New Biofuels ProjectsProposed for 2008

Jeff Skeer, ChairAPEC Biofuels Task ForceFourth Meeting25-26 OctoberBangkok, Thailand

Projects Proposed for 2008

Biofuel Resources:Biofuels on Marginal LandsBiofuel Resource Elasticity

Biofuel Economics and Trade:Biofuel Employment ImpactsBiorefineries and Trade

Biofuels on Marginal Lands: Objective

The project aims to understand how the biofuelresource potential in APEC economies may be augmented through the effective development of marginal and underutilized lands which are poorly suited to conventional agricultural crops (due to limited water, poor soil quality and other factors) but well suited to the production of non-food biofuel feedstocks such as jatropha (for biodiesel) and grasses (for ethanol). An associated objective is to build the capacity of developing APEC economies to assess the potential for additional biofuels production from such lands.

Biofuels on Marginal Lands: Situation

Various APEC economies have large amounts of marginal land that is currently underutilized, but that holds potential for the production of nonfood biofuel feedstocks (such as jatropha and grasses). However, the amounts of such land in most economies have not been systematically assessed. Further, energy experts may be unaware of this resource potential.

The Biofuels Task Force Report to EMM-8 indicates that biofuelsfrom a wide variety of crops are cost-competitive. For example, biodiesel from jatropha in Indonesia, which would be grown on marginal land, could compete with conventional diesel at crude oil prices of $52 per barrel or higher.

This implies substantial potential to expand biofuels production on marginal land that has not heretofore been utilized for productive agricultural purposes.

However, as advancing biofuels production technologies and higher oil prices have only converged in the marketplace quite recently, this potential is as yet poorly understood.

Biofuels on Marginal Lands: Outcomes

By sharing information in a systematic way, the project will make it possible to give energy experts, agricultural economists, and officials in energy and agriculture ministries a clearer picture of the marginal land available to biofuel resource production throughout the APEC region, and thus a better sense of the potential of biofuels to limit the upward pressure on oil prices and demand.

Since such people will help to formulate and conduct the analysis and to review project outputs, their capacity to assess the potential for biofuelsproduction on marginal lands should be enhanced.

Biofuels on Marginal Lands: Benefits for Developing Economies

Rural populations would receive a particular boost from development of biomass resources on marginal lands, which may raise rural incomes not only by boosting demand for these nontraditional fuel sources, but also by making it possible to utilize and monetize portions of land that are currently wasted. Development of biofuel resources on lands that are currently underutilized and unsuitable for agriculture would not compete with land use for growing food.

Biofuels on Marginal Lands: Knowledge for Policymakers

To what extent could marginal lands, previously considered worthless, be opened up to agricultural production?Do such marginal lands need to be better surveyed to have a fuller understanding of the potential? To what extent can the use of marginal lands expand the overall potential for displacement of conventional petroleum for transport?

Biofuels on Marginal Lands: OutputsA report on marginal and underutilized land in APEC economies, summarizing the land resources that are available and suitable to nonfood biofuel feedstock planting, and conclusions about the amount of each type of resource that could be technically available, harvested sustainably, and either used locally or moved to regional markets on existing road networks. Conclusions about the amounts of biofuel resource that could be harvested from marginal lands will be stated in common units such as tons of ethanol or biodiesel and barrels of gasoline or biodiesel displaced. Report will attempt to synthesize information across the APEC region on the portion of current and future demand for petroleum products that biofuel resources from marginal lands might ultimately displace.Report will make preliminary evaluation of the nonfood biofuel resource potential in various APEC economies.

Biofuels on Marginal Lands: Information Request of Task Force

During the second half of 2007, BiofuelTask Force members and EWG members will be requested to provide information on the amount of marginal and underutilized lands in their respective economies that might be developed for production of biofuel feedstocks. Interested Biofuel Task Force members would volunteer to summarize the information provided, drawing implications for biofuel resource potential.

Biofuels on Marginal Lands: Consultant Study and Report

During 2008, consultants selected will compile additional information on the availability of marginal and underutilized land for biofuelproduction, assess gaps in available data on such land, recommend strategies for more comprehensive surveys of such land in interested economies, and prepare a draft report on the potential for enhanced biofuelproduction and oil displacement that may arise as marginal lands are more fully exploited, with due regard to the need to develop such lands in an environmentally sustainable way.

