Governing sustainability in the emerging global integrated biofuels network : dealing with environmental and socioeconomic impacts of biofuel production

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Governing Sustainability in the Emerging Global Integrated

Biofuels Network:

Dealing with Environmental and Socioeconomic Impacts of Biofuel

Production

Master Thesis Political Science – International Relations

Annewies van den Hoorn – 11223308

Supervisor: Dr. Robin J. Pistorius

Second reader: Dr. Jeroen Doomernik June 23, 2017

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Acknowledgements

I would first and foremost like to thank my supervisor, Dr. Robin Pistorius, for providing me with his guidance during the process. His supportive feedback provided me with new insights and renewed motivation to finish my thesis. My special gratitude goes out to his quick responses and accessibility, making the entire process a pleasant one. Also I would like to express my gratitude to my second reader, Dr. Jeroen Doomernik, for investing his time in reading my thesis. Finally, a word of appreciation to my friends and family for their confidence in me. I could have not completed this thesis without their unconditional support.

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List of Abbreviations and Acronyms

2BSvs Biomass Biofuels Sustainability voluntary scheme BEFS Bioenergy and Food Security

DLUC Direct land-use change

EIA Energy Information Administration

EU European Union

FAO Food and Agriculture Organization of the United Nations FDI Foreign Direct Investment

GBEP Global Bioenergy Partnership GEF Global Environment Facility GHG Greenhouse Gas

GIN Global Integrated Network

GIBN Global Integrated Biofuels Network GVC Global Value Chain

IFAD International Fund for Agricultural Development IFPRI International Food Policy Research Institute

IIED International Institute for Environment and Development ILUC Indirect land-use change

IMF International Monetary Fund

ISCC International Sustainability and Carbon Certification LAC Latin America and the Caribbean

LCA Life-cycle assessment LUC Land-use change

MNC Multinational corporation NGO Non-governmental organization

OECD Organization for Economic Co-operation and Development RED Renewable Energy Directive

RFS Renewable Fuels Standard

RSB Roundtable on Sustainable Biomaterials RSPO Roundtable on Sustainable Palm Oil RTRS Roundtable on Responsible Soy

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UNEP United Nations Environment Programme

UNIDO United Nations Industrial Development Organization

UN HLTF United Nations High-Level Task-Force on Global Food Security US United States of America

VEETC Volumetric Ethanol Excise Tax Credit WFP World Food Programme

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List of Tables and Figures

Figure 2.1 Traditional value chain

Figure 2.2 Six dimensions of GVC analysis Figure 3.1 Classification of biofuels

Figure 3.2 Overview of conversion routes to biofuels Figure 3.3 Government-driven biofuel value chain Figure 3.4 Global biofuel value chain

Figure 3.5 World bioethanol production in million liters, 1991-2007 Figure 3.6 World biodiesel production in million liters, 2000-2007 Table 3.1 Percentage share of global ethanol and biodiesel trade over

production, 2000-2010

Figure 4.1 Schematic flow diagram of material flows, energy flows and pollutant emissions in the biofuel production chain

Figure 4.2 Environmental and socioeconomic impacts of biofuel production Table 6.1 Biofuel production rates in million liters per year, 2005-2011 Table 6.2 Overview of national biofuel policy objectives in LAC countries Table 6.3 Certification standards adopted in LAC as of July 2014

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1. Introduction

1.1 Introduction issue area

There has been a rise in the demand for biofuels, mainly driven by the threat of climate change and high fossil fuel prices (Mol, 2007: 297). As pointed out by Mol (2007: 300), there exists a tendency of thinking that biofuels will help mitigate climate change and contribute to energy security and rural development. And, in order to enhance this process, the production and consumption of biofuels should globalize further. However, the growing demand for bioenergy has problematic consequences. Whereas the production of biofuels was initially seen as having a mitigating effect on climate change, this is now being disputed (Mol, 2010: 65). Furthermore, for the production of biofuels to be considered sustainable, it is necessary to look at a wider range of factors than just its impact on climate change (Bastos Lima, 2009; Hunsberger et al., 2014; RSB, 2011).

There are question marks concerning the legal aspects of the biofuel crop production issue. Bastos Lima (2009) argues that the biofuel challenge can be seen as a legal problem, since current efforts at governance are not legitimate, transparent or equitable. Besides that, Hunsberger et al. (2014) point to the questionable effectiveness of the proliferated policy and governance measures aimed at improving the social effects of biofuels. As Bastos Lima (2009) argues, weak or ineffective governance of biofuel can lead to negative outcomes in issue areas, such as income, food security, access to land and resources and social assets. It is therefore important to pay attention to equity and sustainability principles in governing the issue. He points out that: ‘Biofuels are expected to become even more of an issue in the coming years, and therefore even more in need of sustainability principles and legal instruments to govern their development’ (Bastos Lima, 2009, p. 7).

Mol (2007: 303) refers to the emerging globalized biofuels system as a ‘Global Integrated Biofuels Network’ (GIBN). His theory provides a framework for analyzing the biofuel system. As mentioned, there is a need for incorporating sustainability and legal instruments in biofuel governance. Currently biofuel production is mainly driven by policies and political support. However, regulation to ensure biofuel sustainability remains scarce. As Bastos Lima points out: ‘The national and supranational biofuel agendas and bilateral agreements have been so far dedicated

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more to promoting biofuel agro-industry than to controlling its expansion or to addressing its impacts’ (2009: 13). Besides that, there have been no major changes in the production practices in order to deal with the socioeconomic and environmental concerns. Also there is no legal framework or multilateral agreement on the international level that touches upon these concerns. However, international governance is emerging through multilateral organizations, joint partnerships of state and non-state actors, and roundtables established by multiple players to discuss the biofuel issues and agreeing upon voluntary standards for production Bastos Lima, 2009: 14). Overall, these institutions remain limited in their effectiveness. They are still promoting biofuels rather than regulating their production or social and environmental impacts. Such regulation remains limited to the voluntary initiatives, which have yet to show their effectiveness (Bastos Lima, 2009: 15).

As Bastos Lima concludes:

The effectiveness of international biofuel governance in addressing the impact of increased biofuel production has been extremely limited so far, partially because, as seen, restraining biofuel expansion or initiating major changes in its production structure is not really on the agenda. Large-scale biofuel production progresses at full speed and with increased state support. Calls for greater equity and sustainability regulation are yet to be heeded, and alternative views, such as those of small farmers and Southern NGOs, have yet to be taken on board. (2009, p. 15).

