Biofuels, sustainability and the petroleum industry · the world’s energy needs. If GHG reduction is the prime objective then governmental policy instruments should ensure that

Biofuels, sustainabilityand the

petroleum industry

Contents

Executive summary 1

Introduction 2

Biofuels for the transport sector 3

An overview of current and future biofuels systems 4

Current biofuel usage and foreseeable developments 8

Drivers for the development of biofuels 11

Biofuels and greenhouse gas emissions reduction 14

Biofuels and sustainability 17

Global biofuel certification 20

Summary 23

References and further reading 24

© IPIECA 2009. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, ortransmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without theprior consent of IPIECA.

Photographs: ©iStockphoto.com, except cover (bottom right): ©Shutterstock.com

This publication is printed on paper manufactured from fibre obtained from sustainably grown softwood forests and bleachedwithout any damage to the environment.

Acknowledgements

This report was produced by the IPIECA Biofuels Task Force (Chair: Jan-Maarten

Teuben, Shell) on behalf of the IPIECA Operations, Fuels, and Product Issues Committee

(Chair: Brian Doll, ExxonMobil).

The benefits for society of biofuels for the transport sector depend on the ways inwhich biomass is grown and converted to biofuels, i.e. the biofuels system as awhole. Benefits can include improvement of energy security, rural development, andthe reduction of GHG emissions.

Biomass is a renewable, but limited resource which, even in optimistic scenarios,considering the current technology, can only be expected to cover a modest fraction ofthe world’s energy needs. If GHG reduction is the prime objective then governmentalpolicy instruments should ensure that biomass is used where it maximizes GHGavoidance, or where it is the best available alternative to replace carbon intensiveenergy products. This can only be achieved through assessing and comparing thedifferent possible ways to use the available bioresources. These may be different fromcountry to country and region to region; this should be recognized when regionalmandates for biofuel utilization are being considered.

Large-scale development of biofuels raises a number of concerns relating tocompetition with food and pressure on land resources, potentially leading to reductionin food availability, increased food prices and encroachment on sensitive land areasand forests. In some cases, when biofuels production causes clearing of high carboncontent land, substantial CO2 emissions can be produced that may impact the GHGemission benefits of a biofuels system for decades. Many of these effects can only berealistically assessed by considering the performance of specific biofuels systems aswell as effects outside a biofuel system’s boundaries.

As FAO states, biofuel production involves both opportunities and risks for foodsecurity and environment. To effectively manage the impact on food security theestablishment of specific public policies regarding the production and consumption ofbiofuels is needed.

IPIECA members support the development, ultimate adoption and governmentenforcement of an internationally recognized, transparent and accepted certificationscheme, such as that presently under development by the Roundtable on SustainableBiofuels (RSB). Such a scheme should, at a minimum, include a fair and completeassessment of the GHG footprint of biofuels, an assurance on food competition andavailability, and an assessment of the environmental and social issues associated withtheir production. Only through this process can biofuel systems be properly assessedfor their sustainability credentials.

Biofuels, sustainability and the petroleum industry 1

Executive summary

2 Biofuels, sustainability and the petroleum industry

Biofuels continue to become an increasinglyimportant feature of the road transport fuelscene. In the USA, Europe and many otherparts of the world, governments grantincentives and impose mandates, whileresearch institutes and companies develop newtechnologies and pathways to convert biomassinto substitutes for conventional fossil transportfuels such as gasoline and diesel.

These initiatives all aim to capitalize on thepositive effects that biofuels can have ongreenhouse gas (GHG) reduction, energysecurity, and rural development. However,large-scale introduction of certain biofuels canalso have unwanted negative environmentaland socioeconomic effects, and these effectshave recently spurred a worldwide publicdebate on the sustainability of biofuels,including their effect on food prices.

The object of this short report is to analyse thereasons behind the growth of this new fuel,and describe the challenges and opportunitiespresented to the petroleum industry by thelarge-scale production and use of biofuels.

This report shows that all sections of society—policy makers, the petroleum industry andthose living on agricultural land—have a roleto play in ensuring that biofuels development iseffectively regulated, so that the economic andenvironmental benefits may be realized in asustainable manner.

Because of the foregoing, IPIECA supports thedevelopment of a Global Certification Schemeto ensure that the information on thesustainability of biofuels production ispractical, standardized, verified andtransparently communicated.

Introduction


‘Biofuel’ is a generic term used to designatefuels that are produced from biomass, i.e. crops,wood or residues and waste material from abiomass origin. Although biofuels are generallyunderstood to mean transport fuels and morespecifically road fuels intended to substitute forgasoline or diesel, new opportunities for theiruse, such as railway fuels, are becomingapparent, and others, such as aircraft fuels, areunder development. A brief description ofcurrent and potential future pathways to variousbiofuels can be found on pages 4–7.

Transport is about moving people and goods invehicles with the corollary that space andweight come at a premium. The high energydensity of liquid fuels—including biofuels—aretherefore a key attribute and, to date, nopracticable non-liquid alternative energy sourcehas come close to achieving this energy density.

Another fundamental reality is that there arelarge established vehicle fleets and fuellinginfrastructures and these cannot be changed orreplaced overnight (or even within a muchlonger time-frame). The supply chain is up andrunning and must continue without even minordisturbances to enable uninterrupted economicactivity. Fleet turnover of conventional vehicles—in developing countries in particular—can takean extended period of time and can beextremely costly.

The ideal biofuel for transport will therefore be aliquid with maximal energy density, like itsconventional fuel counterpart. It will also befungible with existing hydrocarbon fuels toenable blending in various proportions withoutcreating major problems within distributioninfrastructures or vehicles. This in turn points toliquids with hydrocarbon-like molecules. In

addition, these bio-components will have afavourable greenhouse gas balance throughouttheir life cycle compared to hydrocarbonderived fuels, when assessed on an energybasis. Further, biofuels should not require anoverly costly and complex manufacturinginfrastructure. Optimizing a fuelling supply chainto meet these requirements narrows the biofuelutilization options considerably.