Biofuel Resource Elasticity: Objective

The project aims to understand how the biofuelresource potential in APEC economies is affected by the market price of major biofuel feedstocks, as well as to build the capacity of developing APEC economies to assess the impacts of feedstock prices on biofuel production potential. Insofar as growing demand for biofuels may tend to raise market prices for feedstocks such as corn, sugar, and palm oil, the study aims to determine the extent that higher prices may stimulate greater feedstock output through enhanced crop yields and shifting of land to feedstock production. It will also indicate how increased prices and output of biofuel feedstocks can raise the incomes of rural households.

Biofuel Resource Elasticity: Situation

APEC economies are aware of the potential for the market price of major biofuel feedstocks to affect biofuel resource potential, but not of the extent that the use of marginal or underutilized lands and the use of new technologies to boost output can ease food and fuel production tradeoffs and land limitations while boosting rural incomes. Biomass feedstock production is expanding rapidly in the U.S. and Brazil in response to higher prices, boosting rural incomes.Increased crop prices, biofuel output, and rural incomes can also be anticipated in developing economies of APEC. And with higher feedstock prices, it becomes economical to farm more intensively, with more careful irrigation, with more crops grown from more expensive and higher-yielding seed. Yet the extent to which higher prices lead to greater productionthrough increased planting and more intensive cultivation – the price elasticity of feedstock supply – is not well understood. And the resulting potential to enhance the incomes of men and women in rural areas is also not well understood.

Biofuel Resource Elasticity: Outcomes

By sharing information in a systematic way, the project will give energy ministers and leaders a clearer portrayal of how biofuel resource potential relates to the market price of major biofuel feedstocks.It will also show how greater use of marginal lands and new technologies may boost output, easing food and fuel production tradeoffs and land limitations. Officials and economists from developing economies will be better able to assess such relationships between feedstock market prices and biofuel resource potential. And by showing how strong demand for biofuelfeedstock can boost rural incomes, the project will clarify how women and men in farming households of developing APEC economies can benefit.

Biofuel Resource Elasticity:Benefits for Developing Economies

By building understanding of current and potential biofuel resources, which takes account of land limitations, tradeoffs between food and fuel production, and the potential of new technologies to boost biofuel output, the project should encourage the development of such resources. Development of infrastructure for production and distribution of biofuels should ensue, as a means of displacing oil consumption in transport. Developing economies would receive a particular boost from development of biomass resources through greater agricultural employment opportunities in unindustrialized rural areas.

Biofuel Resource Elasticity:Knowledge for Policymakers

To what extent is biofuels production likely to increase in response to higher prices for crops that stem from growing biofuels demand? How will this enhance the incomes and wellbeing of women and children in farming communities? What are the implications for land use planning and agricultural support payments? What kinds of shifts might be anticipated in the mix of crops planted and the amounts of land used to grow them? To what extent can the overall potential for displacement of conventional petroleum expand?

Biofuel Resource Elasticity: Outputs

A report on how the biofuel resource potential in APEC economies may be affected by the market price of major biofuel feedstocks. Summaries, by economy, of how growing demand for biofuels is likely to raise market prices of feedstocks such as corn, sugar, and palm oil. Analysis of the extent to which higher prices could stimulate biofuel output through enhanced crop yields and shifting of land to feedstock production. Synthesis of information across the APEC region as to the potential for intraregional trade, best practices for biofuel feedstock production, potential for enhanced rural development, and greater GDP.

Biofuel Resource Elasticity:Information Request of Task Force

Biofuel Task Force members are asked to provide information on how biofuel production in their economies has translated into higher market prices for biofuel feedstocks, enhanced crop yields and/or shifting of land to feedstock production.

Interested Biofuel Task Force members would volunteer to summarize the information.

Consultants selected would compile additional information and perform analyses in order to prepare the final report for the Energy Working Group after review by the Task Force.

Biofuel Resource Elasticity: Consultant Study and Report

Active participation will be sought in particular from the economy, energy, and agriculture ministries that are expected to benefit from the analysis undertaken. Input will be sought from universities with experience in modeling the response of agricultural resources to price.Input will be sought from agribusiness firms that adjust their crop mix and practices in response to changing prices.