Thus, it can be argued that there is a gap in governance when it comes to these sustainability challenges. In line with this, Bastos Lima and Gupta (2013: 55) argue that the ongoing socioeconomic and environmental impacts remain to be addressed by biofuel governance. The current treatment of biofuel production in an international context does not only neglect equity needs, it even seems to let production continue in ways that aggravate them. Altogether this shows that there is a need for an effective way to internationally govern biofuel production, especially focusing on equity and sustainability regulation.

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1.2 Research question

In this thesis I want to focus on how to govern biofuels in a way that takes into consideration the environmental and socioeconomic impacts. In other words, how can sustainability be ensured in regulating the biofuel system?

My research question is:

“How does biofuel governance help to mitigate negative environmental and

socioeconomic side effects of a Global Integrated Biofuels Network?”

I will try to answer this research question by focusing on the following sub-questions: 1. What elements constitute an emerging Global Integrated Biofuels Network?

2. What are the environmental and socioeconomic impacts of a GIBN? 3. What types of governance have been established and what is still missing?

4. To what extent has GIBN governance been formulated and implemented in Latin America?

1.3 Relevance

This thesis will have a theoretical relevance. First of all I will discuss Mol’s theory of an emerging GIBN in the wider context of traditional and global value chains. This will contribute to the existing literature on global value chain analysis.

According to Mol (2007: 306) the emerging GIBN, as a consequence of further globalization, intrudes on the local space of place. Local biofuel production systems are undermined and local environmental conditions are endangered. Besides that, food availability and affordability for local people are jeopardized and local farmers become more dependent on powerful global players in the GIBN. Overall it shows that biofuel governance has not addressed the negative side effects for the environment and vulnerability’s within the GIBN. An interesting question as posed by Mol (2007: 307) is then how the biofuel governance structure can develop in a GIBN to modify these tendencies.

In the context of biofuels, little international governance has emerged (Bastos Lima & Gupta, 2014: 392). And, as Bastos Lima (2009: 11) states, ‘regulation to ensure biofuel sustainability remains scarce’. He argues that biofuels are expected to become even more of an issue in the future, which points to the need for sustainability principles to govern their development (Bastos Lima, 2009: 7). Besides that, Ponte

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(2014: 355) states that social science work on the role that standards and sustainability certifications are playing in shaping the biofuel industry has only just started to appear. In order to try and fill this gap in existing literature, I will therefore focus my research on how biofuel governance can help mitigating the negative social and environmental side effects of the emerging GIBN.

1.4 Methodology

In order to answer my research question I will starts by providing a theoretical framework of the GIBN theory as constructed by Mol (2007). I will then operationalize it in order to apply it to a case study. The case study will serve as a way to determine whether a GIBN as defined by Mol is visible in practice and how it is governed. My research furthermore consists of three sub-questions, aimed at answering the central research question. I will use a secondary literature analysis in order to outline the GIBN theory, as well as to answer the sub-questions.

Case selection

To investigate whether Mol’s theory of a GIBN is tangible in practice, I will apply it to the case of Latin America. Latin America proves to be an interesting region to study in the context of biofuel production. The region is filled with large renewable energy sources and has many favorable characteristics when it comes to the production of biofuels, such as good soil, suitable climate, available land and low labor costs (Janssen & Rutz, 2011: 5717). Subsequent to the rising demand for biofuels, there has been an upsurge in investments and government plans emerging in Latin America to enhance biofuel production (Rutz et al., 2010: 15). And, according to Altieri and Toledo (2011: 593), this rising demand for biofuel crops is increasingly reshaping the region’s agriculture and food supply, with yet unknown economic, social and ecological impacts and risks. Janssen and Rutz (2011: 5717) argue that the emerging biofuel market in Latin America has both positive and negative economic, environmental and social impacts.

1.5 Structure

This thesis is divided in seven chapters. After an introduction of the topic, the theoretical framework will be discussed in the second chapter. Since the research question is based on Mol’s theory of an emerging GIBN, this will be the main focus

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of the theoretical framework. In order to move beyond this theory alone, it will be placed in the broader context of value chain analysis. The subsequent four chapters will each deal with a sub-question.

First, in Chapter 3, the theory of a GIBN will be further explored. It will discuss the several aspects of a GIBN and whether these are indeed tangible. In Chapter 4 the second sub-question will be answered, by elaborating on the environmental and socioeconomic impacts of biofuel production. Then, in Chapter 5, the current types of biofuel governance will be discussed. Furthermore it will provide insights in possible ways of improving biofuels governance, taking into consideration the sustainability aspects. The sixth chapter will deal with the final sub-question, concerning the case study of Latin America. The final chapter will conclude the previous chapters and provide an overall answer to the main research question.

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2. Governing the Global Integrated Biofuels Network

2.1 Introduction

When focusing on biofuel governance it is important to take into consideration the different parts of the biofuel value chain. Governance can take place on different parts of this value chain, and understanding how a value chain is controlled can facilitate development within global industries (Gereffi & Stark, 2016: 10). The literature on value chains is extensive and diverse. I will first discuss some of these views, arguing that the GIBN model provided by Mol (2007) will suffice as a viable framework for my research. This thesis is concerned with how biofuel governance can help mitigating the negative impacts of biofuel production. The theory Mol formulates is a comprehensive one that describes the emerging global character of the biofuel system. One aspect of the theory concerns the way the emerging biofuel system is governed, which is particularly important for answering my research question. In formulating my main research question I have therefore specifically chosen to use Mol’s term of a GIBN.

2.2 Value chains

Sturgeon makes a distinction between the traditional value chain and what he labels as a ‘production network’ (2000: 6). The traditional value chain, also referred to as production chain, supply chain or commodity chain, concerns the vertical sequence of events leading to the delivery, consumption, and maintenance of a certain good or service (Sturgeon, 2000: 6). According to Gereffi and Stark, the value chain ‘describes the full range of activities that firms and workers perform to bring a product from its conception to its end use and beyond’ (2016: 7). A traditional value chain consists of a supplier, manufacturer, distribution centers, and consumers (Sharma et al., 2013: 611).

Thuijl et al. (2003) provide an example of what a traditional value chain looks like in the context of biofuels. Figure 2.1 shows a general outline of a conversion route for the production of biofuels. The conversion route consists of interlinked sub processes and the transportation of intermediate products in between them, indicated by the arrows.

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Figure 2.1 – Traditional value chain (Thuijl et al., 2003: 6).

Global value chains

Ryu et al. (2008: 3) point to the tendency of traditional value chains becoming more globally integrated, mainly driven by globalization. In line with this, Gereffi and Stark (2016: 6) discuss ‘global value chains’ (GVCs). They argue the global economy is increasingly becoming structured by these GVCs. This has consequences for global trade, production and employment and how a developing country’s firms, producers and workers integrate into the global economy. Especially for developing countries it is important to have access to the GVCs in order to participate in the global economy and benefit from it. This will be crucial for their development. As Gereffi and Stark (2016: 6) argue, the GVC framework proves useful in understanding how global industries are structured and organized, taking into account the different actors involved. Besides that it helps in examining social and environmental development concerns.

