Biofuels Market

Liquid biofuels have been in use ever since Rudolf Diesel ran his engine on peanut oil at the World’s Fair in Paris in 1900. Due to concerns related to greenhouse gas emissions from fossil fuels, worries over national energy security and various socioeconomic concerns, biofuels regained popularity toward the end of the twentieth century. Bioethanol and biodiesel gained prominence during the 1970 oil crisis as an alternative to fossil fuels for use in transportation in Brazil. For the rest of the world, however, biofuels are a phenomenon of the last 10 to 12 years, as the European Union, the United States and many other markets started subsidizing biofuels partly in a quest to compensate farmers for the phasing out of conventional agricultural subsidies under World Trade Organization pressure and partly to help reduce greenhouse gas emissions.

Many governments around the world have now implemented ambitious targets and policies to promote biofuels. For example, the European Union has endorsed a mandatory target of a 20 per cent share of all energy from renewable sources in overall energy consumption by 2020 and a mandatory 10 per cent target (a recent plenary vote in the European Parliament yielded an agreement to cap the contribution of first-generation biofuels at 6 per cent, as discussed later in this report) to be achieved by all member states for the share of biofuels in the transport sector by 2020. As a result, the world production of ethanol and biofuels doubled between 2005 and 2012.

The global aggregate production of bioethanol and biodiesel averaged 124,141 million litres per year from 2010 to 2012 (Organisation for Economic Co-operation and Development (OECD) & Food and Agriculture Organization of the United Nations (FAO), 2013). Sugar and cereal crops such as maize, sugar cane, sugar beet, cassava, wheat and sorghum are important feedstocks for ethanol production, while oilseed crops such as rapeseed (canola), soy, palm oil and jatropha are important for biodiesel. Due to the wide variety of feedstocks that may be made into biofuels, many countries around the world can participate in the biofuels market. However, despite the initial enthusiasm related to the promises of an alternative source of energy that could replace fossil fuels, significant problems with producing biofuels at a large scale have begun to emerge as the industry develops. Many observers have claimed that biofuels may not reduce greenhouse gas emissions as much as originally anticipated and that they may compete with food production and, subsequently, affect food security and food prices (, 2012; Fonseca et al., 2010; Hamelinck, 2013; Laborde, 2011). Important environmental consequences of biofuels expansion also include the loss of biodiversity, land use change impacts, and the depletion of rainforest and scarce water resources. Some of these issues can be addressed by promoting the use of feedstocks compliant with voluntary sustainability initiatives in biofuel production.

The main voluntary standards covering biofuels for specific crops are the Roundtable on Sustainable Palm Oil (RSPO), the Round Table on Responsible Soy (RTRS) and Bonsucro. The Roundtable on Sustainable Biomaterials (RSB, formerly the Roundtable on Sustainable Biofuels), along with the International Sustainability and Carbon Certification (ISCC), address various feedstocks for the sustainable production of biomass and biofuels. Both are in relatively early stages of development; ISCC just recently became an independent organization of the German Federal Ministry of Food, Agriculture and Consumer Protection via the Agency for Renewable Resources in 2012, while the RSB launched its global certification system in 2011 and has since then issued seven certificates. ISCC, by contrast, has issued over 4,000 certificates, with over 2,000 active by December 2013.


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