Terence J. Centner, The University of GeorgiaStrategic Directions in Social, Legal and Environmental Dimensions

of Research on Biofuels – September 25, 2010

We heard some reasons this morning.

There are any number of reasons.For me, the primary reason involves the maximization of resources.Second, with the development of biofuels, inadequate consideration has been given to negative externalities. The major way to respond to externalities is through governmental intervention.

We expect to learn more about this later today in the sessions on policy, economics, and regulatory dimensions.

So let’s return to resources. What are the resources that should be considered?

Land.People.Communities.Agriculture.Biomass.Technology.Bioengineering.

But what is missing from this list?

What about the sun, wind, and waste?Why should we want to use these resources? With respect to biofuels, can we do more to incorporate the use of these resources?

Why should we want to use these resources? Non-rival resources.

Their use does not detract from using biomass for other purposes including food and as a soil amendment. With respect to biofuels, can we do more to incorporate the use of these resources?

Obviously, yes.Of these, let’s look at waste.

Discarded materials.Mis-utilized materials.Underutilized materials.Unnecessary uses of resources.

What might these be in relation to agriculture?

Manure, chicken litter, biosolids that are discharged.Over-application of nutrients on fields.Burning sources of carbon that could be used to produce energy or improve soil quality.Excessive and unnecessary transport expenses.Landfilling biodegradable materials.Underutilizing outputs.

Have identified agricultural wastes.Let’s also consider the negative externalities accompanying biofuels.

What are some of these externalities?

Soil erosion and removal of organic matter.Deforestation.Pesticides and chemicals in the environment.Denigration of water and air quality.Pollution damages.Barriers to trade and negative impacts on other countries.Higher food prices and loss of biodiversity.Increase in CO2

What might we do about wastes and negative externalities?

Alter our research and policies to address the issues associated with wastes and externalities.Engage in energy modeling, being sure to account for these issues. Recognize renewable energy’s growth pains.

Getting bogged down in creating energy without considering all the consequences. Non-optimal legislative directives.Short term results rather than long term gains.Considerable negative public feeling that biofuel production involves negative externalities.

What do these suggest?

What do the issues suggest?We need to ways to meet the objectives of using biomass for energy.We may want to consider a fourth generation of biofuels based on stewardship and CO2 accounting.

So where should we go with our biofuels research?

Each of us has special talents and gifts.EBI’s mission has been expressed as harnessing the potential of bioenergy to make discoveries and commercialize realities out of these (Somerville).However, commercial realities are more than simple financial accounting. Commercialization depends on governmental structures that incorporate political, social, and environmental needs.

What structural components are important to the biofuels industry?

Environmental laws, sustainability concerns, biodiversity, and social justice (Campbell; Endres; Delucia; Khanna; Mironowski; Zilberman).Governance structures, liability for accidents and pollution, and enforcement of contracts and laws (Khanna).Acceptance and adoption of new technology and bioengineering (Bushnell; Moschini; Polaski; Willems).

Which area is lacking a significant research component?

What is governance?Governance means “the interactions among structures, processes and traditions that determine how power and responsibilities are exercised, how decisions are taken, and how citizens or other stakeholders have their say.” Graham et al., 2003; Lockwood et al., 2010.

Researchers have looked at aspects of governance, but more is needed. What might governance research include?

Looking at structures that address externalities, sustainability, and environmental concerns. Developing methodologies to handle risks.Discerning what might be done to alter governance structures with respect to biofuels.

Let’s look and see how a sociologist views new environmental governance structures.

Mol, A.P.J., Environmental authorities and biofuel controversies, Environmental Politics, 19,1(2010):61-79.

Large international corporations.Inability of laws of one country to apply outside of its jurisdiction.Failure of governments to respond to environmental problems.Failures of governments of enforce environmental standards.Political pressure to deregulate and downsize.

What do these changes mean?

Industry must consider multiple authorities:Governmental.Private moral.Private market.Scientific (including ecological) evidence.

Nongovernmental authorities have been referred to as corporate social responsibility or soft law.

This includes the movement for voluntary environmental management (Khanna).

Legitimacy.Transparency.Accountability.Inclusiveness.Fairness.Integration.Capability.Adaptability.

Lockwood et al., 2010.

Integrated decision-making.Stakeholder engagement.Transparency and triple-bottom-line reportingRespect for and implementation of high environmental and social norms.The precautionary principle.Accountability.Community investment

Pitts III, 2009.

Scientists synthesize corporate social responsibility as “stewardship and accountability.”Looking to the future of biofuels, how will stewardship and accountability impact the industry?Will the negative externalities of corn ethanol production create a public backlash against biofuels?

Observance of the law may not be sufficient.Firms may need to adjust activities due to market and social authorities. Firms need to consider new scientific findings to adjust activities so that they do not stray too far from acceptable legal, market, and social norms.

What issues may be important?

Reductions of waste and negative externalities. The productive use of wastes and to minimize externalities.Sustainability through changes in business practices. Accountability to communities, countries, and the world.

How might these affect the biofuels industry?

How to accept and adapt to false premises, incorrect assumptions, missing data, omitted costs, and misallocated resources?How to do more to account for negative externalities and to use waste?What additional efforts can be made to incorporate conservation and sustainability practices.

Firms must remain dynamic and be ready to change. Will want to continue to differentiate different types of biofuel.Greater emphasis on biomass sources. Must consider the risks associated with dependence on specialized governance structures.

What can we offer the biofuels industry to respond to societal stewardship and accountability?Would the exploration of bioscience for increasing energy production and reducing the impact of energy consumption on the environment be enhanced by additional consideration of government structure?

While some research looks at the issues of structure, what might future research involve?

Structures to encourage the beneficial use of waste.More effective governmental regulation of externalities.Enhancement of governmental performance.Meshing corporate social responsibility with governmental regulation. Enhanced educational efforts.

Interpret principles of corporate social responsibility for biofuels production.Analyze responses to other externalities for ideas to employ in responding to social issues involving biofuels.Develop responses to address negative externalities. Communicate ideas to scientists, researchers, and the industry.

Water pollution regulations for concentrated animal feeding operations.Sodbuster, swampbuster, and manurebuster.Air pollution’s administrative reporting exemption.De minimis hazardous waste treatment exemptions.Environmental Management Systems.

Tiered permitting system.Best management practices.Provisions for storm events.Exceptions for agricultural stormwater discharges and operations without discharges.

These regulations present ideas for new paradigms to respond to social issues affecting biofuel production.

Animal and biomass production compete for land and food inputs.Efficient animal production can free land and food inputs for other uses. Biofuel byproducts can be used for animal feed, and animal byproducts can be used as a biofuel.Symbiotic relationships between animal production units and biofuel production.

Research on governance can enhance EBI’s mission to harness bioenergy.Regulatory structures from other activities provide ideas for developing structures to acknowledge stewardship and accountability in biofuels production.Governance structures may be advantageous to manage agricultural intensification resulting from the use of scarce land and food resources.

Harnessing the potential of bioenergy.Better use of scarce land and food resources.Reductions of externalities and waste.Governance changes to account for stewardship and accountability. Developing new governance structures to respond to social authorities and augment the production of bioenergy.