitigations help to reverse the possible negative impacts on biodiversity. For example, in the case of the Addax Bioenergy Project in Sierra Leone, the independent Report

160 underlines that the ecological importance of rivers, streams,

woodlands, village trees and wetlands was recognised as well as “ecological corridors”

linking natural habitats, to facilitate the continued movement of animals between them. The Environmental, Social and Health Impact Assessment (ESHIA) included a very detailed mapping of habitats, determining “no-go” areas where plantation could not be allowed. Woodlands important for local uses and source of income for the local people were checked before any clearance for sugarcane cultivation.

Other situations show that most EIA are shrouded in mystery. For example, a study conducted in Ghana, Mozambique, Tanzania and Zambia

161 adds examples where one can ask about

the credentials of the officially accredited experts able to conduct an EIA. It is also legitimate to have doubts about the independency of the experts. One company’s EIA falsely referred to mature coastal forest stands (part of the 21 global biodiversity hotspots) as degraded forest. Finally, rigorous monitoring of investments and applications of the law (sanctions for

offenders) are absent. In Tanzania, the national Guidelines for Sustainable Liquid Biofuels Development require investors to submit Environmental and Social Impact Assessments (ESIA) to the National Environment Management Council (NEMC). However, SEKAB Tanzania, a subsidiary of a Swedish company, has been accused of tampering with its Environmental and

158 Agrofuels threat looms in Africa, in Third World Resurgence, May 2009 159 ibid., CIFOR, 2011 160 2011 Annual Independent Public Environmental & Social Monitoring Report, 2012 161 Contemporary processes of large-scale land acquisition by investors: case studies from sub-Saharan Africa, CIFOR, 2011




Social Impact Assessment process for the planned 20 000 plus sugar cane plantation and out-

growers project in Bagamoyo162.

Globally, there is a need for a more strategic vision regarding global development of the biofuels sector in the national context of sustainable development. A Strategic Environmental Analysis (SEA) would be necessary to give a cross-cutting analysis oriented to a systematic decision support process for the biofuels sector (policy, plan and programme: PPP). A SEA is an evidence-based instrument, aiming to add scientific rigour to PPP making by using suitable

assessment methods and techniques. This would allow the country to design, develop and implement a real, scientifically-based policy for the development of biofuels163.

5.5 GHG emissions and Indirect Land Use Changes (ILUC)

5.5.1 Direct and indirect land use change

Global interest for biofuel has been driven by their potential in reducing dependence on fossil fuels, increasing farm revenues, and generating less environmental damage through lower GHG emissions compared to non-renewable fuel sources. The scientific studies agree to

mention that biofuels vary widely in their GHG balances when compared with fossil fuel (petrol). It will depend on feedstock production methods, conversion technologies and use.

In assessing GHG emissions, the data emanating from land-use change (LUC) are crucial to get a complete and accurate picture. LUC occur when feedstocks for biofuels are cultivated in forested lands or in wetlands. The crops implementation release the carbon fixed in the native vegetation. Many scientific models are used to estimate GHG emissions

164. The

parameters and the criteria varied a lot, trying to include several prospective scenarios. The main common conclusions remark that emission related to land use changes driven by biofuel polices are a serious concern. Thus, the LUC effect reduces the environmental gains of the European biofuel policy: the Renewable Energy Directive (RED) established the environmental sustainability criteria that biofuels consumed in the EU have to comply with, a minimum rate of direct GHG emission savings as well as restrictions on the types of land that

may be converted to production of biofuel crops. The Fuel Quality Directive (FQD) also defined targets for GHG reduction from fuels consumed in the EU. Scepticism about the positive impacts of biofuels increased.

In addition, scientific and on-the-field analyses demonstrated that ILUC have to be incorporated into the analysis of the biofuels GHG balances. The European Commission recognised that estimations and modelling must be made to assess the impacts of biofuel on LUC and ILUC and to eventually adjust the legislation on biofuels

165. ILUC happens when

crops or land that would have otherwise been used for producing food or animal feed are used for growing biofuels and existing agricultural production geographically shifts to new land areas created by converting natural areas. Thus, the natural forests and grasslands in a specific region may be converted to croplands as a result of biofuel production being

initiated in a different region. ILUC could lead to both changes in land use and changes in land management practices (for example, farmers responding to increasing prices by

162 Havenevik, K. et al., 2011 dedicated entire paper to documenting the changes introduced to the ESIA report submitted by SEKAB T including deleting such key phrases such as “there is great confusion as to what the “project area» actually entails and deletion of base line studies indicators. The case has also been mentioned by some interviewed parties i.e. Haki Ardhi, researchers 163 During meeting at Ministry of Energy and Mines (Tanzania, 14th December 2012), it was mentioned that a SEA for biofuels development in Tanzania is in draft 164 See for example Global trade and environmental impact study of the EU biofuels mandate, IFPRI, 2010; Estimate of GHG emissions from global land use scenarios, JRC, 2011; Emission balance of first- and second-generation biofuels, CIFOR, 2011; and Assessing the land use change consequences of European biofuel policies, IFPRI, 2011 165 COM(2010) 811 final, Report from the Commission on indirect land-use change related to biofuels and bioliquids; Commission Staff Working Document Impact Assessment, Accompanying the document Proposal for a Directive of the European Parliament and of the Council amending Directive 98/70/EC relating to the quality of petrol and diesel fuels and amending Directive 2009/28/EC on the promotion of the use of energy from renewable sources, SWD(2012) 343 final




applying more fertilisers) which may have important consequences in terms of additional

GHG emissions. These indirect emissions resulting from biofuel production should be considered in calculating the GHG implications of adopting biofuels.

Preliminary findings in the literature on ILUC indicate that it seems to be significant for many feedstocks and it may grow in the future due to quick expansion of biofuel feedstock on large scale. At this stage, it is not possible to get a global vision of the GHG emissions linked to

the bioenergy development including indirect effects, as this would ideally require a

complete global accounting system for direct land use change. Specific investigations based on modelling and estimates are currently made. The main limitations associated with accounting ILUC are (adapted from Ecofys 2011):

• Displacement effects act across national border. Commodities such as palm oil, soy oil and sugarcane are traded on a global scale. Therefore, displacement effects act across borders. Achieving effective national land-use planning in some producing

countries cannot guarantee against indirect effects. If, for example, Indonesia were to prevent further deforestation through effective land-use planning, sourcing increasing amounts of palm oil from Indonesia for the energy sector may still cause indirect land-use change in other producing countries such as Malaysia.

• Displacement effects act across substituting crops. This is caused by the fact that

different crops can substitute each other to some extent. For example, if the EU diverts more rapeseed oil production from food to feed then it is likely to increase its imports of vegetable oils. This could be rapeseed oil but could also be a different vegetable oil as different vegetable oils are to some degree substituting products.

• Competition for land connects also non-substituting crops. Another reason why displacement effects act across crops is that different (non-substituting) crops can

compete for the same agricultural land. An example of this occurred in 2008 when high maize prices led farmers in the US to plant more maize and less soy which triggered soy expansion in other world regions.

FAO166

discuss if biofuels help mitigate climate change. When considering ILUC, while maize

produced for ethanol can generate greenhouse gas savings of about 1.8 tonnes of carbon dioxide per hectare per year and switch-grass can generate savings of 8.6 tonnes per

hectare per year, the conversion of grassland to produce those crops can release 300 tonnes per hectare, and conversion of forest land can release 600 to1 000 tonnes per hectare. According to researchers cited by FAO, the conversion of rainforests, peatlands, savannahs or grasslands to produce ethanol and biodiesel in Brazil, Indonesia, Malaysia or the United States of America releases at least 17 times as much carbon dioxide as those biofuels saved annually by replacing fossil fuels.

Case studies conducted locally provide some initial elements. CIFOR published a study on the GHG emissions of alternative biofuel production

167, where ILUC are not considered. It presents

the large diversity of results, taking in consideration first and second-generation biofuels in different countries: biodiesel from palm oil in Indonesia; biodiesel from Jatropha in South Africa and Mexico; bioethanol from sugarcane in South Africa, Mexico and Indonesia;

bioethanol from wood in South Africa and Mexico; and Fischer–Tropsch diesel from wood in South Africa and Mexico.

Another investigation conducted on biofuel plantations on forested lands in Southeast Asia168

assessed changes in carbon stock with changing land use and compared this with the amount of fossil-fuel carbon emission avoided through its replacement by biofuel carbon. The results suggest it would take between 75 and 93 years for the carbon emissions saved through

use of biofuel to compensate for the carbon lost through initial forest conversion, depending on how the forest was cleared. If the original habitat was peatland, the carbon balance would take more than 600 years.

166 ibid., FAO, 2008 167 ibid., CIFOR, 2011 168 ibid., Conservation Biology, 2008




According to IPCC data169, the carbon stocked in tropical African forests is nearly to 150

tonne per hectare. The development of large-scale oil palm plantations in or near forested areas would cause high levels of GHG emissions.

ILUC may increase the pressure on natural areas as illustrated by the case of small-scale farmers growing Jatropha intercropped with maize (as a main association, other crops encountered include groundnut, beans, sweet potato and soybean) in Zambia170. The assessment shows that they have opened new plots in mature forests or fallow for two

reasons: to establish new Jatropha plantations; or to cultivate displaced food crops because of Jatropha introduced into permanent croplands.

The extent to which biofuels policy contribute to LUC in developing countries is highly uncertain. Many other factors also drive LUC in these countries, such as local policy framework, increasing food demand or third party policies. Therefore, isolating the effect of the EU biofuels policy remains challenging.

While acknowledging that LUC effects should be taken into account, it should be noted that introducing LUC considerations into biofuel policies lead to several non-trivial questions: (1) Why LUC measurements are not introduced for other policies that may have even larger LUC effects (such as agricultural and trade policies)?, and (2) will the sustainability criteria be effective given that they are not adopted globally but only in some countries?

5.5.2 Biofuels production and CO2 emissions

The GHG emissions associated with the LCA of different biofuels vary a lot depending on the feedstocks used and the conversion technologies applied. Recent estimates indicate that most biofuels can reduce GHG emissions compared to gasoline/diesel but only if they are produced in an efficient way. For example, case studies conducted in Argentina, Kenya and Nigeria (FAO 2004) in a scenario of multiple cropping systems and crop rotations, showed that the effects of these practices on carbon sequestration are remarkable. Since bioenergy

development is often pursuit as a way to mitigate climate change, the importance of cultivation practices should not be neglected. On average, conventional monoculture systems did not store carbon; rather, carbon emissions ranging from 0.01 to 0.3 tonnes/ha/yr. were recorded. In the case of crop rotation, instead, a consistent tendency towards carbon sequestration was noted. The values relative to carbon storage ranged between 0.1 and 0.9 t/ha/yr., much higher than traditional monoculture.

High uncertainty remains on the impact of land-use changes on GHG balances, as this is difficult to assess, especially when it implies indirect land use change, varies a lot with the geographical location and the agro-forestry cultivation practice used for growing the biomass.

In some cases, GHG reduction of more than 100% compared to gasoline/diesel use are achieved through the use of co-products (e.g. bagasse, the residue from sugarcane ethanol

production, is burned to produce electricity that is fed into the electricity grid and thus replaces electricity from fossil sources). The IEA compared a number of GHG emission LCAs to come up with the diagram below, showing percentage emission reductions of different biofuel production pathways, with the associated ranges.

169 Guidelines for national greenhouse gas inventories, IPCC, 2006 170 The local social and environmental impacts of smallholder-based biofuel investments in Zambia, Ecology and Society 16(4): 12, 2011




Figure 20: Biofuels production and GHG emissions

Source: IEA, 2012

Sugarcane ethanol can produce significant net GHG savings. By contrast, ethanol produced from cereals can be negative under some circumstances (even excluding land-use change)

compared to gasoline. The wide ranges are mainly due to different methodologies used for assessing emissions of nitrogen dioxide from fertilisers and the assumptions concerning the use of by-products resulting from the conversion phase. For example considering just Europe, the results for biodiesel from rapeseed would improve considerably using IPCC reference values for nitrogen release.




Section 6: Social impacts and human rights concerns

related to the production biofuels in developing countries

6.1 Land and food rights

The close relationship between food security and the need to safeguard access of vulnerable populations to resources such as land and water is being increasingly recognized by the international community, especially the United Nations Special Rapporteurs. Access to

land is closely related to the right to adequate food and it means protecting existing rights of the most vulnerable groups to access land, water, grazing or fishing grounds, or forests, all of which may be productive resources essential for a decent livelihood. “Access to land and security of tenure are essential to ensure the enjoyment of not only the right to food, but also other human rights, including the right to work (for example for landless peasants) and the right to housing. This fact has led the former UN Special Rapporteur on the right to adequate

housing to conclude that the Human Rights Councils should “ensure the recognition in international human rights law of land as a human right”171. The Special Rapporteur on the Right to Food has made similar case on the inter-relationship of the rights of land users with the right to food in his report to the General Assembly in 2010172.

Box 21: Right to Food and Right to Land

The right to adequate food has been recognised under article 25 of the Universal Declaration of Human Rights and article 11 of the International Covenant on Economic, Social and

Cultural Rights.

The Right to Food requires that each individual, alone or in a community with others, has physical and economic access at all times to adequate food or means for its procurement. States may be under an obligation to provide food where “an individual or group is unable, for reasons beyond their control, to enjoy the right to adequate food by the means at their disposal.” Primarily, however, the right to food requires that States refrain from taking

measures that may deprive individuals of access to productive resources on which they depend when they produce food for themselves(the obligation to respect), that they protect such access from encroachment by other private parties (the obligation to protect) and that they seek to strengthen people’s access to and utilization of resources and means to ensure their livelihoods, including food security (the obligation to fulfil).

In terms of the relationship with land rights, it means protecting existing access to land, water,

grazing of fishing grounds, or forests, all of which may be productive resources essential for a

decent livelihood.

In terms of Europe’s own approach, the new EU Food Security Policy Framework, adopted in 2010, has recognised the Right to Food and has a focus on creating an enabling environment for the smallholder sector as the single most effective instrument for increasing food security in developing countries. The EU has also committed to focusing on access to food by implementing the Voluntary Guidelines to Support the Progressive Realisation of the Right to

Adequate Food in the Context of National Food Security173 (COM(2010)127 final)174. In

addition, the EU has played an active role in assuring finalization of the recent negotiations

171 De Schutter, Olivier Special Rapporteur, The right to food, United Nations General Assembly. A/65/281 (August 2010): p 3 172 Ibid. 173 http://www.fao.org/docrep/meeting/009/y9825e/y9825e00.htm 174 http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=COM:2010:0127:FIN:EN:PDF




and final adoption in May 2012 of the Voluntary Guidelines on Responsible Governance of

Tenure of Land, Fisheries and Forests within the Context of National Food Security175.

Box 22: Voluntary Guidelines on Responsible Governance of Land, Fisheries and Forests within

the Context of National Food Security

The recent adoption of the Voluntary Guidelines on Responsible Governance of Tenure of Land,

Fisheries and Forests within the Context of National Food Security by the newly reformed Committee on

World Food Security has been unique in grounding of land tenure and natural resources management issues in the human rights based approach which stems from the need to bridge the overlaps between the environmental and human rights law. While these Guidelines are not legally binding in the sense that they are not replacing any existing international laws or treaties, they carry a normative legal force by providing a framework or benchmark for existing policies and for formulation of new policies and laws related to management of natural resources. The Guidelines re-emphasise existing international

obligations of States, particularly in relation to human rights, as they apply to safeguarding the rights of

people to access land, fisheries and forests. The adoption of these Voluntary Guidelines has coincided with the recognition of the necessity to increase both political and financial investment in providing for improved governance of land tenure in developing countries given the current increasing pressures on natural resources as well as the phenomena of the large scale land acquisitions.

The Guidelines recognise that securing land rights is a precondition for sustainable development and food security. They also identify investment in smallholder farmers and by smallholder farmers as preferable to large scale land acquisitions. The Voluntary Guidelines stipulate that states define what constitutes a large scale land transaction and that the state is responsible to provide safeguards and protections against negative impacts of large scale land transactions. Such safeguards can include introduction of ceilings or limits on permissible land transactions and regulation how large transfers of land above a certain scale must be approved. The state can regulate transactions of tenure rights above certain scale by assuring prior independent assessment or the need for parliamentary approval. The Guidelines also request increased transparency of transactions and that states monitor impacts of all types of large scale land transactions. They also demand that proper impact assessment and consultations should take place before any type of large scale land transaction is finalized. Such assessments should be impartial and based on consultations with all potentially affected by such investments. In terms of private actors and investors, the Guidelines remind that they all have the

responsibility to respect existing legitimate land use rights.

The principal critique relative to agricultural investment in developing countries (including biofuels) deals with the concerns and relevance of treatment of ‘unused’ or ‘marginal’ lands

(High Level Panel of Experts on Food Security and Nutrition, IEED, Oxfam, ActionAid, Land Matrix Database). In 2011, the World Bank quoted research concluding that 445 million hectares of unused land with agricultural potential was available, land which was non-forested, non-protected and populated with less than 25 persons/km (or 20 hectares/household). At the same time, the same study admitted that little of the land classified as “unused” may be free of existing claims (Deininger et al, 2011). Another World

Bank study also admitted that although in many countries land may be abundant, it is not necessarily idle, and it may provide incomes to many people for subsistence farming and other livelihood activities, by providing areas for hunting and gathering, cutting building materials and fuel wood, and grazing livestock (Mitchell 2011). In many cases land is already being used or claimed – yet existing land uses and claims go unrecognised because land

users are marginalised from formal land rights and access to the law and institutions.

The High Level Panel of Experts on Food Security and Nutrition, Cotula and Oxfam criticize studies on land suitability as being largely based on statistics that date back to the 1990’s and satellite imagery which underestimates the land areas used by shifting cultivation and pastoralism or factor in land degradation. “Even where land is available, water may be a major constraint, as proximity to water use may prove to be a source of conflict.” Land that

may not be currently cultivated is often under customary claim from local groups. As HLPE

175 http://www.fao.org/cfs/cfs-home/cfs-land-tenure/en/




FSN concludes “It is often asserted that there is much “available” land in Africa and Latin

America. This suggests abundant unused land. However, is neither already being used in some way

service”176. “Thus, when Mozambique allocated 30sugar cane ethanol plantation, when sugar cane plantation in Kampong Speu, and when the Philippine government allocated one million ha of land to San Miguel

lands were vacant, marginal, idle and available. Subsequent studies showed that this wnot the case: these spaces were inhabited, and productively used by communiti The limits of bio-physical survey approach in combination unregistered land use rights lead to many conflicts

smallholders and pastoralists) and between local communities and governments when it

hastily allocates land to foreign or domestic investors. vulnerable in such processes, for example in Kenya and in Tanzaniaand demarcation of national land law reforms and registration of land use has been very slow and is still incomplete in many of the countries that have become the target forscale land investments.

In addition, the emerging datpreferences of investors suggest that demand focuses on high value lands with proximity to markets, infrastructure and irrigation potential. The same is true with regard to large scale biofuels investments preference for fertile land that can assure higher yields. Investors are rarely interested in “marginal land” even if such land may be registered by the tar

“under-utilized”. The Land Matrix Databasereported land deals over 200,000 ha have iof the land has been previously predominantly used bysecond most important formal land use is communal and only a fraction affecforests or under conservation180

Figure 21: Former user land


176 Land tenure and international investments in agriSecurity and Nutrition of the Committee on World Food Security, 177 Ibid. 178 See De Shutter, Olivier as well as the Report from the Field Visit to Tanzania annexed to this report179 See 4.5 180 Note of caution is advised in interpretationto estimate how many of the large scale land transactions over 200,000 ha are actually being used for biofuels production due to lack of precise data availability on final implementacarried out. Yet, the data proves that significant percentage of large scale deals will end up under cultivation of crops suitable for conventional biofuels



America. This suggests abundant unused land. However, there is rarely any valuable land that

ther already being used in some way, nor providing an important environmental

“Thus, when Mozambique allocated 30 000 ha in Gaza province for the ProCana sugar cane ethanol plantation, when the Cambodian government allocated 20

cane plantation in Kampong Speu, and when the Philippine government allocated one million ha of land to San Miguel-Kuok company partnership, the assumption was that the

lands were vacant, marginal, idle and available. Subsequent studies showed that this wnot the case: these spaces were inhabited, and productively used by communiti

physical survey approach in combination with ill-defined and often

unregistered land use rights lead to many conflicts within local communities (i.e. bsmallholders and pastoralists) and between local communities and governments when it

hastily allocates land to foreign or domestic investors. Pastoralists and herders tend to be most

, for example in Kenya and in Tanzania178. Tand demarcation of national land law reforms and registration of land use has been very slow and is still incomplete in many of the countries that have become the target for

In addition, the emerging data on large-scale land investments as well as general preferences of investors suggest that demand focuses on high value lands with proximity to markets, infrastructure and irrigation potential. The same is true with regard to large scale

ts preference for fertile land that can assure higher yields. Investors are rarely interested in “marginal land” even if such land may be registered by the tar

The Land Matrix Database179 shows that only 82 cases out of over 120reported land deals over 200,000 ha have information on former land use. of the land has been previously predominantly used by smallholders for cultivation. second most important formal land use is communal and only a fraction affec

180.

Land tenure and international investments in agriculture: A report by the High Level Panel of Experts on Food

mittee on World Food Security, HLPE CFS (July 2011): p 26.

well as the Report from the Field Visit to Tanzania annexed to this report

Note of caution is advised in interpretation of the data and graphs provided by Land Matrix Database. to estimate how many of the large scale land transactions over 200,000 ha are actually being used for biofuels production due to lack of precise data availability on final implementation status of the deals, both announced and

Yet, the data proves that significant percentage of large scale deals will end up under cultivation of able for conventional biofuels


92


there is rarely any valuable land that

providing an important environmental

000 ha in Gaza province for the ProCana Cambodian government allocated 20 000 ha for

cane plantation in Kampong Speu, and when the Philippine government allocated Kuok company partnership, the assumption was that the

lands were vacant, marginal, idle and available. Subsequent studies showed that this was not the case: these spaces were inhabited, and productively used by communities”177.

defined and often

within local communities (i.e. between smallholders and pastoralists) and between local communities and governments when it

Pastoralists and herders tend to be most

. The implementation and demarcation of national land law reforms and registration of land use has been very slow and is still incomplete in many of the countries that have become the target for large

as well as general preferences of investors suggest that demand focuses on high value lands with proximity to markets, infrastructure and irrigation potential. The same is true with regard to large scale

ts preference for fertile land that can assure higher yields. Investors are rarely interested in “marginal land” even if such land may be registered by the target state as

shows that only 82 cases out of over 1200 nformation on former land use. Out of them, most

smallholders for cultivation. The second most important formal land use is communal and only a fraction affect land that was

Level Panel of Experts on Food

well as the Report from the Field Visit to Tanzania annexed to this report

of the data and graphs provided by Land Matrix Database. It is difficult to estimate how many of the large scale land transactions over 200,000 ha are actually being used for biofuels

tion status of the deals, both announced and Yet, the data proves that significant percentage of large scale deals will end up under cultivation of




It is important to acknowledge that land users are not necessarily the same as land owners

with state being usually the owner of land which is the case in many ACP countries. Investors receive land either from government, through some state agency created for such purpose, or from private companies and individuals. In some cases, many of the actual land users lack properly defined land rights as is the case of pastoralist in much of Eastern Africa. Figure 22: Land owners


While states are required to assure proper consultation in case of transfers of land use rights, data on consultations is generally very difficult to obtain and depends on a case of each project. Generally, consultation processes or their absence has been a subject of criticism around large scale land investments in Africa. Consultations are often a one-off event rather than an on-going interaction through the project cycle, with little differentiation among

communities due to class, economic status or gender181. Most importantly, most of the consultations take place within the context of great asymmetry of access to information, knowledge and power between the parties. The principle of Free, Prior and Informed Consent is virtually absent from within African national legislation although protection of the rights to land for specific groups such as

indigenous and women is clearly stated in the African Charter on Human and People-s Rights182. The issue of pastoralist or nomadic communities and lack of protection of their land rights and livelihoods calls for special attention as they are most vulnerable in large scale land acquisition processes.

The threat of dispossession or eviction from land due to government’s failure to offer adequate

protection of customary land rights and assure appropriate consultation based on the

principle of free, prior and informed consent is very real. According to the Land Matrix Database, out of 86 large scale land deals above 200,000 ha only in 29 cases the community was somehow involved, however the consultation process was often describes as limited.

181 Cotula et al. Contexts and Procedures for Farmland Acquisitions in Africa: What outcomes for local people? Development 2011.54(1):40-48 182 Ibid and authors knowledge




Figure 23: Involvement of communities in large scale land transfers


Information on the displacement of communities

issue. Some NGOs such as FIAN and GRAIN report many cases in dis not a one single global database which records how many people are displaced due to large scale land acquisitions and even data by Land Matrix out of 1217 has only 40 cases with information on displacements.