Biofuels and Employment: Objective

The project aims to understand how the expanding markets for biodiesel and ethanol for transport fuel may expand employment opportunities for men and women in APEC economies. Particular attention will be given to how a certain amount of biofuel production may boost employment in the farm sector (which raises the feedstocks for production) and the biofuel sector (which converts the feedstocks to biodiesel and ethanol) and may advance rural development goals.

Biofuels and Employment: Situation

We lack a clear understanding of how much given amount of biofuel production could boost employment in the farm and biofuel sectors of developing APEC eocnomies. But the Biofuels Task Force report to EMM-8 indicates, for example, that biodiesel from palm plantations in Malaysia can compete with conventional diesel at crude oil prices of $41 per barrel, while biodiesel from jatropha in Indonesia could compete at crude oil prices above $52 per barrel.This implies substantial potential to expand biofuelsproduction in a cost-effective and environmentally sustainable fashion, with corresponding growth of employment for both men and women in developing economies. But as better biofuels production technology and higher oil prices have only converged in the marketplace recently, this potential is substantially unrealized and poorly understood. And there may be educational and training barriers that prevent men and women from sharing equally in this potential.

Biofuels and Employment: Outcomes

By sharing information in a systematic way, the project will give energy experts, agricultural economists, labor economists, and officials in energy, agriculture and economy ministries a clearer picture of the potential of expanded biofuelsmarkets to boost employment of men and women in the farm and biofuel sectors of APEC economies, as well as barriers to the achievement of this potential.

Biofuels and Employment: Benefits for Developing Economies

By building understanding of how expanding markets for biodiesel and ethanol for transport fuel creates employment opportunities, the project should encourage the development of such resources, as well as the infrastructure for production and distribution of biofuels, as a means of displacing oil consumption in transport.Rural populations would receive a particular boost from development of biomass resources through greater agricultural employment opportunities; developing APEC economies should benefit especially in this respect.

Biofuels and Employment:Knowledge for Policymakers

What employment opportunities for men and women could be created by expansion of biofuels production? What training programs are needed so that men and women from less advantaged backgrounds may share in these opportunities? How much might economic output increase, and government support payments be reduced, as a result? What pace of biofuels market expansion and resulting employment growth might reasonably be anticipated?

Biofuels and Employment: Outputs

A report on how expanding markets for biodieseland ethanol for transport fuel has expanded employment opportunities in APEC economies.

Summaries, by economy, of how incremental biofuel production could boost employment in the farm sector and/or biofuel sector.

Synthesis of information across the APEC region as to the potential for cross-border trade and the resulting increase in employment and GDP, as well as for improved balance of payments.

Biofuels and Employment: Information Request of Task Force

Biofuel Task Force members would be requested to provide information on the topic. Interested members would volunteer to summarize the information. Consultants selected would compile additional information and perform analyses in order to prepare the final report for the Energy Working Group after review by the Task Group on BiofuelEconomics and Trade.

Biofuels and Employment:Consultant Study and Report

Active participation will be sought in particular from the government energy, agriculture, economic and planning ministries that are expected to benefit from the analysis undertaken. Input will also be sought from private firms with experience in biofuelsproduction, since there is likely to be ample empirical evidence of the employment associated with such production.

Biorefineries and Trade: Objectives

The project aims to show APEC decision makers recent advances in development of biorefineriesthat integrate biomass conversion processes to produce both biofuels and high-value co-products.

Bring together experts involved in the development of bio-refineries so that APEC decision makers can benefit from their experiences in setting up policies.

Hold a workshop to discuss the future of bio-refineries: technological and economic prospects, market penetration, and trade opportunities.

Prepare a report to integrate and synthesize the information gained in the workshop.

Biorefineries and Trade: Situation and Outcomes

Biorefineries, which are very promising for providing transport biofuels and high value co-products, are gradually emerging in Europe and APEC region. Many projects to develop biorefinery technology are being carried out, and the products are expected to be traded across economies before 2015. Long-term success will be reflected in sustaining the bio-refinery technologies and new industry-government initiatives.

Biorefineries and Trade: Outputs

A workshop on biorefinery developments, A report on the workshop, with executive summary, in paper and electronic form.References for development of biorefinerytechnologies in the APEC region, based onevaluation of technological and economic potential, expected market penetration, trade opportunities, and lessons from experience in Europe and United States.

Thanks for listening!