State Actors in the Process towards Global Governance:
The Case of the Biofuel Market
Yara Boff Tonella
Rijksuniversiteit Groningen
International Relations & Organization Prof. Dr. J.H. de Wilde
CONTENT
I.
Introduction... 3
II.
Theoretical Foundations... 7
A. Conceptual Framework ... 7
B. The Process towards Global Governance... 11
C. A Theoretical Framework of Global Governance... 18
III.
The Polemic Nature of the Biofuel Market ... 19
A. The Biofuel Trade Picture ... 19
B. The Debate about Biofuels ... 22
C. The Debate and the Need for Global Governance ... 28
IV.
The Need for Global Governance ... 30
A. Governance on the (Quasi)-State Level ... 32
B. Regional and Bilateral Governance... 47
C. Actors and The Demand for Global Governance... 50
V.
The Phase of Conversion ... 53
A. Deregulation ... 54
B. Regulation ... 62
C. State Actors and Global Governance ... 73
VI.
Conclusion ... 74
VII. Epilogue ... 77
A. Rethinking Rationalist Modeling ... 77
B. Rationalism... 78
C. Non-rationalism... 80
VIII.
References ... 88
A. Primary ... 88
I. INTRODUCTION
This research attempts to create a model to map and explain the roles of states in the process towards global governance of biofuels. The reasons for studying this subject are the two works of International Political Economy (IPE) scholars, i.e. Susan Strange’s The Retreat of
the State (1996) and Phillip Pattberg’s “The Institutionalization of Private Governance” (2004). In The Retreat of the State Strange describes the manifestation of power in the current global political system. That is, on the one hand, the state is losing authority, while private authority is becoming more important; and on the other hand, sources of authority are becoming more diffused and at the same time more intertwined. Phillip Pattberg makes in “The Institutionalization of Private Governance” a similar point, i.e. governance is becoming more global and private actors are gaining importance as sources of global governance. Strange developed her idea by concentrating on global governance in the field of telecommunications, organized crime, insurance business, accountancy, cartels and private protectionism and international organizations (econocrats); and Pattberg studied global environmental politics.
organizations (NGOs)1. Hence, the situation in which both state support for and criticism
about biofuels is growing is the starting point of this case study.
Even though Strange and Pattberg may have given empirical evidence that private governance has increased in the field of services and environmental issues, this paper presupposes a realists’ notion that energy issues, in this case biofuels, are typical public policy issues. Realists believe that the state will always try to minimize its dependency, thus also its energy dependency- and will therefore not attribute power to other actors or a higher authority. This is why it is expected that the main sources in the process towards global governance of the biofuel market will remain state actors. Therefore, even though IPE scholars contend that market forces have gained importance and have caused a diffusion of power; this paper applies a state-centric analysis. It will be organized around the exploration of possible global governance initiatives concerning the biofuel market, and specifically to what extent state actors would play a role in this. In sum, the central question of this paper is: to what extent have state actors influenced the process towards global governance of the biofuel market? For the first chapters mainly secondary literature is used, whilst the analysis in the last chapters are predominantly based on primary literature.
Chapter two provides a theoretical framework by firstly, explaining the concept and structure of global governance and secondly, by creating a rationalist model to understand the process towards global governance. The last step is to develop a model to examine the governance transition from the state level to the global level and the role of actors within this process. It needs to be noted that whereas Strange focused on states, this paper expands the concept of the state by also including ‘quasi-states’, e.g. supranational entities or multilevel governance bodies. Thus, instead of studying the state, this paper looks at ‘state actors’, implying both states as quasi-states. Furthermore, ‘private actors’ are categorized into profit and non-profit (non-governmental) institutions, e.g. NGOs and corporations. The model begins to look at how a demand for global governance arises on the national and/or regional level. These levels are studied by looking at to what extent national or regional governance has failed or is incapable to carry out its tasks. These ‘governance gaps’ form the demand for governance on a higher level of analysis. Thus, if actors on the national level are not satisfied by national as well as regional governance, they -either directly or being represented by the regional or bilateral block they have formed- will try to put their demands on global governance institutions’ agenda. If they succeed, the process towards global governance
1
moves on to the next phase of conversion. In this phase the problem has become part of a global governance institution’s agenda and members need to find a solution to the problem. If they succeed in reaching consensus about a solution, this will lead to three possible governance outputs: information activities, rulemaking or operations.
But before applying the model, chapter three gives a review about the academic debate regarding biofuels. The central question is: which arguments will make it likely for state actors to demand for global cooperation and how may they be used in national and/or regional policies? Knowing the debate will gives insight in the costs-benefits analysis the (quasi-) states make, which may lead to a demand for global governance.
. With the help of the pros and cons set forth in the previous chapter, chapter four analyzes to what extent political actors express a demand for global governance. From the literature it became clear that there a three main players in the international biofuel market i.e. Brazil, the US and the EU. Yet these three parties caused difficulties in the analysis of states behavior, since the EU is not a state and would fall under the regional level of analysis. As the EU cannot be regarded as a state, it has been decided to study the EU as a quasi-state and to not elaborate on the national level of the EU, i.e. the member states. Hence, the EU as an advanced form of regional cooperation on biofuels is assumed, the section about regional and/or bilateral cooperation with regard to the EU will therefore concentrate bilateral treaties in which the EU may be engaged. Thus, to understand the demands of these three parties, governance in the three most important producing parties of the international biofuel market, i.e. Brazil, the EU and the US, will be analyzed. The demand of the actors that are from these parties depends on their costs-benefits analysis: do they perceive that national or regional or bilateral governance has failed or is incapable to maximize their utility? If there is a demand, the last section of this chapter will analyze to what extent the demand for global governance comes from state actors.
Moving on to the next phase, chapter five analyzes to what extent state actors have succeeded in putting their political need on global institutions’ agenda and to what extent they have influenced the ‘output’, i.e. global governance.
In the concluding chapter a summary is given about the polemic surrounding biofuels, how the controversy has led to a demand for global governance and how this demand has been converted into global governance. With this information it will become clear to what extent state actors have influenced the process towards global governance.
II. THEORETICAL FOUNDATIONS
This chapter provides a theoretical framework to study the structure of and the process towards global governance. To understand the concept of global governance, the first section will describe ‘global’ as a level of analysis and will explain the structure of global governance. This chapter will draw upon Susan Strange’s work, The Retreat of the state (1996) and Phillip Pattberg’s: ‘The Institutionalization of Private Governance’ (2004), in which he explains the emergence of private authority on the global stage.