Figure 24: Number of projects over 200,000 ha with reported evictions


Concerns relative to the occurrence of human rights violations such as evictions or displacement of local food production, le

Commissioner on Human Rights to issue a news release in October 2012recommendations for biofuel impact assessments. Accordingly, biofuel production guidelines should be integrated with national strateand evaluated on case by case basis due to variety ohave a responsibility under current human rights law to ensure and prioriti

security and the ability of groups affected by such invproductive resources such as land and water. Box 23: Human Rights and Impact Assessments.

ask?184

Who are the current users of this land, and are their rights fof agrofuels?

What is the current state of local food insecurity and how dependent is the community/region/country on food imports, particularly for staple foods?

Shall the expansion of energy crops increase dep

food insecurity?

183 http://www.srfood.org/images/stories/pdf/other184 Recommendations from Office of the High Commissioner on Human Rights and Special Rapporteur on the Right to Food


Involvement of communities in large scale land transfers

displacement of communities is extremely scarce due to senss such as FIAN and GRAIN report many cases in different countries but there

is not a one single global database which records how many people are displaced due to large scale land acquisitions and even data by Land Matrix out of 1217 has only 40 cases with

displacements.

Number of projects over 200,000 ha with reported evictions

occurrence of human rights violations such as evictions or displacement of local food production, led the office of the United Nations High

Commissioner on Human Rights to issue a news release in October 2012recommendations for biofuel impact assessments. Accordingly, the development of national biofuel production guidelines should be integrated with national strategies for food security and evaluated on case by case basis due to variety of production models and uses. have a responsibility under current human rights law to ensure and prioriti

security and the ability of groups affected by such investments to not lose access to productive resources such as land and water.

: Human Rights and Impact Assessments. What questions should impact assessments

Who are the current users of this land, and are their rights fully respected in the process of development

What is the current state of local food insecurity and how dependent is the community/region/country on food imports, particularly for staple foods?

Shall the expansion of energy crops increase dependence on imports, and potentially worsen local

http://www.srfood.org/images/stories/pdf/otherdocuments/20121016_agrofuels_qa.pdf Recommendations from Office of the High Commissioner on Human Rights and Special Rapporteur on the Right to


94

is extremely scarce due to sensitivity of the ifferent countries but there

is not a one single global database which records how many people are displaced due to large scale land acquisitions and even data by Land Matrix out of 1217 has only 40 cases with

occurrence of human rights violations such as evictions or United Nations High

Commissioner on Human Rights to issue a news release in October 2012183 with development of national

gies for food security f production models and uses. States

have a responsibility under current human rights law to ensure and prioritise local food

estments to not lose access to

What questions should impact assessments

ully respected in the process of development

What is the current state of local food insecurity and how dependent is the community/region/country

endence on imports, and potentially worsen local

Recommendations from Office of the High Commissioner on Human Rights and Special Rapporteur on the Right to




Can the local resources in question (land, water) be better used to service local food needs?

What modes of agriculture will be favored in the production of agrofuels and what will the impacts be for local smallholders?

Can smallholders benefit from the expansion of energy crops and can opportunities be found to increase the incomes of smallholders and their position in local value chains?

What is the state of local energy provision, and will the energy yielded be used for local electrification?

Who are the current users of this land, and are their rights fully respected in the process of development

of agrofuels?

6.2 Corporate Social Responsibility

There are several instruments that aim to encourage corporate social responsibility among companies. In terms of relevance to conventional biofuel production, the most relevant ones can be found within commodity specific instruments as well as general CSR instruments. Compliance with such instruments or commodity certification schemes is voluntary and they usually lack remedy mechanisms. Only some are specific in terms of employment rights and conditions.

Commodity specific instruments

• Roundtable for Sustainable Palm Oil;

• Roundtable on Responsible Soy.

General CSR instruments

• OECD Guidelines for Multinational Enterprises;

• Global Reporting Initiative;

• Global Compact;

• Equator Principles.

These guidelines cover standards on labour rights, human rights, the environment, consumer protection and corruption. The scope of the OECD Guidelines, therefore, does not translate to companies operating in ACP countries. The Global Reporting Initiative aims to improve companies’ transparency which is of relevance given the issue of corruption in the land sector as well as a lack of transparency in large-scale land acquisitions aimed for the

production of biofuel feedstocks. The Global Compact is a United Nations initiative launched in 2000 seeking to align business operations worldwide with ten universally accepted principles in four core areas: human rights, labour rights, environment and anticorruption. While it is a voluntary instrument, it possesses some strength in ability to attract also companies outside of the OECD, for example in China. At the same time, the Global Compact lacks a complaints or conflict resolution mechanism when a company is alleged to have violated its

principles. Compliance is simply based on annual reports sent to the Secretariat of Global Compact185.

Due to a lack of research linking the production of conventional biofuels from diverse

feedstock in ACP countries with corporate social responsibility instruments, it is difficult to

assess their influence on working conditions in the biofuel sector.

It is important, however, to remember that rights of agricultural workers are protected at a

very minimum under the International Labour Organization’s core conventions. In terms of land rights, the Voluntary Guidelines on Responsible Governance of Tenure of Land, Fisheries and Forests in the Context of National Food Security stipulate that corporate actors have a responsibility to respect existing legitimate rights of land users.

185 Heri S. et al. International instruments influencing the rights of people facing investments in agricultural land, International Land Coalition, CIRAD, SOMO, World Trade Institute and Oxfam Novib January 2011




6.3 Gender and biofuels

There is still relatively little research that is specifically dedicated to addressing gender

impacts of production of biofuels in developing countries although more studies are slowly

emerging. The most relevant studies up to midInternational Land Coalition and ActionAid. Other studies often treat gender in its suwith sporadic references to single case studies, if at all.

Gender remains as one of the sharpest and most visible forms oto access to natural resources as well as in assuring women’s eq

Women in many of the developing countries produce up to 80consumption but at the same time globally, on average, control less than 2 per cent of land186.

Figure 25: Proportion of women among the total number

Source: SRR2F and FAO Gender and Land Rights Database

Research has found that changes in land tenure systems and the related changes in land use have often resulted in weakening women’s land entitlements, particularly where women are

poor and their access to land is dependent on male relatives, as is the case in most customary land systems in Africavulnerable to exploitation throughdiscrimination when it comes to their access, ownership and control of land as well as protection of their land rights. Second, women face discrimination in sociopolitical relations, especially when it comes to influencing and makin

are particularly vulnerable to change that reduces their incomes, because these are generally already lower then men’s.

The 2008 FAO study on gender and liquid biofuels has nomarginal land to women. “The conversion of these lands to plantations for biofuels production might therefore cause the partial or total displacement of women’s agricultural

activities towards increasingly marginal lands, wto meet household obligations, including traditional food provision and food security. Furthermore, if land traditionally used by women switches to energy crop plantations, the roles men and women play in deci

186 FAO Women and Population Division, Women and Sustainable Food Security http://www.fao.org/sd/fsdirect/fbdirect/FSP001.htmgender dimensions of land grab in Africa187 Ibid. Kachingwe, Nancy 188 HLPE FSN, Daley.E. Gendered impacts of


Gender and biofuels


pacts of production of biofuels in developing countries although more studies are slowly

The most relevant studies up to mid-2012 have been done by FAO, IFPRI, International Land Coalition and ActionAid. Other studies often treat gender in its su

single case studies, if at all.

Gender remains as one of the sharpest and most visible forms of differentiation when it comes to access to natural resources as well as in assuring women’s equal voice in decision making

Women in many of the developing countries produce up to 80%of food for household consumption but at the same time globally, on average, control less than 2 per cent of

Proportion of women among the total number of title/holders

Source: SRR2F and FAO Gender and Land Rights Database


or and their access to land is dependent on male relatives, as is the case in most customary land systems in Africa187. According to the HLPE study citing Daley: “Women are vulnerable to exploitation through land investments in four ways. First, women face sdiscrimination when it comes to their access, ownership and control of land as well as protection of their land rights. Second, women face discrimination in sociopolitical relations, especially when it comes to influencing and making decisions. Third, they

are particularly vulnerable to change that reduces their incomes, because these are rally already lower then men’s. Fourth, they are physically vulnerable to male force

The 2008 FAO study on gender and liquid biofuels has noted the particular importance of marginal land to women. “The conversion of these lands to plantations for biofuels production might therefore cause the partial or total displacement of women’s agricultural

activities towards increasingly marginal lands, with negative repercussions for women’s ability to meet household obligations, including traditional food provision and food security. Furthermore, if land traditionally used by women switches to energy crop plantations, the roles men and women play in decision-making concerning household agricultural activities

FAO Women and Population Division, Women and Sustainable Food Security

.fao.org/sd/fsdirect/fbdirect/FSP001.htm and Kachingwe, Nancy From Under Their Feetgender dimensions of land grab in Africa. ActionAid 2012

Daley.E. Gendered impacts of commercial pressures on land, International Land Coalition 2011


96


pacts of production of biofuels in developing countries although more studies are slowly

2012 have been done by FAO, IFPRI, International Land Coalition and ActionAid. Other studies often treat gender in its subsections

f differentiation when it comes ual voice in decision making.

of food for household consumption but at the same time globally, on average, control less than 2 per cent of


or and their access to land is dependent on male relatives, as is the case in most HLPE study citing Daley: “Women are

First, women face systematic discrimination when it comes to their access, ownership and control of land as well as protection of their land rights. Second, women face discrimination in socio-cultural and

g decisions. Third, they

are particularly vulnerable to change that reduces their incomes, because these are ically vulnerable to male force”188.

ted the particular importance of marginal land to women. “The conversion of these lands to plantations for biofuels production might therefore cause the partial or total displacement of women’s agricultural

ith negative repercussions for women’s ability to meet household obligations, including traditional food provision and food security. Furthermore, if land traditionally used by women switches to energy crop plantations, the

making concerning household agricultural activities

FAO Women and Population Division, Women and Sustainable Food Security From Under Their Feet, A think piece on

ernational Land Coalition 2011




may be altered. In particular, women’s ability to participate in land-use decision-making may

be reduced as the amount of land they control will decline” (Rossi and Lambrou 2008)189. In addition, the loss of biodiversity that may result from large scale acquisitions can have particular impact on women by limiting availability of edible wild plants, water and firewood. The resilience of rural livelihoods might be further reduced by the decline of traditional local knowledge linked to the loss of agro-biodiversity. If biofuels production competes, either directly or indirectly, for water and firewood supplies, it could make such resources less readily

available for household use hence force women to travel longer distances and reducing their time available to participate in decision making processes or other income generating activities (Rossi and Lambrou)190. Pollution of water sources by intensive production of liquid biofuels will also have the effect of pushing women to travel longer distances in search of water hence reducing their time available for other household activities or income generation projects.

According to the HLPE, neither large nor small scale farming has been demonstrated to be necessarily better for women, although that may be due to the fact that there has been little comparative analysis. Some studies suggest that expansion of biofuels may relate to women’s improved access to wage employment at plantations and hence ability to control their own income. At the same time, there are specific health implications related to women’s work on

plantations. For example, in Malaysia, women who make up half the plantation workforce are often recruited to spray chemicals on crops without proper training or safety equipment191. In addition, most of the employment created on plantations is often geared towards male employees. In cases where women and households lose land they have cultivated for household food production or sale on the market and no subsequent labour opportunities are created, it is difficult to speak of positive gender impacts of large-scale

plantations. The newly emerging data from East Africa regarding the failure of some large-scale biofuel plantations (i.e. Sun Biofuels, Bio Shape and Prokon in Tanzania) prove that women are left worse off in such cases while it can be assumed they had often limited voice in the consultation or negotiation process for giving up the land, if and where such consultations have occurred.

Large-scale agricultural production based on contract farming has also received its fair share

of criticism, with one recent review of the literature on such schemes in Sub-Saharan Africa concluding that “women are generally not involved in contracting with agro-industrial firms and are disadvantaged in contract schemes”192.

It is important, however, to note that there are few cases with reported positive impact in improving women’s income from biofuel crops such as Jatropha when such does not result in changes in land tenure structure and does not compete with local food production. One

such example is of Diligent in Arusha, Tanzania which buys Jatropha seeds from farmers who plant it and sell it through sharecropping schemes. Diligent’s business model is based on a unique system of collecting Jatropha seeds from farmers who already have Jatropha hedges on their land. Diligent actively discouraged farmers from planting Jatropha on their land as a main crop, except at the edges of fields as hedges and fences to mark boundaries and keep

livestock off their food crops. The company did this because it did not want to be involved in the “land grabbing” debate and while being a private company its initial operations were also funded by charitable foundations in Netherlands. The documented case study points out, however, that women’s income generated from additional Jatropha harvesting is low and supplementary to the main farming activities193. In addition, recent information obtained during the research for this report points out to the possibility of Diligent ceasing its operations

in Tanzania unless new investors can be located194. Another case which attributes positive

189 A. Rossi and Y. Lambrou “Gender and equity issues in liquid biofuel production.” FAO (2008) 190 Ibid. 191 See Daley. E, International Land Coalition. 2011 192 Daley E and Mi Young Park C. The Gender and Equity Implications of Land-Related Investments on Land Access and Labour and Income-Generating Opportunities, A Case Study of Selected Agricultural Investments in Northern Tanzania, FAO. 2012 193 Ibid. 194 Information obtained during the field visit and from communication with the managers of Diligent in Netherlands




additional income generation possibilities for women is of Mali Biocarburant. However, there is

almost no substantive detail on the gender implications of biofuels investments as such, either

in Tanzania or in Mali.

Much has been written about the health benefits for women resulting from replacing charcoal stoves with locally manufactured cooking stove fuelled by plant oils. While small-scale projects on distribution of stoves powered by local biofuels have had a generally good reception among women in Philippines and few other projects in Africa, there still tend to be

small scale in terms of their reach. Systematic research is scarce and badly needed. At the same time, the rises and volatility of prices of cooking oil due to increased demand for vegetable oils can also often translate into an increasing burden for women by increasing costs for provision of food for the family.

In conclusion, due to a lack of systematic gender analysis of diverse applications of conventional biofuels, it is impossible to state whether the effects are negative or positive as

this depends on case scenarios. At the same time, those few projects and applications that list benefits for women have decided from the onset on the need to take gender issues into account and have chosen to focus on domestic energy markets.

6.4 Technology transfer and capacity development

Technology transfer and capacity development are by-products of investment activities in

developing countries. Setting up a biofuels project requires know-how regarding the processing technology but also agricultural knowledge to produce the feedstock.

Technology transfer is considered as very important because it should bring developmental benefits of foreign investment. The key issue is the extent to which benefits from foreign biofuels and other investments spill over into the domestic sector in a synergistic and catalytic relationship including existing smallholder production systems and other value chain actors

such as input suppliers. The prerequisite for a fruitful relationship is a domestic agricultural sector with absorptive capacity. Benefits should arise from capital inflows, technology transfer

leading to innovation and productivity increase, upgrading domestic production, quality

improvement, employment creation, backward and forward linkages and multiplier effects

through local sourcing of labour and other inputs and processing of outputs. However, these benefits will not flow if investment results in the creation of an enclave of advanced

agriculture in a dualistic system with traditional smallholder agriculture195. The necessary conditions for positive spill-over benefits may often not be present in which case policy interventions in capacity building are needed to create them.

Whether or not the introduction of new technologies will have a positive effect on local women and men is a subject of debate. The FAO (2009) warns that local populations will not

benefit if technology transfer occurs in a system where advanced agriculture and smallholder agriculture continue to exist side by side with limited spill over from one domain to the other.

Cotula (2010) points out that investors often put limitations on the use of technology and related knowledge, particularly when it comes to application outside of the project. It is also conceivable that labour-saving technologies might make production so much more efficient that the producer can expand production a lot and, for example, sell on the international

market - without an increased demand for local labour196.

195FAO Foreign investment in developing country agriculture - issues, policy implications and international response 68th FAO Committee on Commodity Problems, (June 2010); p 5 196 J. Behrman, R. Meinzen-Dick and A. R. Quisumbing, The Gender Implications of Large-Scale Land Deals, IFPRI Policy Brief 17 (April 2011); p 14




Box 24: Different types of technology transfer

• Technology to design, construct and operate a biofuels conversion plant. • Agricultural technology for farming (large and small scale) and producing biofuels

feedstock.

• Technology and know-how to deal with local and international markets including building up the necessary infrastructure (rural roads, silos, harbours).

• Technology to measure the results; for example Paraguay has an obligatory blending with biofuels but does not control this regulation so that consequently the biofuels blending regulation exists on the paper only.

The disparities between and within developing countries in benefiting from technology transfer suggest that the relationship between technology transfer and the accumulation of domestic technological capacity is far from straightforward. In other words, more technology

transfer does not necessarily lead to more technological and economic development.

First generation biofuels are made from sugars, starch and vegetable oils found in arable crops, which can be easily extracted using conventional technology. In comparison, second generation biofuels are made from lingo-cellulosic biomass or woody crops, agricultural residues or waste, which makes it harder to extract the required fuel; this could be done by

the biochemical approach in which enzymes and other micro-organisms are used to convert cellulose and hemi-cellulose components of the feedstock to sugars prior to their fermentation to produce ethanol or the thermo-chemical approach.

The 1st generation biofuels technology is long off-patents197 and therefore the intellectual property rights do not play an important role any longer and do not hamper technology transfer. The 2nd generation biofuels are much more complex and even if the technology is

not so difficult to understand, the application is very expensive in respect to the investment as well as concerning the running cost (enzymes). The intellectual property rights for the 2nd generation biofuels play an important role with many registered patents.

Given the status of the technology and investment requirements to establish processing plants, it is according to UNEP198 unlikely that second generation biofuels production can be

achieved in developing countries in the coming decade!

However, the potential development of second generation biofuels in developing countries could be approached via the biofuel feedstock production. Investment in feedstock production could offer an option for developing countries to profit from the growing biomass market for second-generation biofuels production outside their borders, provided that long-distance transport infrastructure is suitably developed.

During the transition to second generation biofuel commercialisation in developing countries,

cooperative R&D could stimulate technology transfer and generate important experience. Skills development and adaptation of technology especially the local fabrication of part of the facilities, training of personnel on requisite techniques for equipment operation and maintenance and the emergence of private sector participation are important prerequisites for commercialisation of second generation biofuel technologies.

To start promoting biofuels feedstock production for 2nd generation biofuels it needs like for the 1st generation stable and predictable political conditions and targets, within the developing countries as well as from EU side which is a potential buyer of the bio-energy.

Within the international technology transfer, there is a distinction between horizontal and vertical transfers. Horizontal technology transfer consists of the movement of an established technology from one operational environment to another (for instance from one company to

197Advanced biofuels and developing countries: intellectual property scenarios and policy implications, p 64; http://belfercenter.ksg.harvard.edu/files/ditcbcc20091_en_Juma_Bell_chapter.pdf 198 UNEP: Global Assessments and Guidelines for Sustainable Liquid Biofuels Production in Developing Countries: A

GEF Targeted Research Project, 2012; p 114




another or from one country like Brazil to another one like Mozambique). Vertical technology

transfer, in contrast, refers to the transmission of new technologies from their generation during research and development activities in science and technology organisations, for instance, to application in the industrial and agricultural sectors. The 2nd generation biofuels could be a good example for vertical transfer but due to several reasons it is not taking place in Africa199.

One reason is the fact that the 2nd generation technology is much more complicated. Only

multinational companies as well as wealthy countries such as Japan, USA, Canada and Europe are doing research in this field. Currently, there are no commercially successful 2nd generation biofuels plants as even large-scale models in the United States depend on heavy subsidies. As evidence from field trips to Senegal and Tanzania have shown, 2nd generation biofuels are not discussed at all as already the production of 1st generation is quite small.

In 2010 the OECD mentioned in a report that developing countries are not able to actively

engage in the development of second-generation biofuels technologies mostly because intellectual property rights are becoming a major barrier. Initiatives for cooperation on technology development should, therefore, be increased to enable developing countries to build capacity and profit from the new technology when it reaches a commercial stage200.

Notwithstanding, there is transfer taking place as seen in an 83 000 hectares Brazilian biofuels

investment project in Mozambique. Besides this rather limited technology transfer in the processing sector, at least in the sense of valuable input for developing countries, the situation is better when it comes to agricultural technology transfer.

The relevant agricultural knowledge related to biofuels crop production might or might not be available in the country, depending if the feedstock is already grown locally for other purposes. However, existing know-how can be improved and up-dated and resulting in

improvements in agricultural production technology. In case that the investor will grow the feedstock, more training to the staff will be provided than if the investor is just purchasing the raw material local farmers are growing individually.

Large potentials for increased yields of food and non-food biomass seem to exist in sub-Saharan Africa, where development is hampered by insufficient investments in infrastructure, production capacities, education and training201.

Capacity development is a fundamental aspect of technology transfer. In the late 1970s, the discussion was on the costs of technology transfer, and on whether the choice of technologies was appropriate to the local conditions in developing countries. Little attention was given in this analysis to the absorptive capacities and domestic technological learning of those who acquired foreign technologies in other words, to the processes involved in assimilating imported technologies and putting them to work efficiently. The underlying

assumption seemed to be that once a technology was acquired, its absorption and implementation took place almost effortlessly.

However, nowadays, opinion is that the acquisition and absorption of foreign technologies and their further development, are complex processes that demand significant efforts from the acquirers; therefore, capacity development is a key issue in making use of new

technologies.

For biofuel investment projects, one could distinguish between processing and management know-how that is required to run a biofuels company on the one hand and agricultural production skills on the other hand. In case that the crop for biofuel production is largely provided by the biofuels company, all the capacity building efforts and training originate from the private sector.

199 see also http://waccglobal.org/en/20062-communicating-with-angels-being-digital-being-human/585--What-is-technology-transfer.html 200 OECD / IEA: Sustainable Production of Second-Generation Biofuels; 2010; p 40 201 67. S. Bringezu, H. Schütz, et al, “Towards sustainable production and use of resources: Assessing Biofuels”, United Nations Environment Programme (October 2009); p 73




The role of the involved governments becomes crucial if out-growers are involved to provide

part of the feedstock which is usually done on a piece rate. In order to help farmers maximise their revenues government could assist by providing relevant training to smallholders.

Agricultural extension services should be offered to small-scale liquid biofuels feedstock producers, in order to disseminate best practices, facilitate farmer-to-farmer participatory learning, and encourage and address farmers’ requests for technical advice; access to these extension services should be ensured for both male and female producers202. "Currently none

of the African countries achieves even a quarter of its potential productivity. Rather than just focussing only on an expansion of uncultivated land, it is important that investors and governments support improvements in technology, infrastructure, and institutions that can improve productivity on existing farmland," says Klaus Deininger, lead economist in the World Bank’s Development Research Department.

Box 25: Situation in Senegal

The field mission to Senegal also showed that agricultural research activities are part of the

technology transfer; for example IRD (France) is cooperating with the Senegalese Institute for Agricultural Research (ISRA) for the in-vitro production of Jatropha plants and actual production capacity reaches 500 000 plants every 2 months. ISRA ensures the production of the Jatropha plants, mainly done in nurseries. Thanks to a scientific collaboration agreement between ISRA and CULTESA (Centre for Biotechnological Research, Tenerife, Spain), a laboratory for in vitro cultivation has been created to enhance the multiplication activity of

Jatropha seeds.

Another important issue for smallholders and extension services is the introduction of drip irrigation techniques in Jatropha cultivation in Senegal, region of Thiès, unfortunately so far with results below expectations. Furthermore, the overall planned 320 000 ha of planted Jatropha by 2012 (Government policy and target) could not be achieved; only 15 000 ha of Jatropha have been planted out so far.

For example, one of the drivers of Brazil’s success in biofuels through its “Proálcool” programme (1975) which was mainly triggered by energy security considerations and making

use of the existing sugar-cane production infrastructure was its strong foundation in research, education and training, providing a knowledge platform that was able to develop technology and absorb, adapt and improve upon transferred technologies. Creating the domestic capacity to understand, utilize and replicate existing biofuels technologies requires a broader system of innovation that can facilitate knowledge and technical flows among different stakeholders203.

The EU supports within the “ACP Science and Technology Programme” capacity building in biofuel technology to create sustainable, non-food bio-oil supply chains. The programme focuses on linking the relevant science and technology academics, professionals, decision-makers and support scheme managers from South Africa, Namibia, Ghana, Italy and the UK in a series of inter-regional and intra-regional workshops. The programme is addressing the

lack of necessary technical skills, limited knowledge of renewable biofuels or of combined cooling heat and power (CCHP), insufficient investment in agronomic, genetic, technical, and ecological research and innovation areas, and insufficient investment in necessary capital equipment or in supporting new businesses. As most biofuels are made out of food plants, which are not eligible for this support programme, the “ACP Science and Technology Programme” focuses on commercially less important plants like Jatropha, salicornia and

202 56. A. Rossi and Y. Lambrou, "Making Sustainable Biofuels Work for Smallholders Farmers and Rural Households: Issues and Perspectives", FAO, (2009), p 20 203 Jurna C.: Advanced biofuels and developing countries: intellectual property scenarios and policy implications; 2009; p 80




microalgae204. However, a process is started by this programme to transfer know-how and to

make use of it by locally adopted innovations based on these transfers.

