The Global Impacts of Rising Biofuel Mandates and Targets
In collaboration with ActionAid USA, I just co-authored a new study on the high social and environmental costs of government mandates and targets for biofuel consumption. As the summary below suggests, when oil prices are low such mandates, such as the Renewable Fuel Standard (RFS) in the United States, prop up biofuels markets. As the study shows, the United States is the worst biofuels offender. On our present course, we will remain by far the largest global consumer in 2025, contribute the most new demand to global consumption, and do so using the feedstock – corn – that provides the fewest environmental benefits and most directly competes with food and feed markets. Reform is desperately needed, and current proposals in Congress to scale back RFS mandates should be enacted.
Expanding demand for biofuels, fed significantly by government policies mandating rising levels of consumption in transportation fuel, has been strongly implicated in food price increases and food price volatility most recently seen in 2008 and 2011-2012. First-generation biofuels, made from agricultural crops, divert food directly to fuel markets and divert land, water and other food-producing resources from their current or potential uses for production of feed for animals and food for human consumption.
A key policy driver of biofuel consumption is government mandates to increase or maintain rates or levels of biofuel blends in transportation fuel, the U.S. Renewable Fuel Standard and the E.U. Renewable Energy Directive being the most prominent cases. Mandates prop up demand for biofuels, particularly at times when oil prices are relatively low. In a new GDAE Working Paper, Timothy A. Wise and Emily Cole assess the spread of such mandates and targets, finding that at least 64 countries now have such policies. A related policy report from Action Aid USA calls for immediate policy reform.
The authors estimate the consumption increases implied by full implementation of such mandates in the seven countries/regions with the highest biofuel consumption, suggesting a 43% increase in first-generation biofuel consumption in 2025 over current levels. A 43% increase over current levels would likely require 13-17 million hectares more land than we are currently already devoting to biofuel production and approximately 145 billion more liters of water. Some international agencies anticipate even higher levels of biofuel consumption.
The authors assess the likelihood of implementation in key countries and regions, which suggests that with reform, particularly in OECD countries, consumption growth could be slowed. The European Union is considering reforms that would reduce further growth in demand for first-generation biofuels by 50%. The United States would do well to consider similar reforms that recognize the food-versus-fuel conflict.
The United States is expected to remain by far the largest global consumer of first-generation biofuels in 2025, contribute the most to global consumption, and do so using the feedstock – corn – that provides the fewest environmental benefits and most directly competes with food and feed markets. Even a modest reform, such as that proposed by the Environmental Protection Agency in 2013 to scale back the Renewable Fuel Standard, would reduce projected consumption growth in 2022 by one-third. More ambitious proposals in Congress to eliminate consumption mandates for first-generation biofuels go even further.
Mandates must be scaled back, and strict sustainability criteria must be applied to mandates for both first and second-generation biofuels. Otherwise, governments are mandating not just biofuel consumption but hunger and unsustainable resource use.
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