In analyzing GVCs, Gereffi and Stark (2016: 7) distinguish six dimensions, divided in global and local elements. These dimensions are: the input-output structure of the GVC, the geographical scope, the governance structure, upgrading, the institutional context, and industry stakeholders. They depict this distinction in figure 2.2.

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One of the six dimensions of a GVC analysis as identified by Gereffi and Stark (2016: 10) is the governance structure. Analyzing governance is useful in understanding how a value chain is controlled and coordinated when certain actors have more power than others. They argue that: ‘understanding governance and how a value chain is controlled facilitates firm entry and development within global industries’ (Gereffi & Stark, 2016: 10). However, their focus is limited to the role of (lead) firms and industry organization. In the biofuel industry state governments play a large role as well. Ponte puts this criticism of GVC analysis as follows: ‘by focusing on firm-to-firm relations, it does not properly examine the role that other actors play in GVC governance—such as governments, social movements, labour unions, or NGOs’ (2014: 353). Theories of GVC analyses thus leave out several important actors in shaping the governance of the biofuel system. This points to the need for a more comprehensive theory, explaining how biofuel governance is established and how it can help mitigate the environmental and socioeconomic impacts of biofuel production.

In order to answer my research question, I will therefore use the theory as provided by Mol. According to Mol (2007: 300) globalization of biofuels is increasing through rapidly expanding global trade, caused by a rising demand for biofuels. In the context of biofuels, Mol (2007) formulated a theory that concentrates on such a globally integrated system. He defines this as a ‘Global Integrated Biofuels Network’ (GIBN). His theory looks beyond the traditional value chain, more in line with a global value chain analysis as defined by Gereffi and Stark (2016). Furthermore, Mol’s theory focuses on a more global character of governance, taking into account relevant global actors as well. It therefore proves to be a useful model to use in my research. In the following section I will describe the GIBN model and its characteristics as articulated by Mol (2007).

2.3 Mol’s theory of a Global Integrated Biofuels Network

As mentioned in the previous sections, governance takes place on different parts within the biofuel system. And to develop the system and improve its sustainability, governance plays an important role as Mol points out in his theory (Mol, 2007: 307). In analyzing the emerging globalized system of biofuels, Mol tends to incorporate biofuel developments into social sciences, whereas the subject has largely remained

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within natural, economic, and environmental studies. Based on Castells work, Mol refers to the sociology of networks and flows. The theory treats flows and networks as the new architects of global modernity. Mol (2007: 301-302) refers to the work of Urry, suggesting that networks and flows operate in three spatial patterns or modalities: regions, global integrated networks (GINs), and global fluids.

Regions consist of objects, actors and relations (networks) that are primarily clustered together geographically, often within one country. The mobility of flows is constrained by the boundaries of the region, which is characterized by fixed and solid relations. According to Urry (2000: 30) the objects within a region are clustered and boundaries are drawn around these regional clusters. A region can thus be compared to a traditional value chain, where globalization has not yet occurred. Urry (2000: 33) argues that globalization causes the replacement of regions by the other two spatial modalities, namely the networks and fluids.

The second spatial modality, which Mol refers to as a global integrated network, consists of more or less stable, enduring and predictable relations between nodes or hubs stretching across different regions with relatively walled routes for flows. They cross regional boundaries and deliver the same kind of outcome at all nodes with limited adaptation to local circumstances. Castells (1996: 470) depicts networks as sets of interconnected nodes with dynamic open structures. According to Castells (2004: 3) the network has no center, the interconnected nodes vary in relevance and importance to the network, but all nodes are necessary for it to work.

Global fluids are spatial patterns structured neither by boundaries nor by more or less stable relations, but by large flexibility, liquidity, gel-like movement and permeable boundaries. They can be seen as a deterritorialised movement with no necessary end state or goals. This modality is very much related to the unpredictability of global modernity, as pointed out by Urry. Urry (2000: 31) states that within fluids, boundaries come and go and relations transform without fracture. (Mol, 2007: 302).

These spatial patterns of flows are structured by sociotechnical infrastructures, referred to as ‘scapes’ (Mol, 2007: 302). Urry defines scapes as: ‘networks of machines, technologies, organisations, texts and actors that constitute various interconnected nodes along which the flows can be relayed’ (Urry, 2000: 35). On the contrary, flows consist of: ‘peoples, images, information, money and waste, that move

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within and especially across national borders and which individual societies are often unable or unwilling to control directly or indirectly’ (Urry, 2000: 35). Power in a network is related to access, inclusion and exclusion and control over flows. Scapes are shaped by these power relations, but they also structure power positions around these flows, access rights, and the material bypassed by the flows. In the three spatial modalities, the power of states differs. Within regions states can still be seen as the major governing actors, although this becomes more difficult under globalization. Governing becomes even harder for the state in GINs and global fluids, the latter hardly being touched by the states’ activities. (Mol, 2007: 302).

Applying this theory to the emerging biofuel system, Mol (2007: 303) identifies two of the spatial modalities: the region and the GIN. First he describes the region modality. According to Mol (2007: 303) this modality of biofuel flows and networks has been the dominant modality. The objects, actors and relations are clustered together in localities with fixed relations and boundaries and limited global integration. He distinguishes two largely independent forms of these biofuel regions. On the one hand there are developing countries, where the biofuel systems are locally organized with limited differentiation among actors, limited state involvement, and a poorly articulated socio-material infrastructure. In the more advanced developing countries, such as Brazil, and several OECD countries, there are national biofuel regions. These regions are nationally organized, having a well-articulated socio-material infrastructure, strong state involvement, further differentiation among actors, and a larger mobility and wider spatiality of biofuel flows. However, there is limited global integration, poor homogenization across countries and the socio-technical infrastructures are defined, organized and governed locally. As argued by Urry (2000: 33), the process of globalization is leading more towards the network and fluid modalities. The second spatial modality Mol (2007) then distinguishes in the context of biofuels is the emerging Global Integrated Biofuel Network (GIBN). This GIBN is characterized by:

Less concentration of objects, actors and relations in specific locations/regions, increasing transboundary flows of biofuels, an increasingly globally defined scape, the decreasing dominance of states and governability and a homogenisation and standardisation of products and processes; but still with reasonably stable and predictable patterns of

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biofuel exchange and relations and walled routes for biofuel flows. (Mol, 2007: 303)

According to Mol (2007: 306) national biofuel regions are proliferating in both developing and developed countries. This leads to large-scale mono-cropping biofuel production and a more centralized, homogenized production and refining of the crops, while biofuel networks are losing their relevance. Besides that, there is an emerging GIBN in which the production, trade investment, consumption, control and governance goes beyond the power of the state. These developments are causing changes in the networks and scapes that structure the biofuel flows. Large companies and conglomerates of major agribusiness, car industries and oil companies are starting to become more powerful players, while farmers, co-operatives and individual processors are falling behind.