Generally, capacities should be built slowly but continuously in order to avoid bottlenecks when the new technologies become technically available and economically feasible. To ensure technology access and transfer, co-operation on RD&D between industrialised and developing countries as well as among developing countries should be enhanced.205 Of course that is rather the domain of the public sector and the NGOs.

Training and capacity development regarding biofuels technology should not only focus on plant production but also on managerial and technical know-how in operating and constructing processing plants. Project counterparts receive vocational training in construction work and project implementation; consequently their experience is invaluable for the local market development and is a prerequisite for the successful replication of the projects.

204http://www.acp-st.eu/content/capacity-building-south-africa-namibia-and-ghana-create-sustainable-non-food-bio-oil-supply- 205Eisentraut A., Sustainable Production of Second Generation Biofuels: Potential and perspectives in major economies and developing countries, International Energy Agency, 2010; p 11




Section 7: Outline of the results of the study

7.1 SUMMARY OF THE FINDINGS

Lack of information on the biofuel trade flows between the EU and the ACP countries 1. According to official statistics (OECD-FAO, EUROSTAT) there is little trade of biofuel

products from ACP countries and especially from Africa to the European Union, and

export of feedstocks for biofuel purposes appears to be limited. The African production of

biofuel products and feedstocks is still rather small in comparison to other regions and

absorbed almost entirely by local use. A number of planned large scale investment

projects has been recently abandoned partly due to their speculative nature (Jatropha

mainly).

2. The exact production of biofuels in developing countries is not sufficiently documented

and statistical data on biofuels trade is scarce. A lack of homogeneity in product

classification as well as lack of information on their final use (food, energy, or else) make it

difficult to assess the trade flows for biofuels and biofuels’ feedstocks. Value chain analysis

of biofuels has been insufficiently developed for ACP countries so far. Most studies on

biofuels focus at feedstock production neglecting the analysis of processing and

marketing.

3. If a chain of custody is absent, it is not possible to reliably differentiate feedstocks entering

the EU for food or biofuel purposes (as opposed to what is done for wood with the EU

Forest Law Enforcement, Governance and Trade agreements). In this case it is necessary

to rely on historical trends of import/exports leading to significant uncertainties in the

estimates of food crops used for energy.

Rising food prices and potential links with biofuel policies 4. Worldwide, food commodity prices are rising and, with or without EU blending policy,

biofuel production and use in the world is growing. The contribution of biofuels to rising

food prices is highly debated. Some opinions mentioned that biofuels have a strong

influence on food prices. Other analyses demonstrate that other drivers are more

fundamental.

5. Many authors and institutions have linked the EU biofuel policy to the rising food prices.

However, more and more authors blame the global food demand, stock levels (too low),

trade policies, strong correlation between food and petroleum products prices. Rising

standards of living and changes in food consumption patterns (diets) in emerging

countries can also be a strong factor.

Although there seems to be a consensus that some effect on food prices exists, the research team could not find statistical or other quantitative evidence to determine exactly the extent to which the EU biofuel policies have contributed to rising food prices, especially in Africa. No direct effects of EU biofuel policies on food prices have been observed locally in the country studies, but this may be due to regulated prices

and state intervention (e.g. Senegal). In any case, the contribution of the EU biofuel policy to rising food prices in ACP countries is not yet measured and this leaves room to diverse opinions and statements.




6. In Africa, an increasing demand for food crops in conjunction with much slower growth in

agricultural productivity, low level of stocks and dependence on food imports in many

countries can be identified as main drivers that drove food prices up. However, as

markets are becoming more globalised, the impact of biofuels and biofuel feedstocks as

a global commodity is becoming more pronounced. This means that there is a general

trend where food is becoming more expensive, and biofuels production is - with or

without EU blending requirements - becoming more prevalent.

Large scale land acquisitions in Africa and biofuel policies

7. The EU biofuel policy has been identified by many to be among the key drivers behind

the recent wave of large scale land acquisitions in developing countries, as many

companies (both EU and not EU based) have taken into consideration the EU demand for

biofuels in their land investment strategies. It should be noted that, as of today, there are

also many other factors present which seem to have an even greater impact on

attracting large scale land investment. These include, but are not limited to: the national

foreign investment strategy, policies aimed at modernization and investment in the

agricultural sector, foreign investment in extractives industries (mining), speculative

investment in land and water resources via new financial instruments. It is, however,

equally important to note that the impacts of large scale land acquisition have often

already taken place, whether or not they lead to the intended production of biofuel

feedstock.

8. Lack of transparency with regard to large-scale land acquisition on the side of both

private investors and target countries’ governments is a fundamental challenge to good

governance and ensuring better policy coherence. Due to a lack of precise data, the

true scale of the phenomena of large scale land acquisitions and resulting control of

water rights in developing countries is likely to be under-estimated and insufficiently

addressed.

Access and control of water resources as an emerging factor

9. Several reported land acquisitions by local elites as well as by foreign companies are

linked with securing access to water sources and sometime exclusive control of the

resources. This has been documented, for example, in the Italian “SenEthanol project” in

Fanaye (North Senegal) where access to the Senegal River and some of its tributaries

would have been denied to local inhabitants and traditional pastoralists, if not for the

protests of the civil society that forced the government to cancel this land deal. In

addition, it is important to note that most of the large scale sugar cane plantations (for

food or fuel or both) are characterised by high levels of water pollution as drained water

is often discharged to the river without pre-treatment.

10. Most crops used for biofuel production have high water requirements. The water footprint

of biofuels varies widely across contexts, as presented in Box 16 of the report. The

supposed “free” water use by biofuel investors does not encourage and makes difficult to

implement more water efficiency and optimization. The uses of water to produce energy

and the uses of energy in water supply and sanitation (water-energy nexus) are not

sufficiently taken into consideration by the policy makers.




11. Large areas of fertile watered land (Tanzania, Mozambique, ) and irrigable lands (Mali,

Senegal, Sudan, Ethiopia, etc..) are becoming increasingly targeted by investment funds

(i.e. Middle East) , some EU pension funds and by other emerging nations resulting in

granting them access and control to portions of the Nile, Zambezi, Niger and Senegal

rivers. This represents a real threat to the capacity of the African countries to determine

their own agricultural policies in the near future as through the growing risk of loss of

control over their land and water resources.

Overall environmental issues

12. Impacts on land, water and natural resources mostly reported for biofuel production are

mainly associated with cultivation of energy crops with input intensive farming systems.

Sustainable management for land and water-use, external inputs, impacts on ecosystems

and efficiency remains a big challenge and more progress needs to be achieved on

these if we are to talk of sustainable energy.

13. Direct and indirect land use changes must be taken into consideration to get a real

assessment of the biofuels production impacts. Good practices that minimize indirect

land use change risks exist and should be promoted.

14. Environmental impacts depend on bioclimatic conditions, crop characteristics and

farming system. Evidence of impacts specifically associated with intensified biofuel

production remains limited as most of the problems are similar to those already identified

with agricultural production in general (not specific to biofuels). Expansion of monoculture

feedstock plantation for biofuels is detrimental to biodiversity and causes loss of natural

habitats. It is very challenging to successfully conduct the change from a conventional

food and agriculture model to sustainable practices.

Role of the private sector: Business model, investment profile, job creation and social corporate responsibilities

15. In some of the reported cases both the involved private sector actors and the local

investment promotion agencies have not undertaken the basic agronomic assessment

and profitability analyses before the decision for investment in biofuels feedstock

production was taken. Negligent approach to Environmental and Social Impact

Assessment studies has been reported, for example in Tanzania. Lack of local capacity

and transparent systems to enforce and monitor the preparation of ESIA (ESIA) seems to

be one of the main causes.

16. Inclusive business models that involve smallholder farmers as active partners appear to be

more viable from a social and economic point of view than those based on large-scale

land acquisitions. Many large scale biofuels project in Africa failed or are being

abandoned. Instruments such as contract farming arrangements, out-grower schemes,

joint ventures and/or more innovative models of benefit-sharing should be explored as

viable alternatives.

17. There is a wide gap in studies on corporate social responsibility (CSR) instruments vis-à-vis

biofuel investments in ACP countries. A study addressing corporate social responsibility

beyond existing mechanisms, evidencing its influence on working conditions and




environmental impacts in the biofuel sector and ways to enhance existing mechanisms

with increased accountability and remedy mechanisms is very much needed. New

thinking with regard to CSR in agricultural investment is needed.

18. Enhancing agricultural yields in the medium-long term requires investments in the form of

better access to technologies. Promoting better production techniques and fostering

rural financial services is crucial. In the longer term, the development of a sustainable

biofuel industry could promote access in rural areas to cheaper and safer energy supplies

and hence support economic growth and long-term improvements in food security.

However it should be considered that biofuels business strategies must be based on long-

term strategies, as plants may need several years before providing a first commercial

harvest.

19. Jobs creation due to biofuels development is controversial. The potential “new” jobs

created could be significant, the production for biofuel industry can create new income

and therefore contribute to prevent rural exodus as well as contribute to poverty

reduction in rural areas. At the same time, the jobs actually created are often seasonal

and characterized by poor working conditions in plantations and factories. The only

exception, where there is real additional income created for farmers, seems to be in the

schemes where Jatropha seeds are bought from farmers (often women) who produce

these in addition to but not replacing the main food crops. Finally, there is a big gap

between the jobs planned and promised by the investors and the jobs actually created.

20. Projects for biofuel development use different business model (from large-scale

plantations to smallholders’ projects). The main challenge relies in the capacity to

implement a real sustainable model, as the risks and uncertainties on conditions, yields

and final profitability remain high.

Energy security

21. Where energy access (in particular for remote rural areas) is low and where deforestation

for firewood and charcoal is high, biofuels locally produced for local use could become

an alternative with positive environmental and social impacts.

Emerging local civil society demand for more transparency

22. Farmers associations and civil society organizations are asking for more transparency and

"fair" land deals. This mobilization can be very effective. In a country like Senegal, they

have been able to mobilize the population to gain back their rights to access to land and

water resources. They have been able to develop legal capacity to tackle "unfair" or

"irregular" local and national government decisions and are pushing strongly for a land

reform. The same phenomenon can also be observed in other countries.

Gender impacts 23. There is relatively little research dedicated to gender impacts of large-scale biofuels

production in developing countries. Changes in land tenure systems and land use, and

therefore in access to water and other natural resources, often results in negative impacts

on women’s land entitlements as well as in time spent for household-related activities,

particularly in African countries. In addition, there is little evidence so far of assumed

benefits in terms of employment opportunities generated for women in large scale




plantations as in reality male labour seems to be preferred while conditions on plantations

may carry additional health risks.

Expectations versus reality, debunking the myths 24. While Jatropha constitutes a key “non-food crop” for large scale land investment,

recently emerging data regarding failures of large scale Jatropha plantations, especially

in Eastern Africa, calls for further need of research of the crop potential. The expected

yields are not being met. The Jatropha plant needs much more inputs that the “plant it

and forget it miracle crop” model that was promoted and lay behind many of the

investment projects.

25. A key finding of this study relates to the risks associated with the claims and perception of

"unused land" availability in developing countries. The general idea depicting ACP

countries and especially Africa as an untapped reservoir of “land availability for

expansion agriculture and biofuels production” fade away when confronted with the

reality of limited demarcation level of land, incomplete land reforms and land use

registration and general lack of participatory land use planning prior to assigning land for

biofuels production on local level. Protection of the land users who are often not the land

owners (i.e. government) is mostly inadequate in land acquisition processes and leaves

much room for abuses and human right violations. A case by case study of each country,

region and locality is advised against claims of massive land availability for any particular

biofuel feedstock.

26. Most African countries have not formulated a national bioenergy policy. It is only in

December 2012 that the African Union adopted a policy document (Pan African

Bioenergy Policy and Guidelines) that should serve as a basis for individual countries and

RECs to further develop and implement policies on the ground. The Pan African policy

document recommends some ideas on sustainable land use planning such as mapping

out the potential and assuring national consultation for demarcating land for biofuels.

7.2 RECOMMENDATIONS

GENERAL RECOMMENDATIONS (GLOBAL)

7.2.1 Land issues

1. Both EU and developing countries national policies promoting foreign direct investment in agricultural land should be carefully scrutinized vis-à-vis their social and environmental

impacts and through the introduction of necessary safeguards. For example, a list of possible safeguards has been provided in the recently internationally approved Voluntary Guidelines on Responsible Tenure of Land, Fisheries and Forests in the Context of National Food Security. Other international initiatives seeking to discipline land investments, such as the currently elaborated Principles for Responsible Agricultural Investments under the Committee on World Food Security, should also be supported.

2. The concept of idle or/and marginal land can be deceiving. Any global, regional or

national studies citing specific amount of “idle land” or “unused land” available for cultivation of one or another biofuel feedstock must be treated with great caution.




Research as well as field visits have demonstrated that in most cases such land is usually

already being used or claimed, although such uses and claims may be unrecognized because land users are marginalized from formal land rights, often due to incomplete land demarcation and land reform processes. In addition, such land often provides important livelihood support as well as environmental and cultural services. A case by case study of each country, region and locality is advised against claims of massive land availability for any particular biofuel feedstock.

3. Land tenure reforms, the demarcation of land with participatory land use planning

techniques, legal recognition of customary land rights and promotion/integration of smallholder farming in developing countries must be supported politically and financially. This includes training and technical assistance for promoting the use of territorial land planning techniques at local level.

4. Work of NGOs and civil society engaged in monitoring and asking for more transparency

of agricultural land investments and investments in biofuels as well as in support to land demarcation processes should be encouraged at international, national and country levels.

5. The potential for biofuels development in the country must be assessed on a case by

case basis with a mapping of suitable areas per crop, thorough understanding of crop’s soil and water requirements, reliable data on yields and real cost-benefit analysis including social-economic impact assessments before projects are endorsed and land attributed, in order to prevent negative impacts linked to failed investments.

6. Assessment of land suitability potential for agriculture and land-use planning are key

points to be strengthened in order to orient possible biofuel development, integrating land tenure issues and avoiding land concentration.

7. There is a need for greater and increased gender analysis at all levels of policy and

research regarding biofuels production. There is a need for further research on gender

impacts of biofuels both on global level as well as through case studies on national level.

In addition, Environmental and Social Impact Assessment studies should include

gendered differentiated data. Reporting on prior land use patterns, also in term of

gender, should be enhanced in biofuel projects, where possible.

7.2.2 Environmental issues

8. Enhancement of good environmental practices in feedstocks for biofuel production must be largely diffused and used to limit natural resource depletion and mitigate potential negative socio-economic and environmental impacts.

9. Access to water for local communities must be guaranteed and conditions to deliver access to water resources to the companies aiming to produce feedstock for biofuel

must be carefully considered. The use of water resources must be strategically (geopolitical analyse), environmentally, economically and financially evaluated so as to estimate the current situation and value and forecast future developments. Promote solutions for water efficiency and optimisation.

10. It is urgent to recognize the increasing scarcity of water and to address the Water-Energy-

Food Nexus in an integrated manner. The role of public sector (at international, national and sub-national levels) is vital and the role of the private sector and other non-state actors is also crucial. Public-sector coordination and facilitation is needed to formulate




and implement a coherent vision and policies to face the water scarcity and potential

threats to food supply, in particular linked to biofuel development. Orientations presented in the 2011/2012 European Report on Development, to manage water, energy and land for inclusive and sustainable growth, must be widely disseminated and implemented by public and private bodies, from local to national and international levels.

11. Land Use Change, including Indirect Land Use Change (ILUC), must be assessed and

integrated when analysing the potential impact of GHG emission reduction from biofuels development. A number of good practices and tools that could support governments and operators exist that could also mitigate indirect land use change. While the EU is leading on this subject, the current proposal that envisage an end of subsidies for crop-based biofuels could send the wrong signal to the developing world. Indeed it is over simplistic to assume that food crops always compete with food leading to ILUC, while

non-food crops never do it.

12. The study shows that developing countries have difficulties with the implementation and enforcement of EIA/ESIAs. Capacity building, training, global framework for EIA/ESIA and SEA related to biofuel production would help to ease the decision support process for the

biofuels sector. Capacity building should be further supported at global level, by making methodologies, tools and data more easily available through international organisations (such as the OECD or FAO) and further supported by development cooperation projects.

7.2.3 Transparency

13. There is a need to improve the information on world trade flows for biofuels and (where possible) biofuel feedstocks, for instance by adopting a common nomenclature at the international level. Guidance towards the establishment of a global chain of custody is

urgently needed. Aspects related to transparency of operations should be duly considered in all biofuel certification schemes and related policies.

14. Increase political will and support at global lfor assuring transparency in land and water acquisition processes and the fair undertaking of Social and Environmental Impact Assessments prior to project implementation.

15. Good examples from other transparency initiatives, such as the Extractive Industries

Transparency Initiative, should be further studied and analysed with the view of setting up similar systems for improvement of data availability and private sector accountability on investment in agricultural lands and water resources.

16. Policies promoting foreign direct investment in agricultural lands in ACP countries should systematically require/support independent monitoring of Environmental and Social Impact Assessments, transparent registration of large-scale land and water deals with access to data by all.

7.2.4 Business models for a biofuel value chain

17. A value chain analysis of biofuels must be conducted prior to promoting new investments,

including production, transformation, commercialization and use of biofuels by the private sector and the specialised government institutions. The technologies used for biofuel production should also be assessed in this context – more research in this area and relative cost and benefits of different technologies would be useful.




18. Knowledge on agronomy and sustainable farming systems regarding biofuel feedstocks

production and their use in developing countries must be improved and largely disseminated. Their adoption must be supported with appropriate policies and mechanisms at farmer’s and company’s level. Specific attention must be paid to non-food crops like Jatropha.

19. Sustainability approaches must be promoted in all type of projects i.e. large-scale

commercial plantations, small-scale biofuel projects, out-grower schemes. The typology of biofuel projects presented in this report (see figure 19) could facilitate the initial appraisal of investments.

7.2.5 Social and human rights issues

20. National biofuel policies should be coherent with the existing poverty eradication and food security strategies at country and regional levels to ensure sustainable social and economic impacts.

21. Any investments resulting in land tenure changes must be accompanied by thorough

consultation based on the internationally recognized principle of free, prior and informed consent that involved all the stakeholders at the local level, including women and marginalized social groups. While evictions should be avoided at all costs, in cases of

evictions, detailed plans for resettlement and compensations to be paid by the investor must be agreed in advance with parties affected and their implementation should be independently monitored.

22. There is a gender difference in the impacts of projects that affect access to resources such as land and water.. To be able to take these gender impacts sufficiently into

account, there is a need for improved gender analysis at all levels of impacts of biofuel policies. Effects of any land tenure changes should be analysed from the perspective of proper valorisation of land for women and marginalized social groups. Promises of employment generation through biofuel projects should take gender considerations into account. Environmental and Social Impact Assessments should (where possible) include gendered differentiated data, including on prior land use patterns.

23. The potential need for introduction of accountability and remedy mechanisms into

existing international corporate social responsibility mechanisms and schemes should be further studied and analysed.

24. Compliance with the existing developed codes of conduct and certification schemes

should be promoted and developing countries should be supported to enforce their adoption and enabling instruments should be developed to lower the related costs for the farmers.

25. Implementation of the UN Guiding Principles on Business and Human Rights should be

promoted including corporate social responsibility and increase transparency of corporations in terms of financial as well as non-financial disclosure. The recent EU and US initiatives to promote better country-by-country financial reporting by companies should also be promoted.

7.2.6 Role of local governments

26. National governments must play a leading role in preventing and removing negative effects of biofuel development through increasing transparency, ensuring coherence of

national bioenergy strategies and agricultural investment strategies with development




objectives and national development strategies and prioritization of food security of their

populations.

27. Local governments and RECs are advised to initiate and formulate explicit rules, policies and legislation and the promotion of production, investment and trade in bioenergy products. The key functions of national governments in this area are: • Policy making: Develop a sustainable bioenergy policy coherent with national energy

strategy, as an integral part of the national development and food security strategy with adequate legal provisions for the production, distribution, use and trade in bioenergy; Develop and implement a global land-use planning strategy.

• Regulatory: Set stringent environmental standards, promote transparent investment policies; Create safeguards for protection and promotion of smallholder farming as biofuels development should never be at the expense of population (displacement)

or food production.

• Developing capacity: Strategically choose best adapted feedstock and technology options, and conclude economically, socially and environmentally acceptable deals. In addition, create forums and mobilise various government departments, the private sector, civil society and the academic community; ensure beneficial outcomes for

smallholder farmers; and promote information exchange and best practice.

• Inter-ministerial coordination and more coherence in developing countries policies: Involve all ministries that may be linked with the promotion, production and trade of bioenergy to strengthen complementarities and promote coherence;

• Enforcement: Enhance enforcement legislation and monitoring of agricultural investments.

7.2.7 Role of EU and international institutions

28. The EU has the responsibility to regularly evaluate and eventually review its biofuel policy and its impacts in other parts of the world, while taking into account that indirect negative impact can occur even before any production actually occurs and before or even in the absence of significant imports of biofuels to the EU.

29. Specific studies devising strategies for bridging any existing gaps and inconsistencies

between the EU Food Security Policy Framework and EU Renewable Energy Directive vis-à-vis potential for promotion of large scale export-oriented biofuel plantations in detriment to the promotion of local food production should be conducted.

30. The EU and other international institutions can exert their influence (as donors and key political actors at the international level) for the achievement of the following objectives:

• Good environmental practices in feedstock for biofuel production must be largely disseminated and used; there is a need to develop an institutional setting able to prevent unsustainable practices and stimulate good environmental and socio-economic performance;

• Support more research to better understand the environmental links between biofuel

production and resource depletion: i.e. deforestation, water consumption, land degradation;

• For biofuel development projects supported by public funding, high level of transparency and full respect of EIA/ESIA state-of-the-art must be mandatory and monitored;

• The role and contribution of biofuels to increase energy access and energy security

improving the national energy mix should be considered, looking for coherence and




harmonization of policies (Power System Masterplan/Biomass Strategy Policy/National

Liquid Biofuels Policy); The EU and other international institutions should support such projects;

• While acknowledging that LUC effects should be taken into account, the extent to which EU biofuel policies contribute to LUC and ILUC in developing countries is uncertain and difficult to quantify. Therefore, it seems more effective to focus on the potential synergies between food and fuel production, such as improved valorisation

of agricultural residues and biomass production in degraded areas. There is a need to develop an institutional setting able to prevent unsustainable practices and incentivize good environmental and socio-economic practices such as the deployment of Integrated Food and Energy Systems (IFES) or the adoption of those technologies able to reduce residues to a minimum.

7.2.8 Specific recommendations to EU institutions

31. The European Commission

• Ensure representation of Policy Coherence for Development (PCD) perspective and presence of development experts in discussions on formulation and review of energy policies;

• Consider expansion of the sustainability criteria to include social criteria, food security, access to natural resources such as land and water and principle of free, prior and informed consent for communities affected by land transaction for biofuels;

• Identify and address any existing gaps and inconsistencies between the EU Food Security Policy Framework and EU Renewable Energy Directive;

• Assist developing countries through development aid, research and capacity building

and joint pressure on more transparency and accountability of the private sector private to ensure that development of biofuels is coherence with their development strategies and the needs of their populations;

• Make sure that above developed PCD aspects and concerns are sufficiently taken into account of the impact assessments for policies affecting and/or triggering biofuels production and in general agricultural investments in developing countries,

especially in areas such as trade, agriculture or energy.

• The EU should support developing countries in addressing the water-energy-land nexus through its development cooperation programmes, by supporting inclusive and sustainable business models and promoting appropriate governance. Mechanisms to strengthen information exchange may ensure that policy-formulation processes

include properly the water and energy nexus, as a strong commitment for PCD promotion. The specific recommendations expressed in the 2011/2012 European Report on Development need to be considered for implementation in future development projects.

• A series of international initiatives to discipline land investments (principle for Responsible Agricultural Investments, Voluntary Guidelines on Responsible Tenure of

Land, Fisheries and Forests) are currently being further elaborated and implemented. Proper financial and political support should be given to assure that they are implemented at country level and supported by the private sector. They could become a central piece of a longer term approach on sustainability criteria for various commodities, including biofuels.

32. Role of DEVCO




• Engage actively in exchanges with the other DGs (e.g. ENERGY, AGRI,

ENVIRONEMENT, TRADE, RESEARCH) on the further researching and integration of the underlined recommendations into the policies and projects aimed at biofuels development and trade;

• Define and communicate a detailed and well-argued position regarding biofuels

development and its development impacts, from DEVCO point of view, including options and tools for corrective actions where necessary.

• Define and communicate a detailed and well-argued position regarding biofuel grants projects financing in developing countries, including the development of a set of minimum criteria for sustainability.

33. The European External Action Service

• The EEAS should work in close cooperation in DEVCO to make sure that Policy

Coherence for Development is mainstreamed in the work of EU delegations. EC delegations should include PCD issues in their dialogue with local actors including private sector and civil society in order to gather information on impacts of non-aid EU policies;

• The EU delegations should be instructed to play an active role in gathering relevant

information and feedback on PCD issues such as biofuels production or large scale land acquisitions from developing countries and actively encouraged to signal any incoherencies with regard to PCD from the country level perspective. This feedback could in turn feed into the European Commission's efforts to promote more PCD in policy-making at EU level.

