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Institute for Global Environmental Strategies

Biofuel and CDM:An assessment

Jane Romero

Institute for Global Environmental Strategies


4 March 2009
Biofuel Use Strategies for Sustainable Development (BforSD)

Contents
o Biofuels and CDM
o Overview of biofuel policies in Asia
o Assessment of current situation
o Future of biofuels in CDM
o Way forward

Jane Romero IGES | http://www.iges.or.jp 2


Biofuel Use Strategies for Sustainable Development (BforSD)

Biofuels and CDM


“As petrol prices continue to rise, biofuel production, domestic
use and trade reduce oil import dependency and increase energy
security. Biofuel production creates employment, encourages
economic diversification and promotes rural development. It
contributes to the Kyoto Protocol reduction targets, using the
financial incentive provided by the Clean Development
Mechanism. Biofuels can help developed and developing
countries alike meet commitments to combat climate change and
achieve the Millennium Development Goals.”

~ Supachai Panitchpakdi, Secretary-General of UNCTAD


Video Message to the 11th Session of the Conference of the Parties of the UN Framework Convention
on Climate Change and the First Meeting of Parties of the Kyoto Protocol on the occasion of the launch
of UNCTAD´s Biofuels Initiative
Montreal, Canada, 7 December 2005

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Biofuel Use Strategies for Sustainable Development (BforSD)

Biofuel policies in selected Asian countries


Country Blending rate Major Strategy/ Goal/ Economic measures
feedstocks
India E5 Jatropha, Indian Biofuel National Strategy, 2008 / 20% biodiesel and bioethanol by
sugarcane 2017 / 11.2 mil ha of jatropha planted and matured by 2012 for the target
blend of 20% / fixed prices for purchase by marketing companies
China E10 Corn, cassava Biofuel share 15% of transportation energy by 2020; incentives, subsidies
and tax exemption for production
Malaysia 5% Palm National Biofuel Policy, 2006 / B5; Diesel: plans to subsidise prices for
blended diesel
Indonesia BDF: 10% Palm, jatropha National Energy Program, B20 and E15 in 2025; Diesel: subsidies (at same
E5 level as fossil fuel)
Thailand E5, E10; B2 Palm Biodiesel Development and Promotion Strategy /
Enforce nationwide B2 in April, 2008 / B5 in 2011 / B10 in 2012;
Ethanol: price incentives through tax exemptions
Philippines BDF: 1% Coconut Biofuel Strategy 2006 / BDF mixing rate 1%, 2% by 2009 / Ethanol: 5% by
2009, 10% by 2011; tax exemptions and priority in financing
Japan upper limits E3 Sugarcane, waste Plan to replace 500 ML/year of transport petrol with liquid biofuels by 2010;
B5 oil subsidies for production

Source: IGES (2008), Romero (2008)

Jane Romero IGES | http://www.iges.or.jp 4


Biofuel Use Strategies for Sustainable Development (BforSD)

Indian biofuel national policy


o Blending mandate
o Indicative 20% blending by 2017 for biodiesel and bioethanol
o Current blend: 5% ethanol in gasoline in 20 states
o Planned to double to 10% ethanol in gasoline starting Oct 2008 but was
postponed due to surge in sugarcane costs

o Sustainable production & land usage


o Focus on non-edible energy crops: jatropha, pongamia (keranj), sugarcane,
sweet sorghum; more R&D for second-generation feedstocks
o Propagation in marginal / waste / degraded / under utilized land

o Fiscal and financial incentives


o Promote biofuels by classifying biodiesel and bioethanol as declared goods
to ease commerce within and outside the country‟s states
o Elimination of tax and duties on biodiesel
o Minimum price for oil seeds
o Minimum price for bioethanol based on actual production and distribution
costs

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Biofuel Use Strategies for Sustainable Development (BforSD)

Theoretical potential of biofuel in Asia (2030)

Source: MRI, 2007

• biofuels can a complementary solution – if


planned and managed well
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Biofuel Use Strategies for Sustainable Development (BforSD)

Current situation...

o Overestimated what o Underestimated the


we know uncertainties

energy security
economic
gains

climate
change

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Biofuel Use Strategies for Sustainable Development (BforSD)

The future ain’t what it used to be ~ Yogi Berra

o falling oil price


o global recession

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Biofuel Use Strategies for Sustainable Development (BforSD)

Who gains?
The jatropha case:
o Greening of the environment
o Rural economy and livelihood
o pro-poor initiative to cultivate underutilized marginal land
o labor intensive (could employ village women and children)
o planting
o fruit picking
o jatropha oil could be utilized to fuel simple machines in villages – rural
electrification
o Commercial viability still in question
o marginal land ~ marginal harvest
o must be produced in volume Should governments
o current technology still inefficient infuse more money for
o germplasm R&D and demonstration
o harvesting process projects given the current
o logistics financial crisis?
o limited number of established refineries
o relies on government subsidies
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Biofuel Use Strategies for Sustainable Development (BforSD)

Who gains?
Jatropha case study in Yunan, China:
o Greening of the environment
o 1,200 ha planted in hillside
o Rural economy and livelihood
o to augment farmer‟s income
o jatropha planted not in arable land
o Feedback from farmers
o “wait and see” attitude
o no existing market for jatropha
o they will only harvest the fruits if the price will be competitive
o no established refineries
o deemed too risky