The emerging GIBN disrupts the specific local space of place, undermining the local biofuel production systems and endangering the local environmental conditions. Besides that it jeopardizes food availability and prices for place-based locals and the local farmers become increasingly dependent on powerful global players within the GIBN. (Mol, 2007: 306-307). The GIBN provides for the increasing global mobility of biofuels, technologies and standards and tries to tackle the related environmental issues in the global context. However, the more local issues, such as water and soil degradation, are being neglected. These and other socioeconomic and environmental impacts of the GIBN will be discussed in Chapter 4. These issues raise the question central to this thesis, how can biofuel governance develop within the emerging GIBN in a way that ensures sustainability?

2.4 Biofuel governance

Most of the biofuel governance remained nationally oriented until 2007, developed by state and non-state actors within the national system. Biofuels have primarily been governed by national governments, promoting the cultivation and processing of biofuel crops. In most countries governments have stimulated this market, protecting it against foreign competitors. Through the implementation of subsidies and setting targets for biofuel use the government can exert influence on domestic use of biofuels. However, the state’s control is diminishing with the increase in international trade, world market development and global actors. This globalization disputes the

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relevance of a national system and creates the need for a more globally harmonized biofuels regime. There is much discussion on how to form and control this global scape and which issues to take into account. According to Mol the issues that stand out are free trade, certification and standardization and new power relations. (Mol, 2007: 307-308).

Free trade

With growing demands, more countries are opening up their markets in order to encourage investments in industry and the marketing of biofuels on a global level. Where countries such as the US were initially focusing on protecting their farmers by protectionist policies against imports, the increasing demand for feedstock and rising corn prices is putting pressure on these policies. Together with other major players in the biofuel system, such as the EU and Brazil, the US became more susceptible to developing international standards and open markets. This trade liberalization will encourage the production and use of biofuels over fossil fuels. But in order to achieve this, there is also a need for global collaboration on standards and specifications of biofuel quality. Another problem is that there is no clarity on how to classify biofuels within the existing trade regime. They can arguably be seen as agricultural, industrial or environmental goods, which will have different implications for the protective measurements undertaken by different countries. It is important to move toward a standardized product and develop criteria that ensure sustainability in the production methods, taking the local environmental and socioeconomic interests into consideration when moving towards a global network. (Mol, 2007: 308).

Certification and standardization

Overall, Mol (2007: 309) argues, the current global biofuels network is moving towards further harmonization and uniform standardization of biofuel products, markets and regulatory regimes. Certification and labeling can be seen as institutional tools to incorporate the specific place-based environmental and social interests into the space of flows. According to Mol (2007: 309) this is visible in the emerging GIBN through several calls for certification and labeling systems by environmental NGOs, local farmer organizations and scientists for example. The interests they represent vary from protection of the local environment to food security and sufficient labor standards. Certification and standardization can thus serve as a tool for

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governance to incorporate sustainability in terms of environmental and socioeconomic factors.

New power relations

Along with the emergence of a global biofuels scape, the power relations will change considerably as well. With the emergence of standardization and certification and the process of biofuel globalization, large organized actors that operate beyond region networks will gain power. This is mainly because they are more efficient in co-constructing and working within global socio-material infrastructures than states or localized NGOs. Large-scale modes of production are for example preferred over local smallholder farmers. This is followed by several international initiatives that seek to protect the rights of local farmers and small-scale businesses. (Mol, 2007: 309).

2.5 Conclusion

This chapter has argued that the theory of Mol concerning an emerging GIBN proves to be useful in dealing with issues of biofuel governance. As Mol concludes: ‘Environmental sustainability and vulnerabilities stand out as two of the most critical issues in the development of a GIBN’ (2007: 301). He states that climate change can be seen as the driver behind biofuel production. But, he argues, it is more difficult to see inclusion of new social vulnerabilities in the GIBN. And ‘as long as the emerging GIBN takes on too many of the characteristics of the current fossil fuel GIN, we cannot expect a fuel switch to result in better positions for such vulnerable actors’ (Mol, 2007: 310). He thus points to the importance of looking at incorporating environmental and socioeconomic interests into the global integrated biofuels network. As the previous section has shown, there are several obstacles to overcome for biofuel governance in order to deal with the sustainability issues. These obstacles are concerned with consequences of increasing globalization, such as free trade, the implementation of standards and certifications and new power relations. If the gap in governance concerning sustainability issues is to be overcome, these issues should be taken into consideration. This will further be discussed in Chapter 5.

In the following chapter I will answer the first sub-question by dividing Mol’s theory of a GIBN into separate characteristics. In order to see whether his theory is tangible, I will discuss these different elements and provide examples.

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3. Elements of an Emerging GIBN

3.1 Introduction

This thesis is concerned with the governance of an emerging globalized biofuel network, in order to ensure sustainability. As the previous chapter has shown Mol argues we can speak of an emerging GIBN. This chapter will further elaborate on the characteristics of this GIBN and see where governance comes into play. First it will discuss the background of biofuel production and its rapid emergence.

Along with the increasing industrialization, the world faces both a crisis of fossil fuel depletion as well as severe environmental degradation (Agarwal, 2007: 234). Fossil fuels take up 80 percent of the primary energy used in the world (Nigam & Singh, 2011: 53). In order to meet the energy demand, fossil fuel sources are being exhausted. The consumption of these fossil fuels is causing great harm to the environment through its large greenhouse gas (GHG) emissions. Examples of the impacts on the environment are climate change, a rising sea level, loss of biodiversity, and receding glaciers (Nigam & Singh, 2011: 53). Besides these environmental consequences, the rising demand for fossil fuels leads to rising prices of crude oil. And since oil is an important part of the economy, the rising oil prices impact global economic growth and financial markets (He et al., 2010: 868).

Call for sustainable alternatives

Nigam and Singh point out that: ‘Progressive depletion of conventional fossil fuels with increasing energy consumption and GHG emissions have led to a move towards alternative, renewable, sustainable, efficient and cost-effective energy sources with lesser emissions’ (2011: 53). Biofuels constitute an alternative source, which is considered the most environment-friendly. According to Nigam and Sigh (2011: 53) biofuels are being explored to replace fossil fuels and can be seen as a favorable form of fuel consumption because of their renewability, biodegradability and generating acceptable quality exhaust gasses.