34. EU member states

• Address through policy measures any impacts identified in the biennial monitoring

reports on social sustainability implications of the Renewable Energy Directive.

• In their role as donors, support the EU efforts to ensure more coherence for development and – among other things - take into account findings on impacts of

biofuels production in developing countries to inform their decisions on supporting and/or financing projects related to biofuels production or access to sustainable forms of energy in developing countries.

7.2.9 Issues to be tackled by the Private sector

The role of agribusiness investors Based on our analysis and interviews, private sector actors play an important role in

determining the development impacts of biofuels production in developing countries, by their investment practices, the quality of their impact analysis and business plans and in general through their corporate behaviour within international and national regulatory environments and in their interaction with local stakeholders. On top of the requirements such as Directive 2009/28/EC the private sector might consider the following recommendations to enable successful biofuel projects:

• UN Guiding Principles on Business and Human Rights: These principles include also the

right to adequate food .These guidelines should be taken serious and all issues related to these and other voluntarily guidelines and principles should be communicated.




• Corporate Social Responsibility (CSR): The private sector could and should increase the transparency and adherence to CSR in developing countries reflecting the formal and informal ways in which business makes a contribution to improving the governance, social, ethical, labour and environmental conditions of the developing countries in which they operate, while remaining sensitive to prevailing religious, historical and cultural contexts. Such an approach would integrate the investment

project deeper in the local society and enable a better mutual understanding. Furthermore, the companies would be able to communicate to their clients on their contributions to sustainable development.

• Environmental and Social Impact Assessments (ESIA): The private sector should apply

very closely the ESIA methodology, not only for satisfying administrative requests but

also as a commitment with sustainable land and water management. Such a behavior would help to bypass upcoming conflicts resulting in unclear or poorly defined owner- and user rights.

• Investments based on sound agricultural know-how: Agricultural know-how could be

improved by cooperation from the project start onwards with international organisations like FAO and Pan-African and other national research institutes. Three groups should benefit from this know-how transfer: the investor to do a sustainable project, the local staff who will work on the biofuel feedstock production and the local authorities to understand well from the beginning of a project if it has the potential to become sustainable.

• Financial know-how: Financial know-how and sound business plans are the other main

drivers to make a project successful. The business plan must respect the state-of-the-art rules, i.e. long-term vision, analysis of alternatives, cash-flow.

• Social infrastructure: Social investments, when designed in a participatory way with

the local beneficiaries, such as school, ambulance, dwells, rural roads and others productive infrastructures, help improve investors’ position and acceptance by the population and should be encouraged.

• Job creation: When possible, social labour should be used instead of machineries;

specially if it is cheaper. However investors could create jobs easier if employment

rules are not too tough but more important if the investment climate is good for foreign companies.

The potential role of NGOs

• Advocacy and lobbying for adequate land-use planning (where available for biofuel

development) and biofuel contribution to the national / rural energy strategy • education • training in agricultural issues related to biofuel feedstock production but also to local

fruit and vegetables, livestock and other agricultural production for self-consumption or the local market,

• capacity building and training for government staff to understand better the way ESIA

are done, what has to be the content of these analyses and how to enforce their findings later on;

• health care issues from basic hygiene, to vaccination programmes up to fighting malaria and AIDS,

• nature conservation, for example managing and monitoring the above mentioned natural reserves and others;

• setting up business incubators or certain artisan clusters




• monitoring of CSR implementation by biofuel projects especially regarding improved

governance, social, ethical, labour and environmental conditions

7.3 CONCLUDING NOTES

As the pressure on natural habitat and resources is increasing due to the global expansion

and intensification of agriculture, driven by population growth and change in diets, the need

to meet the rising global demand for liquid fuels for transport is further exacerbating the

situation.

Sustainable bioenergy has the potential to improve performance of the agricultural sector,

enhancing its economy, including improvement of the livelihoods of poor farmers in

developing countries, while preserving the environment.

Sustainable cultivation models exist in the food crop and timber producing sectors, and they

can be applied successfully to bioenergy crops at project level when consistent with national

energy and poverty eradication strategies. Examples of good practices demonstrate their

potential benefits for soil quality, water availability, agrobiodiversity, climate change

mitigation, productivity and income generation. There is an urgent need for awareness

raising, training and dissemination efforts targeting the capacity of the national authorities to

monitor projects and the capacity of practitioners (farmers) to adopt these good practices.

It is generally accepted that bioenergy has the potential of either increasing or reducing

food security depending on the policies in place and the characteristics of the local

agricultural sector. The effects of biofuels development on national food security can differ

significantly depending whether the country is a net exporter or a net importer of food and

agricultural commodities.

One of the challenges for the bioenergy sector lies in the need for the establishment of policy

frameworks that are embedded in the overall poverty eradication and sustainable

development policies so as to ensure that the poor can be among its key beneficiaries.

Impacts of biofuel production on ecosystems can be very important and a shared global

concern, while socio-economic impacts are even more relevant for developing countries.

Impacts on land tenure, gender and access to resources (e.g. water) are of special concern

in ACP countries. The need to ensure sound development of bioenergy sector is even more

complicated by the fact that many ACP countries lack enforced biofuel policy frameworks,

and are characterized by weak governance.

A relatively recent phenomenon of large-scale land (and related water resources)

acquisitions has been registered in developing countries. While due to a lack of precise data

and transparency on these types of transactions it is difficult to assess precisely the extent of

the role of biofuels and biofuel promotion policies in Developed countries, it can be safely

assumed that biofuel markets have been an important driver for such investments. It is

important to note that large scale acquisitions of land are taking place in countries where

registration and demarcation of community land titles has been slow and is still incomplete.

Local people often lack knowledge of the formal legal system or how to seek redress in the

event of contested rights. Many countries do not have in place legal or procedural




mechanisms to protect local rights and take account of local interests, livelihoods and

welfare in event of increasing land conflicts due to increasing land pressures and large scale

land acquisitions.

Remarkable difficulties exist in obtaining reliable data from target country registries as well as

from investors and the issue of transparency in large scale land acquisitions, including

acquisitions which were aimed for production of biofuels, needs further research and scrutiny

and monitoring.

The failure of bioenergy investments (recently emerging data on a wave of failed large scale

investments in Jatropha in East Africa) can have severe negative consequences on local

livelihoods, especially in the cases where employment and income generation has been

promised in exchange for land and where such promises have never materialised. The reason

behind the failure of these investments is often due to their speculative nature (aimed mainly

at land and water acquisition as such) or in overly optimistic expectations about achievable

yields from new plantations. The latter can be given either from the extrapolation of pilot

project data to large-scale production (often the complexity of large-scale projects is

underestimated) or from the assumption that some energy crops could prosper on marginal

land. The experience tells us that however, that all agricultural activities target primarily

productive agricultural land and that there is no miraculous plant: all plants have lower

performance if grown on marginal or degraded land.

Furthermore, a big question emerges in relation to the identification of “marginal land” that

has been presumably identified in some studies as suitable for cultivation of certain bioenergy

feedstock. What is sometimes called “marginal land” appears to be fundamental in

sustaining the livelihoods of local communities and/or providing a variety of environmental

and cultural services leading to significant secondary impacts.

One key conclusion of this study is that a policy focused on fulfilling an internal biofuel

blending target through certified biofuels alone cannot expect to develop a sustainable

bioenergy industry automatically, especially in poor developing countries, unless these policy

measures are backed with international support to strengthen the bioenergy policy

frameworks in close synergy with sustainable development and food security policies in

biofuel producing countries. This translates into the need for supporting policy development in

countries with a weak policy framework, building upon the (positive and negative)

experiences while enforcing existing policies especially in relation to land tenure, economic

and social policies as well as management of natural resources.

This necessarily implies the provision of training, sharing good (environmental and socio-

economic) agricultural practices and facilitating the transfer of adequate technologies and

methodologies.




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131. Visser, P (et al.) (2007):Etude sur le développement de la filière Ethanol / Gel fuel comme énergie de caisson dans l’espace UEMOA

132. Watson H.K., (2011), Potential to expand sustainable bioenergy from sugarcane in southern Africa

133. Wetlands International (2008): Biofuels in Africa, An assessment of risks and benefits for African wetlands

134. World Bank and IMF, (2012), Global Monitoring Report 2012: Food prices, nutrition, and the Millennium Development Goals

135. World Bank (2010): bioenergy development. Issues and impacts for poverty and natural resource management

136. Zuubier, P (et al.): Sugarcane ethanol, contributions to climate change mitigation and the environment




ANNEX 1: A CRITICAL REVIEW OF KEY SOURCES EXAMINED

An extensive literature review has been undertaken for the preparation of this report. A

critical review of the sources analyzed allows us to draw some conclusions on the different positions of NGOs, international organizations, UN organizations, the public sector, private actors and civil society, about the development cost and benefits of biofuel production. Bioenergy is largely used, especially in developing countries, and the potential for its further development is enormous. This is a matter of fact, but its potential contribution in a

sustainable way to the world energy system is highly debated. International organizations such as the IEA, IRENA and IEA-Bioenergy trust in the huge opportunities that can be brought in the near future by technological development, assisted by a significant increase of fossil fuels prices and the value of carbon credits in the future. This

would tremendously incentivize bioenergy and biofuels production and consumption around the world, especially in developing countries. The faith in breakthrough technologies that will make possible to push down the cost of bioenergy and take out more energy from the same amount of biomass is shared by a number of wealth countries including the US and Western European countries. A big question mark associated with this view is related to the contribution that could come from advanced biofuel technologies (that can make use of

lignocellulosic biomass and wastage) as, so far, these technologies did not manage to meet the expectations and countries around the world are revising their targets associated with advanced/lignocellulosic biofuels. OECD and FAO can be considered reliable public sources of data with regard to the current market situation and future scenarios in industrial countries and their models (the AGLINK-

COSIMO) are among the most complete available today. UN organizations appear overall more cautious about the sustainable bioenergy potential. Within the UN system, authoritative organizations such as FAO and UNEP have adopted a rather neutral approach to biofuels, stressing that several bad and good examples exist around the world. Although bioenergy has a tremendous sustainable potential, and can also

have positive spill-over effects in other sectors (such as in the agricultural sector for food), according to them it is important to put in place safety measures first to reduce the degradation of the natural resources and to protect the most vulnerable segments of the population (including their food security) before bioenergy investments take place. This is strictly linked with land tenure issues. A number of “lower risk” bioenergy options have been

identified by UNEP and FAO after several years of research. Other organizations such as UNIDO and UNECE have developed also a (partial) view on bioenergy sustainability, the first more focused on technology transfer for energy access, and the second more focused on trade of solid biomass. UNCTAD started working on the trade and development implications of the biofuels sector as well in 2005 with an impartial approach, highlighting how the physical market has a limited impact on world prices, but their work remained scattered over the last

few years. UNDP and GEF seem to have adopted a more cautious approach on biofuels, prioritizing other kinds of renewable energy interventions, and limiting their bioenergy experience mainly to biogas. Also some work from the UN University was used for this report, but this should be used with care, as a rather simple analysis of biofuel potential for Africa transpire, neglecting several potential socio-economic impacts.

The importance of looking at biofuels with a holistic approach, considering all impacts on environmental, social and economic aspects and prioritizing cascade uses of biomass seem to be a shared concern among international organizations, but few actually proceed with this multidimensional analysis.




The European Commission's Joint Research Center research also seems to be characterized

by an impartial and evidence-based assessment of the sustainable bioenergy resource base (more than IEA and IRENA). The IISD has launched the GSI, a very informative initiative on energy subsidies that aims to highlight how these subsidies (including mandates and all market distortive interventions), including fossil fuel and biofuel subsidies, alter the state of play of global markets. Their

information is always complete and quite impartial. CIFOR can be considered an impartial information broker especially for information related to forests and the use of solid biomass for bioenergy. The CIFOR’s team implemented investigation works worldwide, on the impacts (environmental, social and economics) of biofuel production.

The SEI is also worth to be mentioned as they developed a long history of science-based analysis about impacts of bioenergy on natural resources such as water. Government sources are usually driven by political drivers, rather than an evidence and

research based approach and have to be approached with caution, although they can be very useful in specific precise areas. It is interesting to monitor debates within the Global Bioenergy Partnership, a high level governmental forum dealing with sustainable bioenergy development, composed by those governments interested in bioenergy. Also within this forum there was consensus that environmental, social and economic aspects are equally important pillars of bioenergy sustainability.

The work of GIZ, for example, is focused on development opportunities for the poorest that could derive from bioenergy. GIZ did a lot of very well recognized work on bioenergy for energy access, often in collaboration with other key NGOs. For example the work done with Practical Action aimed at measuring energy access and security is worth mentioning. Practical Action also worked extensively on biofuels and bioenergy for sustainable

development, for example through the PISCES project that brought evidence-based and field research to the international scene (recently on Jatropha). Positions of NGOs (Non-Governmental Organizations) can vary as they comprise multitude of organizations operating at different levels, scales and with different thematic or geographic focus. Several issues compete as the main concern in the biofuels debate among NGOs. In

general, international development focused NGOs, due to their pro poor advocacy, have focused on collecting data on negative implications of biofuels and on warnings on their potential negative impacts. Non-governmental coalitions have been particularly active in collecting data on large scale large acquisitions (i.e. GRAIN) which has subsequently provided the only existing global database on the phenomena used subsequently by the

Land Matrix Project as well as by World Bank as basis for their analysis of the phenomena. At the same time, there is also a plethora of environmental and bioenergy focused NGOs which seek to implement and test local level applications of bioenergy (i.e. TATEDO in Tanzania). Other NGOs, including ActionAid and Oxfam, have developed a position against growth of liquid biofuels on land that in their opinion could be used for food crops and against

promotion of liquid biofuels through subsidies. WWF doesn’t necessarily share this opinion, as according to them, the use of biofuels cannot be good or bad a priori. It is worth adding that IIED, a non for profit institution, has become the global reference point regarding socio-economic impacts of bioenergy, for example on land tenure and contract arrangements regarding FDI in agriculture and biofuels.

Pangea is an interesting relatively new association. It comprises mainly private companies active on bioenergy and biofuels at various level of the supply chain. It is aimed at promoting sustainable African bioenergy investments, and an enabling environment. Their work aims at




highlighting how biofuels can provide important energy services to African communities. It

was not possible to have a good insight about the reliability of the information provided by this association, but their work is highly relevant as it would help to bring additional evidence about good examples implemented by the private sector to build upon.




ANNEX 2: HIGHLIGHTS - AFRICA BIOENERGY POLICY FRAMEWORK

The Africa Bioenergy Policy Framework and Guidelines provide principles and guidelines for

RECs and African Union member states to guide policies and regulations that promote a viable sustainable bioenergy sector. It integrates previous efforts by NEPAD, UN and different RECs on bioenergy. For reasons of policy coherence and harmonisation at regional and continental level, the African Union initiated a comprehensive consultative process to define an Africa Bioenergy Framework that fosters the development of modern and sustainable bioenergy sector in Africa. Africa Bioenergy Policy Framework and Guidelines was adopted

by the CEMA (Conference of Energy Minister of Africa) in November 2012 in Addis Ababa (Ethiopia).

Objectives of the Pan African policy framework

The adoption of a common policy framework was urgently needed to create a sustainable bioenergy sector, as changes in land use and crop production affect directly the availability and price of food, especially for the rural poor. The food versus energy problem is also an issue in terms of land tenure system prompting the need to strengthen the rights of indigenous populations and smallholders against the increasing interest of the local elite, foreign countries and multinational firms. The social and environmental consequences such as the

loss of access to key ressources, depletion of biodiversity, water, soil fertility and landscape have not yet been fully assessed. Overall, Africa is yet to benefit from the booming bioenergy market. Against this background, a Policy Framework should enable the adoption of sustainable regulations and guidelines to enhance food security, rural development, poverty alleviation, land rights and tenure, environmental protection, social equity and wellbeing, cultural

heritage and macro-economic impacts. With reference to the above, and for reasons of policy coherence and harmonisation at regional and continental level, the AU initiated a comprehensive consultative process to define an Africa Bioenergy Framework that would foster the development of modern and sustainable bioenergy sector in Africa.

Justifications for a Pan African Approach

Bioenergy production, trade and use transcend national boundaries because of its socioeconomic and environmental implications. Bioenergy policies become ineffective when they are not broadly supported and coherent at regional level. The lack of similar measures in

one country or region can annihilate efforts taken in another. As a result of the absence of proper and coordinated regulatory frameworks, short-term gains are often sought in place of long term sustainability goals. RECs can take lead in harmonising policies that facilitate the development of a viable modern bioenergy sector. An inclusive African bioenergy framework is also justified on the grounds that bioenergy has a great potential to contribute to African cross-border energy trade. A harmonised approach

can lead to the development of shared and agreed-upon standards, codes, behaviours, etc. for a common bioenergy market. Africa needs to modernise its bioenergy sector due to a number of reasons, including: • The predominance of (traditional) biomass accounts for the bulk of energy consumption

for households, as well as an important share of the total final energy consumption. It is characterised by low efficiency along the entire value chain and substantial gains can

therefore be realised by modernising existing technologies and behaviours.

• Bioenergy has gained importance as a modern source of energy particularly for transport. As a result, there is a need for a more coherent policy, as well as the development of necessary regulations to mitigate negative effects of bioenergy production.




• The global trend is to develop and strengthen institutions in order to manage the impacts

of bioenergy on food production, poverty and the environment. Institutions to manage bioenergy developments either do not exist or are not strong in Africa.

• In spite of many national programmes in Africa, achievements are still far and few. There is a need to develop complementary national sustainable bioenergy policies and strategies, as well as regulatory frameworks based on Africa’s collective vision, which is consistent with NEPAD, the MDGs and global conventions.

Following guiding principles to make the bioenergy sector promotion more coherent with

other sectoral and global processes are proposed by the Africa Union:

• Embedding bioenergy development within poverty reduction policies and strategies, as well as within the ambit of the MDGs.

• Integrating bioenergy into energy mix strategies and national development strategies that improve energy access, particularly rural electrification.

• Integrating policies, measures and actions (for example, standards) with regional initiatives so as to achieve economies of scale, as well as preventing that good measures in one country be compromised by the lack of similar supporting policies in surrounding countries.

• Develop structured cooperation with industrialised countries to benefit from knowledge,

available research and technology transfer, and facilitate South-South collaboration.

• Adapt sustainability criteria, MRC process (measurement, reporting and validation) and certification methodologies adopted elsewhere or as proposed at the international level.

The formulation process of a sustainable bioenergy policy framework

The formulation of a sustainable bioenergy policy framework requires the consideration of a

number of issues, including (i) economic, social, environmental, political and cultural dynamics; (ii) civil society organisations and institutional coordination; (iii) sub-regional and global cooperation on energy trade and investment; and (iv) development finance, stakeholders participation as well as technical issues such as sound methodologies, R&D and availability of reliable data. The process of ensuring that there is a strong political commitment and capacity to enforce regulatory measures is also important. Key policy

options to be considered include: • A well-articulated bioenergy policy has huge multiplier effects and cross-sectoral impacts

that positively influence agricultural and industrial growth, and trade development. Therefore, a national bioenergy policy cannot, and should not, stand alone but be integrated into national energy development, industrialisation, agriculture and transport sector strategies – as well as link bioenergy development to national macroeconomic

development strategies.

• Regulations that promote the satisfaction of “own needs first”, and make export possible only in case of excess can be encouraged as it is highly preferable that Africa do not provide only feedstock for exports, but also address the need of its own population and industry.

• It is essential that the bioenergy and food production should be made mutually

supportive. A “nexus” approach is recommended as water, energy and food availability are interconnected; actions in one sector may either help or harm the other sectors.

• Africa should be strategic in selecting its bioenergy feedstock options. Feedstock that enrich soils and do not require substantial water needs to grow can be promoted. Developing second-generation biofuels such as ligno-cellulosic and algae-based

feedstock should be given attention.




• The development of bioenergy projects that encourage the participation of the local

communities and empowering rural inhabitants, especially women should be promoted

• Governments and RECs should take lead in promoting bioenergy by setting up regulatory frameworks at regional levels. This is necessary to assess major impacts such as land-use change, biodiversity and greenhouse gas emissions, water, soil fertility, etc. This type of impact assessment implies a regional approach, as the ecosystems encompass and have cross-border impacts.

• A framework should include comprehensive bioenergy legislation such as (i) product labelling and control, (ii) certification schemes, and (iii) fiscal policy and taxation.

Bioenergy governance

The following guidelines are proposed for the African bioenergy governance.

(i) National and local governments must play a leadership role in initiating and formulating policies and legislation, and the promotion of production, investment and trade in bioenergy products. The key functions of government are: � Policy making: Develop a sustainable bioenergy policy as an integral part of the

national development strategy with adequate legal provisions for the production,

distribution, use and trade in bioenergy. � Regulatory: Set environmental standards, create attractive investment climate and

provide supportive monetary, fiscal and pricing policies. � Developing capacity and convening: Strategically choose best feedstock and

technology options, and conclude economically, socially and environmentally acceptable deals. In addition, create forums and mobilise various government

departments, the private sector, civil society, and the academic community to rally behind the bioenergy agenda.

� Inter-ministerial coordination: Involve all ministries that may be linked with the promotion, production and trade of bioenergy to strengthen complementarities and avoid rivalries.

� Monitoring and enforcement of the regulations and laws.

(ii) The private sector is ultimately the engine of bioenergy development, but requires enabling policies presented above.

(iii) Civil Society Organisations serve as watchdogs for government and business actions, and advocate for bioenergy at the national and community levels. The active participation of the civil society in the promotion and capacity building of bioenergy is certainly crucial to promote sustainable development of bioenergy.

Instruments for implementing bioenergy policies

Regulation and enforcement

A robust legal and institutional framework is necessary to scale up the sustainable use of

bioenergy as a key component of the energy strategies. The main purpose of regulations is to reduce fossil fuel dependence, promote growth and the rural livelihoods without affecting food security. Bioenergy targets and timetables

Guidelines should be enacted by the RECs and set targets on the share and mandatory use of sustainable and certified bioenergy in the household, transport, industry and power sectors. However, laws should be passed to protect land considered essential for food production, or for the biodiversity.

Guidelines and standards




The International Sustainability and Carbon Certification System developed the first

internationally recognised certification system for biomass. More recently, the work of FAO/GBEP can serve as model. Awareness

In most African countries, resources, such as agro-processing residues and urban waste, are not recognised as sources of energy, but rather burned in open fields as a way to avoid disposal costs. The small amount of bioenergy that is mobilised or available at household level is wasted through inefficient consumption devices such as the traditional kilns and inadequate behaviour.

Mechanism for engaging stakeholders

• Strengthen the capacity of private sector to source, integrate, install, operate, maintain

and service bioenergy systems, as well as provide business training and incubation support.

• Train policymakers on policies and programmes for accelerating adoption of bioenergy by small landholders and encourage them in cooperation with other sectors (food and trade) promoting better coherence across governments and policies.

• Train the finance and banking sectors (senior management/loan officers) on the risks/rewards of financing bioenergy projects, through pilot projects and programmes that minimise initial investment risks.

• Provide training and technical assistance on standards for bioenergy development, drawing on international efforts in this area.

• Provide training to governments and the private sector on the official and voluntary carbon markets.

• Conduct communications and outreach on bioenergy benefits/challenges, consumer awareness campaigns.

Removal of financial barriers

• Engage local financial institutions and micro-credit agencies on bioenergy, and conduct

banker training workshops to increase awareness of bioenergy risks/rewards by investment officers and managers.

• Establish risk mitigation facilities to spur local financing for bioenergy projects, particularly

at the small-scale level.

• Foster development of “bankable” project portfolios in bioenergy; offer assistance to entrepreneurs in areas such as R&D, seed capital funding, pre-feasibility and feasibility assistance, reimbursable grants, etc.

• Explore opportunities for diaspora finance and innovative financial schemes such as the carbon finance at the national/regional levels.

• Engage the private sector in project identification and development and understand its issues/requirements with respect to financing projects in developing countries.

Policy incentives that contribute to unlock the potentials

• Provide pragmatic instruments to promote rural development, gender equity, and

sustainable agriculture.

• Establish of national/regional targets and timetables for bioenergy including small farmers.

• Develop and implement regulatory frameworks to accelerate bioenergy development.

• Link bioenergy to agricultural and industrial priorities.




• Establish lead organisations in each national government to coordinate bioenergy activi-

ties across the interested ministries (e.g., agriculture, energy, rural development, environment, etc.).

• Establish guiding principles for bioenergy-based land use development.

• Foster a regional market for sustainable bioenergy, to include cross-border trade.

• Engage the private sector in policy/regulatory development, including producer organizations, SMEs, cooperatives, etc.

• Monitor and evaluate the impacts and performance of bioenergy activities at the national and regional levels.

Developing monitoring systems

Monitoring systems should be able to detect measure and register all relevant changes and provide updated information to policymakers and other stakeholders. The agricultural and

forestry services, as well as the electricity sector institutions will be called upon to provide updated information. In addition, ministries or authorities can regularly contract expert opinions or studies to provide and review data, and this can be done by:

• Gathering and analysing statistics data that are directly fed into the national energy statistics or the existing Energy Information Systems in several countries.