The above suggests two potential ‘modes’ forthe introduction of biofuels in transport:

Mainstream fuels

If biofuels are to become part of the mainstreamthey will need to conform to the requirements fortransport fuels, and be capable of being used byconsumers without requiring any modificationsto their vehicles. Fuels containing biofuels arecommon in many markets now: examples aregasoline containing 5 per cent and 10 per centethanol (E5 or E10 respectively) and dieselcontaining up to 5 per cent biodiesel (B5). Thesefuels are currently retailed as maingrade fuels inmany markets. Newer ‘flex fuel’ technologyvehicles may allow the mainstreaming of higherconcentrations of biofuels within the fuel chain,as they are capable of utilizing biofuel-conventional fuel mixtures, in any proportionfrom 0 to100 per cent.

Niche markets

In this case fuels with particularly attractiveproperties or benefits can be envisaged even ifthey cannot be introduced as maingrade fuels.Examples are E85 (gasoline containing up to85 per cent ethanol), pure biodiesel (B100)and blends of un-hydrogenated vegetable oranimal fats (see page 5) as these are notcompatible with the entire vehicle fleet and

Biofuels for the transport sector


might require specially adapted vehicles. Afinal example is DME (dimethyl ether), which isa diesel fuel which can be made from biomasssources, with very beneficial emissioncharacteristics (clean burning and low pollutantemissions) but it is gaseous at ambient

temperatures and therefore needs a dedicateddelivery system like LPG. Examples of nichemarkets for these fuels are ‘captive’ bus andindustrial transport fleets, or specially adaptedpassenger vehicles (as in the case of E85).

Biocomponents for gasoline

Ethanol is produced by fermentation of sugarsfrom sugarcane and sugar beet, as well ascereals (through hydrolysis of starch), and canbe used as a substitute for gasoline in sparkignition engines. Although pure ethanol can beused, for practical reasons it is more often usedin mixtures with conventional gasoline. Mostexisting gasoline engines and fuel systems can

A large range of suitable compounds can, inprinciple, be produced from biomass. To date,biofuels have mostly been produced from foodcrops, (many of which are ‘non-staple’ foods,such as sugarcane, sorghum and palms) byutilizing their oil, sugar or starch content. Theuse of non-food crops is being developed,although the current use of jatropha and othernon-edible crops is very small.

An overview of current and future biofuels systems

Rape, also known as canola (left), is the favourite biodiesel crop in Europe, whilst soya (right) is the crop ofchoice in the Americas.


tolerate mixtures of up to at least 5 per cent byvolume (v/v) ethanol and, in most cases up to10 per cent (E10). Additionally, E20 to E25blends have been used for several years inBrazil. High level mixtures such as ‘E85’ (up to85 per cent ethanol) require specially designedvehicles which are normally capable ofoperating with any mixture of gasoline andethanol (‘Flex Fuel Vehicles’).

Ethanol is also used in the form of ETBE (ethyltert-butyl ether) after reacting with isobutenederived from oil refineries. In practice ETBEreplaces MTBE, a similar compound made frommethanol. Note, however, that MTBE has beenbanned by many states in the USA, mainly dueto concerns over groundwater contamination.

Biocomponents for diesel

Vegetable oils can, in principle, be used indiesel engines. Because of issues related tostability and viscosity, the oil is first reacted withan alcohol to form an ester known as biodiesel.Methanol is normally used, hence the genericname of FAME (Fatty Acid Methyl Ester) as a

synonym for biodiesel. Oil from a range ofcrops can be used although some oils canexperience stability issues even afteresterification, due to oxidation. The use of anti-oxidant additives can help to solve thisproblem. Rape (also known as canola) is thefavourite biodiesel crop in Europe. Soya is thecrop of choice in the Americas. Palm oil, mostlyproduced in South-East Asia, can only be usedin limited quantities in colder climates becauseof unfavourable cold flow properties. Moreexotic crops such as jatropha have also beenproposed, e.g. in India in relation to use of low-quality land and flexible growing conditions.Tallow oil and used cooking oils can also beturned into biodiesel, however only limitedquantities of these materials are usuallyavailable for biodiesel production.

Biodiesel can be used either neat inappropriate vehicles where permitted, or mixedwith conventional diesel at low levels in existing

Jatropha is one of a range of non-edible cropscurrently used to produce biofuels, although its use iscurrently small.

As with any other fuel, caution is required whenreformulating for biofuels, to avoid known issuesincluding sticking valves and interference withexhaust after-treatment systems.


material that may in some cases be used forfood, fodder or energy production.

The search for advanced biofuels is thereforedriven by a desire to broaden the range ofplants—including algae—that can be used andto maximize biofuel production from a givenpiece of land. Some of the most cutting-edgebiofuels research currently ongoing involves theproduction of biodiesel from microalgae andethanol production from lignocellulosic residues.

Investigations into the use of advanced biofuelsfocus on ligno-cellulosic biomass, i.e. wood, awide range of ‘woody’ plants such as fastgrowing grasses as well as waste materialsuch as straw. There are two main routes:

1. The first route turns cellulose and hemi-cellulose into fermentable sugars fromwhich ethanol or other alcohols can beproduced.

2. The second route synthesizes moleculesafter gasification of the biomass into‘syngas’. The process is similar to thatapplied to natural gas and coal to produce

vehicles. The use of blends above 5 per cent byvolume in modern light-duty diesel engines iscurrently the subject of intense discussion inEurope as auto manufacturers claim thatbiodiesel interferes with exhaust after-treatmentsystems and injector performance, and isrelated to lubricant dilution. Biodiesel has alsobeen linked to other automotive issues such asvalve sticking on standing and poor cold-flowproperties. A number of these issues arepotentially capable of being addressed throughthe use of additive packages, however thisdemonstrates the need to use caution whenreformulating to use biofuels.

Another way of using vegetable or animal oilsand fats is through hydrotreatment wherebythese oils are turned into saturatedhydrocarbons similar to conventional diesel,albeit of a distinct quality, approaching that of‘BTL’ (Biomass-To-Liquids, see below).