Biofuels

Biofuels are fuels directly deriving from biological sources. They are mainly being produced from biomass and may take the form of liquid, gas or solid fuels. Biofuels

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can be classified as primary and secondary biofuels. Primary biofuels are used in their natural and unmodified form, mostly for heating, cooking or electricity production. Examples of primary biofuels are wood chips, firewood and pellets. Secondary biofuels, on the other hand, are modified primary fuels, produced by the processing of biomass. They can be used for transport and various industrial processes. The classification further divides secondary biofuels into first, second and third generation biofuels. This division is based on the raw material and technology that is being used for production of the biofuels. Figure 3.1 depicts this classification. (Nigam & Singh, 2011: 53).

Figure 3.1 – Classification of biofuels (Nigam & Singh, 2011: 54).

Agarwal (2007: 236-237) provides an overview of the potential secondary biofuels available. Figure 3.2 depicts these different forms of biofuels and their conversion routes. Of all these different biofuels, the liquid forms biodiesel and bioethanol are considered to be the most common forms of biofuel globally (Agarwal, 2007: 236). Most authors, including Mol (2007), focus on these forms so I will stick to this in my thesis as well. Bioethanol can be produced by the fermentation of cereals, grains, sugar crops and other starches. Biodiesel is produced through transesterification of oilseed crops, such as rapeseed, soybeans, sunflower, palm and jatropha (Agarwal, 2007: 236; Mol, 2007: 298).

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Figure 3.2 – Overview of conversion routes to biofuels (Agarwal, 2007: 237).

Why the emergence of biofuels?

Biofuels thus emerged as a more sustainable alternative to fossil fuels. In 2010, biofuels accounted for over 80% of the renewable energy sector (Guo et al., 2015: 723). According to Mol (2007: 299) there has been a significant rise in attention for biofuels and a related increase in their production. Bastos Lima and Gupta (2014: 392) claim that biofuel production nearly six folded between 2001 and 2012. Mol states there are four main reasons for this increase. Besides the harmful GHG emission of the exploitation and use of fossil fuels, Mol (2007: 300) points to the dependence of fossil fuel importing countries. These countries are highly dependent on the regions producing and exporting fossil fuels. By creating their own bioenergy programs, these countries will become less dependent and thereby increase their national energy security (Sharma et al., 2013: 609). A third reason Mol (2007: 300) gives is the rise in fossil fuel prices, mainly manifested in the oil price. Producing biofuels can be a more cost-effective alternative (GBEP, 2007: 19). The fourth and final reason is that there is an ongoing rural crisis, taking place in many OECD countries, mainly caused by overproduction of agricultural commodities, low prices and low wages for farmers (Mol, 2007: 300). This crisis paved the way for new

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agricultural markets, especially in large-scale, capital-intensive agricultural areas, such as the US. Governments play a role by supporting farmers to engage in biofuel production through subsidizing them.

Building on the four main reasons Mol discerns, government policies are an important driver of the increasing demand for biofuels (Sorda et al., 2010: 6977). As pointed out by Sharma et al.: ‘countries all over world have recognized the importance of renewable resources and have developed mandates, incentives, and policies to accelerate the implementation of biofuels/bioenergy systems’ (2013: 610). Governments are subsidizing the production of biofuels and starting to set requirements for biofuels to be blended with fossil fuels (Rothkopf, 2007: 1). Since the 1990s this has mostly been taking place in Brazil, the US, and EU countries, where governments have been heavily promoting biofuels (Ponte, 2014: 353). In promoting biofuels production, these governments are also being supported by agribusiness, oil and energy companies, car companies, investment funds, farmer organizations and various other international organizations (Mol, 2010: 65).

According to Mol (2007: 300) the increasing biofuel production started around the early 2000s, and was almost four times as big within six years. And where consumption was mostly taking place on a national level, the exportation of biofuels has witnessed a rapid increase. This indicates a globalization of biofuels, and a move from regional and national value chains to a global one (Ponte, 2014: 360). In analyzing this emerging global biofuels system, Mol (2007) relies on a sociology perspective of networks and flows. As discussed in the theoretical framework of this thesis, he articulates a theory of an emerging global integrated biofuels network. In the following section I will further elaborate on the elements of this GIBN in order to answer the first sub-question.

3.2 Global Integrated Biofuels Network

One of the three spatial modalities in which networks and flows operate Mol (2007: 302) distinguishes, is the Global Integrated Network (GIN). A GIN consists of more or less stable, enduring and predictable relations between nodes or hubs stretching across different regions with relatively walled routes for flows. They cross regional boundaries and deliver the same kind of outcome at all nodes with limited adaptation to local circumstances. In the case of the biofuel system, Mol (2007: 303) argues that such a GIN is emerging, moving beyond national biofuel regions. Mol refers to this as

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a Global Integrated Biofuels Network. This emerging GIBN he describes is characterized by:

Less concentration of objects, actors and relations in specific locations/regions, increasing transboundary flows of biofuels, an increasingly globally defined scape, the decreasing dominance of states and governability and a homogenisation and standardisation of products and processes; but still with reasonably stable and predictable patterns of biofuel exchange and relations and walled routes for biofuel flows. (Mol, 2007: 303)

In order to operationalize Mol’s (2007) theory of Global Integrated Biofuels Networks, I will divide the theory into several aspects and investigate whether they are tangible and how governance comes into play. The GIBN theory can be disaggregated into six characteristics; each will be discussed separately in the following sections.

Globally defined landscape

First of all, an important aspect is the increasing global character of the biofuel network. According to Ponte (2014: 364) the biofuel value chain is becoming more global through several processes of internationalization, cross-regionalization, and what he calls a few global dynamics. He argues the emerging globalization of biofuels is indicated by the following three elements:

(1) Increased trade flows and broader geographic dispersion of feedstock production; (2) new international and crossregional processes taking place mostly through government-led or government-facilitated initiatives; and (3) increasing consolidation among industry actors, the rise of international operations and alliances, and the increased and sometimes completely new involvement of global players from the agrofood, fuels, and agroprocessing industries in biofuels. (Ponte, 2014: 364-365)

First, as shown in subsequent sections, the international trade has been increasing. Besides that, the number of countries engaging in biofuels production is rising as well1. The second element Ponte (2014: 365) mentions, is the emergence of new forms of international and cross-regional cooperation processes. An example is the

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collaboration between the US and Brazil, also involving Central American actors and institutions in their alliances (Hollander, 2010: 700). Besides that, Brazil also signed bilateral cooperation agreements with several African countries on sugarcane and ethanol production (Ponte, 2014: 365).