• Measuring and analysing the impacts of national bioenergy policies (achievement of tar-gets, budget control and impact assessment).

• Assessing achievements of government targets. • Analysing sustainability of land use, GHG emissions, biodiversity and other socioeconomic

effects. • Development of certification scheme to guarantee sustainability and traceability.

• Tracking system for capturing transfers of ownerships and cancellations. • Recording legal cases (frauds, penalties, etc.).

Relevant data to be monitored

The monitoring of the following data can be of great importance for the purpose of ensuring that the criteria are applied and that corrective measures can be taken timorously:

• Increased access to energy and impact for the poor • Land prices, • Food prices, • Property relations (land tenure), • The availability of food, • Relocation of food production and cattle breeding,

• Deforestation, • Change in the type of vegetation.

Implementation strategies

Africa is home to substantial bioenergy resources and potentials, though the resources are

mostly under developed (agri-processing and household wastes) or poorly used (inefficient energy conversion process and poor cooking devices). There is urgent need to formulate policies that can mobilise resources and stakeholders to make a proper use of the resources to the benefit of humans and the ecosystems. The following recommendations at country level are proposed:

(i) Assess national biomass resources through the:

• Adoption of coherent biomass assessment approach; • Application of sustainability criteria; and • Consideration of cross-country effects;

(ii) Formulate national bioenergy strategies and biomass action plans considering:




• Integration of the national bioenergy strategy into the country overall development

strategy; • Setting of targets and priorities; • Status and quality of national biomass action plans (BAPs); and • Attractiveness and consistency of national policy frameworks and support schemes

for bioenergy promotion;

(iii) Implement national bioenergy policies taking into consideration:

• Policy impact on actual market and industry development; foods, gender, environment, biodiversity

• Cost-effectiveness of bioenergy strategy and support schemes; • Efficiency of administrative procedures; • Information and integration of stakeholders; and • Quality standards and qualification of key actors;

(iv) Monitor national bioenergy markets and policies by applying: • Effective approach to market monitoring; • Effective approach to policy performance measurement; and • Effective approach to sustainability guarantee with a proper reward and penalty

system.




ANNEX 3: EXISTING CORPORATE RESPONSIBILITIES AND

CERTIFICATION SCHEMES

It is important that biofuels shall be produced in an environmentally responsible way, under safe working conditions through training and education, without violating human rights, labour rights or land rights and so on. Therefore it is useful to have these sustainability schemes in place; however the rules should be easy to apply and companies should be easily controllable without too much paper work and costs involved; in other words these schemes must be pragmatic and the certification process should not become a questionable big

business like partly happened in the forestry sector already.

Biofuels - sustainability schemes

In order to receive government support or count towards mandatory national renewable energy targets, biofuels used in the EU (whether locally produced or imported) have to comply with sustainability criteria. These criteria aim at preventing the conversion of areas of high biodiversity and high carbon stock for the production of raw materials for biofuels. The

entire biofuels' production and supply chain has to be sustainable. To this end, the sustainability of biofuels needs to be checked by Member States or through voluntary schemes which have been approved by the EC.

As the EC does not run these schemes itself, it opened up the opportunity for private companies and for institutions to play this part. Since July 2011, the EC has recognised the below mentioned 12 voluntary schemes that apply directly in 27 EU Member States; the

sustainability schemes include the Assessment report and the Commission Implementing Decision.

1) ISCC a German (government financed) scheme covering all types of biofuels; ISCC is a global initiative developed in a multi-stakeholder approach with a large number of companies from the entire supply chain. Furthermore research organizations, NGOs like WWF and industry associations from different countries are involved. ISCC is governed

by an association with currently 55 members. ISCC is covering all types of biomass and biofuels and has a global scope. The scheme has received recognition for all criteria of the Renewable Energy Directive. The development of the scheme has been supported by the German Federal Ministry of Food, Agriculture and Consumer Protection via the Agency for Renewable Resources (FNR).

2) Bonsucro EU, a roundtable initiative for sugarcane based biofuels, focuses on Brazil; Bonsucro EU is a special version of the Bonsucro scheme, specifically designed to meet the mandatory requirements of the Renewable Energy Directive. Bonsucro is a roundtable initiative, which has a large number of companies from the different parts of the supply chain involved. Furthermore, the "World Wide Fund For Nature" (WWF) is a member. Bonsucro EU is a standard for sugarcane based ethanol with a strong focus on

Brazilian sugarcane production. The scheme has received recognition for all criteria of the Renewable Energy Directive, except for the provision on highly biodiverse grasslands.

3) RTRS EU RED, a roundtable initiative for soy based biofuels, focuses on Argentina and Brazil; RTRS EU RED is a special version of the RTRS scheme, specifically designed to meet the requirements of the Renewable Energy Directive. RTRS is a roundtable initiative,

which has a large number of companies from the different parts of the supply chain involved. Furthermore, a number of representatives from the civil society, including environmental NGO's are its members. Among these members are: "Conservation International", "The Nature Conservancy" and "World Wide Fund For Nature" (WWF). RTRS EU RED is a standard for soy based diesel with a strong focus on Argentinean and Brazilian soy production. The scheme has received recognition for all criteria of the

Renewable Energy Directive. 4) RSB EU RED, a roundtable initiative covering all types of biofuels; RSB EU RED is a special

version of the Roundtable for Sustainable Biofuels scheme, specifically designed to meet the mandatory requirements of the Renewable Energy Directive. RSB is a




roundtable initiative, which has a large number of companies from the different parts of

the supply chain involved. Furthermore, it has members from the civil society including environmental NGO's. Among these members are: "Conservation International", "The International Union for Conservation of Nature", (IUCN), "United Nations Foundation", "Wetlands International" and "World Wide Fund For Nature" (WWF). RSB EU RED is covering all types of biofuels and has a global scope. The scheme has received recognition for all criteria of the Renewable Energy Directive.

5) 2BSvs, a French industry scheme covering all types of biofuels; 2BSvs is a French initiative, developed by a consortium of different companies led by Bureau Veritas. 2BSvs is covering all types of biofuels and has a global scope. The scheme has received recognition for all criteria of the Renewable Energy Directive, except for the provision on highly biodiverse grasslands.

6) RSBA, an industry scheme for Abengoa covering their supply chain); RBSA is an industry

initiative, developed by Abengoa. RBSA is covering ethanol and has a global scope. It is characterised by a mandatory requirement to calculate actual greenhouse gas values as supposed to also allow default values, with a view to drive better greenhouse gas performance in the supply chain. The scheme has received recognition for all criteria of the Renewable Energy Directive.

7) Greenergy, an industry scheme for Greenergy covering sugar cane ethanol from Brazil. The standard is an industry initiative, developed by Greenergy. The standard is applied to sugarcane based ethanol produced in Brazil. The scheme has received recognition for all criteria of the Renewable Energy Directive, except for the provision on highly biodiverse grasslands.

8) Ensus voluntary scheme under RED for Ensus bioethanol production

9) Red Tractor, a Red Tractor Farm Assurance Combinable Crops & Sugar Beet Scheme 10) SQC, a Scottish Quality Farm Assured Combinable Crops (SQC) scheme 11) Red Cert 12) NTA 8080

All 12 certification schemes meet the EU requirements; however they differ and for example ISCC covers also social sustainability principles. ISCC takes the following 6 principles into

consideration:

1) Biomass shall not be produced on land with high biodiversity value (HCV) or high carbon stock (according to Article 17(3), (4) and (5) of the Directive 2009/28/EC. HCV areas shall be protected.

2) Biomass shall be produced in an environmentally responsible way. This includes the protection of soil, water and air and the application of Good Agricultural Practices.

3) Safe working conditions through training and education, use of protective clothing and proper and timely assistance in the event of accidents.

4) Biomass production shall not violate human rights, labour rights or land rights. It shall promote responsible labour conditions and workers' health, safety and welfare and shall be based on responsible community relations.

5) Biomass production shall take place in compliance with all applicable regional and national laws and shall follow relevant international treaties.

6) Good management practices206.

Besides the 12 recognised certification schemes there are other initiatives like the Roundtable on Sustainable Palm Oil (www.rspo.org), the Roundtable on Sustainable Soy, as well as the Better Sugarcane Initiative (www.bettersugarcane.org). These initiatives also tend to improve

environmental and social standards of producers within the industry, often through creating voluntary codes of good practice.207

Among the international institutions, the following are worth mentioning:

206 www.iscc-system.org/en/ 207 OECD, Doornbosch R., Steenblik R.: Round Table on Sustainable Development. BIOFUELS: IS THE CURE WORSE THAN THE DISEASE? Paris, 11-12 September 2007, p 39




IFC Performance Standard on Social and Environmental Sustainability. The standard deals

with

a) Assessment and Management of Environmental and Social Risks and Impacts b) Labour and Working Conditions c) Resource Efficiency and Pollution Prevention d) Community Health, Safety, and Security e) Land Acquisition and Involuntary Resettlement; this chapter follows the typical World

Bank approach that nobody should be worse off after the project then before the project; the objectives are: a) to avoid, and when avoidance is not possible, minimize displacement by exploring alternative project designs; b) to avoid forced eviction; c) to anticipate and avoid, or where avoidance is not possible, minimize adverse social and economic impacts from land acquisition or restrictions on land use by (i) providing compensation for loss of assets at replacement cost and (ii) ensuring that

resettlement activities are implemented with appropriate disclosure of information, consultation, and the informed participation of those affected; d) to improve, or restore, the livelihoods and standards of living of displaced persons and e) to improve living conditions among physically displaced persons through the provision of adequate housing with security of tenure5 at resettlement sites.

f) Biodiversity Conservation and Sustainable Management of Living Natural Resources g) Indigenous Peoples h) Cultural Heritage.

But there are some more guidelines and principles and most likely the number will still increase.

Voluntary Guidelines on the Responsible Governance of Tenure of Land, Fisheries and

Forests in the Context of National Food Security Principles for Responsible Agricultural Investment that Respects Rights, Livelihoods and Resources

a) Respecting land and resource rights. Existing rights to land and associated natural resources are recognized and respected.

b) Ensuring food security. Investments do not jeopardize food security but strengthen it.

c) Ensuring transparency, good governance, and a proper enabling environment. Processes for acquiring land and other resources and then making associated investments are transparent and monitored, ensuring the accountability of all stakeholders within a proper legal, regulatory, and business environment.

d) Consultation and participation. All those materially affected are consulted, and the agreements from consultations are recorded and enforced.

e) Responsible agro-investing. Investors ensure that projects respect the rule of law, reflect industry best practice, are economically viable, and result in durable shared value.

f) Social sustainability. Investments generate desirable social and distributional impacts and do not increase vulnerability.

g) Environmental sustainability. Environmental impacts of a project are quantified and

measures are taken to encourage sustainable resource use while minimizing and mitigating the risk and magnitude of negative impacts208.

The Principles for Responsible Investment

PRI - Principles for Responsible Investment is an investor initiative in partnership with UNEP

Finance Initiative and the UN Global Compact. The signatory institutional investors have a duty to act in the best long-term interests of the beneficiaries. In this fiduciary role, investors believe that environmental, social, and corporate governance (ESG) issues can affect the

208 K. Deininger, D. Byerlee et al “Rising Global Interest in Farmland. Can it Yield Sustainable and Equitable Benefits?”,

The World Bank (2011), p XXVII & FAO: Principles for Responsible Agricultural Investment that Respects Rights, Livelihoods and Resources; 2010; p 2




performance of investment portfolios (to varying degrees across companies, sectors, regions,

asset classes and through time). Responsible investors also recognise that applying these Principles may better align investors with broader objectives of society. Therefore, where consistent with these fiduciary responsibilities, they commit to the following:

a) Responsible investors will incorporate ESG issues into investment analysis and decision-making processes.

b) Responsible investors will be active owners and incorporate ESG issues into our

ownership policies and practices. c) Responsible investors will seek appropriate disclosure on ESG issues by the entities in

which we invest. d) Responsible investors will promote acceptance and implementation of the Principles

within the investment industry. e) Responsible investors will work together to enhance our effectiveness in implementing

the Principles. f) Responsible investors will report on their activities and progress towards implementing

the Principles209.

The principles remain sometimes unclear, for example when defining the “beneficiaries” as beneficiaries could be the shareholder of a biofuel company or the local population;

furthermore there are “no legal or regulatory sanctions associated with the Principles” (Principles of Responsible Investments by UNEP Finance Initiative).

Additional responsibilities of the private sector on a voluntarily basis

All certification schemes approved by the EU tend to overlook production processes and trade flows and despite good intentions there is always room for fraud; however in principle

the EU schemes like ISCC cover all topics and can lead to positive outcomes if taken seriously.

Beside the EU certification scheme it is very essential to follow IFC requirements too as most international investors try to have IFC on board to safeguard their investments in the sense that such an investment is more under international observation and less vulnerable by local policy changes. The IFC has its own standard and investors have to follow it throughout the

life of an investment by IFC.

Gender is just mentioned in the way the women’s role in the management and use of these natural resources should be specially considered.

The World Trade Organization (WTO) is considered by some experts as acting against social responsibility by not disallowing certification and labelling schemes for sustainable products; the discussion between free trade and social responsibility started already in November 2008

when eight countries – Argentina, Brazil, Colombia, Malawi, Mozambique, Sierra Leone, Indonesia and Malaysia – have written to the EU to protest at WTO against the "unjustifiably complex" sustainability rules! They argued that environmental criteria 'relating to land-use change will impinge disproportionately on developing countries'.

The magazine BusinessGreen continued that these 8 countries have been afraid that the EU

intends to ban the purchase of biofuels from energy crop plantations that are believed to harm the environment and lead to food shortages by displacing land used for food crops and contributing to rainforest deforestation. – This might be one of the reasons why some parties argue that the sustainability criteria are too strict whereas others say they are too interpretable.

Land tenure is a very relevant topic as most biofuel investments are linked to farming and,

therefore, require cooperation with farmers or more often rental or purchase agreements.

209 http://www.unpri.org/principles/ - RESPONSIBLE INVESTMENT IN FARMLAND: A CASE STUDY COMP ENDIUM (OCTOBER 2012)




It is interesting to note that the German Federal Ministry for Economic Cooperation and

Development (BMZ) writes in an actual strategy paper from 2012: “More important than the behaviour of investors is the role of the countries where rental or purchase agreements are signed. The governments of these countries have to undertake responsibility to prevent irresponsible land grabbing; these governments should rather guide investments in their country in a way that enables win-win-situations.(...) Especially countries with weak institutions, poor governance and widespread corruption are affected. If a poor land tenure policy is

caused by weak institutions but not by the political will of the government, then development cooperation could assist significantly (...) for example by land registration.”

Furthermore the ministry recommends respecting existing but also traditional rights and rights recognized by customs and joint land and water rights. This might be of importance to developing countries which often have no land registration and a lot of land in joint use; when just pursuing the “official” rights, investors might get confronted rapidly with traditional

ways of living and doing business in Africa or other countries on other continents.

To make land tenure issues even more complicated there are two opposite opinions: a) land registration helps smallholders to register and therefore to protect their property and b) land registration can just be done with proper documents and without these papers (property title, cadastral map, special user rights etcetera) – for example because of traditional hand-over

from father to son - the informally existing property rights will get definitely lost.

However it is in the investors own interest to cooperate with the local population in all questions such as job creation, social institutions like schools and hospitals, resettlement and all kind of land tenure as a respectful attitude towards the local population and to avoid conflicts such as land occupation, road blockade and strikes.

Another key aspect is speculation which is often used together with land grabbing. By

definition speculation in agricultural land means that land is purchased without any further activities to increase the value of the purchased land; i.e. no soil preparation, no planting, no grazing etcetera. Land speculation should be made less attractive and a simple solution would be to collect taxes on land which is not in use. Speculators who invest in agricultural land without further activities – because they just wait for windfall-profits when selling it again - would have to pay a tax on fallow land.

Investments in agricultural land mean that the investor purchases (or rents) agricultural land and that the investor set activities to increase the value of this land; this could be to start a biofuel feedstock production or just setting up pastures to raise cattles.

However large agricultural land acquisition in developing countries - regardless if speculative or not - will not cease just because biofuels will not be supported that heavily by the EU any longer.

While land deals give rise to concerns they also provide opportunities. Investors may introduce new technologies and skills, expedite the development of contextualised production systems with higher productivity, and spark innovation. Innovative business models can offer different approaches to raising agricultural production. Industry codes for responsible investment are welcome, but they are not sufficient to ensure compliance.

Transparency and appropriate governance remain key.

Land use change is always taking place if land will be converted from food crop production to biofuels cultivation. One could say that there is no place on earth which is not cultivated by men if these places could be used for pastoralism or agriculture. Also here it is at least partly the responsibility of the investor to find solutions which are acceptable for all stakeholders; and to say it with a slogan: Good policy does not displace food farming; on the

contrary it strongly supports peasants’ food production.

Transparency might be a keyword for investments in developing countries. The more transparent and open all negotiations are, the better the result will be for all stakeholders. Transparency should not be limited to talks, also environmental impact analyses and other documents should be published to establish trust. Another keyword might be collaboration;




the World Bank recognizes that large-scale agricultural investment poses significant

challenges that can be addressed successfully only if stakeholders collaborate effectively.

The responsibility of the private sector is defined very broadly. One might say that responsible private investors should follow the guidelines and principles and also respect laws even if they are not properly enforced.




ANNEX 4: Senegal Field Visit 3rd to 14th December 2012, Demba

Diop and Maria Blanco

Acronymes

AAPB Association Africaine pour la Promotion des Biocarburants

ANER Agence Nationale pour les Energies Renouvelables

ANIDA Agence Nationale d’Insertion et de Développement Agricole

APIX Agence de Promotion des Investissements et des Exportations

ASER Agence Sénégalaise d’Electrification Rurale

BAD Banque Africaine de Développement

BAME Bureau d'Analyses Macro-Economiques

CICODEV The Alliance for Consumer Citizenship/Alliance Citoyenneté et Consommateurs

CNCR Conseil National de Concertation et de Coopération des Ruraux

CR Communauté Rural

CoR Conseil Rural

CSA Commissariat à la Sécurité Alimentaire

CSS Compagnie Sucrière de Sénégal (Senegalese Sugar Company)

ECOWAS Economic Community of West African States

FPTF Fédération des Producteurs de Tabanani du département de Foundiougne

GOANA Grande Offensive Agricole pour la Nourriture et l’Abondance (Great Push Forward for Agriculture, Food and Abundance)

ISRA Institute Sénégalais de Recherches Agricoles (Senegalese Agricultural Research Institute)

LOASP Loi d’orientation agro-sylvo-pastorale (Agriculture, Forestry and Livestock Act)

LPDSE Lettre de Politique et de Développement du Secteur de l’Energie

NEPAD New Partnership for Africa's Development (African Union (AU))

PAM Programme Alimentaire Mondial (WFP)

PERACOD Projet d’électrification rurale et d’accès aux combustibles domestiques

PNUD Programme des Nations Unies pour le Développement

PROGEDE Programme de Gestion Durable et Participative des Energies Traditionnelles et de Substitution/Sustainable and Participatory Energy Management Programme

REVA Retour Vers l’Agriculture (Return to Agriculture)

ROPPA Réseau des organisations paysannes et de producteurs de l’Afrique de l’Ouest

SENELEC Société Nacional d’Electricité

SOCAS Société de conserves alimentaires du Sénégal (Canned Food Company of Senegal)

SODEFITEX Société de Développement des Fibres Textiles (Textile Fiber Development Company)

SOPREEF Société pour la Promotion de l’Accès à l’Energie et à l’Eau dans le Département de Foundiougne

UEMOA Union Économique et Monétaire Ouest Africain (Economic and Monetary Union of West Africa)




1. Country Overview 1.1. Country profile

With 196,722 sq km of land (of which 4,192 sq km of water bodies), Senegal borders the North Atlantic Ocean between Guinea Bissau and Mauritania. Senegal has a population of roughly 13 million (July 2010), with about half of the population living below the poverty line. The climate is dominated by a dry tropical climate with a rainy season (May to November). The country’s principal natural resources are fish, phosphates, and iron ore. Just over 12% of the land is arable and 1,200 km2 are irrigated, with 0.24% of land devoted to permanent crops. Its total renewable water resources are 39.4 km3 (1987). Agriculture products include peanuts, millet, maize, sorghum, rice, cotton, tomatoes, green vegetables, cattle, poultry, pigs, and a sizeable fish industry. Major exports include fish, groundnuts (peanuts), petroleum products, phosphates, and cotton; imports include food and beverages, capital goods, and fuels. Key environmental challenges include poaching, deforestation, overgrazing, soil erosion, desertification, and overfishing. Senegal was beset by an energy crisis that caused widespread blackouts between 2006 and 2011. 1.2. Senegal Economy The World Bank210 reports that the Senegal’s economy is slowly recovering from the economic slowdown of the past few years, with real GDP growth estimated to have grown to four per cent on average in 2010 and 2011. Driven by momentum in secondary and tertiary sectors, the Senegalese economy pursued its expansion in 2011, but at a slower pace than initially expected due to poor electricity supply, higher food and fuel prices, and a poor rainy season. A gradual recovery in the construction sector, fuelled by greater road infrastructure spending, and momentum in the cement sector supported growth in the secondary sector while dynamism in the telecommunication, transport, and financial sectors supported the growth in tertiary sector. Inflation rose in early 2011, reflecting increasing international food and petroleum prices, but this trend reversed in the second half of the year. Year-on-year inflation has returned to below three per cent. 1.3. Agricultural policy The agricultural policy in Senegal relies mainly on the Guidance Law for Agriculture, Forestry and Livestock (LOASP), adopted in 2004. This Guidance Law defines the strategy for the development of

210 Senegal Country report highlights




the agricultural sector and the reduction of poverty for a twenty year period. Among its specific objectives, we distinguish: definition of a legal status for farm exploitations as well as for land assets security and water control, diversification of production, fostering of agricultural exports, promotion of private investment in agriculture and rural areas, capacity-building in rural areas. Recent programs to boost agricultural production include the Plan REVA (Return to Agriculture, 2006) and the GOANA (Great Agricultural Offensive for Food and Abundance, 2008). Agricultural area amounts 3.8 Mha (20% of total area) but only 12% of the total area is cultivated (2.5 Mha). With just 5 per cent of its land under irrigation, Senegalese agriculture is mainly rainfed and seasonal. Whereas only 12% of the land area is cultivated, the agricultural sector employed about 75% of the workforce in 2008. Land tenure is determined by both legal and customary systems. Smallholder production predominates and farmers usually combine cash crops (groundnuts and cotton) and subsistence crops (millet, sorghum, maize, and rice). Senegal remains a net food importer. It is the second importer of rice in Africa (after Nigeria) and rarely meets self-sufficiency on millet and sorghum (the country’s staple crops). The main export crops are groundnuts and cotton. Groundnut production uses about 40% of the cultivated land and occupies around one million farmers. Recent trends show a decrease in groundnut and cotton production and an increase in the production of fruits and vegetables (green beans, melons, cherry potato and mango). In recent years, export oriented large-scale horticulture projects are being undertaken, mainly in the coastal zone and along the Senegal River valley. Main livestock sectors are cattle, and sheep and goats and poultry. Despite significant livestock population, Senegal remains a net importer of meat, especially sheep. Poultry production has increased significantly in recent years and this subsector has great potential for further growth. 1.4. Energy policy The energy policy is outlined in three “policy letters” (LPDSE, Lettre de Politique et de Développement du Secteur de l’Energie), adopted in 1997, 2003 and 2008. The main objectives of the LPDSE 2008 are: secure energy supplies to households and industries; improve the access to energy services and reduce the vulnerability of the country from external factors. The new energy strategy is centred on diversification of energy sources and involves the development and use of renewable energies such as solar, wind, biofuel and hydroelectricity. The energy sector relies heavily on oil imports to meet Senegal’s energy needs. In recent years, oil price increases as well as rising energy demand have increased this dependence. For instance, the fuel bill rose from 185 billion CFA francs in 2000 to 384 billion CFA francs in 2006 and to 623 billion CFA francs in 2008 (Dia et al, 2009). 2. Bioenergy Policies, Programs and main feedstock s 2.1. The Biofuels National Program Since 2006, Senegal has adopted a national biofuels strategy that is largely centred on the development of Jatropha for biodiesel and sugarcane for ethanol. Within the plan REVA, the Special Biofuels Program aims at achieving biodiesel self-sufficiency, creating jobs and reducing poverty. Jatropha has been chosen for biofuel production because it is a non-food crop well suited to the Sahelian environment. Moreover, pure Jatropha oil can be directly used as fuel. The objective of the Jatropha program is to attain 1.19 billion litres of crude Jatropha oil in 2012, equivalent to 1.134 billion litres of refined oil, which can be used as biodiesel for vehicles as well as to generate power.