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Biofuel Use Strategies for Sustainable Development (BforSD)

Good for environment?

o Biofuels are not created equal


o LCA results still fuzzy
o The gains in burning cleaner fuel can be offset by
unsustainable production practices
o rainforest destruction
o peat land conversion
o heavy fertilizer use
o induce water scarcity
o Questions on sustainability of biofuels partly derails its
inclusion in the CDM portfolio
o as of 1 January 2009, no biofuel projects among the 1300 projects
approved in the CDM portfolio

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Biofuel Use Strategies for Sustainable Development (BforSD)

Overcoming barriers in CDM

o Biofuels – perceived as „carbon neutral‟ – have initial high


expectations to be a major focus of CDM projects
o Co-benefits from biofuel production (job creation, rural
development) reinforces the SD component of CDM
o Currently only the CO2 reduction potential is monetized in
CDM
o Under the current system with limited approved
methodologies applicable to biofuels, the chance for
approval of biofuel CDM project on a significant scale is
highly unlikely.

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Biofuel Use Strategies for Sustainable Development (BforSD)

Biofuels in CDM
Meth. Title / Description GHG Host Remark
No. reduction country
69 30 TPD Biodiesel project using oil seeds from jatropha and pongamia 26 ktCO2 India C
in Andra Pradesh, India
82 Baseline methodology for the production of sugar cane based 53 ktCO2 Thailand C
anhydrous bio-ethanol for transportation using LCA
108 Biodiesel production and switching fossil fuels from petro-diesel to 26 ktCO2 India C
biodiesel in transport sector
109 Sunflower Methyl-Ester Biodiesel Project in 33 ktCO2 Thailand C
129 Generalized baseline methodology for transportation biofuel production 33 ktCO2 Thailand C
project with LCA
142 Palm Methyl Ester – Biodiesel Fuel (PME-BDF) production and use for 218 ktCO2 Thailand C
transportation
180 BIOLUX Benji Biodiesel Beijing Project production of waste cooking oil 123 ktCO2 China A
based biodiesel for use as fuel
185 Khon Kaen Ethanol Project 40 ktCO2 Thailand B
223 Biodiesel Project 205 ktCO2 South Africa C
224 Manufacturing of Biodiesel from Crude Palm Oil and Jatropha Oil 60 ktCO2 India C
228 AGRENCO Biodiesel project in Alta Araguala 335 ktCO2 Brazil WIP
233 Palm Methyl Ester – Biodiesel Fuel (PME-BDF) production and use for 143 ktCO2 Thailand WIP
transportation in
Note: A = Approved by the Executive Board (EB); B = Project participants / EB must make some changes;
C = Rejected / new Project Design Document (PDD) must be submitted; WIP = work in progress
Source: Woo (2008) using data from UNEP Risoe.

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Biofuel Use Strategies for Sustainable Development (BforSD)

Biofuels in CDM
Current CDM approved methodologies applicable to biofuels

Methodology Description
AM 0047 Production of biodiesel based on waste oils and/or waste fats
from biogenic origin for use as fuel
AMS-II.F Energy efficiency and fuel switching measures for agricultural
facilities and activities
AMS-III.B Switching fossil fuels

AMS-III.C Emission reductions by low-greenhouse house emitting


vehicles
AMS-III.T Plant oil production and use for transport applications

Note: AMS refers to Small Scale CDM Methodologies


Source: http://cdm.unfccc.int/methodologies/PAmethodologies/approved.html

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Biofuel Use Strategies for Sustainable Development (BforSD)

Can CDM be made to work for biofuels?


o more CDM approved methodologies needed
o second generation biofuels maybe more feasible
o explore use of biofuel feedstock wastes for use in biomass
energy generation
CDM approved methodologies which could be applied to biomass
energy utilizing biofuel feedstock solid waste
Methodology Description
AM 36 Fuel switch from fossil fuels to biomass residues in boilers for heat
generation – Version 2.1
ACM2 Grid-connected electricity generation for renewable sources (no
biomass)
ACM6 Grid-connected electricity from biomass residues (includes AM4 &
AM15)
AMS-I.C. Thermal energy for the user with or without energy
AMS-I.D. Grid-connected renewable energy connection
AMS-III.E Avoidance of methane production from decay of biomass through
controlled combustion, gasification or mechanical/thermal treatment
Source: http://cdm.unfccc.int/methodologies/PAmethodologies/approved.html

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Biofuel Use Strategies for Sustainable Development (BforSD)

Way forward
o current biofuel situation maybe bleak – need to revisit
ambitious targets
o change in policy direction – biofuel for transport and rural
electrification
o we need a way out of our “shock and trance” tendency
when oil prices are low
o work on sustainability issues - learning from „mistakes‟ not
just best practices
o more biofuel R&D will be needed, especially for second
generation biofuels
o more R&D for biofuel feedstock wastes for use in biomass
energy generation
o need to develop additional methodologies for biofuels in
CDM or other future climate regime
Thank you for your attention….
Jane Romero IGES | http://www.iges.or.jp 16