Biogas

Biogas is produced by anaerobic fermentationof—mostly waste—biomass. After purificationand treatment it consists essentially of methane(similar to natural gas) that can be used inspecially adapted vehicles.

Current and advanced biofuels

Ethanol and biodiesel made from food cropsare often referred to as ‘first generation’ or‘current generation’ biofuels in contrast tofuture options (‘next generation’ or ‘advanced’biofuels). Most current biofuels are made fromfood crops that were not originally developedfor energy production. In many cases, duringprocessing, only part of the plant is used tomake the fuel, leaving large amounts of

The production of biodiesel from microalgae is atthe forefront of research into potential ‘advanced’biofuels.


liquid fuels (the Fischer-Tropsch process). Arange of compounds can be producedsuch as methanol, dimethyl ether andsynthetic diesel (the latter being known as‘BTL’ for ‘Biomass-To-Liquids’). It is alsopossible to produce methane or hydrogenthrough this route.

Although all these processes require energy,most of that energy can be provided in theform of biomass so that the final fuels will havea very small GHG footprint. Figure 1 providesa schematic overview of the different routes. Asis the case for fossil fuels, the energy carried inbio-components stems from their carbon andhydrogen content. In biofuels the carbonoriginates from recent biomass and thereforefrom the conversion of atmospheric CO2 by the

original plant. When the fuel is burned thecarbon is turned back into CO2 and the cycleis completed. In theory, no carbon is eitheradded or removed from the atmosphere andone would conclude that biofuels are fully‘carbon neutral’. In practice, however, this isnot the case inasmuch as energy is required togrow crops and manufacture biofuels, some ofwhich is from fossil origin. Other greenhousegases may be emitted at various stages,particularly N2O, a very potent GHG which isemitted from agricultural fields. Themechanisms by which biofuels can influencegreenhouse gas emissions is treated in moredetail on pages 14–16.

Current generation Advanced

oil seeds• soy• rape• sunflower• palm• jatropha

sugar canesugar beet

Cereals

starch

hydrolysissugar

ethanolhydrogen

vegetable oil

ethanol, methanol

biodiesel

hydrotreating

HVO(hydrotreatedvegetable oil)

(hemi-) cellulosehydrolysis

gasification

‘syngas’(CO+H2)

synthesis

fermentationdistillation

ethanol andother alcahols

(butanol)

syn-diesel (BTL)DME

methanolmethanehydrogen

ligno-cellulosic biomass• wood• grasses (switch grass, Miscanthus, etc.)• straw and other waste material

esterification

Figure 1: An overview of the different routes to biofuels production


Figure 2: World fuel ethanol production

1975

70

10

Figure 3: US biofuels mandate—EISA Renewable Fuel Standard (2008–2022)

0

60

50

40

30

20

1978

1981

1984

1987

1990

1993

1996

1999

2002

2005

2008

2008

35

5

0

30

25

20

15

10

2010

2012

2014

2016

2018

2020

2022

non-cellulosic advancedbiomass-based diesel

40

advanced cellulosic biofuelnon-advanced renewable fuel

billi

on li

tres

billi

on g

allo

ns

Ethanol, made from sugar cane, has been usedon a large scale in Brazil for many years. Cornethanol is being introduced at a very fast pacein the USA through an ambitious federalmandate programme accompanied by varioussubsidies to farmers and producers whereas asmaller mandate has also been put in place forbiodiesel (see Figure 3).

In 2007, US refiners and importers wererequired to use 4.7 billion gallons of biofuels.However, 6.85 billion gallons of ethanol wereused as a transportation fuel in 2007, farexceeding the federal mandate. In December

2008 at 9.0 billion gallons and will grow to36 billion gallons in 2022. The individualmandates will begin to phase in during 2009.

California’s proposed ‘Low Carbon FuelStandard’ (LCFS), which aims at reducing theGHG footprint of road fuels, will, in effect,have to be met largely by introduction ofbiofuels, mostly ethanol in gasoline at a ratethat may go beyond the federal mandate.

As a result of legislation passed in 2003proposing indicative biofuels targets to EUMember States, Europe already uses

Ethanol derived from crop starch (e.g. fromcorn) or simple sugars (e.g. from sugar cane) iscurrently used to substitute for gasoline.Esterified vegetable oils (fatty acid methyl esters(FAME), or biodiesel) or animal tallow are usedas substitutes for diesel. As an example of theincreasing global use of biofuels, Figure 2illustrates the historical development of fuelethanol production worldwide.

of 2007 the US Congress passed the ‘EnergyIndependence and Security Act of 2007’(EISA). The EISA included a significantlyincreased renewable fuel standard containingfour interrelated parts consisting of an overallmandate and set-asides for ‘advanced’,‘cellulosic’ and ‘biomass-based’ diesel. Thesemandates incorporate life-cycle GHG reductionrequirements. The overall mandate started in

Current biofuel usage and foreseeable developments

Ada

pted

from

F.O

. Lic

hts


● Managing competition for land resources(food and fodder vs. bioenergy) and fordifferent biomass applications(transportation fuels, heat, power andindustrial raw materials);

● Increasing yield per hectare anddeveloping efficient supply logistics for bothdedicated crops and residues.

Various estimates for the proportion of globalTotal Primary Energy Supply (TPES) that couldbe provided by biomass without generatingundue competition with food production andother uses have been produced; thesegenerally fall in the 5–15 per cent range,although the degree of uncertainty in suchestimates is very high. Some regionalestimates, based on predictable local practicesand policies may appear more credible butfood and energy markets are global, andmajor changes in one region will have animpact on the rest of the world.

substantial amounts of biodiesel while ethanoluse is growing fast either as such, or in theform of Ethyl tert-Butyl Ether (ETBE). Theproposed ‘Renewables Directive’ seeks amandatory 10 per cent (energy basis) ofbiofuels in the road fuel pool by 2020. Aseparate proposal under the Fuel QualityDirective would imply a considerably largerproportion of biofuels. Another proposedpiece of legislation, similar to California’sLCFS, would require a 50 to100 per centgreater penetration of biofuels by 2020. (SeeJRC-EUCAR-CONCAWE case study overleaf).Many other countries are considering, or arealready imposing, biofuels legislation, forexample in Asia, Africa, Australasia andSouth America.