The program foresees that each rural community allocates 1,000 ha of land to Jatropha plantation, giving a total of 321,000 ha. Yield is estimated at 10 tonnes of grains per hectare (plant maturity). 2.2. Overview of the institutional actors On a government level, there has been quite some instability with regards to the biofuels sector. It was first allocated to the ministry of agriculture in 2006, then a ministry of Biofuel was erected in (2007) for a few month before the responsibility returned to the Ministry of agriculture again (2008). In 2010, the Ministry of Renewable Energy was created with a department in charge of biofuels and nowadays it is the Ministry of Energy who is in charge since the 2012 election. The Ministry of energy is creating an Agency for Renewable Energy that will centralize all renewable energies activities including biofuels. Direction des biocarburants This department will be merged within the Renewable Energy Agency of Senegal (ANER) and is charge of the developing the liquid biofuels policies of Senegal. The department crafted a liquid biofuel (biocarburant) orientation law signed by the Government on the 15 December 2010. The law is based on the needs to reduce the country dependence on imported petroleum coal products. Because of its potential for rural and agricultural development, job creation and environmental impacts, the government of Senegal has elaborated an ambitious liquid biofuels programme that promotes mainly Jatropha and sugar cane. Several applications decrees are envisaged to both stimulate and regulate the development of biofuels: food security, water use issue, land use, environmental and social protection. The tax incentives include 5 years grace for production that target local market and exoneration from import duties. Expert oriented project are only allowed if 50% of the aimed production will be used locally.

To date, none of the application decrees have been adopted and implemented. Institut Sénégalais de Recherche Agricole (ISRA)

ISRA is one the main pillar of the Senegalese policy on Jatropha development, assuring the coordination of the National Biofuel Program. The Government objective is to enable the production of 1.19 billion litres of biodiesel (321.000 ha) by 2012 in order to reduce the dependency on imported oil resources. The policy in based on the implication of the small scale farmers across the country. Each of the 321 rural districts of the country has been given the mandate to plant at least 1000 hectares. Within this national plan, ISRA (www.isra.sn) ensures the production of the Jatropha plants, mainly done in nurseries, targeting a total capacity of 1 billion plants and 1 million cuttings. Thanks to a scientific collaboration agreement between ISRA and CULTESA (Centre for Biotechnological Research, Tenerife, Spain), a laboratory for in vitro cultivation has been created to enhance the multiplication activity of Jatropha seeds. This laboratory receives financial support from the Spanish cooperation (Tenerife, Spain). After the multiplication process, the plants are distributed to the producers. Agence de Promotion des Investissements et des Exportations (APIX) The APIX (National agency for the promotion of investment and exports) aims at promoting Senegal as an investment destination. The APIX facilitates both national and foreign investment by (i) providing economic, business-related and technological information on a permanent basis, (ii) supporting investors throughout the investment chain, (iii) supporting investors for the formalities of registration and for obtaining the various administrative authorizations. Nine biofuel projects have been registered at the APIX between 2007 and 2010. Job creation from these projects was estimated at about 10000 jobs (most of them seasonal) and Jatropha plantations




were estimated to attain 90000 ha. Whereas no official information is available about the current situation of these projects, only two of them are confirmed to be operational. The PROGEDE

The PROGEDE (government Agency) stands for the Sustainable and Participatory Energy Management project and is funded by the World Bank (IDA $5.2 million), the Dutch Government (DGIS $8.8 million) and the Global Environmental Fund (GEF $4.7 million). Since 2003, the PROGEDE has worked with the population of the Region of Tambacounda to plant 60 km of Jatropha cursas together with a nursery of 200 hectares. The phase II of the project aims to develop a 10 hectares Jatropha plantation in each of the 506 villages that are linked to the PROGEDE biofuels program. In total there are an additional 5000 hectares of planted Jatropha in the region since 2007211. 3. Biofuels development: the current situation 3.1. Biofuel sectors Biodiesel from Jatropha The Special Biofuels Program started in 2006 is being implemented by the Department of biofuel of the Ministry of Energy and Mining (currently under restructuration). The Senegalese Institute for Agricultural Research is in charge of developing planting materials and its wide distribution to growers. The original set of objectives was to plant 321,000 ha of Jatropha bushes by 2012, providing 1,000 ha per rural community. This program would yield 3.2 million tonnes of seeds by 2012, netting 1.2 billion gallons of straight Jatropha oil, or 1.1 billion litres of refined oil that could be used as biodiesel. Senegal expected that Jatropha would contribute to a significant reduction in oil imports and make the country a net producer of energy. By December 2012, less than 15.000 hectares of Jatropha have been planted according to the Ministry of Energy (Direction des Biocarburants) meaning that the assigned targets and expected outcomes of the Senegalese biodiesel policy have not been met and that the government has not been successful in its attempt of convincing farmers to integrate massively Jatropha plants in their farming system. However, ISRA has now reached a consistent plant production capacity of 500 000 plants every 2 months in their nursery facility. The distribution of these plants to farmers is free of charge and may change the situation in the near future by generating more feedstock to the local industry of for export. ISRA recognize that most of the plants go to the local elite (religious leaders and politicians) as small farmers do not have the means to organize the transport of plants. Most small farmers are even not aware about the possibility of free planting materials. Local production of Jatropha seeds is still quite low. The harvested seeds are traditionally used for soap making. Most of the Jatropha plantations are concentrated in the so called groundnuts belt stretching across the region of Kaolack, Diourbel and Fatick. In the Factick region, a Jatropha growers association is reported with over 90 hectares of plantations In term of processing facilities, the company NEO SA, created by investors from Monaco (France), is currently building a 12.000 tones Jatropha oil facility extensible to 165.000 tonnes in the future. Another small processing facility co owned by the farmers’ association of Sokone is reported. The Sokone farmers’ association planted about 90 hectares of land. They sell their Jatropha seeds production at an agreed upon price of 100 FCFA (Euro 15 cents) per kg to the processing unit. It is reported that one of the cement factory (SOCOCIM) use Jatropha seeds to feed its kilns. No information was obtained about the quantities or the areal the planted with Jatropha bushes. The perception is that SOCOCIM is using Jatropha more for public relation and marketing purpose than a real strategy to switch to sustainable energy.

211 A Niane, acting coordinator of PROGEDE, December 2012




Little is known about the actual Jatropha coverage, yields, effective production and trade in Senegal. The involved private sector actors are reluctant to provide information on their production and sales. No meaningful information could be obtained from the Sokone processing plant or from the newly established NEO Factory in Gossas. Ethanol from molasses residues Meanwhile, ethanol production has been underway at the Senegalese Sugar Company (CSS) since 2008. The company produces approximately 35,000 tons of molasses that has been considered as waste for more than 2 decennia (the molasses, residues of the sugar processing, used to be dumped in artificial lake). Nowadays, the molasses is transformed into 2,500 m3 of industrial ethanol and 10,000 tons (12,500 m3) of anhydrous ethanol than can be used as biofuel. Other valorisation of agricultural waste The oil seeds company (formally SANACOS now SUNEOR since its privatization) has been employing groundnut shells in cogeneration with a production estimated at 341 kilotons. Nonetheless, energy generation from groundnut shells remains limited in comparison to the large volume of groundnut production available within the country. The biogas industry is also growing, although modestly. Currently a project seeking to produce heat and electricity from the Dakar Abattoir is under construction (SOGAS). The Dakar municipality is equally implementing biogas projects to valorise their waste water collection plants. 3.2. Land issues Tenure systems The one issue that seems to unite all the Senegalese public and private actors is the unclear land tenure system and the need to reform it. Indeed 4 categories of land co-exist in confuse manners in Senegal: 1. Urban zones (zones urbaines). These are land managed by communal entities such as city

councils 2. Rural land (zones de terroir) are used for farming, animal husbandry, cultural rites and managed

by the rural communities. In this category of customary tradition, the rights for access and use are transmited from generation to generation. The rural council can allocate the rights of use to an individual, a group or a private entity. The rural council can also claim back the allocated land if it is not used or if the use is diverted from its original purpose.

3. Pioneer land (zones pionières) are zones with low population density and therefore under the control of the central government.

4. Reserves (zones classées) are protected land such as animal sanctuaries and under the control of the central government.

Increasing land disputes The FAO (2012) reports that 20% of the legal cases in the Dakar courts are currently related to land dispute issues. This trend is likely to continue. The co-existence of these several land tenure systems causes many problems of coherence, and constitutes a permanent source of disputes and misuses. Several cases are reported where Government allocated land to private users by obliging the local council to sign under pressure of being dismissed using the so called ’special delegation’ administrative procedure (Sangalkam in 2008, Mbane in 2008). The special delegations are legal procedures that the Government can use to remove elected persons from office when they commit a fault. Le Conseil National de Concertation des Ruraux (CNRA) reported that about 400.000 hectares of land have been allocated to the local elite (politician, religious guides and businessmen) since 2006 for agricultural projects often through irregular practices. Because of the incoherent land tenure systems, the rush of the local elite for land since 2006 and the heavy pressure they put on the rural councils, some rural communities have ended up attributing formally (on paper) more land than they actually dispose of their territory (Mbane in the North of Senegal for instance).




Strong mobilisation of the NGOS and rural farmers There is very strong mobilisation in rural Senegal against the allocation of land to private companies and against liquid biofuels in general. NGOs under the leadership of the CNCR, ENDA Pronat and many others actors have documented most of the cases of land attribution and have helped mobilize the population to stand up for their rights. The most famous case remains Fanaye rural community where the (above mentioned) irregular allocation of 20.000 hectares of land to an Italian company (Senhuile / SenEthanol) instead of the 300 hectare announced during the public hearing has led to the death of 2 protesters during the riots. Following this, the Government has decided to displace the project in the natural reserve of Ngith, in turn threatening many years of biodiversity conservation efforts. Ngith, on the shores of the Lac de Guiers is currently one the richest bird sanctuary and biodiversity areas of West Africa. 4. Biofuel Best Practices in Senegal 4.1. Waste to energy project of the sugar cane comp any The case of the CSS (Compagnie Sucrière Sénégalaise) is worth mentioning as it has turned environmental constraints to a viable energy solution. Since more than 40 years, the company cultivates about 10 to 15 000 hectares of sugar cane in the Senegal Rivers Valley with one of the highest yields in the world (150 tons per hectare of canes). The sugar cane is processed into sugar and the residual molasses used to be dumped in large reservoirs creating artificial lakes and widespread pollution. In 2006, the Government of Senegal decided to commission a study aimed at the valorisation of the molasses into cooking fuel (gel fuel). According to this study212, the production of gel fuel would be too costly as compared to the price of traditional fuel. On the contrary, the production of bio-ethanol would be economically feasible. Against this background, the CSS invested 4.6 billion FCA in ethanol plant that provides medical alcohol to Senegal and ethanol for the export market. The project allowed for eliminating the environmental problem of waste (molasses) disposal and the production of ethanol which can either be blended in the fuel market of Senegal or sold to provide the needed foreign currency. This is a possible good practice to follow. 4.2. Certified Jatropha project ANOC (African National Oil Corporation), created in 2008, is one of the few foreign venture still active in the Jatropha sector. This firm operates in the Gossas and Kaffrine regions. ANOC invested in the production and transformation of Jatropha nuts. Production of Jatropha is done directly by the firm (currently 350 ha are planted of Jatropha and 2000 ha are expected to be put in production in the near future) and contracted with small farmers. Transformation has just started in the 3 processing units the enterprise has, producing SVO (straight vegetable oil) and biodiesel. Expected biodiesel production from ANOC plantations 2013 2104 2015 2016 2017 2018 0.1 million litres

0.6 million litres

1.5 million litres

2.5 million litres

3.5 million litres

5.0 million litres

ANOC foresees to progressively increase direct production of biodiesel to reach 5 million litres in 2018. Aside from direct production, ANOC process Jatropha nuts from local farmers. Part of the production will be sold locally and the rest will be exported. ANOC is registered at the Ministry of Environment and an environmental impact assessment of the project has been carried out. Furthermore, ANOC highlights in interviews that they are the first biofuels producer certified as “GHG savings” in Africa. The Certificate guarantees that the firm complies with the requirements of the RED and the certification system ISCC (International Sustainability and Carbon Certification) approved by the European Commission.

212 More information available at http://www.css.sn/




According to its General Director, the success of this venture is mainly due to the involvement of the local population. The insecure institutional setting remains a main risk. 5. Summary of findings and gaps

Slow progress of the biofuels institutional framewo rk

• A biofuel law exist since December 2010 and aims to promote sustainable development of biofuels to reduce the dependency of the country on imported fuels and foster rural and agricultural development while integrating measure for food security, social and environmental protection. However, the application decrees of the law are not implemented, rendering the law very ineffective. Some activities encouraging the signature of the application decrees are needed. As a result, the biofuels value chain is not operational, creating uncertainties for early biofuel producers. In particular, it remains unclear if biofuel exports will be allowed and to which extent.

Reform of the land tenure system is urgent

• Land tenure reform is demanded by many of the parties involved in the agricultural and biofuels chain, from government officials to producers and NGOs. However, the collected views on possible solutions are so divergent that finding a consensus will be a difficult task. While some argue that land should be privatized and given to the one that can invest in it, many are radically opposed to this option without really providing viable solutions and options of their own. This maintains the current status quo which is characterised by irregularities and neverending disputes.

• Land demarcation and land-use planning, a critical factor for promoting agricultural investment, agribusiness and biofuels production, has not been implemented in Senegal yet. The government may choose to directly allocate land to local or foreign producers under current land tenure conditions, guaranteeing them long-term control. Such an approach has been considered in several countries, although it remains to be tested for a conclusive assessment. Regardless, strengthening of land ownership in ways that protect smallholder and industrial producers needs to be included in the policy setting according (Sana Faty, Director of biocarburant, Dec 2012).

• In terms of policy and practice, Senegalese NGOs demand that the government define precise procedures and criteria for land allocation for biofuel production. Procedures should involve the consideration of pre-existent—formal or customary—land rights, and incorporate a range of steps likely to mitigate the risks of negative impacts on local groups. These steps could include prior local information, consultation, mediation, fair compensation, and appeal possibilities.

Isolation of biofuel impacts not easy

• The extent to which the massive allocation of agricultural land is strictly related to bioenergy is unknown. According to CNCR, large-scale land acquisitions affect more than 700,000 ha, of which more than 100,000 ha are directly linked to Jatropha projects. How much land is used for biofuels production cannot be answered at this stage as plantations are not registered and there are no monitoring and evaluation activities in Senegal. However, it can safely be assumed that many projects still exist only as plans – also due to the "virtual" nature of some of the land allocations.

• Food insecurity linked to food prices (rice and maize), production variability and non-integrated markets. No direct link with biofuels development is observed or reported by stakeholders on the ground. However, this is not conclusive, as the Senegalese government subdidises food prices. The importance of the susbsidies is not known.

Land suitability and environmental impacts




• There has not been – at any stage- a real inventory of the Senegalese agricultural land and its suitability for biofuel production. The encountered NGOs expressed a need to map out the different soil characteristics and their suitability for biofuel feedstock. Current productions of Jatropha are not supported with studies to predict the expected yields and impacts on soil, water and biodiversity.

• Senegal is dry Sahel country where water resources are scarce. A national consultation about the allocation of water for growing crops should be defined including the quantities of water that could be reserved for biofuels once the food crops are met. This is likely to be the second most controversial issue after and linked to land allocation.

• The liquid biofuels law implies that an environmental and social impact study and mitigation plan should be submitted to and accepted by the Ministry of Environment before a license can be given to an operator and any production take place. In reality very few of the on-going projects in Senegal has received an approval from the Ministry of Environment. The unfortunate usual practice is to first develop production capacity and seek for the license and environmental and social clearance afterwards.

Jatropha knowledge gaps

• On the planned 321.000 hectares of Jatropha by 2012, less than 15.000 ha have currently been planted. Exact figures are missing as Jatropha area is not yet reported by the DAPS.

• Actual production is not known. (Jatropha only becomes productive after 5-7 years after planting). Jatropha yields are not yet measured in situ but seem to be far from potential (more research is needed) and expectations.

• Jatropha is a new production and then a lot of uncertainties exist about input requirements and management practices. A common misconception was to expect maximum yields afeter 3-4 years, where the plant apparently only reaches production age at 5-7 years.

• The encountered NGOs expressed a need to map out the different soil characteristics and their suitability for biofuel feedstock. Current production of Jatropha is not supported by studies or reasearch analyzing the expected results and impacts on soil, water and biodiversity.

Concluding remarks on biofuels development

• The objectives of the National Biofuel Program are still far from being attained. Jatropha had been presented to farmers as a “miracle crop” and, therefore, farmers’ expectations have not been met.

• The instability of the institutional framework (unclear land rights, changing legal environment, irregular practices in land allocation) makes business too risky both for small farmers and for agro-industrial investors.

• The Biofuels Law requires an environmental and social impact study before a license can be given and production take place. In practice, only one of the ongoing projects in Senegal has been approved by the Ministry of Environment.

• Small-scale and inclusive business models have been more successful than large-scale land acquisitions.

6. SWOT analysis

Strengths

• Development of a new value chain (Jatropha)

• Potential to reduce dependence from imported energy




• Diversification of energy sources

• Additional (off-grid) energy source in rural areas

• Economic use of available resources (land, labour)

• Additional source of income in rural areas

• Economic use of agricultural residues Weaknesses

• Poor knowledge of Jatropha production requirements

• Poor knowledge on the economic viability of Jatropha production

• Lack of market for Jatropha seeds, the Jatropha value chain is not operational

• Unstable land tenure system Opportunities

• High oil prices enhance competitiveness of biofuels

• National energy policy supports biofuel production and use Threats

• Uncertainty about the economic, social and environmental sustainability of biofuel projects

• Lack of clear land tenure system

• Insecure institutional framework Bibliography Dia D., Fall C.S., Ndour A., Sakho-Jimbira M.S. (2009). Le Sénégal face à la crise énergétique

mondiale : Enjeux de l’émergence de la filière des biocarburants. ISRA- Bureau d'Analyses Macro-Economiques.

Faye I.M., Benkahla A., Touré O., Seck S.M., Ba C.O. (2011). Les acquisitions de terres à grande échelle au Sénégal : description d’un nouveau phénomène. Initiative Prospective Agricole et Rurale, 45 pages.

FAO (2012). Trends and impacts of foreign investment in developing country agriculture, evidence from case studies, Food and Agriculture Organization of the United Nations, Rome.

Annex 1. Itinerary Date Meetings Addresses Subjects 04.12.12 Ministère Energie et Mines

Direction biocarburant Mr Sany Faty, director Mr Birame Faye Mr Kader Diop Madame Oumou Ba

221 77 5601164 [email protected]

Biofuels national policies Land tenures systems

04.12.12 Delegation de l’UE au Sénégal Boubacar Draba, Chargé programme Section Infrastructures

Tel: 00 221 33 8891100 [email protected]

Areas of EU cooperation with Senegal

04.12.12 ENDA Pronat Mariam Sow

00 221 33 889 34 39 [email protected]

Land issues Food security

05.12.12 NL embassy in Dakar Miriam Otto, second Sectary

[email protected] 00221338490360

Environmental issues related to the allocation of a natural reserves (NGIT) for




biofuels production 05.12.12 ENDA Energy

Abdou NDOUR 00 221 33 822 24 96 [email protected]

Studies carried out by ENDA to map out the production potential and the appropriateness of the zones

06.12.12 ISRA Yacine Badiane Ndour, Maitre de Recherche

00221338326298 [email protected]

Jatropha planting and plantation, status of the research in Senegal;

06.12.12 Conseil National de concertation et de coopération des ruraux (CNCR) Mr El Hadj Thierno Cisse Mr, Yoro Idrissa Thioye,


Land issues

07.12.12 Spanish Embassy in Dakar Guillermo Franco, Pilar Latre

(221) 33 889 23 61 [email protected]

Foreign investment in agriculture and energy

07.12.12 Ministère de l’environnement Idy Niang


Environmental requirement for biofuels

07.12.12 ENDA Energy Secou Sarr, Coordinator

00 221 33 822 24 [email protected]

Mapping ot the production areas

10.12.12 FAO Regional office Mr Patrick David, Papa Boubacar Soumare

00 221 33889 16 26 [email protected]

Relation between food security and biofuels

10.12.12 World food Programme Kokou Amouzou

00221 33 859 75 50 [email protected]

Relation between food security and biofuels

10.12.12 Ministère Energie et Mines (Direction biocarburants)Mr Sany Faty, director Mr Birame Faye Mr Kader Diop

221 77 5601164 [email protected]

Biofuels national policies

10.12.12 Communaute Rural de Raneri Souleymane sow, President

+221775499245 [email protected]

Explained how land is distributed by rural communities

11.12.12 Ministère Energie et Mines, Mr Boubacar Mbodj, Conseiller énergie renouvelables


The restructuration process of the ministry of energy and the place of biofuels

11.12.12 ActionAid International Fatou Ngom Zakaria Sambakhe

[email protected] Land issues Food security Biofuels investments

11.12.12 Ministère de l'Agriculture et de l'Équipement rural, DAPS Somé Baldé

Balde_some@yahoo. fr Agricultural production Land use

11.12.12 Commissariat à la Sécurité Alimentaire (CSA) Mouhamadou Ndiaye

[email protected] Food security Evolution of agricultural prices

11.12.12 CICODEV Afrique Amadou C. Kanoute

[email protected] Land issues Biofuels investments

12.12.12 Agence Nationale des Energies Renvouvelable Djiby Ndiaye


The restructuration process of the ministry of energy and the place of biofuels

12.12.12 APIX Adama N. Gueye


Promotion of foreign investment in Senegal, no special case for biofuels

12.12.12 Fédération des Producteurs (221) 77 159 12 14 Investment in biofuels




de Tabanani du département de Foundiougne (FPTF) Abdoulaye Faye

Jatropha supply chain

12.12.12 SAEB - Société Africaine d’Exploitation de Biocarburants Daniel Vidal

[email protected] Investment in biofuels Jatropha supply chain

13.12.12 Office of the President of the Republic of Senegal Prof Arona C. N. Diouf, Special advisor o Agriculture, Energie and environment


The need to develop appropriates application decree to render the Senegalese biofuel law effective

13.12.12 Agence Espagnole pour la Coopération Internationale au Développement (AECID) Mercedes Navarro

[email protected] Foreign investment in biofuels

13.12.12 African National Oil Company (ANOC) Alessando Milani

[email protected] Foreign investment in biofuels

14.12.12 Bureau d'Analyses Macro-Economiques (ISRA-BAME) Cheickh S. Fall Amy Faye Djiby Dia

[email protected] Biofuels sector Production costs Land issues

14.12.12 Association africaine pour la promotion des biocarburants (AAPB) Serigne Amar

[email protected] Investments in biofuels

14.12.12 Travelling back




Annex 2. List of biofuel projects agreed by the API X Raison sociale Produits et services Site de production

SENIT AGRO BUSINESS SARL Biocarburant à base d'huiles végétales: huile de Jatropha et de ricin

Communauté rurale de Boulel

CARBIOL SENEGAL SARL Biodiésel conditionné dans cuves et citernes des camions des sociétés spécialisés dans le transport d'hydrocarbures

Saly Portudal - Département de Mbour

SENERGIE SA Huile végétale; biodiésel; biogaz; bio fertilisants

Communautés rurales de Gandé et Syer - Arrondissement de Keur Momar Sarr

GTA ENVIRONNEMENT SA Biogaz en vue de production d'énergie électrique

CTT de Mbao / CET de Sindia

PLANTATION VERTE SARL Biomasse comme combustibles dans la production d'énergie mondiale (production et transformation de Jatropha et autres biocombustibles)

Lewa - Ndoumboulene - Communauté rurale de Mbane - Dpt de Dagana

ITAL SENEGAL SARL Graines de Jatropha; biocarburant conditionné dans cuves et citernes des camions de transport d'hydrocarbures

Salguir / Diagnoum - Podor

JTF (JATROPHA TECHNOLOGIC FARM SENEGAL) SARL

Jatropha curcas et huile; plantes oléagineuses; biocarburant et biodiesel

Neteboulou

SOPREEF SARL (SOCIETE POUR LA PROMOTION DE L'ACCES A L'ENERGIE ET A L'EAU DANS LE DEPARTEMENT DE FOUNDIOUGNE)

Huile de Jatropha Sokone / Département de Foundiougne

AFRICAN NATIONAL OIL CORPORATION SARL

Graines de Jatropha; biocarburant (conditionné dans des cuves et citernes des camions de transport d'hydrocarbures)

Communauté rurale de Ourour - Arrondissement de Ouadiour - Département de Gossas

SBE SENEGAL SARL Graines de Jatropha curcas et Huile Végétale Biocombustible

Région de Thiès - Département de Tivaouane - Communauté rurale de Mérina

TOTOIL SARL Biofuel: huile de Jatropha Communauté rurale de Tankon

GIE BIOECO Biogaz à partir du traitement des déchets agricoles, agro-industriels et ménagers

SOGAS,Route de Khor,Sor,Saint Louis

BBE SA (BERTOLA BIO ENERGIE)

Jatropha; huile de Jatropha; fertilisants

Communauté rurale de Mbadakhoun

SOPREEF SARL (SOCIETE POUR LA PROMOTION DE L'ACCES A L'ENERGIE ET A L'EAU DANS LE DEPARTEMENT DE FOUNDIOUGNE)

Huile de Jatropha Sokone / Département de Foundiougne




ANNEX 5: Tanzania Field Visit 2nd to 15th December 2012,

Magdalena Kropiwnicka and Michel Schlaifer

Acronyms CCRO Certificates of Customary Right of Occupancy EC European Commission EDF European Development Fund ESIA Environmental and Social Impact Assessments ESMP Environmental and Social Management Plan EU European Union GDP Gross Domestic Product GIS Geographic Information System GNI Gross National Income GoT Government of Tanzania GPS Global Positioning System MDG Millennium Development Goal MEM Ministry of Energy and Minerals MLHHS Ministry of Lands, Housing and Human Settlement NEMC National Environment Management Council ODI Overseas Development Institute PAP Project Affected Population PPP Policy, Plan and Programme REA Rural Energy Agency of Tanzania SAGCOT Southern Agricultural Growth Corridor of Tanzania SEA Strategic Environmental Analysis SIDA Swedish International Development Cooperation Agency TABEF Tanzanian Biofuels Forum TANESCO Tanzania Electric Supply Company TIC Tanzanian Investment Centre ToR Terms of Reference Tsh Tanzanian Shilling WB World Bank




1. Quick Country Overview

Global situation

Legislative and administrative capital: Dodoma. Commercial capital and de facto seat of most governmental ministries: Dar Es Salaam.