After explaining the concept and structure of global governance, the next section will take a closer look at the process towards governance to gain insight in how a topic, such as biofuels, becomes part of the governance agenda. The model of Rittberger and Zangl (2006, 117) will be applied to describe the phases a political issue goes through before being governed by an international organization. This model is useful to the extent that it gives a structured view of the process towards governance, but it does not specifically pay attention to the role of actors in the process. For more understanding on this, Porter and Brown’s work
Global Environmental Politics (2000, 34-78) will be used, because it describes the role of state and non-state actors in global environmental politics.
Together with the knowledge gained in the first section, an analytical framework will be created to examine the role of states in the process towards global governance.
A. CONCEPTUAL FRAMEWORK
How the concept of global governance can be analyzed in the following sections first, the meaning of ‘global’ as a level of analysis will be explained. Second, Pattberg’s article about the rise of private global governance will help to indicate the sources of global governance.
1. ‘Global’ as a Level of Analysis
power in the form of legitimate physical force remains the monopoly of the state within its own borders (Weber, 1948, pp. 77-78). In this view, the international level is only relevant level of analysis in the sense that it creates the structure for states, which is anarchy. States, and so the national level, are thus the principal and only legitimate actors in the study of international relations.
At the end of twentieth century this paradigm was challenged by different schools of thought. The notion was growing that the international system could be characterized by a high level of institutionalization and organization instead of anarchy. Scholars acknowledged the liberal view that international organizations and the rule of international law contribute to the peaceful settlement of disputes among states and enhance global cooperation (Keohane & Nye, 1977). The focus on states as the primary actors in the study of international organizations was rejected; scholars, in particular IPE scholars, now started to analyze the multitude of actors within international relations, such as NGOs and multinational organizations. Subsequently, many studies focused on globalization and global governance, i.e. “different systems of rule on different levels of human activity as an organizing social principle beyond hierarchical steering and sovereign authority of nation states” (Pattberg, 2004, p.11). In that sense ‘global’ as a level of analysis does not refer to a global sphere, in which the most powerful states, the ‘global players,’ interact and govern. Central to the concept is the notion of an authority beyond the state. Global governance is possible, because political actors act upon agreed norms and rules; there is no need for a superior authority to enforce these rules (Rittberger & Zangl, 2006).
‘Global’ as a level of analysis refers to a bureaucracy beyond the national or regional level that exercises soft power. What the sources of power are will be explored in the next section.
2. The Sources of Global Governance
Before identifying the sources of global governance, this section will first look at the structure in which global governance is embedded in, i.e. globalization. However, the precise definition of this term remains vague. From being synonymous to Americanization or exploitation to a neoliberal utopia; it is difficult to find an adequate definition. This is the reason why this section refrains from a semantic debate and will focus on what consequences globalization has had on the sources of global governance.
Studying global governance within a context of globalization requires a different analytical approach. This approach has been further developed by IPE scholars, who focused on the global level of analysis and acknowledged the multitude of sources of authority. A key issue in their theories about globalization and global governance is whether public authority has declined (Strange, 1996; Hall & Biersteker, 2002; Campbell, 2004). In many studies scholars agree upon the fact that governments are loosing authority to the private sector, a process which Susan Strange described as “The retreat of the state” (Strange, 1996; Hall & Biersteker, 2002; Pattberg, 2004). Whilst the decline of public authority takes place, there is an increase in private authority. This can be explained by the multitude of private organizations and institutes that take over governments’ tasks. According to Pattberg: “Transnational corporations, non-profit organizations, business associations and think tanks increasingly agree upon, implement, and monitor different forms of regulations, including general codes of conduct, management standards, and certified product labels” (2004, p.9). Rosenau powerfully describes this as the ‘crazy quilt nature’ of world politics: “Global governance is the sum of myriad – literally millions of- control mechanisms driven by different histories, goals, structures, and processes” (cited in Pattberg, 2004, p.11). Hence, globalization has caused a diffusion of sources and foci of authority.
of an overarching global political regime” (cited in Pattberg, 2004, p.13). Not only market authority, but also moral authority is becoming more diffused. Moral authority is often seen as form of authority of non-governmental organizations which have important epistemic and legitimating functions in formulating transnational policy decisions, regime rules, principles, and decision-making procedures (Hall & Biersteker 2002, p. 14). NGOs are important sources of moral authority that often aim at changing corporate behavior by stimulating certification and the establishment of standards of sustainability (Lipschutz & Fogel, 2002).
However, this does not necessarily mean that state authority has disappeared; it rather means that public and private authority have become more intertwined. Stopford and Strange refer to this process as “triangular diplomacy”, i.e. diplomacy can take place between states, states and firms and among firms. Basic to this idea is that international politics can not be understood without paying attention to international business, and conversely, international business and management could not be fully understood without taking international and domestic politics into account (Stopford and Strange, 1991, pp.19-24).
Pattberg structured the multitude of mechanisms of global governance by distinguishing public, hybrid and private mechanisms. His categorization as regards environmental politics can be seen in Figure 2.1:
Figure 2.1 Mechanisms of Global Governance
Pattberg, P. (2004). The Institutionalization of Private Governance: Conceptualising an Emerging Trend in Global Environmental Politics.
Global Governance Working Paper, 9, p. 12.
transnational corporations, global advocacy networks, and non-profit organizations. Last, private governance constitutes firms, business associations, advocacy networks, think tank, and non-profit organizations.
When looking at different forms of global governance, there is a wide range of levels of organization: from loose forms to far-reaching forms of organization, such as institutions, regimes and organizations2; however, this study will only use the Pattberg’s categorization of mechanisms and will not to be used to elaborate on the different levels of organization.
3. The Concept of Global Governance
In conclusion, the concept of global governance refers to a multitude of actors that exercise soft power at the global level. The sources of governance can be categorized into: private, hybrid and public institutions. In the next section a dynamic approach will be developed that will provide the analytical tools to explain the process towards global governance.
B. THE PROCESS TOWARDS GLOBAL GOVERNANCE
In this section a theoretical framework will be developed to understand the role of actors in the process towards global governance. This paper will focus on state actors, to test if states are loosing authority to non-state actors or if the state remains the primary provider of public goods such as energy to society.