The third and final element concerns the emerging international alliances in the private sector and increasing complex web of cross-regional investments. Where the local biofuel regions consisted of farmers, co-operatives and individual processors as main players, more global players are emerging in the biofuels system (Mol, 2007: 306). These global players consist of global agrofood traders, major oil companies, auto and aircraft manufacturers, the aviation industry, and developers of genetically modified crops (Ponte, 2014: 365). Along with these global payers, internationally joint ventures have increased. An example is Renessen, an alliance between Cargill and Monsanto, seeking to integrate animal feed and biofuels. Genetically modified maize, soy and rapeseed produced for animal feed can produce both biofuels and animal feed (Borras et al., 2010: 577).

These elements clearly indicate the global character of the biofuels system. Borras et al (2010: 578) speak of an emerging ‘global biofuels complex’, which is in line with the GIBN as described by Mol. Besides that, Ponte (2014: 366) argues that the indicators mentioned above show a merging of regional and national biofuels value chains into a global value chain (GVC).

Decreasing dominance of states and governability

Following the increasingly global landscape is an important characteristic of the emerging GIBN in light of this thesis. According to Mol (2007: 306), the production, trade investment, consumption, control and governance of biofuels are inreasingly beyond the control of the state. This is also a characteristic of globalization in general; the state is losing its sovereignty, governing capacity and authority (Mol, 2010: 68). Mol states that: ‘Up until 2007 biofuels have been largely governed through national governments promoting the growth of biofuel crops and the processing of these crops into bioethanol, biodiesel and, to a much lesser extent, other products’ (2007: 307). Ponte (2014: 369) adds to this that traditional biofuel chains were government driven, meaning that their structure was formed by regulatory decisions. However, with an increasing global character and a strong growth in international trade, it becomes more difficult for national governments to stay in control (Mol, 2007: 308). The

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state’s authority is partially being replaced by market authority (Mol, 2010: 68). As the previous section has shown, more global players are getting involved in the biofuels system. Conglomerates of the agribusiness, large oil companies, and car companies are starting to acquire more power; becoming architects of the biofuel scapes2 they are part of (Mol, 2007: 306). Mol (2010: 69) states that when it comes to environmental authority, the decreasing role of the state is also caused by the deterritorialization and globalization of environmental problems. Pollution, polluters, and biofuels are not restricted to or contained within national borders, hence authority cannot be limited to the national level (Mol, 2010: 69).

Ponte puts it as follows:

As the biofuel value chain becomes more global a new set of key global drivers is emerging, including direct value chain actors such as providers of inputs and technology, producers and international traders, oil majors and distribution companies, and providers of end-use technology, but also indirect players such as sustainability standards makers and certifiers, social movements, and international NGOs. (Ponte, 2014: 369-370)

He argues that the government still has an important role in governing biofuels, but other indirect actors are starting to play an important role as well (Ponte, 2014: 369). In his article he makes a distinction between biofuel governance before the mid 2000s and after. Before the mid 2000s, there were mostly regional and national biofuel chains, referred to as local and national biofuels regions by Mol (2007). In line with Mol’s theory of an emerging GIBN, Ponte (2014: 369) argues that after the mid 2000s these traditional regional and national value chains were moving toward a global value chain. These differences are being clearly depicted in Figures 3.3 and 3.4. Figure 3.3 shows the situation before the mid 2000s, where the traditional value chain is governed by government regulation and policies. Here governance took place through mandates, tariff protection, investments and subsidies all driven by the government (Ponte, 2014: 369). Figure 3.4 shows where the new global players come into play as actors in biofuel governance. Each player exerts influence on a certain part of the chain. It can be concluded that the dominance of state governance is decreasing, while other actors gain more influence in structuring the biofuel system.

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Governance of the biofuel system is thus being shaped by the interplay between these actors (Ponte, 2014: 369).

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HAHAHAHA igure 3.3 igure 3.3

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Less concentration in specific regions

In biofuel regions the objects, actors and relations are clustered together in localities with fixed relations and boundaries. There is limited global integration, poor homogenization across countries and the socio-technical infrastructures are defined, organized and governed locally. An example of such a national biofuel region would be Brazil, where the government has an active policy concerning sugarcane cropping and rural development, an infrastructure of hybrid ethanol/sugar plants, a flex-fuel car development and production program, the integration of petrol companies and a policy mandating the mixing of bio-ethanol with petrol (Mol, 2007: 303).

According to Mol (2007: 303) biofuel regions are being confronted with the emerging GIBN. Where production of biofuels was mostly taking place in Brazil, the US and the EU, more and more countries are starting to invest in its production as well. They are driven by the opportunities biofuels production creates, to replace fossil fuel imports and the ability to export biofuels on the global market (Oosterveer & Mol, 2010: 66). Figures 3.5 and 3.6 show this rise in production and countries partaking in the production of both bioethanol and biodiesel. It becomes clear that in just a few years, the concentration of production in specific areas is starting to become less, spreading out over several regions.

Figure 3.5 – World bioethanol production in million liters, 1991-2007 (Oosterveer & Mol, 2010: 67).

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Figure 3.6 – World biodiesel production in million liters, 2000-2007 (Oosterveer & Mol, 2010: 67).

Increasing transboundary flows of biofuels

The increasing production of biofuels is thus partly caused by a rising demand for biofuels. In the EU for example, the demand for biofuels is mainly driven by policies promoting the use of renewable energy. The EU set out reach a target percentage of 5,75 percent biofuels blend into fossil fuels by 2012, ascending to 10 percent by 2020 (Jank et al 2007: 4). However, according to Jank et al (2007: 7), the required areas to produce biodiesel are insufficient to reach these targets. Therefore the EU will be forced to increase its import in order to meet the demands. As Jank et al state: ‘Since the supply and demand of biofuels are not originating from the same place, in theory, there should be room for significant increases in international trade flows’ (2007: 3).

With the internal markets failing to meet national demands, the global market of biofuels is proliferating. Current levels of consumption and growth rates in countries such as the US, China, Japan, and India, will not be able to meet their demand without importing biofuels (Rothkopf, 2007: 443-444). According to Oosterveer and Mol (2010: 66) the biofuels-related trade has grown substantially in recent years as a consequence of the rising demand for biofuels and biomass. And even though the international trade in biofuels was still limited around 2007, empirical evidence suggested a rise in flows in the following years (Jank et al. 2007: 3). Junginger et al (2008: 728) conclude that international bioenergy trade is growing rapidly, and Lamers et al. (2011: 2656) show that international trade has grown

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exponentially between 2000 and 2009. Ponte (2014: 356) illustrates the percentage of global ethanol and biodiesel trade over production between 2000 and 2010, as shown in table 3.1. This clearly indicates that there are indeed increasing transboundary flows of biofuels. Biodiesel Ethanol 2000 0 0 2001 0 0 2002 0 0 2003 0 0 2004 0 2-3 2005 1 6.1 2006 2 6.8 2007 10 5.3 2008 18 6.4 2009 14 4.1 2010 14 4.4

Table 3.1 – Percentage share of global ethanol and biodiesel trade over production, 2000-2010 (Ponte, 2014: 356).