With population of more than 46 million213, 75% of Tanzanians are living in rural areas. Although Tanzania averaged 6-7% gross domestic product (GDP) growth in the last decade, it remains one of the world's poorest countries in the world with many people still living below the poverty line of US$1.25/day214 and gross national income (GNI) per capita income about US$ 540215 Tanzania ranks 152 on the Human Development Index 216 and 38.8% of Tanzanian population are classified as undernourished (people not consuming enough calories) according to FAO State of Food Insecurity 2012 Report217.

1.1 Relations EC - Tanzania

The European Commission is supporting the Tanzania government’s poverty reduction strategy called MKUKUTA and participates with other donors in the Joint Assistance Strategy for Tanzania. The main focus of previous EC development programmes has been to assist the government’s poverty reduction strategy, mostly through budget support in primary education, roads, water, legal and judicial reform and health218.

The new EC development cycle (2008–13) allocates €555 million to Tanzania (part of the 10th European Development Fund). Most of this (€305 million, more than half of the funding) is provided as general budget support to the country’s poverty reduction programme. A further €139 million is directed at sector budget support in the road sector and €55.5 million has been reserved for trade and regional integration , particularly in the East African Community Customs Union and the Southern African Development Community. The EU is negotiating a new Economic Partnership Agreement with Tanzania, a comprehensive trade agreement that includes trade alongside development cooperation. An additional €51.5 million are provided for projects on water and sanitation under the MDG initiative. Furthermore, another €50 million aim to support projects in energy, environment and strengthening the civil soc iety – good governance and democratisation .

213 http://data.worldbank.org/country/tanzania 214 http://europa.eu/rapid/press-release_MEMO-12-584_en.htm 215 http://data.worldbank.org/country/tanzania 216 http://hdrstats.undp.org/en/countries/profiles/TZA.htm 217 http://www.fao.org/docrep/016/i3027e/i3027e.pdf 218 http://eeas.europa.eu/tanzania/index_en.htm




The European Union is a long standing partner in the Agriculture and Food Security sector in Tanzania helping to improve food security and agricultural productivity in order to lift farmers out of poverty. Trade and Agriculture Support Programme (€55 million in total) is promoting easier access to local and international markets, better competitiveness of agricultural products through the improvement of standards (cotton, horticulture, fisheries, coffee and tea) as well as applied research for the development of new varieties (coffee, tea); support to the Sugar Sector (Sugar Accompanying Measures, €12.5 million over the period 2007-2013). EU is also supporting SAGCOT (Southern Agricultural Growth Corridor of Tanzania), an Initiative launched by Tanzania to stimulate sustainable commercial agricultural development in southern Tanzania through improved rural infrastructure and new types of finance219. Tanzania has benefited from the Food Facility launched in 2009 to respond to the 2007/2008 food crisis with €32 million (€20 million as general budget support and some €12 million allocated to projects implemented by Non-Governmental Organisations).

1.2 Agriculture

Tanzania’s economy relies heavily on agriculture; it contributes significantly to the production of food and raw materials for industries, employment generation and foreign exchange earnings, accounting for over a quarter of GDP, providing 80% of the labour force and 85% of exports (FAO 2012b). In 2009, agriculture contributed about 27% to the GDP, second after the services sector. The female proportion of the total agricultural labour force is 79.7% reaching 91.7 in rural areas; female headed households make up 25% of total households nationally and 24% of households in rural areas (FAO, 2012b). Agriculture plays a key role in food security, economic growth and poverty reduction.

Given the economic significance of the sector, investment (both public and private) in this sector is seen as fundamental for economic growth. Since the mid-1980s, the Tanzanian economy has undergone a gradual transformation that redefined the role of government and private sector. Today, most of the production, processing and marketing functions have been assigned to the private sector. In its Vision 2025, the government aims to achieve an agricultural sector that is modern, commercial, highly productive and profitable, and which utilizes natural resources in an overall sustainable manner (FAO 2012a).

Agriculture is dominated by smallholders cultivating an average of 0.5 to 2 hectare, with low levels of productivity and insufficient access to credit and input. Large-scale farms (sometimes with foreign-owners) are mainly focused on tea, sugar and coffee productions. Other non-traditional commodities that have recently attracted investments include seaweed, maize, poultry, mushrooms, vegetables, cut flowers, beef, fruits, sesame and honey. Some foreign investors were interested by biofuels (Jatropha, oil palm and sugarcane, see point 2.). Regarding food production, maize is the main food crop alongside sorghum, millet, rice, wheat, beans, bananas and potatoes; coffee is the main cash crop alongside sisal, cashew, cotton, tobacco, tea, cloves, flowers and oil seeds.

1.3 Energy

Over the last two years, the Tanzanian economy has increasingly experienced power interruptions that disrupted the pace of economic growth and development. In 2011, the country faced a 40% reduction in the national power supply largely due to droughts and reduced water level which affected hydropower generation. The national energy company, TANESCO220, is relying mostly on hydro and thermal power. Hydro contributes the largest share of TANESCO’s power generation: 73% of total power generated from October 2009 up to September 2010. Gas and thermal contributed the remaining amount. The company is facing financial difficulties in securing bank loans as well as challenges in its own governance structure221. In addition, large scale gas discoveries on the coast have led Tanzania to begin development of a gas pipeline to Dar Es Salaam backed by financing through non-concessional loan from the Import-Export Bank of China222.

Tanzania remains dependent on imports of petroleum of which it consumes about 30,040 bbl./day (2009, estimation). Tanzania imports oil at a cost of an estimated US$ 1.3-1.6 billion per year, accounting for up to 25% of total foreign exchange earnings223.

219 The EU support to SAGCOT was reconfirmed at the May 2012 G8 Summit in Camp David, which launched a new initiative called the 'New Alliance to improve food security and nutrition' 220 http://www.tanesco.co.tz 221 http://www.ippmedia.com/frontend/index.php?l=43662 222 http://www.bloomberg.com/news/2012-06-14/tanzania-s-china-funded-gas-pipeline-to-be-started-this-year-1-.html 223 http://www.indexmundi.com/tanzania/oil_imports.html




The national energy mix is largely dominated by biomass (90%), mainly firewood and charcoal when renewable energy remains very small (solar, wind, geothermal). The Ministry of Energy and Minerals (MEM) elaborated in 2011 a “Power System Masterplan 2011 to 2033” detailing the priorities to be developed (coal, natural gas, renewable bioenergy). It is reviewed on a regular basis224.

Consumption of charcoal is extremely high as it is the main energy source for Tanzania’s urban population. In Dar Es Salaam alone it is estimated at much more than 20,000 tonnes per annum (Sulle and Nelson 2009). As a result of limited cash flow and weak purchasing power, poorer households buy charcoal frequently and in small quantities at a high unit price. The perceived low cost of charcoal and its easy availability are the main reasons why it is largely used. The structure of the charcoal chain is complex, comprising many actors with varying interests and stakes. Trade is conducted by formal as well as informal actors. A reduced number of people consider charcoal production to be their main economic activity. The majority produce charcoal occasionally, particularly in time of financial stress.

The value of charcoal business is conservatively estimated at about us$ 650 million per year (WB 2009).

According to official data mentioned by the Rural Energy Agency of Tanzania (REA) about 18% of Tanzanian population has access to electricity although this figure is quite different in rural areas225. Very few people have access to energy in rural areas (estimated at 1% to 5% in 2010; the Government target is to increase the electrification in rural areas to 16% by 2015).

In the energy sector, €8 million were allocated by the EU to electrification (under the 10th EDF). The objective is to further increase access to electricity by households, businesses and public services while also promoting Tanzania's renewable energy potential. Tanzania has also been identified as one of the pilot countries of the Sustainable Energy For All Initiative launched by the UN Secretary-General Ban Ki-Moon in mid-2011 with a view to ensure universal access to modern energy services doubling the rate of improvement in energy efficiency and doubling the share of renewable energy in the global energy mix. The EU is at the forefront in leading this Initiative226.

Projects focused entirely or partially on biofuels are supported in Tanzania by the EU Energy Facility and are mainly focused on Jatropha seeds transformation for biodiesel227. For example, TaTEDO228 is implementing the EU supported project aimed to improve access to energy services in remote areas through the promotion of Multifunctional Platform (energy generation by diesel and biodiesel from Jatropha seeds, machines for agriculture products, local grid).

2. General situation regarding biofuel development and institutional framework

Tanzania has experienced massive interest in its agricultural land in the period of 2006-2008, including interest in acquisition of land for large scale biofuel ventures. Official government figures from 2009 indicated that about 20 companies have requested land for commercial biofuel production. Total request of land has been far greater than actually allocated with some research pointing out to 4 million hectares of land having been requested at some point particularly for Jatropha, sugar cane and palm oil. According to Sulle and Nelson (2009), out of 640,000 ha allocated only 100,000 have been granted formal rights of occupancy. Today, the Tanzanian Investment Centre (TIC), a one stop foreign investment facilitation institution, has 10 registered biofuel companies (see Annex 2)229. At the same time, officials at TIC have not been able to give precise data as to which of the companies registered are still operational given that some of the listed companies are well known to have ceased their operations (i.e. Prokon Renewable Energy Solutions and Systems LTD and Bio Shape (T) Ltd). In addition, one of the companies with plans for large scale sugar cane plantation and ethanol production in Bagamoyo i.e. Agro EcoEnergy Tanzania Limited, is not currently listed with TIC. Lack of access

224 Interview at the MEM, December 2012 225 http://www.rea.go.tz/ 226 http://europa.eu/rapid/press-release_MEMO-12-584_en.htm 227 Meeting in Brussels with Alessandro Bianciardi (DEVCO C5), 28th November 2012; comments from Evaluation Team of

some Energy Facility Projects using Biofuels, January 2013 228 TaTEDO is a Sustainable Modern Energy Social Enterprise Organization with more than 20 years’ experience, actively involved in sustainable energy development projects, programs and businesses in rural areas, see http://www.tatedo.org/index.php 229 Data obtained from Senior Statistician at TIC during the meeting at TIC office.




to precise information, updated data bases, monitor ing and transparency with regard to large scale land investments in biofuels continues to be one of the key governance challenges in Tanzania.

Initial boom and interest in biofuel investments has been accompanied by a policy vacuum which promoted the government to place a moratorium on new projects in 2008 until development of biofuel guidelines. The Guidelines for Sustainable Liquid Biofuels Developm ent in Tanzania 230 have been developed in 2010 and have been consulted with civil society through TABEF (Tanzanian Biofuels Forum). The Guidelines must be accompanied by a Policy (to define National Directives) and a Biofuel Act (Enforcement ) in order to achieve legislative force. The Biofuel Policy is currently in its draft stages231 and receiving inputs from various stakeholders including civil society. The national Biofuel Policy is expected to be ready for the Parliamentary approval by June 2013 while the Biofuels Act is expected to be ready by the end of 2013. In parallel, the country is also developing a Biomass Policy Strategy with the support of the EC (EU Partnership Facility). The institutional framework is still under definition and, at the moment, it remains difficult to assess what is the current applicable policy regarding development of liquid biofuels. For example, it is still unknown what would be the position regarding the tax regime for biofuels. Harmonization of the policies with regard to genera l energy development and role expected for biomass / biofuels into the national energy mix represents a strong challenge in achieving coherenc e and synergy .

The Guidelines establish the Biofuels One Stop Centre within the Tanzanian Investment Centre (TIC) and among other things require investors to submit Environmental and Social Impact Assessments (ESIA) to the National Environment Management Council (NEMC) and feasibility study reports to Biofuels One Stop Centre. Despite theserequirements, sustainable practices are not always respected. For example, interlocutors mentioned to the Consultants the use of pesticides in feedstocks for biofuels and exposition of the workers without health protection232. In many cases, the cost benefit analysis and the profitability study of the investment seem to have been too quick, even if TIC approved the project233.

In accordance with the Investment Act, TIC continues to facilitate investor’s access to land and provision of fiscal and non-fiscal incentives to potential investors. Neither the Guidelines nor the draft Policy mention issue of water use nor set specific ceilings on the time period for land leases or scale of investment although such proposals are often discussed in the Tanzanian media and are being increasingly advocated after recent failure of a number of large scale investments234. The problem with the Guidelines process stems from the fact tha t biofuel development was primarily conceived as an energy issue and was not sufficient ly connected with agricultural, land, water and food security aspects.

Besides the ESIA already mentioned in the Biofuel Guidelines, there is a need for a more strategic vision regarding global development of the biofuels sector in the national context of sustainable development. A Strategic Environmental Analysis (SEA) would be necessary to give a cross-cutting analysis oriented to a systematic decision support process for the biofuels sector (policy, plan and programme: PPP). SEA is an evidence-based instrument, aiming to add scientific rigour to PPP making by using suitable assessment methods and techniques. This would allow the country to design, develop and implement a real, scientifically-based policy for the development of biofuels235.

There is a lot of potential for sustainable development of biofuels in Tanzania. Nevertheless, a detailed mapping of the potential has not been achi eved . Currently there has been experimentation with first generation biofuels even if there is no consolidated idea of the levels of national production. Some second generation projects are at their first stages i.e. seaweed farming in Zanzibar236. The Ministry of Agriculture is currently preparing ToRs for national agricultural zoning aiming, among others, to identify the areas suitable for biofuel production237. For the moment, it considers that biofuel development should be studied and evaluated on “case by case” basis238.

230 United Republic of Tanzania, November 2010 231 United Republic of Tanzania, September 2012 232 ActionAid Tanzania mentioned this in the case of Sun Biofuels plantations 233 Comments from several interlocutors met i.e. NGO and Academia 234 See for example “Investors to Acquire Limited Land”, Tanzania Daily News, 28th November 2012 235 During meeting at MEM (14th December 2012), it was mentioned that a SEA for biofuels development in Tanzania is in draft

but it has not been possible to analysed it 236 A project supported by Sweden, involving small farmers, interview at the EU Delegation, December 2012 237 Interview at the Ministry of Agriculture, December 2012 238 Permanent Secretary Ministry of Agriculture, December 2012




Regarding Jatropha, a Tanzanian NGO239 is conducting a partial mapping of potential areas in the Lake Victoria and North-central zones of Tanzania (regions considered are Arusha, Manyara, Kilimanjaro, Singida, and Tanga).

Awareness campaigns and training sessions have been organised by the Ministry of Agriculture focused on farmers and civil society and educational materials have been prepared for use during these fora. No monitoring of these actions has been conducted, so it is difficult to estimate their impacts.

3. Land Security and Land Conflicts

Tanzania is considered to have one of the most complex and extremely comprehensive land acts stemming from the land reform began in 1999 and in effect since 2001. The 1999 Land Act and Village Land Act provide the overall framework for land rights.

Land is divided into four main categories: Village Land (includes land within the village areas of Tanzania’s 11,000 villages); Reserved Land (land set aside for special purposes such as national parks, forest reserves, game parks, land for public use and highways); General Land (includes urban areas, land earlier allocated to the Tanzanian government or land held by Tanzanian Investment Centre) and Hazardous land (refers to areas the development of which is likely to pose a danger for life or environment i.e. mangrove swamps, shoreline, corridor within sixty meters of a river bank). All land is owned by the government (i.e. President) but rights over land can belong to citizens i.e. Granted Right of Occupancy and Customary Right of Occupancy. Certificates of Customary Right of Occupancy (CCROs) are issued in rural areas by village councils after proper demarcation process. Villages which hold CCRO can then begin a process of setting up Village Land Plans. In fact, village land use plans include the idea of setting aside some of the village land for potential agricultural investments. Village land is under the managerial authority of the Village Councils which are answerable for land management decisions to the Village Assembly. General land is any land which is not reserved or village land but may somewhat confusingly include village land which is called “unoccupied or unused”. General land is under the authority of the Commissioner of Lands in the Ministry of Lands, Housing and Human Settlement (MLHHS). The Villages which give up their land to investors usually get their land transferred to General Land category and hence lose their land rights even in case of a failure of investment (i.e. BioShape or Sun Biofuels).

The implementation process of the land reform and issuing of the CCRO has been extremely slow till now and driven mostly by donors and NGOs, including local NGO’s240. According to interviewed land rights organizations, currently about 10 per cent of the country’s 10,397 villages have received a certificate of village land and out of these only a small percentage has completed Village Land Use Plans. The Village Land Use Plans are prepared by the National Land Use Commission and show the zoning in different uses of village land and according to the Commission “are the only ways to meet requirements for villagers scientifically and find extra land for the biofuels production” (Havnevik et all. 2012). The FAO report on Foreign Investment in Agriculture (2012b) mentioned that MLHHS and the Prime Minister’s office responsible for land administration have an employment gap of about 75 per cent of requisite technical staff although there is a large pool of technical land administration university graduates in the country. At the same time, there is an increasing interest in registering single farms over the course of past few years. Recent experiences driven by farmers’ organisations and mobilization of well-trained students (in survey, GPS, GIS, mapping) demonstrate that the pace of issuing the CCRO’s is increasing.

Tanzania is also experiencing increasing conflicts over land and water between commercial (including crops for biofuels production) and subsistence farmers as well as between pastoralist communities and other farming population. The situation of pastoralist’s groups calls for special attention as due to undefined land rights in combination with their nomadic life style this group has become particularly vulnerable to limited livelihood options due to increasing land pressures and climate change (i.e. increasing draughts). In addition, most nomadic tribes in Africa and in Tanzania

239 KAKUTE, supported by Partners for Development, a US based NGO working with United States Department of Agriculture’s

grant 240 See www.hakiardhi.org




are not necessarily identified as “indigenous groups” and hence lack resulting legal protection in international and national law with regard to “land rights”241.

The Land Act explicitly aims to create a land admin istration framework which will facilitate making land available for private investors . TIC plays a key role in identifying land that is available for investment and is organized into so called “land bank” to which investors may apply. Much of the land identified is usually General Land but in many cases can also be land found in Village Land which is then subsequently transferred to General Land category by a Presidential decree. The process is long and tends to be slow: formal approval is needed from TIC (financial viability), the Ministry of Agriculture (agricultural viability), the MLHHS (land registration) and Ministry of Environment (ESIA). Coordination and communication among governmental agencies is poor. However, several foreign and European investors in large scale biofuels production in Tanzania seem to have been able to proceed and secure land access without sound feasibility studies (economic profitability, agronomy and environmental aspects).

There is a perceived lack of agreement with regard to the issue of “land availability” in the country. The main reason of such situation relies in the fact that the so-called “empty land” is in fact used by local communities, even if such use is often deemed as not sufficiently “productive”. TIC claims that Tanzania has plenty of “available and unused land” for investment. Ministry of Agriculture prioritizes production of food crops enhancing food security through the “Kilimo Kwanza”, i.e. through the green revolution approach. Civil society and researchers counteract claims of land availability stating that most of land has customary claims and even unoccupied land provides important livelihood support for seasonal livestock grazing (of key importance also to pastoralist communities), extraction of forests products and of other important livelihood uses (i.e. burial grounds, watersheds). For example, in the case of Agro EcoEnergy Bagamoyo project, the government has identified an abandoned ranch land of over 20,000 ha as available for investment. This land has already been classified as General Land but it hosts more than 1300 people who have settled there over the years and cultivate various plots such as cassava, cashew and rice. In addition, the land is used for grazing and access to water by pastoralist communities which have immigrated from another part of the country currently struck by a draught. Hence, although this is General Land and population lacks formal land titles, it is subject to loss of livelihood support while the amount of compensation and resettlement projects are still not clear despite its outlines within the Agro EcoEnergy’s Environmental and Social Impact Assessment submitted to the African Development Bank242. In another case, the failed Jatropha project of Sun Biofuels in Kisarawe district has left so far unresolved the issue of community’s access to their burial grounds243.

Most interestingly, the Agro EcoEnergy project in Bagamoyo is set to become a pioneer in testing future “Land for Equity” scheme, a new legislation under elaboration at the MLHHS244. As an alternative to “compensation”245 amount often determined by the investor, “Land for Equity” foresees a percentage of company shares for the Central Government, the District Council and the Village Community. The details of “Land for Equity” scheme are still under definition and the issue of repartition of shares over the course of different time period between different levels of government, the tax regime to be applied, the representativeness of the communities and the consideration of the Project Affected Population (PAP) currently begin to create intense debates. During the consultancy mission in Tanzania a scoping study was being conducted246 to advise the MLHHS and gather various views on its potential implementation. A thorough and complete understanding of the concept and regulations that will apply by all stakeholders would be absolutely necessary before its implementation.

241 For example see special treatment of indigenous people’s land rights in the Voluntary Guidelines on Responsible Tenure of

Land, Fisheries and Forests in the Context of National Food Security http://www.fao.org/docrep/016/i2801e/i2801e.pdf 242 ADB, undated 243 The case of Sun Biofuels failed project has been well documented by the international press and NGOs and well known by

majority of interviewed parties. See for example: http://www.guardian.co.uk/environment/2011/oct/30/africa-poor-west-biofuel-betrayal

244 According to the Environmental and Social Assessment of the Bagamoyo Sugar Project submitted by Agro Ecoenergy Tanzania in MoU with the Government of Tanzania, the land for the project will be given to the company in kind as capital for acquisition of shares in the project. Further details are not provided. See: http://www.afdb.org/en/documents/environmental-social-assessments/ 245 There is a legal requirement that villagers must be compensated fairly by the government when Village Land is transferred to

General Land. In practice, investors themselves tend to pay compensation directly to the villagers, creating substantial differences in opinion and confusion over the amount of compensation and target beneficiaries.

246 MLHHS has contracted consultants from Overseas Development Institute, LANDESA and national university. Their assessment was not yet available as it was in the state of research by December 2012




In cases where villagers have voluntarily given up their land for transfer to General Land for the purpose of making it available to investors, they have often had little awareness of the size of the land being given up and that such transfer of land is perpetual and cannot be reversed. For example, in the case of failed large scale biofuel projects by Sun Biofuel in Kisarawe district as well as by BioShape in Kilwa District, the villagers most probably will not be able to gain back their land, althought his is not finally used by the investor, because it has – through the deal - become General Land and is now administered by TIC or and will probably be taken over by another investor.

In case of Tanzania, even though the legal frameworl exists - many large scale projects still took place in the absence of proper prior consultation with the affected communities (asymmetries of information between parties) and with a general preference by investors for land that is fertile and well located to good irrigation and infrastructure.

4. Field visit to biofuels production (Bagamoyo, Ar usha – Moshi)

Due to time constrains available for the field visits, the team has split to make two field visits in parallel to the Bagamoyo area (sugar cane) and to Arusha – Moshi region (Jatropha). The Mission did not have enough time to analyse developments relative to palm oil which are mostly located in the Western part of the country247.

Bagamoyo

Sugar cane development seems to hold promises as Tanzania is still importing large quantities of sugar and has had experiences of successful development of large scale irrigated plantations linking with smallholders under contract farming arrangements in Kilombero Valley. Companies such as Mtibwa Sugar, Kilombero Sugar and Kagara Sugar are anticipating that they will soon produce surplus sugar to be used for ethanol production to run factory machinery and vehicles, although the status of the current ethanol production could not be verified during the time of the field visit.

A number of large sugarcane plantations were in the planning and development stages, most notably in coastal areas such as Rifiji and Bagamoyo by a Swedish company SEKAB through its subsidiary SEKAB Bioenergy Tanzania LTD (hereinafter SEKAB T). SEKAB T has lost its financing from Swedish municipalities and SIDA due to fears arising from the potential conflicts with food production due to, among other issues, the sheer scale of the land sought for investment in the coastal areas of Rifiji-Kilwa (initial proposal for 500,000 ha). In this heated case, many state that SEKAB T was ill advised about the size and location of their planned sugar cane cultivations, but not about the activity itself. In addition, SEKAB T has been accused of tempering with its Environmental and Social Impact Assessment process for the planned 20,000 plus sugar cane plantation and out-growers project in Bagamoyo248.