The ultimate biomass resources that could bediverted towards energy use and, morespecifically, the ultimate quantities of biofuelsthat could be produced is a subject ofconjecture and intense debate. Significantamounts of biomass, in the form of wood, arealready used for energy, and the eventualmagnitude of the resource depends uponmany factors that need to be analysed andunderstood.

Besides the ethical issue of competing withfood, there is also a growing realization thatusing biomass for energy will, in manycountries, put extra pressure on land resources,and thereby on ecosystems, natural habitats,virgin forests etc. This is part of the debatetoday and the subject of ongoing technicalanalysis to better understand these effects.Because of this evidence, the EuropeanBiofuels Technology Platform has suggestedthat, in the case of feedstocks, research anddevelopment should focus on two items:

Using biomass for energy will place increasingpressure on food and land resources, and is thesubject of ongoing analysis.


As an example, the increased production ofcorn ethanol is having a significant effect onthe agricultural sector in the USA (see Table 1).Corn exports have increased in the past fiveyears due partly to the weakening dollar,bilateral trade agreements and increasingdemand around the world. The growth of cornethanol is expected to have a complex impacton corn supply (Dohlman & Gehlar, 2007).

Table 1: Corn exports from the USA

year corn exports (million bushels)

2003/04 1,900

2004/05 1,818

2005/06 2,134

2006/07 2,125

2007/08 2,450

Source: US Department of Agriculture

In early 2008, the European Commission set anambitious target to incorporate significantvolumes of bio-components into European roadfuels over the next decade and beyond, posing animmediate technical challenge to fuels, vehiclesand the supply and distribution infrastructure.

It became obvious that developing workablesolutions required both technical knowledge anda multi-stakeholder approach. As a robustEuropean working relationship had already beenestablished between the Joint Research Centre(JRC) of the European Commission, theEuropean Council for Automotive R&D(EUCAR), and the oil industries’ Europeanresearch association (CONCAWE), known as the‘JEC’, a new Biofuels Programme was developedin 2008 with the objective of clarifying theopportunities and barriers to achieving the

Commission’s target of 10 per cent biofuels (onan energy basis) in European road fuels by 2020.

This programme is expected to be of threeyears duration with three clear steps currentlydefined:1. Develop a consensual supply/demand picture

of biofuel types and availability, with dueconsideration of the biofuel challenges andopportunities.

2. Identify possible performance issues for theexisting and near-term light-duty vehicle fleetbased on this biofuel supply picture.

3. Identify vehicle/fuel options for reducing theimpact of biofuels on future light-duty andheavy-duty vehicles and after-treatmentsystems, in order to ensure that the 2020targets for biofuels in European roadtransport are achieved.

The JRC-EUCAR-CONCAWE biofuels partnership


rural development, and biofuel production isfrequently seen as a way to bring income tofarmers either through increased profits or, incases where biofuels are not cost-competitivewith fossil fuels, through government subsidies.

For developing countries, biofuel programmescould be beneficial in supporting ruralcommunities and mitigating the trend ofmigration into large urban centres. The extentto which biofuel programmes can contribute torural development is dependent on thecharacteristics of the industry (scale, modernity,integration) and, ultimately, whether it is ableto become financially viable without directgovernment financial support. As an example,the Brazilian ethanol model is based onmodern and mechanized agriculturalproduction, with many small-scale caneproducers (but still large by developing countrystandards), large but not monopolisticmill/distillery complexes that generateelectricity for themselves and for sale to thegrid, and a nationwide ethanol supply systemthat is well integrated with urban, social andindustrial development. The Brazilian modelalso benefits from a massive land area,sufficient supply of water, favourable climaticconditions for growing sugar cane, low-costlabour, and an efficient cooperative systemwith short raw material transport distances.Duplicating these conditions in other countriesmay be possible, but will be a challenge.

Greenhouse gas emissions reduction

Reducing greenhouse gas emissions in order tomitigate climate change has, in recent years,become the strongest driver for biofuels; the nextchapter is dedicated to the reductions in GHGsthat can be achieved with biofuels and the

Use of biomass for transport and, moregenerally, for energy is promoted for a numberof reasons, often in combination with eachother. Depending on which objectives onefocuses on, different actions may beappropriate and the potential benefits may beof a different nature.

National or regional security of energy supply

The largest oil consuming countries areincreasingly aware of their growingdependency towards producing countries andseek to develop more diverse and securesupply sources. Biofuels, particularly whengrown domestically, but also when imported,can contribute to supply diversity and security.If security of supply is the main objective thenactions should target those sectors that importenergy. In the USA, this means primarilytransport, as most electricity and heat isgenerated from domestic coal, gas and othersources. In Europe, transport also relies onimported energy, and the heat and powersector is also very much (and increasingly)dependent on imported gas. In such a case,using biomass to generate electricity orproduce biogas for heating (e.g. in community‘Combined Heat and Power’ (CHP) projects)may also address the energy security issue,albeit a different supply issue than fortransport fuels.

Support to agriculture and ruraldevelopment

In many developed countries agriculture hassuffered from over-production and a lack ofprofitable markets. Developing countries areoften looking for suitable cash crops to support

Drivers for the development of biofuels


potential is limited, and it is not a significantdriver in Europe and North America wherevehicle emission regulations and fuel quality aresuch that the potential benefits of biofuels in thisrespect are minor. Ethanol can decreasetailpipe emissions of CO, PM, HC and benzenebut can increase tailpipe NOx and aldehydes,a respiratory irritant, as well as evaporative HCemissions. All emission effects are larger invehicles without catalytic converters because theoverall emissions are higher.

considerations that need to be taken intoaccount in order to measure these reductionsconsistently.