2
316-1. Rittberger and Zangl’s Input-Output Model
To understand the process of global governance, the model of Rittberger and Zangl will be used (2006, pp. 102-117). Rittberger and Zangl have developed a model to describe the political dynamics of international organizations, which start with a political problem that is then converted into global governance. However, as shown before, the concept ‘international’ in the sense of ‘between nations’ does not cover the wide range of sources of global governance. It refers to a level ‘between’ instead of ‘beyond’ nations. Nevertheless, the logic of the model is useful, therefore “international organizations” will be replaced with “global governance institutions”, and as explained before, without specifically referring to a level of organization (see footnote 3).
Furthermore, it needs to be noted that the process is not one directional. The type of output a global governance institution has produced will influence its future authority and its functioning; global governance institutions may also influence the behavior of public actors or private actors through their mandate or composition. This paper will, however, focus only on the process towards global governance. In figure 2.2 the model on the process towards global governance is drawn. To avoid zooming in too much on the national level, Rittberger and Zangl’s actors in the phase of demand, i.e. are member states governments, administration, parliamentary assemblies, interest groups and communities of experts, are in this model replaced by Pattberg’s categorization, i.e. state, hybrid and public actors. Rittberger and Zangl’s institutional setting is also adapted to Pattberg’s classification of public, hybrid and private institutions. The last phase of the model, however, follows Ritbberger and Zangl’s model by mentioning three possible policy outcomes: policy programs, information activities and operations.
Figure 2.2 the process towards global governance
INPUT CONVERSION OUTPUT
Adapted version of Rittberger and Zangl’s input-output model (2006). International organization: polity,
politics and policies. Houndmills, Basingstoke, Hampshire and New York, N.Y.: Palgrave Macmillan, p. 117.
2. Actors in the Process towards Global Governance
Since this paper not only analyzes the process of global governance, but also which actors are the determinants of the process, this section will look at the work of Porter and Brown (2000, pp. 35-78) to get a more comprehensive understanding of the role of actors in global politics.
(a) Public actors
As explained before, the analysis of state actors also includes quasi-states, because supranational entities are increasingly regarded as quasi-states in global politics. In some cases supranational entities have even taken over the place of its member states in global negotiations. States are thus not the only public actors of global governance. Even though Porter and Brown do not mention quasi-states, the same analogy is applied. Hybrid actors can be any form of cooperation between state and non-state actors, and private actors are divided into two categories: NGOs (non-profit) and corporations (profit).
(b) Non-state actors
Following Porter and Brown, this paper distinguishes two groups of non-state actors: NGOs and corporations, which will represent non-profit and profit non-governmental institutions. NGOs are non-governmental organizations that are dedicated to a societal cause. They influence the global governance process in different ways. Firstly, they identify or re-identify a problem, thereby creating or supporting a public debate. They may demand for global governance trough their own governments or lobby for a more advanced position of their government. Furthermore, proposing a solution by drafting an agreement and finding supporters for the proposal is often part of their strategy. In some cases they may directly lobby or negotiate in international negotiations. Finally, they may monitor the implementation of agreements and report to the secretariat and/or other organizations. NGOs can work both on the national as on the international level. This paper will try to understand why NGOs may demand for global governance, in the sense that they find national, regional and/or bilateral policy insufficient. It will not elaborate on to what extent these NGOs are national or international.
Corporations may try to influence how an issue becomes part of the political agenda or try to prevent it from getting on the political agenda. Initially corporations address their issues to national policymakers. They lobby to convince their governments to adopt a certain position within a global regime, yet some corporations or umbrella organizations may directly take part in global negotiations. Since state actors are the main object of analysis, this paper will not try to go deeply into the question to what extent corporations may be internationally organized. The relevant question is to what extent they perceive a failure incapability of national or regional policy which can only be solved on the global level.
3. A New Model of the Process towards Global Governance
This section will compile the work of Rittberger and Zangl and Porter and Brown, unless another reference is made.
(a) The First Transition: From Demand to Conversion
Starting point of this model is the national level, and with the state as a focal point. A state will demand for global governance when it fails to carry out its governance tasks and as a result cannot address the existing needs for governance. States do not always succeed to fulfill these functions, because of three reasons: first, the influence of external factors. States are in many cases interdependent and therefore sensitive to the actions of other states. However, their sphere of influence is limited, because the interfering factors originate outside their jurisdiction. Moreover, some topics, such as global warming or telecommunications, cannot be solved nationally, because they concern whole world regions or even the globe itself. Second, resource deficiency, governments might not have the adequate material, organizational or epistemic resources to perform the functions. And last, the lack of interest to carry out certain functions or the inability to perceive an issue as a problem.
An issue may be solved on a higher level, i.e. either on the regional or bilateral level or the global level. Regional governance can be effective in dealing with an issue, but if not, the issue may need to be governed on the global level. Consequently, regional or bilateral blocks may also be the instigators of a process towards global governance.
part of the public debate or on the global political agenda; the extent to which support actors can be found; swing actors’ conditions that alter the debate to push the global agenda in their favor.
Non-state actors may also express a demand for global governance. As became clear, NGOs and corporations can try to demand for global governance through the state and therefore influence the role a state will play in the global governance process. But non-state actors can also directly address their demands to global governance institutions or propose the creation of non-state or hybrid global regimes. NGOs are prone to make use of their moral authority and aim at raising awareness about an issue, whereas corporations will align with foreign corporations to use their market authority to influence the global governance agenda. NGOs, but especially corporations, may also try to prevent an issue to become part of the political agenda and can thus also play a veto role.
(b) The Second Transition: Converting Demand into Global Governance
Figure 2.3 State actors in the process towards global governance
INPUT CONVERSION OUTPUT
Second adaptation of Rittberger and Zangl’s input-output model (2006) 117.
C. ATHEORETICAL FRAMEWORK OF GLOBAL GOVERNANCE
In conclusion, this chapter has given a two folded explanation of global governance: first, a static approach on what the structure and sources of global governance are and second, a dynamic approach, how global governance is achieved. Regarding the former, it became clear that studying the multitude of sources of global governance required a structured analytical approach; Pattberg’s work helped me to categorize the sources of global governance into public, private and hybrid mechanisms. For the latter, the model of Rittberger and Zangl was used, who analyzed the political dynamics of international organizations. Their model appeared to be useful to develop a new model of the process towards global governance. Furthermore, by adding elements of Porter and Brown’s work on the role of actors in global environmental regimes, a new model about the process towards global governance was created. The model begins with the phase in which a demand for global governance arise, which, in next phase, will be converted to output, i.e. global governance. Both public as private actors may play a role in this process by either leading the process into the next phase or by blocking the continuation of the process.