247 Just to mention that the country is not self-sufficient in edible palm oil. Experiences reported from Kigoma (FELISA) and Morogoro were stopped 248 Havenevik, K. et al., 2011 dedicated entire paper to documenting the changes introduced to the ESIA report submitted by SEKAB T including deleting such key phrases such as “there is great confusion as to what the “project area» actually entails and deletion of base line studies indicators. The case has also been mentioned by some interviewed parties i.e. Haki Ardhi, researchers.




Currently, a new company that has taken over SEKAB’s Bagamoyo project called Agro EcoEnergy Tanzania Limited is proceeding with its imminent development of a sugarcane plantation in a joint venture with the Government of Tanzania (GoT) to produce sugar for domestic consumption, molasses for power generation and bioethanol249, including an out-growers project250. The project is located in the coastal region of Bagamoyo District, approximately 20km northwest of Bagamoyo Town. The land251 is provided as capital in kind by the GoT in the framework of the future “Land for Equity”. The project company will lease 21,255 ha of the abandoned ranch while the majority of the coastal strip of the former ranch will remain under the control of the

GoT. A further 2,000 ha of land in an adjacent village will also be used by the project. Out of the total area, 7,800 ha will initially be used to cultivate sugar cane and the remaining part of the land will be reserved for biodiversity protection, reforestation aimed at sustainable charcoal production and areas for pastoralism252. “The processing plant will produce hydrous and anhydrous ethanol from c-molasses available. (…) The plant will also be designed to allow for the use of more than its own generated molasses as a feedstock for ethanol production. Molasses may be available from other sugar

producers in Tanzania at a competitive price adding more value to the molasses then current usages”253. Irrigation for the sugar cane cultivation will be provided from the Wami River bordering Sadani National Park, which is also supplying water to Bagamoyo and as far down as northern sections of Dar Es Salaam’s suburbs. The project has obtained water extraction permits and also plans to build both dams and dykes (in event of flooding) as well as water tanks (in event of draught). Water from the river will be used both for irrigation as well as for the running of several factory processes. The clearing of the

land for the project is scheduled to commence by January 2013.

At the time of the mission in December 2013, the consultant had a chance to visit the 200 ha demonstration farm with sugar cane nursery and water irrigation system. The nursery farm has successfully tested high yield sugar cane varieties mainly from Mauritius, South Africa and Reunion Island as to obtain most suitable sugar variety. The demonstration farm is also employing state of the art drip-irrigation system (Israeli firm) but the project itself with use a variety of irrigation methods.

Agro EcoEnergy is running a training program for out-growers component of the project helping farmers set up private companies and training them in improved farming practices of food crops. In opinion of the interviewed trainers, the farmers will soon be planting sugarcane seeing profit opportunity in availability of a steady market. While according to schedule the out-growers component is to begin by 2017, it may be operational very soon. The consultant has also met with NGOs (ActionAid local office in Bagamoyo and Hanaan Environmental) and visited Project Affected

Populations (PAPs) in Razaba community as well as members of the Barabaig pastoralists. Agro EcoEnergy is providing them with basic literacy training and/or poultry rearing. While the land to be transformed into the plantation is classified as abandoned ranch, a number of people have seasonal or permanent small plots of food cultivations. In case of Razaba community they expressed anger and confusion with regard to relocation plans and complains with regard to inability to plan for future cultivations. Some also expressed potential positive outcomes with regard to training in literacy being offered. The pastoralist community utilizing grazing land is particularly large due to

draught events and the plans foreseen for the pastoralists take into account only a very limited number of families being able to remain and use small portion of land for grazing and access to dams.

249 According to the Demonstration Farm Manager and staff of Agro EcoEnergy 250 The project incorporates a comprehensive Community Development Programme to build up production capacity of the out-

growers over a four year period from when the local process industry is in place 251 previously used as a cattle ranch but operations ceased during 1994 252 Company mentions that 17 families will be able to remain on the land while being introduced to “modern cattle grazing

techniques” 253 For detailed description of the project please see ESIA: http://www.afdb.org/en/documents/environmental-social-assessments/




In conclusion, it is difficult to assess overall developmental benefits of the Bagamoyo project at this stage of its implementation. There seems to still be critical confusion among parties interviewed with regard to the actual “project area” with some reporting that the project will be stretching in some areas 1km into the Sadani National Park. The issue of water use, water rights and any water use payments remains insufficiently detailed254, for example regarding the effect of water flow changes on the mangrove areas, local biodiversity or relationship between large scale irrigation and malaria. General impact on rich biodiversity of the area and waste management should also be closely monitored. One visited community reported lack of knowledge about the planned phases and relocation plans. As the land for project is classified as “General Land”, PAPs do not formally qualify for compensation but according to international standards must be provided with suitable relocation options. In the meantime, some positive effects may be expected: the pioneering implementation of “land for equity” can bring potential benefits to the communities depending on its administration and how much would remain with the communities and PAPs; provision of power generation to the communities could also offer tremendous developmental benefit; and opportunities for access to the domestic sugar market could generate increased incomes.

Arusha - Moshi

At the time of the field visit, there seemed to be a general sense among most interviewed parties that large scale Jatropha based investments have mo stly failed due to several reasons including economic slowdown, difficulties in obtain ing credit, bad planning without consideration of basic agronomic principles and fea sibility studies, knowledge of the plant qualities, type of investment (clearly speculation farming) . As of 2012, a number of the most prominent biofuel investment companies i.e. Sun Biofuels, BioShape, Prokon have either suspended, abandoned or sold off to third parties that may or not revive the original projects.

Considering use of Jatropha, the common opinion expressed by the persons interviewed is that the vegetal material needs to be domesticated in order to get more regularity in the yields and a better oil content. In case of small scale Jatropha use , the Mission could visit 2 experiences:

• TaTEDO, a national NGO involved in sustainable energy development projects and programmes in rural areas, also hosting and affiliated to several local and international sustainable energy development partners and networks;

• Diligent, a Dutch private company, developing a business model for existing Jatropha seeds collection for biofuels processing and out-growers scheme.

TaTEDO experiences

TaTEDO is promoting Multifunctional Platform (EU funded) for energy generation and uses in rural remote areas. The “kit” provided includes a generator, a local grid, a press machine for Jatropha seeds and machines for agriculture products transformation (mill). The generator can use diesel and biodiesel as well. The total amount of the equipment reaches 35 million Tanzanian Shilling (Tsh). TaTEDO’s project subsides 80% and the villager’s group pays 20%, through a 3-years credit. The farmers

own the machines and are responsible for the maintenance. At the moment, 8 Multifunctional Platform are in operation when the project aims to implement it in 50 villages.

In the case of Mjimwina village (in Hai District, Moshi), the installation is supplying electricity to 38 houses and an extension is planned to reach 50 houses. TaTEDO sold the equipment to a villager’s group, for a total amount of 35 million Tanzanian Shilling (Tsh) through a 3-years credit. Users pay according to category defined into 2 groups:

• Shop, bar: 1 000 Tsh per day; • Houses: 600 Tsh per day (for light, radio, mobile

phone).

254 See the ESIA for full description of planned water use




This Masaï village has been recently created as people have been displaced from West Kilimanjaro Region (National Park). They began to sow Jatropha seeds provided by TaTEDO. As Jatropha oil production has not start yet, the villagers buy diesel from another village. The engine operates 6 hours per day, under the responsibility of an operator contracted and employed by the villager’s group. He has been trained by TaTEDO on technical issues while the group has been trained in management and financial administration.

An alternative to diesel, while Jatropha will grow in the community, would be to buy Jatropha nuts from other neighbouring villages instead of buying diesel.

Diligent

Due to global economic situation, the company stopped its activity at the end of August 2012. Considering the potential market, the current General Manager is looking for new investors. Diligent activities do not impact on land tenure as it is not looking for land. Its activity creates a market opportunity for existing Jatropha seeds: Diligent paid 300 Tsh per kg, 250 to the farmer and 50 to the collector. The company is advising farmer’s organisation as a leverage point for local sustainability and for development.

A large number of farmers are already familiar with Jatropha traditionally planted as fence between food producting plots. According to a partial appraisal in 2 districts mentioned by the General Manager, raw material exists (it was estimated to 10 million kg). Expansion of Jatropha plantation (always in hedge) is foreseen in conservation agriculture systems255. The collection and transport of the material remain a specific issue to face. Diligent made agreements with several partners to extend access to farmers’ resources and mobilise the seeds at a low price. The farmers have no access to the market for biofuels from Jatropha256. Diligent has performed quality test of the biofuel produced and it is currently developing a partnership with research centres. On the other side of the value chain, Diligent has identified interested customers for its produce from several sectors:

• Safari companies257 (for vehicles, safari camp generators, cooking); • Public institutions (schools, hospital)258; • Alternative substitute to charcoal (after oil extraction, the seed cake can be pressed to

make briquettes with high calorific power).

Jatropha’s genetic material must be analysed and the plant must be “domesticated” as there is a wide diversity of plants, with large difference in oil rate contents, vegetal characteristics and soil / water requirements. To develop industrial model regularity obtained by development of good genotype is needed. Diligent is developing investigation with a Belgium research Centre on Jatropha. More investigation matters include use of sunflower and / or maize residues and potential of the croton nuts259.

5. Summary of identified gaps

Global gaps

Most of the main gaps identified during the desk review have been well-illustrated by the current situation reported by the interlocutors met in Tanzania.

• Even if the biofuel fever in Tanzania in 2008 could be impacted by the EU biofuel policy (initially European companies were clearly hoping to export biofuels to Europe), today the causality between EU biofuel policies and impacts in Tanzania is not very direct as many other drivers affect the strategy and development of biofuels in the country (i.e. national foreign

255 As in the “cotton belt” close to the Lake Victoria 256 A traditional use for Jatropha is local soap 257 There is 250 safari companies in Arusha, the 2 biggest have 300 cars each… Cooperation with Tanzania National Park

(TANAPA) administration is already considered 258 The Regional Commissioner of Kilimanjaro declared that public institutions may not use more firewood or charcoal,

unfortunately without promoting any alternative 259 Croton trees are planted as a windbreak in Kenya and Uganda




investment strategy, national debate on food security, national energy strategy, foreign investment to modernize agriculture sector); the persisting biofuel production seems to have reoriented mainly to local market.

• Currently no exports of biofuels are reported from Tanzania into the EU. However, lack of reliable data (on land availability, on biofuels production in the country, on current investors and status of their operation) does not make it possible to better analyse the current trade situation. Neverthless, level of exports is expected to be low, as according to ACT260, international standards, mandatory for export markets, are very difficult to reach in Tanzania;

• Impacts on land and water are associated with intensive cultivation of large-scale feedstocks for biofuels, as well as in high intensive farming system;

• Fundamental analyses (agronomic assessment and profitability) have not always been thorough and fully respected when applying for investments in biofuels cultivation, despite national priorities as defined in the Guidelines for Sustainable Liquid Biofuels Development (i.e. ESIA, financial feasibility). Dubious approach to environmental and social assessments (for example in the case of SEKAB T) has been reported;

• According to the Tanzanian experiences, inclusive business models that involve smallholder farmers as active partners appear to be more sensible than those based on large-scale land acquisitions; they may consider contract farming arrangements, out-grower schemes, joint ventures and/or more innovative models as the forthcoming “Land for Equity” still under development;

• In the positive cases of TaTEDO and Diligent (to a certain extend), biofuel development designed in a sustainable way increase local access to energy, improve remote rural areas livelihoods, contribute to rural development and to added-value to agricultural products and not lead to an increase in deforestation;

• Transfer of technology has not been documented in the projects visited nor specifically mentioned by the interlocutors.

Specific gaps on biofuels development and instituti onal framework

• In Tanzania, a number of large scale biofuel investments have recently been abandoned, sold or ceased their operations i.e. Sun Biofuels, Bioshape, SEKAB (replaced by Agro EcoEnergy), PROKON; many promises (creation of new jobs, infrastructure, training and transfer of technology) were not fulfilled as expected leading to scepticism in farmer’s expectations from biofuels. Many of these companies have been European and it can be perceived that they began their operations with the view to export biofuels for the EU markets;

• The reasons for failure seem to be linked to several drivers, including poor initial analysis (speculation farming without consideration of basic agronomic principles and properly carried feasibility studies), difficulties in obtaining legitimate land access, conflict with local communities over land and water related resources, insufficient investors solidity, overly short term vision and insufficient consideration of the most adequate business model;

• There is a domestic market for biofuels: rural energy supply, tourism operators, public institutions and industries;

• The potential for biofuels development in the country must be further studied and strongly documented in order to build a comprehensive strategy based on scientific knowledge (mapping of suitable areas per crop, thorough understanding of crop’s soil and water requirements, reliable data on yields and real cost-benefit analysis including social-economic impact assessments);

• Diligent experiences, as well as evaluation of projects supported by the Energy Facility, highlight that Jatropha is still in an early stage of development as a biofuel producing plant suited to small and large scale. Ambitious expectations on yields and growth have not

260 Agricultural Council of Tanzania, December 2012




been achieved and it is recommended that Jatropha’s agronomy and yield characteristics must be better developed;

• There is no updated, national database on operation status of registered biofuel companies by TIC, neither by other public body;

• Guidelines for Sustainable Liquid Biofuel have been developed in a participatory way. They consider the realization of an ESIA and an economic feasibility study but the mitigation plan (Environmental and Social Management Plan - ESMP) is not detailed enough nor is it respected. The legislative force of the Guidelines will depend on the National Liquid Biofuel Policy (currently in draft, expected to be discussed in the Parliament in Spring 2013) and on the Biofuels Act (foreseen by the end of 2013);

• Coherence and harmonization of policies in Tanzania (Power System Masterplan / Biomass Strategy Policy / National Liquid Biofuels Policy) are necessary to better define the national energy mix and the role of each type/source of energy;

• Lack of a coherent/coordinated approach between governmental bodies with regard to land availability issue in the country vis-à-vis foreign investment and development priorities is highly detrimental and can lead to negative impacts (food security/ energy; economic and social development in rural areas / modernization of the agricultural sector; domestic market / exports; raw material / final transformed products);

• Main environmental concern is on natural resources management (deforestation for firewood and charcoal where biofuels could become a positive alternative) as well as water rights and water payments in the case of feedstocks for biofuel;

• A national-wide SEA would help to develop an in-depth analysis of the environmental impacts of biofuels development in the country.

Specific gaps on biofuels development and land issu es

• As Tanzania has still not completed full demarcation and national level surveys of customary land use in accordance with its land reform, conflicts between local populations, investors and government at different levels can be expected: “the house is not in order yet261”;

• Increased attention and resources should be made available for the finalization of the process of issuing of CCRO’s and Village Land Use Plans;

• Land security for village communities should be guaranteed, even in the case where villagers lease land to foreign investors, subject to prior informed consent based on full , reliable and complete information, and including appropriate safeguards (in particular in the case of failure of investments);

• Access to water rights is becoming more and more acute, deals already concluded have ignored local community’s water use rights: an increasing number of tension and conflict situation is reported and are likely to grow in importance;

• The preparation of the “Land for Equity” proposal should be closely monitored in order to analyse how benefits and shares will be distributed between central government, district level and local communities. In addition, the concept also needs more scrutiny if it is to be transformed into legislation.

261 HakiArdhi Executive Director, December 2012




Bibliography

Academia

GEXSI (2008). Global market study on Jatropha. Final report, Chapter 4.2 Africa.

Havenevik, K., Haaland H. and Abdallah J (2011). Biofuel, land and environmental issues – the case of SEKAB’s biofuel plans in Tanzania. In cooperation between Nordic Africa Institute, The University of Agder, Norway and Sokoine University of Agricultural Sciences, Tanzania.

Nathan E. Hultman, Emmanuel B. Sulle, Christopher W. Ramig and Seth Sykora-Bodie (2012). Biofuels Investment in Tanzania: Policy Options for Sustainable Business Models. The Journal of Environment Development published online 7 May 2012.

Pedersen, Rasmus Hundsbaek (2010). Tanzania’s Land Law Reform: the Implementation Challenge. Danish Institute for International Studies Working Paper 2010:37.

Sulle, Emmanuel and Nelson, Fred (2012). Biofuel investment and Community Land Tenure in Tanzania, The Case of Bioshape, Kilwa District. Tanzania Natural Resource Forum and Maliasili Initiatives.

Sulle, Emmanuel and Nelson, Fred (2009). Biofuels, land access and rural livelihoods in Tanzania. International Institute for Environment and Development and Tanzanian Natural Resource Forum.

International Institutions

ADB (no date). Bagamoyo Sugar Project. Executive Summary of the Environmental and Social Assessment.

ADB (no date). Bagamoyo Sugar Project. Executive Summary of the Resettlement Action Plan.

Arias Pedro, Hallam David, Suffyan Koroma and Pascal Liu (FAO 2012 a). Trends and Impacts of Foreign Investment in Developing Countries Agriculture. Evidence from Case Studies. FAO.

Arndt Channing, Pauw Karl and Thurlow James (2010). Biofuels and Economic Development in Tanzania. IFPRI.

CIFOR (2011). A global analysis of deforestation due to biofuel development, Chapter 1.10 “Biofuel development in Tanzania”, p 81 – 84.

Daley, Elizabeth and Mi-Young Park, Clara ( FAO 2012b). The Gender and Equity Implications of Land-Related Investments on Land Access and Labour and Income Generating Opportunities. A Case Study of Selected Agricultural Investments in Northern Tanzania. FAO.

Eijck Janske van (2008). Case study: The Smallholder Model of Biofuel Production in Tanzania. GTZ and ProBEC.

FAO (2008). The State of Food and Agriculture, Biofuels: prospects, risks and opportunities, Box 14 “Biofuels crops and the land issue in the United Republic of Tanzania” p 84.

FAO – BEFSCI (no date). Diligent.

UNI-IAS (no date). Biofuels in Africa. Impacts on Ecosystems Services, Biodiversity and Human Well-being.

World Bank (2010). Bioenergy development. Issues and impacts for poverty and natural resource management, Box 2.4 “Charcoal Production in Tanzania” p 66.

United Republic of Tanzania

Ministry of Energy and Minerals (2010). Guidelines for Sustainable Liquid Biofuels Development in Tanzania.

Ministry of Energy and Minerals (2012). First Draft. National Liquid Biofuels Policy.




Non-governmental Organizations

ActionAid Tanzania (2009). Implications of Biofuel Production on Food Security in Tanzania.

Practical Action Consulting (2012). Jatropha: the broom of poverty; myth or reality? A critical analysis of the Zimbabwean Jatropha programme in Mutoko district.

TABEF (2012). Gaps and Recommendations of the first draft National Liquid Biofuels Policy.




ANNEXES Annex 1: Itinerary

Date Activities

02 - 03.12.12 Europe - Tanzania

04.12.12 Organization of the mission

Meetings with Action Aid (land issues)

05.12.12 Meetings with the EU Delegation (energy), Researcher (land issues, biofuels and environmental impacts) and Agro EcoEnergy Tanzania (private company for biofuels production)

06.12.12 Meetings at the Agricultural Council of Tanzania (agriculture sector and biofuels), team experts for “Land Equity”, Tanzania Federation of Cooperatives (farmer’s organisation)

07.12.12 Meetings with Oxfam (land and biofuels), HakiArdhi (land rights and resources), TaTEDO (energy, renewables)

08.12.12 Synthesis

Literature revision

09.12.12 -

10.12.12 Meetings with Ministry of Agriculture (food security, biofuels, national strategy), ANSAF, TIC, researcher

11.12.12 Travel to Bagamoyo

Meetings with the Agro EcoEnergy project (responsible for out-growers

component)

Travel to Arusha

Meetings with TNRF

12.12.12 Visit to the Demonstration Farm (Agro EcoEnergy project)

Travel to Moshi, meetings with TaTEDO and visit the Multifunctional Platform in Mjimwima village (Hai District)

13.12.12 Visit to Razaba community and pastoralist communities (Agro

EcoEnergy project)

Return to Dar Es Salaam

Meetings with Diligent, contact with researcher

Return to Dar Es Salaam

14.12.12 Debriefing at the EU Delegation.

Meetings with the Ministry of Energy & Minerals

14 – 15.12.12 Tanzania - Europe

During its stay in Dar Es Salaam, the mission tried to meet with the Ministry of Land and Human Settlements, the National Environment Management Council (NEMC), UNDP, UNEP FAO, the Universities (Sokoine University of Agriculture – SUA and Faculty of Forestry and Nature Conservation), but it has not been possible to confirm appointments.




Annex 2: List of Biofuels Companies Registered by T IC

BIOFUEL COMPANIES REGISTERED by TIC

Project Location Activities Jobs Value in Mln USD

Foreign Local Total

Enviro-Fuel Technologies T

P. O. Box 42355, DSM DSM Bio-fuel 29 3,000 1,938 4,938

Africa Biofuel & Emission

Reduction (T) Ltd.

P.O. Box 14317, Kagera

Biharamulo Area

Kagera

Bio-Fuel Product 60,000 hectares of plantations

4500 15 6,52 21,52

Prokon Renewable Energy

Solutions and Systems Ltd Rukwa

To establish and operate facilities for producing Jatropha

based bio fuels/ 11,008 litres of oil p.a.

54 1,845 4,307 6,152

TM Plantations Ltd.

P. O. Box 772, Kigoma Kigoma Oil Palm Plantation 35 70 - 70

Sivas Africa Ltd.

P. O. Box 15398, DSM DSM Agriculture Bio Diesel 185 7 314 0 7 314

Bio Shape (T) Ltd

Box 20787 Lindi Lindi Jatropha Plantation 1000 10,883 0 10,883

Mtongani Paharmacy Ltd

Box 25476 Dsm Kagera Kakindo Sugarcane Farm 171 0 3,539 3,539

Tanga Forests Ltd

Box 171 Tanga Tanga Pangani Tree Plantation 253 6,8 0 6,8

Africa Green Oils Ltd

Box 34463 Dsm Coast Rufiji Palms for Edible oil 1000 21,615 41,461 63,076

Arkadia Ltd

Box 5468 Tanga Tanga - Mkinga Jatropha Plantation 1000 2,412 0 2,412




Annex 3: Persons met

Institutions Name Position Contact

National institutions

Ministry of Agriculture, food and cooperative

Mr. Mohamed SAIDI Permanent Secretary [email protected]

Mrs. Ada MWASHA Acting Assistant for Crop promotion Section

Mrs. Esther MFUNGALE

Crop promotion Section [email protected]

Ministry of Energy & Minerals

Edward Leonard ISHENGOMA

Acting Assistant Commissioner –New & Renewable Energy

[email protected]

Paul KIWELE Coordinator Biofuels Project

[email protected]

Tanzania Investment Centre

Tibenda NJOKI Senior Statistician [email protected]

Agricultural Council of Tanzania

Saidi S. SAIDI Networking Officer [email protected]

Cleophas C. RWECHUNGURA

Communication Officer [email protected]

Laetitia WILLIAM Policy Officer [email protected]

Tanzania Federation of Cooperatives

Willigis O. MBOGORO Executive Secretary

[email protected] Agnes S. NAMUSHISA

Director of Coop. Development

Ahadiel E. MMBUGHU

Research & Management Officer

International institution

Delegation of the European Union to Tanzania and the Eastern Africa Community

Baptiste BOBILLIER Programme officer Energy [email protected]

Private sector

Agro EcoEnergy Tanzania

Per CARSTEDT Executive Chairman [email protected]

Anders BERGFORS Managing Director [email protected]

Mike OGG Responsible for the Out-growers component

[email protected]

Ian Sherry

Andre FAYD’HERBE Manager of Demonstration Farm Bagamoyo

Diligent Jan GEVAERT General Manager [email protected]

NGO and Civil Society

Actionaid International

Scholastica HAULE Policy Director [email protected]

Bernard Paul BAHA Land Accountability [email protected]




Tanzania Programme Manager

Stephen CHIMALO Director Bagamoyo District Office

[email protected]

Oxfam Marc WEGERIF Economic Justice Campaign Manager

[email protected]

Haki Ardhi Yefred MYENZI Executive Director [email protected]

TaTEDO

Estomih N. SAWE Executive Director [email protected]

Gisela NGOO Expert in rural energy, environment and gender

+255 022 2700438

Thomas MUKUNDA Moshi Office Officer +255 713 496 207

Dora URIHO Moshi Office +255 767 000 722

Agricultural Non State Actors Forum

Audax RUKONGE Executive Secretary [email protected]

Tanzania Natural Resources Forum

Geoffrey MWANJELA Head of Programmes [email protected]

Hanan Environmental Magreth MAINA Training Officer

Researchers

Prosper NGOWI Mzumbe University Economics & Business [email protected]

Emmanuel SULLE Independent Biofuels in Tanzania [email protected]

Fred NELSON Independent Biofuels in Tanzania [email protected]

Local communities

Bagamoyo Villagers from the Razaba Community

Pastoralist communities

Moshi Villagers in Mjimwina, TaTEDO Multifunctional Platform

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