Other potential benefits of biofuels

Biofuels are not generally introduced with theaim of mitigating local pollutant emissions.However, biofuels may, under certaincircumstances, have some potential forreduction of vehicle tailpipe emissions. This

In contrast to the Proalcool Program (the BrazilianGovernment ethanol programme launched in themid-1970s), the introduction of biodiesel into theBrazilian fuel market is fairly recent, with themandatory addition to conventional diesel fuel of2 per cent biodiesel from January 2008 and 3 percent biodiesel from July 2008. In parallel, theFederal Government created the ‘Social Fuel Seal’,which extends tax breaks to biodiesel producersacquiring raw materials from family-run farms.

In Guamaré Municipality, Rio Grande doNorte State, two Petrobras pilot plants have beenoperating since 2006. One of the plants is basedon the conversion of vegetable oils, the end resultof a reaction with methanol, and the other plantuses a new technology in which the green fuel ismanufactured directly from castor oil seeds usingsugar cane alcohol as a reagent. Some 2,500 smallfarmers and their families grow the castor oil andsunflower crops to supply the pilot plant operations,with a potential annual output of 20.4 million litres.Potentially, the units can generate employmentand income for up to 5,200 rural families.

In 2008, three pilot plants were upgraded tofull industrial scale facilities (QuixadáMunicipality—Ceará State; CandeiasMunicipality—Bahia State; and Montes Claros

Municipality—Minas Gerais State). Each unit hasan annual installed capacity of 57 million litres,creating income for 70,000 farmer families thatlive within 200 kilometres of the plants. Petrobrasis encouraging production of oleaginous cropsclose to biodiesel facilities and has a adopted apartnership approach: as well as formingpartnerships with organizations representing smallagriculturalists—the local labour unions and landactivists—agreements have also been concludedwith National and Regional Governments, all keyactors in the adoption of incentive-based publicpolicies for new oleaginous crop plantations.Petrobras guarantees purchase from theagricultural cooperatives and supplies selectedseeds and technical assistance to farmers thatcommit to produce grains for delivery to theindustrial units. Eighty per cent of biodieselproduction costs are made up of raw materialinputs, represented by the oleaginous plants. Forthis reason, remuneration of the farmer has to beconsidered as critical in guaranteeing thesustainability of the production chain. The majorchallenge for Petrobras is to meet the need forcompetitive prices, but at the same time, fosterthe objective of social inclusion through thecreation of rural employment and income.

Petrobras: social aspects of biodiesel production


Biodiesel, which is essentially (although notentirely) sulphur-free, can help to reduce thesulphur content of the diesel fuel pool andcontribute to reducing sulphur and particulateemissions from diesel vehicles. On the other hand,its physical and chemical properties may havea negative impact on after-treatment devices.

With respect to pollutant emissions, it isimportant to understand that the introductionof biofuels in developing countries where thevehicle fleet is not equipped with catalytic

converters may not only fail to yield theexpected benefits, they may actually solve onepollutant problem at the expense of another.As an example, the introduction of ethanolinto road transport fuels in regions wherecatalytic converters are not fitted to vehiclesmay increase the emission of some airpollutants such as aldehydes. However, theintroduction of ethanol in these regions mayindirectly benefit the environment and humanhealth by replacing lead anti-knock and otherfuel additives.

The potential of biofuels to reduce tailpipe emissionsis relatively small, given the increasingly stringentregulations for limiting exhaust emissions.

The growing use of ethanol will increase theemissions of some pollutants and decrease others. Allemission effects are magnified in older vehicles thatdo not have catalytic converters.

Ethanol production plant, South Dakota, USA

Biofuels and greenhouse gasemissions reduction


Using biomass to generate energy is seen as away to reduce GHG emissions and this hasbecome, in recent years, the strongest driverfor the introduction of biofuels.

An important consideration is that biomass is alimited resource which, even in optimisticscenarios can only be expected to cover afraction of the world’s energy needs. Land orother resources used to make biofuels cannotbe used for other purposes. As illustrated inFigure 4, more GHG can generally be avoidedby substituting biomass for fossil fuels in heatand power generation rather than in transport.

If GHG reduction is the prime objective thenbiomass should be used where it maximizesGHG avoidance. This can only be achievedthrough assessing and comparing the differentpossible ways to use available land orbiowastes. The answer could include ameasure of biofuel production associated withother uses for some of the biomass streamsincluding heat and power and, potentially,chemicals manufacture.

Biofuels can potentially reduce the net GHGproduced by transport. The GHG footprint ofbiofuels can, however, be very differentdepending on where, how and from what theyare produced. The net GHG avoidance of ethanolproduced in Europe can, for example, rangefrom virtually 0 per cent to more than 80 percent compared to fossil gasoline. The mainfactors affecting this balance are the crop usedand the conditions under which it is grown, theorigin of the energy used in the biofuelmanufacturing process and the fate of by-products.

Figure 4: CO2 savings from using biomass

wood to electricity

0 5 10 15 20 25

wood to road fuels

conventional biofuels

CO2 avoided (tonnes/ha/a)

Sour

ce:

2007

JEC

WTW

Stu

dy

More GHG cangenerally be avoidedby substituting biomassfor fossil fuels in heatand power generationrather than in transport.

The net GHGavoidance ofbiofuels candepend on manyfactors includingthe type of crop,source of energy,manufacturingprocesses, etc.


These effects occur through macro-economicforces in the global market for agriculturalproducts. Converting land to biofuels productionwill impact on the supply/demand balance ofthe crop previously produced on that land. Adecrease in production of a certain crop in onepart of the world can lead to increasedproduction of this crop in another part of theworld, and hence to land-use change.

Currently, there is no scientific or politicalconsensus on how to best calculate direct orindirect effects associated with land-usechange. And without consensus on methods,there can be no agreement on the size of thiseffect, which is why current estimates varygreatly. However, what has become clear inrecent years is that these effects could be

In addition to the GHG balance pertaining tothe ongoing production chain per se,converting land from natural or man–madeforest or grassland to agricultural use can resultin the one-time release of substantial quantitiesof CO2 through reduction of both above-groundbiomass and of soil carbon content.