INSTITUTIONAL SETTING Public institutions DEMAND State Actors Hybrid institutions Non-state actors Private institutions GOVERNANCE Policy Programs Information activities Operations
Lead state Lead state
NGOs & Corp.
III. THE POLEMIC NATURE OF THE BIOFUEL MARKET
This chapter will give an overview of the biofuel market and will review the debate that revolves around biofuels. The key question is what implications the debate may have for national policies, or: which discourse is reflected in national policies and how does this relate to a demand for governance? Different sources have been used, including academic work, reports of various international organizations non-governmental organizations (NGOs) and governments.
A. THE BIOFUEL TRADE PICTURE
Figure 3.1 Global Bioethanol and Biodiesel Production
UNEP /International Panel for Sustainable Resource Management. (2009). Towards sustainable production and use of resources: assessing biofuels. Paris, p.33.
The potential of biofuels is estimated to replace 30% of petroleum consumption for transport fuels by 2030. IEA reports indicated that biofuels will meet 3.4% of total road-transport fuel needs in 2030. Figure 3.2 shows that biofuel consumption is expected to continue its rapid growth, specifically in the EU, US, Brazil and Canada (IEA 2006).
Figure 3.2 World Biofuels Consumption by Scenario (Mtoe)
Paris: IEA Publications, p.394.
Biofuel consumption is principally growing in the US and the EU; it is therefore not surprising to see, as shown in figure 3.3, that the main importers of biofuels are the US and the EU. Developing countries are the main exporters of ethanol, with Brazil as leading market.
Figure 3.3 International Trade in Ethanol in 2006
UNEP /International Panel for Sustainable Resource Management (2009), p. 36.
As shown in figure 3.4, the main exporters of biodiesel are next to the US developing countries, including Indonesia, Malaysia and Argentina.
Figure 3.4 International Trade in Biodiesel in 2006
UNEP /International Panel for Sustainable Resource Management (2009), p. 36.
Even though biofuel production has increased, international trade remains little. Brazil and the US are the main ethanol producers, but their production remains mainly destined for domestic consumption. International biodiesel trade is limited to EU and US imports from Indonesia, Malaysia and Argentina.
B. THE DEBATE ABOUT BIOFUELS
This section will review literature about the pros and cons of biofuels. Drawing upon the work of Loppacher and Kerr three key issues concerning biofuels will be looked at: energy security, environment and rural development (Loppacher and Kerr, 2005). For the part about energy security, publications of the International Energy Agency and the work of Yacobucci and Schnepf will be used. The former provides a useful definition about energy security and the latter published some insightful studies for the US Congress. For more understanding of the environmental impacts of biofuels mainly three studies will be used, i.e. the findings of Farell et al, who reviewed studies on the environmental impacts of biofuels (Farrell et al., 2008) and the World Watch Institute, a think tank that does research mainly in the field of global environmental issues (World Watch Institute website: www.worldwatch.org, accessed 02-02-2010). Finally, to know what the issues concerning rural development and food prices are, reports of the World Watch Institute and the paper of Teixeira Coelho, the head of CENBIO- the Brazilian Reference Centre on Biomass of the University of Sao Paulo will be looked at.
1. Energy Security
This paragraph uses IEA’s definition of energy security, which is: “The uninterrupted physical availability at a price which is affordable, while respecting environmental concerns” (IEA website: www.iea.org, accessed 04-02-2010). Even though the definition mentions “environmental concerns”, this section focuses on the first part of the definition, which is the economic aspect of energy security, i.e. the interrupted physical availability of energy for low energy prices. In many cases “the interrupted physical availability” is tantamount to decreasing import dependence, and not necessarily decreasing energy prices. In that sense, energy security is an issue in which national interest is characterized by an inclination towards reducing dependence on countries as much as possible. It is consequently not likely that biofuel policy voicing energy security rhetoric will promote global governance.
2006). This has already resulted in oil price spikes, a trend that will accelerate in the next years. In order to decrease oil dependence, oil importing countries are exploring sound alternatives. Although biofuels are a very promising form of renewable energy, the production has started from a small base and, as figure 3.5 shows, has not and will not displace(d) fossil fuels as the over-riding source of energy (IEA, 2006).
Figure 3.5 Renewable Share of Global Final Energy Consumption
Source: Ren21
which is around 8.3. Moreover, biofuels are expected to improve in efficiency because of technological developments (Farrell, 2008).
Thus, with regard to energy security, states may defend biofuel policy, because of the mayor benefit that biofuels can be produced domestically, which decreases import dependence. If they choose this argument, it is likely that they will not attribute power to a higher –global governance- institution. If a country is able to consume biofuels with a high energy balance it may choose to promote biofuel production in terms of low energy prices and may be interested in global free trade. Yet biofuels have not been energy efficient enough to substitute fossil fuels. In general, energy security does not constitute a strong argument for countries to promote biofuels and it is unlikely that this will be used as the main argument for global biofuel policy.
2. Environment
Some of the main drivers for biofuel policy are environmental concerns. The history of global environmental regimes shows that countries are willing to cooperate or to attribute power to global governance institutions in this field. Since the 1980s the environment has become part of the global political agenda. Different global conferences were organized to seek joint action on environmental issues, such as biodiversity and global warming. Global warming or climate change in particular became subject of concern. The coming into force of the Kyoto protocol in 1997 created for the first time in the history of global environmental politics a legally binding agreement to mitigate the process of climate change by setting carbon emission reduction targets.3 This happening showed the growing momentum in the international community to fight climate change and resulted in an exploration of alternative forms of energy, such as biofuels.
Assuming that biofuels are carbon neutral, many countries started to engage in biofuel production to meet greenhouse gas (GHG) reduction targets. The explanation is as follows: biofuels emit CO2 when they are burned, but when the feedstock is grown, it takes CO2 out of the atmosphere, which means that there is a zero net emission. But to really know whether biofuels are climate neutral, the energy balance of the production process needs to be examined. The environmental impacts of the biofuel production cycle are shown in figure 3.6. The higher the energy balance, the more climate friendly the fuel is, because it means that a slight amount or no fossil fuels were consumed in the production process. The energy balance
3
of biofuels will be negatively affected by the input of 'fossil elements', meaning that fossil fuel inputs are required in the production process (World Watch Institute, 2006). Fossil energy use consists of agricultural machinery for installing irrigation systems, harvesting, transport and storage. Moreover, fossil resources can also be used in the form of such as chemical pesticides and fertilizers (World Watch Institute, 2006).
