Review of Indirect Effects of Biofuels
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Review of Indirect Effects of Biofuels Evaluation of the drivers of land use change Review of future demand and supply of biofuels to 2020 and their impact on GHG-emissions Report to The Renewable Fuels Agency ED43654 Final 26th June 2008 Review of Indirect Effects of Biofuels Title Review of Indirect Effects of Biofuels Customer Renewable Fuels Agency Customer reference Confidentiality, This report is the Copyright of RFA and has been prepared by AEA copyright and Technology plc under contract to the DfT dated 7 April 2008. The contents reproduction of this report may not be reproduced in whole or in part, nor passed to any organisation or person without the specific prior written permission of the RFA. AEA Technology plc accepts no liability whatsoever to any third party for any loss or damage arising from any interpretation or use of the information contained in this report, or reliance on any views expressed therein. File reference AEA Draft 4 to RFA ED 43654 Reference number V4 - Final AEA Energy & Environment The Gemini Building Fermi Avenue Harwell International Business Centre Didcot OX11 0QR t: 0870 190 6374 f: 0870 190 6318 AEA Energy & Environment is a business name of AEA Technology plc AEA Energy & Environment is certificated to ISO9001 and ISO14001 Authors Name J Bates, P Howes, C Dent, A Brown, D Rapson Approved by Name A Pridmore, C Fry Signature Date 26/06/08 AEA Energy & Environment iii Review of Indirect Effects of Biofuels Executive Summary Background This report was produced as a component part of the ‘Review of Indirect Effects of Biofuels’ also known as the ‘Gallagher Review’. The review was requested by Ruth Kelly, Secretary of State for Transport, and is led by the Renewable Fuels Agency (RFA) Chairman Ed Gallagher. He was supported in drafting a final report by other members of the Review Executive – the Review Authors and the Project Director as well as by the Review Secretariat which includes the Project Manager and Project Assistants. The Review was specifically focused on new and emerging evidence on the displacement effects of biofuels. It was evidence-based, examining the impacts of rising demand for biofuels on land-use and specifically the effects on net greenhouse gas (GHG) savings, taking into account potential direct and indirect land use changes. It also addressed the extent to which increasing demand for biofuels is driving increasing food commodity prices and food insecurity for the most vulnerable members of society. The Review aimed to consider recent and anticipated future demand and supply scenarios to 2020 and the effects of these compared to a baseline that should take account of other land use change drivers. It specifically seeks to address six key questions: • What are the key drivers of land use change and food insecurity to date and to what extent is increasing demand for biofuels significant? • To what extent may global demand for biofuels contribute to land use change and food insecurity to 2020 given known current and proposed targets? • How are GHG-savings from biofuels affected by displaced agricultural activity and resulting land-use change taking into account the introduction of possible advanced technologies and other improvements in production? • What are prudent levels and appropriate forms of biofuel targets for the EU currently and to 2020 - recognising indirect effects of biofuels? How might the introduction of advanced biofuels and technologies change these levels? • What policies can mitigate the potential negative indirect effects of biofuels on land-use change and food security? • What further work would help to monitor and evaluate displacement effects of biofuels? The above six questions are being addressed through the following work elements: • Consultancy studies – A. Evaluation of the drivers of land use change B. Review of future demand and supply of biofuels to 2020 and their impact on GHG- emissions C. Economic benefits and food insecurity concerns of increasing demand for biofuels • A call for evidence – including two stakeholder workshops • Expert seminars • A final RFA report Elements A and B were managed by AEA with the involvement of a range of subcontractors. This report summarises the work undertaken to cover these specific elements, thereby contributing to the evidence-base which the RFA used to answer the six questions outlined above. iv AEA Energy & Environment Review of Indirect Effects of Biofuels This Work A core aim of this study was to examine the indirect effects of biofuels policy, particularly UK and EU policies. To achieve this it was necessary to have an appreciation of a number of factors: 1. A thorough understanding of global agriculture, production and trade of agricultural commodities and the potential response of markets to the expansion of biofuels. This includes the potential for conflict between biofuels production and the production of other agricultural commodities, such as food and wood, including impact on the price of such commodities. 2. An appreciation of how much land would be required to meet biofuels targets, and of the land available to meet these requirements. This includes an understanding of which crops are important for biofuels and where they are most likely to be grown. 3. The potential to mitigate the conflicts in (1) by improved efficiency of production (e.g. technological advances and yield improvements for all agricultural commodities); and by the use of co-products for feed and fuel. The environmental impacts of such practices. 4. Regional differences and the significance of these differences. 5. An appreciation of the environmental impacts of the likely land use changes caused by biofuels production, both direct and indirect. It is difficult for one study team to encompass all of these factors – to do so would require access to a very wide range of relevant skills and information. Given the time constraints on the work, a consortium of study teams was contracted to examine the issues for which they have relevant expertise and to produce reports which could inform this synthesis report. The work was therefore divided into a series of separate but connected studies. These studies examined various aspects of the potential indirect effects of biofuels on land use change and GHG emissions. The work was in the form of a review and analysis of available data. The time-scale was insufficient to allow sophisticated models to be developed. However, scenarios were developed to allow examination of current volume based targets and hypothetical GHG reduction ones and to ensure the studies were all based on the same scenario analysis. A likely feedstock mix was developed to allow quantification of tonnages required. Data on yield projections for relevant crops were examined under three scenarios and these data were combined with the target scenarios to provide an indication of land requirements for biofuels in 2020 for each scenario. The scenarios were also tested at different biofuel target levels and for the influence of the use of co-products for animal feed on projected land use. A number of key uncertainties are known to influence biomass resource potential. These include: improvement of agricultural management, choice of crops, food demands and human diet; use of degraded land; competition for water; efficiency of water use; climate change etc. (WAB 2008). These factors could not be modelled in the timescale of this study and were examined by reference to the literature. In addition various key papers have recently highlighted the GHG emission consequences of the indirect impacts of biofuels, notably Searchinger (2008), Fargione (2008) and Crutzen (2007). These papers were reviewed by members of the study team to examine the uncertainty of the underlying assumptions and whether or not the findings stand up to scrutiny. This report synthesises the results of all of the studies managed by AEA. The key findings of these studies are summarised below. Land Use Issues Land Requirements for Biofuels The study examined the targets currently proposed internationally in order to estimate how much land would be required by 2020 to produce the crops necessary to meet the targets. Four scenarios were considered – the current volume based targets and targets based on a 7% GHG reduction. Both sets of targets have been investigated with and without the deployment of second generation biofuels conversion technologies, and then used to predict land demand. Additionally three scenarios were used to examine potential agricultural productivity changes: Business as usual (where productivity continues to improve as at present); maximum improvement (productivity improves by 1% a year over AEA Energy & Environment v Review of Indirect Effects of Biofuels the BAU scenario); and yield decline (where there are no productivity improvements). Finally the use of co-products as animal feed, displacing the need for import of animal feed from elsewhere and hence avoiding land use change for these products, was examined for ethanol from wheat and corn and biodiesel from rape. The adoption of second generation technologies, the potential for the use of biofuel co-products and improvements in productivity have been seen to have a significant impact on land use. The results are summarised in the Figure below. The first column examines the yield projections for the yield decline scenario. This scenario is significantly influenced by the estimated yields for jatropha (which are highly uncertain) and, to a lesser extent, soy. This is also particularly