There are two types of effects from land-usechange. There is a direct effect: GHG gasescan be released when converting land tocertain agricultural crops (e.g. by releasingGHG gases as methane, N2O and CO2 fromthe soil or when captured carbon gets releasedas biomass is burnt to clear land). The indirecteffects of land-use change are derived bysimilar mechanisms, but they are morecomplicated to estimate or manage.

Substantial quantities of CO2 released through conversion of land to agricultural use may impact the GHGbenefits of any crop, hence the need for effective regulation on land conversion.


significant, depending on the local context,including type of crop change and agriculturalpractices. This uncertainty in turn emphasizesthe need to continually refine these estimates toassess the significance of GHG emissions inthe context of land-use change. An additionaldifficulty in measuring these effects is in settingthe time-window for evaluation, as somebiofuel feedstocks are being produced on landconverted many years ago.

Where GHG reduction is a key driver, thecontributions of direct and indirect land-usechange can make or break the justification forintroducing biofuels. Although we cannot yetbe certain of the impact that these effects willhave on GHG emissions, we can be certainthat direct and indirect effects of land-usechange will be the topic of an importantscientific and political debate in the comingyears, as society strives to ensure the overallsustainability of biofuels.

The effects of land-use change will be an importanttopic of scientific debate in the coming years.


Biofuels and sustainability

demand and purchasing power for fuels to runcars, commerce and industry could create aneven stronger pull away from food crops andpotentially aggravate global food shortages.

This, however, has also to be considered in thecontext of public policies regarding ruraldevelopment and the positive impact ofproviding farmers with cash crops, particularlyin developing countries.

Water usage

Water availability is an increasingly seriousconcern in many parts of the world andagriculture is the largest user. A 2006 report bythe International Water Management Institute(IWMI) estimates that globally, one in threepeople is already enduring one form or anotherof water scarcity, and contends that risingdemand for irrigation to produce food andbiofuels can aggravate scarcity of water.Clearly, the development of biofuel crops needsto take into account the availability and qualityof water, e.g. by developing varieties withlow water requirements.

As the large-scale development of a biofuelindustry will impact on land and water use,food supply and cost, agriculture and ruraldevelopment, it is essential to assess thecapability of each region to produce biofuelagainst its particular social, environmental andeconomic conditions, especially as this may inturn affect biodiversity and lead to increasedencroachment on natural forests, grasslands, andprotected and environmentally sensitive areas.

Competition with food crops

The effect on food prices of diverting crops, suchas corn and palm, to make biofuels is a heavilydebated subject. Biofuels expansion plans relyboth on growing specific crops and on use ofwaste biomass. Depending on geographicregion, this could lead to a significant portion ofthe arable land area being used for energycrops rather than for production of food for thegrowing world population.

Large-scale development of biofuels could havean impact on agricultural commodity markets(e.g. cereals) and potentially increase bothprice level and volatility. The strength of the

The large amounts of biomassneeded to completely replacegasoline with biofuel using today’stechnology would require massiveland-use change. In some countries,the complete replacement ofgasoline with locally-producedbiofuels is not feasible as it wouldrequire extensive land areas togrow biomass.


The rising demand for irrigation can place increasingpressure on water availability—an already seriousconcern in many parts of the world

Increased agricultural production has the potential tothreaten global biological diversity.

Land access and rights

Large-scale development of biofuels willincrease the global demand for agriculturalinputs and, in particular, land. While estimatesfor global land availability vary, increasingcompetition for land may encroach and putpressure on individuals’ existing use of, andrights and access to, land especially incountries where security of tenure is weak. Onthe other hand, in most cases the security oftenure is weak due to the low income of suchowners and the biofuel crop may foster theregularization of land owning, mainly byproviding an extra income to small farmers.

Biodiversity

Large-scale biofuel production, if not carefullymanaged to avoid biodiversity impacts, has thepotential to reduce biodiversity via a number ofmechanisms:

● Encroachment on forests and other naturalland areas: a large demand for biofuelcrops could add to the already ongoingpressures stemming from illegal loggingand demand for food and firewood, andaccelerate reductions in the size andcontinuity of natural ecosystems includingforests, prairie, wetlands and grasslands.

● Encouraging monoculture: where itdisplaces more biodiverse areas, somebiofuel crop production at industrial scale islikely to replace the existing naturalvariation with specific species, optimizedfor their biomass yield and othercharacteristics. This means that vegetationwould be less varied than in naturalecosystems, unlikely to support a diversefauna and tend to be less resilient.


● Risk of invasive species: certain species thatare considered for biofuel production areknown as invasive species in many parts ofthe world. Therefore, information gatheringand risk assessments are recommended forthe introduction of crops into new areas.(GISP, 2008)

● Increased use of pesticide, fertilizers andwater: use of additional land to growbiofuels crops will increase current excesspesticide and fertilizer runoffs to receivingland and water bodies. Associated increasesin water demand will further tax already-limited freshwater supplies and potentiallydivert water from aquatic ecosystems.

● Increased exploitation of natural forestsand other habitats: increased demand forwood, including wood waste, may lead,directly or indirectly, to increasedharvesting of existing forests includingbiologically-important old-growth forestareas and other natural habitats such asprairie, wetlands and grasslands.

IPIECA believes that it is vital to ensure that the use ofbiofuels does not lead to undesirable consequencesthat outweigh the intrinsic benefits.

Used for biodiesel, the African palm has alreadybecome widespread in some biofuels-producing areas.

Dependence on public support schemes

Even in today’s world of exceptionally highfossil energy prices, biofuels remain expensiveto produce and are generally not competitivewithout some form of subsidy. Competition withfood tends to push up feedstock prices. Publicsupport schemes are generally required, at leastinitially, diverting financial resources from othersectors of the economy. A thorough cost/benefitanalysis is therefore essential before a countryor state implements support schemes.


Global biofuel certificationDifferentiating between sustainable andunsustainable biofuel production

Although biofuels carry attractive promises ofimproved energy security, rural developmentand GHG emissions reduction, the abovediscussion also highlights potential negativeeffects that are dependent on how biofuels areproduced. In order to be successful, biofuelsneed to be sustainable by current social,economic and environmental norms.