Figure 3.6 Biofuel Production Cycle and Environmental Impacts
UNEP /International Panel for Sustainable Resource Management (2009), p. 51.
Recent studies show that the primary energy input (fossil fuels) accounts for 80% of the energy contained in the ethanol output (Farrell et al., 2008). This means that carbon savings are only 13% higher per kilometer compared with petroleum based fuels. Yields of sugar-cane based ethanol, such as the Brazilian ethanol, are much higher than of corn-base ethanol and the fossil input is much lower (IEA, 2006). For each unit of sugar-based ethanol only about 12% of a unit of fossil energy is required (IEA, 2006). With regard to EU sugar beet ethanol, studies showed that compared to fossil fuels EU ethanol could reduce carbon emission with 40% to 60% (IEA, 2006). Biodiesel could also lower carbon emissions with 40% to 60%.
million hectares of land harvested, an area larger than the United Kingdom (World Watch Institute, 2006). In addition, to clear the land forests are burned, a process in which high amounts of carbon is emitted (World Watch Institute, 2006; UNEP, 2009).
Biofuel supporters, however, argue that the further development of second generation biofuels will solve many environmental problems, because they are derived from non-edible plants that can be harvested at intervals of one to seven years, or from waste. Moreover, they can grow on poor quality land and require less fertilizer (IEA, 2006). An example is biofuel produced from Jatropha trees, which grow on marginal degraded and even deserted soils that are unfit for food or feed productions (UNEP, 2009). Research and development will result in more efficient and environmentally friendly biofuels.
All the reports so far analyzed show that the environmental benefits of biofuels depend on their energy balance, thus the production process. Biofuels have a high energy balance when fossil energy inputs are excluded. However, besides the energy balance other factors have also to be taken into account, such as changes in land use and the input of other scarce resources. The variety of literature suggests that on the one hand technological innovation is key to overcome these problems. On the other hand, clear guidelines and standards need to be developed to ensure sustainable production, taking not only the energy balance into account, but also other factors. States that produce biofuels with a high energy balance and take into account other environmental factors will use the environmental rhetoric to promote biofuel production and will be interested in global governance to prevent free riding behavior or unfair competition. It has become clear that the environmental benefits of biofuels are low, though. That is why it needs be questioned whether environmental benefits are truly the principal motives of (global) biofuel policy.
3. Rural Development and Food Prices
require fewer inputs of fertilizers and pesticides (World Watch Institute, 2006). Moreover, the Brazilian case shows that the establishment of a sugarcane industry can stimulate employment. The number of jobs created per unit of energy produced is higher that in other energy sectors (Teixeira Coelho, 2005).
A second reason relates to electricity. Many people in developing countries, specifically in the lowest development countries (LDCs), lack access to electricity services, making firewood in remote areas the main source of energy. Increased access to decentralized small energy technologies such as biofuels contributes substantively to development (Teixeira Coelho, 2005). Depending on the level of conversion efficiency, biofuels have a great potential for power production at relatively small and medium size electricity grids. In addition, using firewood as a fuel has led to deforested and degraded areas, which could be recovered by sugarcane crops.
Thirdly, despite these benefits, there is also a downside linked to the connection with the food price spikes of the last decade. Higher food prices have negative effects on food importing countries. Biofuel production forms a danger for food security, because land, water and other products are used (FAO, 2008). Increasing demand for raw materials for biofuel such as sugar, corn, cassava, oilseeds and palm oil has contributed to higher food prices (FAO, 2008). Ethanol production is more of a threat to food security in developing countries then in developed countries, because unlike in developed countries, food consumption is a substantial part of the total consumption in developing countries (Yacobucci & Schnepf 2007, World Watch Institute 2006).
In conclusion, biofuels may have great potential for rural developmental. The image that biofuels are principally bad for food security in especially developing countries has to be nuanced, as biofuels production can also lead to greater investments in agriculture, more income for farmers especially in developing countries and improved access to fuels remote and poor areas. Rural development is thus a good argument for countries to promote biofuel trade, but since it is mainly countries’ national interest to keep production within their borders it is likely that this rhetoric will not promote global governance.
C. THE DEBATE AND THE NEED FOR GLOBAL GOVERNANCE
There are different drivers for the biofuel market, including environmental concerns, energy security and rural development. At the same time biofuels are subjected to a growing criticism. Although biofuels could contribute to more energy independence, their economic viability can be doubted, because biofuels are currently not capable of substituting fossil fuels. Reducing import dependence may be an argument for countries to promote biofuels, but it has become clear that overall energy security gains are modest, therefore undermining energy security rhetoric. Together with the fact that energy security is a typical national matter, countries will not be interested in attributing power to a global governance institution. Furthermore, some biofuels may help to reduce GHG, but other negative environmental impacts have to be taken into account such as soil degradation, deforestation and water scarcity. Even though environmental gains have so far not been convincing, the potential benefits (due to research and development) and the fact that the environment is an issue that has been addressed in global fora, make it probable that states will use the environmental rhetoric in their biofuel policy and will also promote global governance. Finally, biofuels have put more pressure on agricultural production and demand, consequently contributing to spikes in food prices. However, biofuels have the potential to contribute to rural development, in particular in developing countries. Subsequently, countries want to keep production domestic and are reluctant to increase their energy dependency by importing biofuels. This national character of the rural development discourse will prevent states taking an active stance to promote global governance on this matter.
depend on the level of oil prices, which have to reach extremely high levels in order to make biofuels competitive.
IV. THE NEED FOR GLOBAL GOVERNANCE
Figure 4.1 shows the first part of the process towards global governance, which will be examined in this chapter. The model starts by analyzing how and from which actor’s demands for global governance arise. This demand can arise from state actors or from non-state actors and can be initiated on the national, bilateral or regional level. Therefore, states and non-state actors will be analyzed by conducting studies on the three main exporters and importers of biofuels, i.e. Brazil, the US and the EU. The choice of these three parties appeared to be problematic, because on the one hand, the EU could not be compared to Brazil or the US, since it is not a state. Strange claims that the EU is exemplary of the idea of the retreat of the state, i.e. European states have attributed power to an international organization, the European Union. Following this reasoning and in line with the level of analysis approach, the EU would represent an international organization on the regional level. This paper will deviate from this, because in the first place, energy policy is a shared competence in EU policy. This signifies that the EU can set minimum targets for its member states, which are free to decide what policy to implement to meet the targets. Moreover, the EU is gaining importance as a unitary player in world politics. According to Jorgensen and Christiansen the EU is “more than a regime, it is an extraordinary ‘saturated regime’ that is structured by its core institution, the ‘embedded acquis communautaire’ (Jorgensen and Christiansen, 1999, p.539). The EU has in different bilateral or international negotiations replaced its member states’ membership. The literature about biofuels confirms this; i.e. the EU is mainly presented as one entity. Therefore, a middle course will be adopted by referring to the EU as a ‘quasi-state’. The analysis as regards the EU starts thus on the regional level, and will not elaborate on the national level of its member states.
agreements concerning biofuels. The central question is to what extent regional or bilateral initiatives leave governance gaps that can only be filled by global governance.