Homogenization and standardization of products

The increasing international trade of biofuels is attracting new global actors. Besides growing import and export rates, there is also an increase in foreign direct investment (FDI) in biofuels (Mol, 2007: 308). The emerging global character of the biofuel system makes the national regimes more or less insufficient and shows the need for a global regime (Mol, 2007: 308). Mol (2007: 309) argues that in the emerging GIBN the main state and economic actors are moving their discussions and developments towards further harmonization and standardization of biofuels, their markets and regulatory regimes. Standards are set for biofuel products so that they can be easily transferred through the international market. As Mol puts it: ‘Fuel specifications for biodiesel … have developed differently in the USA and the EU, for instance, thus endangering global trade. With emerging global markets there is a need for global collaboration on standards and specifications of biofuel quality’ (2007: 308).

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Standardization can take place through certification and labeling for example, which I will further discuss in the third sub-question of my thesis in Chapter 5.

Reasonably stable and predictable patterns of biofuel exchange

All of the characteristics as mentioned above point to a globalization of the biofuel system. Yet, Mol (2007: 303) argues, the emerging GIBN is still characterized by reasonably stable and predictable patterns of biofuel exchange and relations and walled routes for biofuel flows. Despite the emerging global character of the biofuel system, this process of globalization is still partial (Ponte, 2014: 366). According to Ponte (2014: 366) most of the biofuel production and consumption is still located in Brazil, the US, and the EU. Besides that, the trade flows of biofuel remain small compared to the flows of other major agro food commodities. And despite the emergence of global actors, the biofuel system is still largely governed by national and regional regulatory and policy processes (Ponte, 2015: 366).

3.3 Conclusion

During the 2000s, biofuel production proliferated as sustainable alternative to fossil fuels. Besides that the international trade of biofuels increased as well. This points to the growing global character of the biofuels system, which Mol refers to as an emerging global integrated biofuels system. As shown in this chapter, this GIBN consists of several elements. First of all, there is less concentration in specific regions. The concentration of biofuel production in specific areas is starting to become less, spreading out over several regions. Secondly, there are increasing transboundary flows of biofuels. The international trade of biofuels grew exponentially between 2000 and 2010. This also points to the emergence of a more globally defined landscape. Besides an increase in international trade, more countries are engaging in biofuel production, and more international cooperation emerges along with a homogenization and standardization of products. However, the system remains characterized by reasonably stable and predictable patterns of biofuel exchange.

An important aspect of the GIBN Mol points to is the decreasing dominance of states in governing biofuels. As a consequence of the increasing global character of the biofuels network, more global actors are starting to play a role in the governance of biofuels. Before the forms of governance are further assessed, it is important to discuss the issues governance should take into consideration. As already mentioned in

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the first two chapters of this thesis, the increasing production of biofuels is followed by negative environmental and socioeconomic consequences. These consequences are currently not being addressed by governance, creating a gap in biofuel governance. The next chapter will elaborate further on the several environmental and socioeconomic impacts of biofuel production that biofuel governance should take into consideration in order to ensure sustainability and thus to overcome the governance gap.

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4. The Environmental and Socioeconomic Impacts of an Emerging

GIBN

4.1 Introduction

As the previous chapter shows, there has been an increase in the production and consumption of biofuels and an emerging GIBN can be detected. However, the growing demand for bioenergy has problematic consequences. According to Mol (2010: 61), the current biofuel system is being disputed for its negative impacts on the environment and the poor. He argues that the emerging GIBN disrupts the specific local space of place, undermining the local biofuel production systems and endangering the local environmental conditions. Besides that it jeopardizes food availability and prices for place-based locals and the local farmers become increasingly dependent on powerful global players within the GIBN. (Mol, 2007: 306-307). And whereas the production of biofuels was initially seen as having a mitigating effect on climate change, this is now being contested (Mol, 2010: 65). Furthermore, for the production of biofuels to be considered sustainable, it is necessary to look at a wider range of factors than just its impact on climate change (Bastos Lima, 2009; Hunsberger et al., 2014; RSB, 2011). These sustainability issues are currently not touched upon by biofuel governance, creating a governance gap. It is important that biofuel governance tackles the environmental and socioeconomic issues related to the emerging GIBN for its development to be sustainable and thereby overcoming the gap in biofuel governance. To see which factors should be considered for the developing a more sustainably governed GIBN, this chapter discusses the several environmental and socioeconomic impacts of the emerging GIBN.

4.2 Environmental impacts

The environmental impacts of increasing biofuels production can be divided into different categories. I will make a distinction between impacts on greenhouse gas emissions, the impacts on biodiversity, and impacts of land-use intensification and land-use changes (LUCs).

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One of the main reasons behind the increasing demand for biofuels is the idea that biofuels are less harmful to the environment, compared to fossil fuels. However, Mol (2010: 65) states, the environmental profile of biofuels is receiving criticism as well. While biofuel production is largely driven by the need to mitigate climate change, it can cause the opposite effect (Bastos Lima, 2009: 3-4). The GHG emission savings from biofuels differ considerably, based on the type of feedstock, cultivation methods, conversion technologies, energy efficiency assumptions, and calculation methods used (Mol, 2010: 65). According to Bastos Lima (2009: 4) a life-cycle assessment (LCA) can show varying results, since much fossil fuel may have been used during the cultivation and processing of the biofuel. As Zah et al. (2009: S102) argue, the results from LCAs show that the GHG emission savings of conventional biofuels are usually considerably small. Besides that, Sorda et al. (2010: 6977) claim that some LCAs of certain types of feedstock crops and processing techniques even indicate a negative net contribution to a reduction in GHG emissions. In their article, Zah et al. (2009: S103) provide an elaborate overview of the biofuel value chain. The overview, as shown in figure 4.1, depicts where polluting emissions occur in the value chain.

Figure 4.1 – Schematic flow diagram of material flows, energy flows and pollutant emissions in the biofuel production chain (Zah et al., 2009: S103).