Recognizing the emerging international marketfor biofuels, a biofuel certification scheme thatcan be applied globally and enforced bygovernments will be an essential framework tosupport that market. In general, biofuelproviders would certify their biofuel while thefuel suppliers would use certificates from thebiofuel providers to demonstrate compliance.

Reduction of GHG emissions is a major driverfor biofuels growth. It is therefore essential tobe confident that those biofuels that are beingencouraged (and often subsidized bygovernments) do indeed lead to substantialreductions of GHG emissions. This calls forglobally agreed, transparent methodologies toassess the ‘GHG footprint’ of biofuels acrosstheir life cycle.

The potentially undesirable environmental andsocial impacts also need to be addressed. Thisrequires agreement on the high level generalprinciples to be adhered to, following carefulconsideration of how these principles can bebest managed on the macro level (throughinternational agreements) and at a micro levelthrough a sustainability scheme, many ofwhich are under development. One of theinitiatives in this respect is the Roundtable onSustainable Biofuels (RSB—see below) inwhich IPIECA is participating.

In many if not all cases the issues at hand arenot only relevant to biofuels but to the wholeagricultural sector and possibly the forestrysector, including, inter alia, food production.Indeed their application only to the biofuelsector, which can never represent more than asmall proportion of total agriculture, would bewholly ineffectual. One of the challenges istherefore to ensure that the principles andrules are acknowledged and respected by all.In the development of such principles andrules, the aspirations of producing countries interms of rural development must also be fullytaken into account.

These different requirements are included underthe generic term of ‘sustainability’ and severalgovernments, institutions and internationalbodies are working on certification systems toassess the sustainability of biofuels, as well asverification systems to assure mandates arebeing met and that auditable management andassurance systems are in place throughout thesupply chain.

Developing certification systems will be a longand difficult task, although some aspects canbe addressed directly through rules to befollowed by producers and the various actorsalong the chain. A number of the aspirationscan only realistically be fulfilled throughcoordinated national or international efforts.‘Land-use change’ is a case in point. Simplyensuring that a consignment of biofuel does notoriginate from land with high carbon stock willnot provide any guarantee against the‘domino’ effect whereby such land is used forsome other purpose.


IPIECA is participating in the Roundtable onSustainable Biofuels—a key initiative todefine a ‘sustainability scheme’ to ensure thatthe use of biofuels does not lead toundesirable social or environmentalconsequences.

The RSB is working towards the principle of aglobal meta-standard, whereby different crop-specific or regional schemes would bevalidated as meeting specific sustainabilitycriteria. The system will encompass cropschemes such as those developed by theRoundtable for Sustainable Palm Oil, TheRoundtable on Responsible Soy and the BetterSugar Initiative—all of which are alsoimportant building blocks for the establishmentof an international scheme.

The RSB has work streams covering:● environmental criteria;● GHG methodology and criteria;● social criteria; and● implementation practicalities.

IPIECA members in Europe are also taking partin the CEN (European Committee forStandardization) TC 383 on ‘sustainableproduced biomass for energy’.

IPIECA supports the concept of globalbiofuel certification

The international oil industry recognizes that ifbiofuels are to play a material part in themarket, they must be produced sustainably: theend-user must also be assured that the biofuelsincorporated in fuel blends have been producedsustainably. A corollary of this is the need tointroduce schemes to ensure compliance. Forsuch schemes to raise the sustainability standardof biofuel production, they must be widelyavailable and be recognized as being credibleindicators of biofuel sustainability—and theymust be applied.

With this aim in mind, a number of members ofIPIECA have been working with the Roundtableon Sustainable Biofuels (RSB) alongsideparticipants from universities, NGOs and theUnited Nations. The RSB was set up in 2007 toestablish a global system of standards forbiofuel sustainability that would be accepted byall stakeholders.

Taking into account the formalCEN procedure for newstandards, publication of thestandard could be achieved asearly as mid-2011.

Whether certification ofsustainability criteria is done atan industry level (Roundtable

for Sustainable Palm Oil), aregional level (CEN in

Europe) or at aglobal level(Roundtable on

Sustainable Biofuelsand the International

Organization for Standardization—ISO),defining a mechanism to measure andstandardize sustainability is complex. In orderfor any biofuels sustainability certificationmechanism to be implementable and

successful, schemes should ensure the followingissues are adequately addressed:

1. The indicators used to measuresustainability should be defined in a waythat they are measurable, verifiable andrelevant.

2. A process and a detailed GHG calculationmethodology should be in place for newand existing biofuels production operations.

3. A realistic and practical methodology foraccounting of land use to assess the impactof direct or indirect land-use change(including treatment of set-aside and idlelands). Biodiversity of land use andcultivation practices should be considered.

4. All other criteria should be prioritizedaccording to specific relevance to biofuelsrather than to agriculture in general.



The benefits for society of biofuels for thetransport sector depend on the ways in whichbiomass is grown and converted to biofuels,i.e. the biofuels system as a whole. Benefitscan include improvement of energy security,rural development, and the reduction of GHGemissions.

Biomass is a renewable, but limited resourcewhich, even in optimistic scenarios, consideringthe current technology, can only be expected tocover a modest fraction of the world’s energyneeds. If GHG reduction is the prime objectivethen governmental policy instruments shouldensure that biomass is used where it maximizesGHG avoidance, or where it is the bestavailable alternative to replace carbon intensiveenergy products. This can only be achievedthrough assessing and comparing the differentpossible ways to use the availablebioresources. These may be different fromcountry to country and region to region; thisshould be recognized when regional mandatesfor biofuel utilization are being considered.

Large-scale development of biofuels raises anumber of concerns relating to competitionwith food and pressure on land resources,potentially leading to reduction in foodavailability, increased food prices andencroachment on sensitive land areas and

forests. In some cases, when biofuelsproduction causes clearing of high carboncontent land, substantial CO2 emissions can beproduced that may impact the GHG emissionbenefits of a biofuels system for decades.Many of these effects can only be realisticallyassessed by considering the performance ofspecific biofuels systems as well as effectsoutside a biofuel system’s boundaries.