Figure 4.1 The first transition in the process towards global governance
NATIONAL/SUPRANATIONAL REGIONAL/BILATERAL
LEVEL → or GLOBAL LEVEL?
INPUT CONVERSION
Second adaptation of Rittberger and Zangl’s model (2006) 117.
The primary sources of literature are the most recent biofuel policy programs of the three countries (respectively): “Plano nacional de agroenergia 2006-2011” (Ministério da Agricultura, Pecuária e Abastecimento (MAPA), 2006); a Congressional Research Study (CRS) by Brent Yacobucci and Randy Schnepf named: “Ethanol and Biofuels: Agriculture, Infrastructure, and Market Constraints Related to Expanded Production” (2007) and the official “Biomass Multi-Year Program Plan” (US Department of Energy (USDE), 2009); and finally the EU Directive “On the promotion of the use of biofuels or other renewable fuels for transport” (EC, 2003) and the “Communication the Council and the European Parliament.”(EC, 2007) Besides that, websites and publications of other non-state stakeholders will be used.
A. GOVERNANCE ON THE (QUASI)-STATE LEVEL
1. Brazil
Brazil has a longstanding history of biofuel production. The first consumption of sugarcane ethanol dates back to the thirties of the twentieth century. After the oil crisis in 1973 the Brazilian government decided to actively promote the production and use of ethanol. Not only energy security, but also problems within the agricultural sector and a new political élan can be seen as the main motives for the Brazilian government to start to actively engage in ethanol production. Brazilian sugarcane production was in hands of a socio-political elite that had been able to retain its privileges throughout the late 20th century. Its powerful position was jeopardized in 1975 when sugar world market prices collapsed. At the same time there was a political élan of dependencia theories that pledged for more (energy) independence of developing countries. These factors combined led to the launch of the Pro-Alcool ethanol support program (Lehtonen, 2007).
Even though Brazilian biofuel policy has been influenced by Brazilian agribusiness, until the end of the millennium the main source of governance of the biofuel market was the state. In 1975 it was the Brazilian government that launched the “Pro Alcool” ethanol program. This program implemented and regulated the use of ethanol as a fuel to be blended with petroleum gasoline. From the eighties on, Brazilian fuel policy obliged car users to blend pure petroleum gasoline with ethanol/gasoline blends. Since the launch of the Pro-Alcool Program the Brazilian government has supported the ethanol industry in three ways: first, by guaranteeing purchase by the state-owned company Petrobras. Second, by extending low-interest loans for agro-industrial firms. And third, by fixing gasoline and ethanol prices. All contributed to a highly competitive ethanol market (Lovins, 2005).
Currently, Brazil is one of the biggest ethanol producers of the world. Factors contributing to Brazil’s competitiveness are the positive energetic balance of ethanol compared to other types, favorable climate conditions, low labor costs, and mature infrastructure built over at least three decades. Brazil now has the lowest costs in production (Doornbosch & Steenblik, 2007). It is estimated that by 2010 Brazilian companies invest about $10 billion in ethanol production, while aiming at doubling their exports (Xavier 2007). As Brazil has become economically the most viable and efficient ethanol producer in the world, it has decided to largely deregulate the market. Its only support for the sector consists of indirect assistance to ethanol (e.g. research and development), a remaining blending target of 20% to 25 % and credit assistance to producers (Harmer, 2009). In addition, biofuel imports are subject to low tariffs, i.e. of 20 % (Sandalow, 2006).
Whereas the Brazilian government has retreated from the market in the last decade, it has started to respond to concerns of NGOs about the sustainability of biofuels. Both international NGOs as Brazilian NGOs that gather in the Energy Working Group of the “Brazilian Forum of NGOs and Social Movements for Environment and Development” (FBOMS) have criticized the environmental and social impacts of the Brazilian biofuel market (Van Dam et al., 2008). FBOMS has particularly criticized two aspects of the market: First, the deforestation of the Amazon Forest and the usage of other protected areas such as the Pantanal for ethanol protection. And second, the sugarcane industry is controlled by large agribusinesses, that manage highly mechanized production (FBOMS website: www.fboms.org.br, accessed 05-03-2009). This has helped to maintain the aristocratic nature of the ethanol industry and has contributed to a further marginalization of small farmers (Moret A, Ortiz L, Rodriques D. 2006).
levels and have guaranteed technical assistance to them in exchange for tax benefits and credit (UNCTAD, 2008; Van Dam et al., 2008).
There has been a shift in the sources of governance in Brazil: from a state-driven industry it has become almost completely privatized. Governance activities now are mainly in the field of sustainability and in cooperation with private actors, the sources of governance are thus hybrid.
(a) Brazil and the Need for Global Governance
Even though the Brazilian government has largely retreated from the national market, it takes an active stance on international trade policy. Brazil’s demand for global governance mainly responds to energy security and rural development and thus reflects the governance needs of domestic ethanol producers who want to expand their trade internationally. As shown in figure 4.2 in the year 2006 Brazilian ethanol exports took a share of 22 % in total production. Prospects show that in the year 2014 ethanol exports will only be 12.5 % of total production. Ethanol production is therefore expected to grow, but mainly in the domestic market; exports as a percentage of total production will decrease.