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Impacts on biodiversity

In addition, the expansion of biofuels production is causing great damage to biodiversity (Dauvergne & Neville, 2010: 636; Fargione et al., 2010: 371). Biodiversity is a rather complex concept, referring to different underlying and complementary components (Oorschot et al., 2010: 4). Biodiversity can be divided into three parts: the variation of genes within species, the variety and abundance of species within a certain area, and the variety of ecosystems (Laird & Wynberg, 2003: 1). The production and consumption of biofuels has several impacts on biodiversity. Sala et al. (2009: 127) divide the impacts into three categories: the expansion of agricultural land, the invasion of focal crops, and the pollution of terrestrial and aquatic ecosystems. Overall, Oorschot at el. (2010: 4) make a distinction between impacts related to land-use intensification and land-use change.

Land-use intensification

The increasing demand for biofuels is leading to an increase in its production, which in turn leads to the intensification of existing agricultural practices. According to Oorschot et al.: ‘intensification may affect biodiversity, as it might lead to an increase in agricultural drivers of biodiversity loss, such as the load of nitrogen compounds, pesticides, and water use’ (2010: 6). The intensified production of biofuel crops endangers soil and water conservation (Mol, 2010: 65). The increased water use is leading to lower water availability in dependent ecosystems (Oorschot et al., 2010: 4). Overall, agriculture is responsible for 70 percent of the world’s fresh water use (Bastos Lima & Gupta, 2013: 54). With the increasing production, this percentage will grow even larger. Furthermore, intensification through increased fertilizing can lead to higher GHG emissions (Ros et al., 2010: 3). Besides being harmful to the environment, these fertilizers and pesticides have a negatively impact on human health as well. Another issue related to biodiversity, according to Sala et al. (2009: 131-2), is that many crops for biofuel production are being intensively cultivated in areas other than their historic habitat. These so-called ‘non-native taxa’ (Sala et al., 2009: 131) intervene with the local ecosystem, altering the composition of the ecological communities. Bastos Lima and Gupta (2013: 54) conclude that reliance on monocultures harmful for biodiversity and soil quality, and that pursuing this form of biofuel production may exacerbate the already existing environmental impacts.

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Land-use change

The increasing biofuel production is leading to the expansion of agricultural land for feedstock cultivation. Bastos Lima (2009: 4) argues that in calculating the GHG emission, the land-use changes resulting from biofuel production should also be taken into consideration. According to Zah et al. (2009: S102) the negative effects of biofuel production predominate when carbon and biodiversity loss caused by land-use change are being incorporated in the LCA of biofuels. Land-use change can be divided into two forms: direct land-use change (DLUC) and indirect land-use change (ILUC). DLUC takes place when new cropland is created for the production of biofuel feedstock (Valin et al., 2015: iv). This happens when rainforests are being removed in order to convert the land for oil palm and soy production for example (Mol, 2010: 65). According to McDonald et al. (2009: 4), biofuels are the most land-intensive form of energy production. There are studies that show a considerable amount of GHG emissions following the establishment of biofuel agriculture in carbon-rich natural areas (Fargione et al., 2008; Searchinger et al., 2008). Often these huge GHG emissions are bigger than the emission savings of biofuel use (Fargione et al., 2008: 1237).

Besides direct use change, biofuel production also leads to indirect land-use changes. Valin et al. state that ILUC occurs ‘when existing cropland is land-used for biofuel feedstock production, forcing food, feed and materials to be produced on new cropland elsewhere’ (2015: iv). The increasing biofuel production is displacing other forms of farming activity, pushing them to other areas such as forests, which in turn can lead to deforestation. Even though ILUC does not take place within the biofuel supply chain, it can be linked to biofuel production because of the international nature of agricultural markets (Valin et al., 2015: 1). Since the crops used for biofuel production are mostly used for food as well, it impacts the market. Crop prices will increase, which could have several consequences for the market. First of all, food consumption will slightly decline. Secondly, supply will increase and farmers will improve their methods, since they can get a better price for their product. Eventually, the overall agricultural production will proliferate and more land will be converted for crop production. Due to the open nature of the agricultural market, this land conversion takes place on a global scale as well (Valin et al., 2015: 1-2). Overall, land-use change is seen as one of the largest threats to global biodiversity (UNEP, 2009: 69).

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In determining the environmental aspects, it thus shows to be important to look beyond the traditional value chain. As the UNEP report puts it: ‘life-cycle oriented assessments need to consider both the production chain and the spatial perspective at various scales’ (UNEP, 2009: 52). The severe environmental impacts related to LUC would otherwise be neglected in the assessment. So besides looking at the value chain on the regional and national scale, the global perspective should also be taken into account in order to assess the impacts of biofuel production, as depicted in figure 4.2. The socioeconomic impacts of biofuel production will be discussed in the next section.

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4.3 Socioeconomic impacts

Besides the harmful impacts on the environment, the increasing biofuel production also has socioeconomic impacts. On the one hand, biofuel production can be seen as providing opportunities for developing countries. They can enter global export markets, provide their farmers with a higher income, and boost their national economy by reducing the fossil fuel import and enlarging the export of biofuels (Mol, 2010: 66). On the other hand however, there are some concerns as well.

Food security

Increasing cultivation of biofuel crops for biofuel production has consequences for food security. An increasing demand for biofuels produced from agricultural feedstock leads to an increase in the demand for agricultural commodities and resources (Liverman & Kapadia, 2010: 6). And since most of the crops used for biofuel production are food crops, this increasing demand will lead to an increase in food prices. Biofuel production is considered to be one of the main drivers behind the rising food prices from 2006 onwards (Liverman & Kapadia, 2010: 15-16). According to a report coordinated by the FAO and the OECD3 (2011: 10) biofuel production will exert upward pressure on food prices even more in the following years. In terms of food security, this especially affects the availability of food and the access to food (FAO, 2008: 72). These impacts are mostly felt by the poor in the least developed countries (Mol, 2010: 65). This is especially the case for countries that are reliant on food import (FAO, 2008: 73). On the household level the rural poor are most susceptible to the risks of increasing food insecurity. However, on the long term the increasing demand for biofuels can provide them with opportunities to profit from the agricultural growth. Nonetheless it is of vital importance that governments support the agricultural productivity, especially by enabling small producers to gain access to the market (FAO, 2008: 85-86).

Rural development

Another problematic socioeconomic aspect of the increasing biofuel production concerns the working conditions of the farmers. With the expanding biofuel production, more jobs are being created in the rural sector. Since biofuel production is

3_{In collaboration with FAO, IFAD, IMF, OECD, UNCTAD, WFP, the World Bank, the WTO, IFPRI,}

Governing sustainability in the emerging global integrated biofuels network : dealing with environmental and socioeconomic impacts of biofuel production