As FAO states, biofuel production involves bothopportunities and risks for food security andenvironment. To effectively manage the impacton food security the establishment of specificpublic policies regarding the production andconsumption of biofuels is needed.

IPIECA members support the development,ultimate adoption and government enforcementof an internationally recognized, transparent,and accepted certification scheme, such as thatpresently under development by the Roundtableon Sustainable Biofuels (RSB). Such a schemeshould, at a minimum, include a fair andcomplete assessment of the GHG footprint ofbiofuels, an assurance on food competitionand availability, and an assessment of theenvironmental and social issues associatedwith their production. Only through this processcan biofuel systems be properly assessed fortheir sustainability credentials.

Summary

Brown, Lester R. (1997). The Agricultural Link: How Environmental Deterioration Could DisruptEconomic Progress. Worldwatch Paper 136, The Worldwatch Institute, Washington DC.

Delucchi, M. A. (2006). Lifecycle Analysis of Biofuels. Report UCD-ITS-RR-06-08, Institute ofTransportation Studies, University of California, Davis.

Dohlman, E. and Gehlhar, M. (2007). US Trade Growth, a New Beginning or Repeat of the Past.In: Amber Waves. Economic Research Service, United States Department of Agriculture,September 2007. www.ers.usda.gov/AmberWaves/September07/PDF/AW_September07.pdf

JEC (Joint Research Centre of the European Commission, EUCAR, CONCAWE) (2007). Well-To-Wheels Analysis of Future Automotive Fuels and Powertrains in the European Context. Version 2c,March 2007. http://ies.jrc.ec.europa.eu/wtw.html

Fargione, J., Hill, J., Tilman, D., Polasky, S., Hawthorne, P. (2008). Land Clearing and the BiofuelCarbon Debt. Science, 29 February 2008: Vol. 319. no. 5867, pp. 1235–1238.

IWMI (2006). Water for food, water for life: Influencing what happens next. IWMI Report (eds.Molden et al.), Stockholm, August 2006.

Paltsev, S., Reilly, J. M., Jacoby, H. D., Gurgel, A. C., Metcalf, G. E., Sokolov, A. P. and Holak, J.F. (2007). Assessment of U.S. Cap-and-Trade Proposals. MIT Report 146, April 2007. http://web.mit.edu/globalchange/www/MITJPSPGC_Rpt146.pdf

Searchinger et al. (2008). Use of U.S. Croplands for Biofuels Increases Greenhouse GasesThrough Emissions from Land-Use Change. Science, 29 February 2008: Vol. 319, no. 5867, pp.1238–1240.

Tilman, D., Hill, J., and Lehman, C. (2006). Carbon-Negative Biofuels from Low-Input High-Diversity Grassland Biomass. Science, 8 December 2006: Vol. 314, no. 5805, pp. 1598–1600.

Lee, H., Clark, W. C and Devereaux, C. (2008). Biofuels and Sustainable Development: Report ofan Executive Session on the Grand Challenges of a Sustainability Transition. Venice, May 2008.

Renewable Fuels Agency (2008). The Gallagher Review of the Indirect Effects of BiofuelProduction. St. Leonards-on-Sea, UK, July 2008.

Global Invasive Species Program (GISP), 2008: Biofuel crops and the use of non-native species:mitigating the risks of invasion, May 2008.http://www.gisp.org/publications/briefing/index.asp

FAO (2008). The State of Food and Agriculturehttp://www.fao.org/sof/sofa/index_en.html

Macedo, I., Seabra, J. and Silva, J. (2008). Greenhouse gases emissions in the production anduse of ethanol from sugarcane in Brazil: The 2005/2006 averages and a prediction for 2020.


References and further reading


IPIECA membership

Company Members

BG Group

BP

Chevron

CNOOC

ConocoPhillips

Eni

ExxonMobil

Hess

Hunt Oil

KPC

Mærsk

Marathon

Nexen

NOC Libya

Occidental

OMV

Petrobras

Petronas

Petrotrin

PTT EP

Qatargas

RasGas

Repsol YPF

Saudi Aramco

Shell

SNH

StatoilHydro

Talisman

Total

Woodside Energy

Association Members

American Petroleum Institute (API)

Australian Institute of Petroleum (AIP)

Canadian Association of Petroleum Producers (CAPP)

Canadian Petroleum Products Institute (CPPI)

The Oil Companies’ European Association for Environment,Health and Safety in Refining and Distribution (CONCAWE)

European Petroleum Industry Association (EUROPIA)

International Association of Oil & Gas Producers (OGP)

Petroleum Association of Japan (PAJ)

Regional Association of Oil and Natural Gas Companies inLatin America and the Caribbean (ARPEL)

South African Petroleum Industry Association (SAPIA)

World Petroleum Council (WPC)

International Petroleum Industry Environmental Conservation Association5th Floor, 209–215 Blackfriars Road, London SE1 8NL

Tel: +44 (0)20 7633 2388 Fax: +44 (0)20 7633 2389E-mail: [email protected] Internet: www.ipieca.org

IPIECAIPIECA is the single global association representing both the upstream and

downstream oil and gas industry on key environmental and social issues,

including: oil spill response; global climate change; fuels and products; health;

biodiversity; social responsibility; and sustainability reporting.

Founded in 1974 following the establishment of the United Nations

Environment Programme (UNEP), IPIECA provides a principal channel of

communication with the United Nations. IPIECA Members are drawn from private

and state-owned companies as well as national, regional and international

associations. Membership covers Africa, Latin America, Asia, Europe, the Middle

East and North America.

Through a Strategic Issues Assessment Forum, IPIECA also helps its members

identify emerging global issues and evaluates their potential impact on the oil

industry. IPIECA’s programme takes full account of international developments in

these issues, serving as a forum for discussion and cooperation, involving

industry and international organizations.

Documents

Biofuels, sustainability and the petroleum industry · the world’s energy needs. If GHG reduction is the prime objective then governmental policy instruments should ensure that