Figure 4.2 Brazilian Ethanol Production Projection (in billion liters)
Instituto de Estudos do Comércio e de Negociações Internacionais (ICONE) –
From Brazil’s point of view one the most important ways to alter the trend of relatively declining exports, is to remove international trade barriers. Brazil’s demands global trade liberalizations by phasing out subsidies, lowering import tariffs and prohibiting export subsidies on biofuels (Sandalow, 2006). Brazil is a lead actor in putting liberalization of biofuel trade on the global governance agenda, or as can be read in the federal government's Agroenergy Policy Guidelines, the objective is to achieve: "Leadership in the international biofuel commerce. A series of comparative advantages should enable Brazil to lead the international biofuel market and promote energy products derived from agroenergy. Expanding exports would not only generate hard currency, but also consolidate the sector and drive the development of the country” (MAPA, 2006, p.34). In the Brazilian agroenergy plan 2006-2011 Brazil describes what actions need to be taken to become a lead actor to achieve international biofuel trade liberalizations, i.e. by organizing conferences for biofuel producing countries and initiating the creation of an International Organization of Producers and Consumers of Biofuel (IOPCBio). These actions have to lead to “help consolidate the path of the international biofuel market, eliminating potential tariff and non-tariff barriers ahead of time, creating arenas for the solution of eventual problems arising in the transactions between the countries and, at the same time, providing Brazil conditions to lead the evolution of the international biofuel market.”(MAPA, 2006, pp. 36-37). Clearly, Brazil takes an active stance in promoting its idea of a free global biofuel market.
Biofuel producers have influenced Brazilian position on global governance to a large extent. They do not only try to influence policy trough the state, but also independently on the global level. UNICA, the umbrella organization for Brazilian sugar cane producers publishes reports on the benefits of Brazilian ethanol and the ethanol market, encouraging the expansion of ethanol production and use, and through the state promoting a free market in global trade negotiations. They have offices in Washington DC and Brussels to lobby at the heart of global decision-making (UNICA website: http://unica.com.br, accessed 10-03-2010). With regard to global trade regulation, Brazilian biofuel producers -whether through the state- play an active role in putting biofuel trade deregulation on the global agenda.
international umbrella organization and by cooperating with foreign NGOs, such as Greenpeace-Germany, and Friends of the Earth-Germany (WWF website: www.wwf.org.br, accessed 10-03-2010). In terms of the model, in the phase of putting in the field of sustainability criteria on the global agenda, whereas Brazilian NGOs play an active role, Brazil is a veto actor or a swing actor.
In conclusion, because of the competitiveness of Brazilian biofuels Brazil actively pushes for global governance to liberalize the world biofuel market and can be considered a lead state regarding biofuel trade liberalizations. Both energy security as rural development are the primary driver for the demand for global governance. This position is heavily influenced by biofuel producers, who not only lobby the state, but also try to address governance demands on the global level by publishing reports. Brazil takes a more moderate position with regard to the creation of global sustainability standards. This also rather reflects the interests of Brazilian biofuel producers, than those of NGOs. NGOs have succeeded in cooperating with the Brazilian government to introduce sustainability seals, but they have failed to influence Brazil in becoming a lead actor in the field of sustainable biofuel trade. NGOs therefore actively address their concerns on the global level trough the international structure of their organization or by linking up with other NGOs. Concluding, the sources of the demand for global governance in the field of trade liberalizations are hybrid, i.e. Brazil and Brazilian ethanol producers; whereas the source of demand for global governance in the field of social or environmental standards comes from NGOs.
2. The United States
Figure 4.3 US Ethanol Production Projection (in billion liters)
Instituto de Estudos do Comércio e de Negociações Internacionais (ICONE) – Nassar, A. M. (2007). Perspectivas globais: etanol e mercados emergentes.
Retrieved on February 10, 2010, from ICONE website: http://www.iconebrasil.org.br/arquivos/noticia/1387.pdf
The American bioenergy sector is almost completely governed by the state. The biofuel market was created by a mix of Federal and State subsidies, loan programs, and incentives (Yacobucci & Schnepf, 2007). A study by Yacobucci and Schnepf showed that the total annual support fell between 5.1 and 6.8 billion dollar per year (Yacobbuci & Schnepf, 2007). The principal objectives of US biomass policy are: first, to dramatically reduce dependence on foreign oil. Second, to promote the use of diverse, domestic and sustainable energy resources; Third, to reduce carbon emissions from energy production and consumption; Fourth, to establish a domestic bio industry (USDE, 2009). Hence, reducing oil import dependence can be considered as the primary driver to govern the US biofuel market.
Energy Independence Act which requires fuel efficiency improvements of 40 % for cars and light trucks by 2020. Furthermore, different legislation4 was introduced to support the development of bio-refineries, to educate people about the benefits of biodiesel use and to assist farmers and rural small businesses in purchasing renewable energy systems (UNCTAD, 2006). The new Energy Bill includes different support mechanisms next to the already existing tax credit scheme. Main objective is to increase the level of gasoline ethanol blends to around 7.5 billion a year by 2012. 200 million dollars is reserved per year for research and development, loan guarantees for construction of new bio-refineries and an extension of the current biofuel procurement program (Slingerland & Van Geuns, 2005).
Although energy security is the main reason for the US to support the biofuel industry, there are also environmental push factors. The Clean Air Act requires cities to promote cleaner fuels, and partly by tax breaks and subsidies for producing ethanol (UNCTAD, 2006).
Finally, the US ethanol market remains fairly protected from imports. Ethanol imports are subject to a 2.5 % ad valorem5 tariff and a per unit duty of 0.54 dollar per gallon, which according to Yacobucci has been a significant barrier to ethanol imports (Yacobucci, 2008). Besides, there is the Caribbean Basin Economic Recovery Act (CBERA), which allows ethanol that has been produced for at least 50 %) in a CBERA country to enter the US market free of duty.
Biofuel producers, united in the American Coalition for Ethanol (ACE), have successfully put their interests on the US government’s agenda, which has been an essential factor that led to government support and protection of the domestic market (Orden et al., 2009).
The need for state support for biofuels is, however, being questioned. Biofuels have not been able to provide a sound alternative for oil. Current biofuel supply accounts for only 2.4 per cent of annual gasoline demand on an energy basis. In 2006 about half of total gasoline production was blended with ethanol. Total gasoline consumption remains 28 times larger then ethanol production6. Calculations by the CRS pointed out that if in 2006 all the available agricultural land was used for corn for ethanol; biofuel production would have covered only 13.4 per cent of the total fuel consumption in the US (Yacobucci and Schnepf,
4
The Farm Security and Rural Investment Act of 2002, the American Jobs Creation act of 2004 and the Farm Bill
5
A tariff rate charged as percentage of the price (WTO website: www.wto.org, accessed 10-03-2010).
6
2007). To substitute 20 per cent of petroleum imports in 2006, large amounts of land, i.e. nearly 137 million acres, would have been needed to meet the demand for corn and ethanol. This target is unfeasible, because the US corn-harvested acreage has never been more than 76 million acres since 1950 (Yacobucci and Schnepf, 2007).
American biofuels cannot compete with other types of biofuels either, because ethanol produced from corn uses more fossil fuels in its production and has a lower net energy balance compared with ethanol produced outside the US (UNCTAD, 2006). The review study by Farell et al. showed that most researchers found a slight energy balance of 1.2 for corn derived ethanol (Farell et al., 2006). So, even though domestically produced biofuels can reduce import dependence, they do not necessarily increase energy security. Moreover, as long as US ethanol is produced from corn, it will be vulnerable to threats to this supply, such as droughts and rising corn prices. Consequently, the American biofuel market need state support to engage or to stay engaged in the biofuel market.
US ethanol policy does not require any sustainability standards. It does require lifecycle analysis in order for them to be counted against blending mandates. Renewable biomass also has to be proven to reduce carbon emissions for at least 50 %. Moreover, the Environment Protection Agency, which is a governmental agency, is now developing criteria to evaluate biofuels production with regard to sustainability (Early, 2009). They participate in the interagency the Biomass Research and Development Board (BRDB) that is comprised of numerous Federal Departments and agencies (BRDB website: http://www.brdisolutions.com, accessed 15-02-2010). Private actors’ influence in the development of sustainability standards is limited. The most prominent non-state initiative comes from the Institute for Agriculture and Trade Policy (IATP) and Friends of the Earth US, that has drafted principles for sustainable biomass production (IATP website: www.IATP.org, accessed 15-02-2010). They have, however, not been consulted by the US government; and to date no standards have been adopted.
(a) US and the Demand for Global Governance
The lack of competitiveness of corn based ethanol is the primary reason for the US government to support its market. However, this has led to two political problems: First, even though there have been many government support programs, biofuels have not caused a substantive shift in US fuel consumption. Second, the increase of corn production for ethanol has been crowding out other agricultural products and corn production for other uses. This has led to rising food prices and has had negative impacts on the environment. Therefore, government support has been questioned. Global governance may be needed to deal with these political problems.
With regard to the first issue, the US could increase energy security by diversifying its markets geographically instead of increasing its production domestically. As the US has already taken initiatives to lower trade barriers for certain countries, it could look at global solutions to create a free world market for biofuels. It should therefore reduce its support measures and eliminate its tariffs on ethanol. This would boost imports, resulting in lower prices of ethanol, less pressure on domestic corn production and a better allocation of production, through these measures biofuels can be produced more efficiently and have a higher energy balance (Motaal, 2008). Global trade liberalizations would facilitate this.
However, in the Biomass Action Plan of December 2009, there is no reference to any global action. The paragraph “the international political climate” only describes Brazil’s potential to meet ethanol demand worldwide, and in particular demand in the US. The paragraph remains descriptive though, and does not mention any plans on how to enforce trade between these countries (USDE, 2009). US international biofuel policy focuses on the international potential of the Brazilian ethanol market.
interests will not lead to a demand for global governance. Therefore, the country can be regarded as a veto actor demanding biofuel trade liberalizations.
The second issue which has not been answered on the national level concerns developmental and environmental aspects of biofuels. Even though the reduction of GHG emissions is mentioned as an objective in the Biomass Program Plan, the US is not member of the Kyoto Protocol, and is therefore not bound to international CO2 reduction targets. The US has not been actively promoting to set up global standards for a more efficient and sustainable biofuel market (Early, 2009). This relates to the US’ fear that global sustainability standards will harm the competitiveness of US ethanol, especially in relation to Brazilian ethanol. Since states are prone to cooperate in the field of sustainability, the contrary applies to the US: its lack of environmental interest means that the country can be considered as a veto actor in the field of global regimes on sustainable biofuel markets.
Instead of the US government, NGOs are promoting global sustainable biofuel trade. IATP and Friends of the Earth US have addressed two primary problems concerning the sustainability of the US biofuel market: first, the expansion of the corn industry has led to an expansion of corn production, which has substantial environmental impacts, because corn is among the most energy intensive of the major field crops. More corn production will require more fertilizer and chemical use and soil erosion. Second, increasing biofuel production also has consequences for corn exports and prices. The US is the world’s primary producer and exporter of corn. If more corn production will be intended for ethanol, US capacity for export will diminish and corn prices will increase. Higher corn prices will affect food prices, in particular meat prices, because most corn is destined for animal feed. This is particularly detrimental to consumers in food importing developing countries, because their share of expenditures on food as part of the whole household budget is larger (Yacobucci & Schnepf, 2007). For instance, US support for ethanol in 2006 can be regarded as the main cause for the price spike of white corn in Mexico (Early, 2009) International NGOs, including Friends of the Earth International, Greenpeace, World Wildlife Fund and Oxfam have addressed these concerns on the global level by publishing papers and by lobbying global governance institutions (www.greenpeace.org, www.foei.org, www.worldwildlife.org, http://www.oxfam.org, accessed 26-02-2010).
domestic producers and to decrease energy import dependence. Therefore, the US does not promote global trade liberalizations or global certification regimes. It is even likely that US will oppose such regimes, because the stakes are high, as the country is one of the most important ethanol producers in the world.
NGOs have failed to influence the governance position into one that is more focused on sustainable production. This explains why NGOs are very active in addressing their demands on the global level.
3. The European Union
Biofuels fall under EU energy policy. Energy policy has been a fundamental element in EU policy: in the Treaty of the European Union energy is mentioned as one of the fields that is an essential part of the European Community’s political realm. EU cooperation started with European countries cooperating to create a European Coal and Steal Community in 1951. Nowadays energy is a shared competence, meaning that both member states and the EU have the power to make laws. In the EU’s view a common energy policy is needed, because energy related issues, such as the reduction of GHG emissions, the competition capacity of the EU in the world and import dependence cannot be solved on a national level. Moreover, there is a great variety in policy initiatives between the member states in regards to biofuels (OECD, 2007). So far energy is not a full competence, but a shared competence only. Through directives and other policy measures the EC sets targets for member states to increase their biofuel production, in that sense the EU fulfills the governance tasks of coordination and rulemaking.
The EU is the primary producer of biodiesel. EU biodiesel uses mainly sunflower rapeseeds and soy beans as a feedstock. EU ethanol is derived from sugar beets and wheat7. EU biodiesel production accounts for 87% of total biodiesel production and as figure 4.4 shows, is nearly entirely intended for domestic consumption.
7
