Biofuels Policy: What's Sustainable?

Posted February 17, 2009

What does renewable energy really mean? And while we’re at it, what’s sustainability, anyway?

Seemingly simple questions, but they’re ones that crop up again and again as I get started in my work with the Rural Communities program.

Take, for instance, a set of biofuels policy recommendations released last week by a coalition of five green NGOs, headed up by the Environmental Working Group. I’ve pasted them below.

The proposals amount to a series of safeguards to ensure that federal policy incentives—things like tax credits and subsidies—are tied to environmental performance standards. In other words, if the ethanol or biodiesel isn’t actually reducing greenhouse gas emissions or our dependence on foreign oil, its producers won’t get federal money for it.

Sounds pretty sensible, right? Indeed, the proposals are sensible. But in our view, they’re also too narrow.

Sustainability standards for biofuels and other rural-based renewable energy policies must take into account the economic concerns of family farmers. If we lose them—and overly aggressive (albeit well-intentioned) policy moves like eliminating the Renewable Fuels Standard (RFS) probably won’t help—we lose our best shot at both environmental sustainability and maintaining vibrant rural communities.

We applaud this group’s efforts, but we propose a couple of tweaks:

1. Policy incentives should be tied not just to environmental performance standards, but also to local and regional economic benefits.

2. Rather than eliminate the Renewable Fuels Standard, let’s view it as an opportunity to create and ensure a market for sustainably produced agricultural products. Mandates for local production and sourcing are a first step, along with a gradual shift of focus away from quantity, and toward economic and environmental quality.

I’ll be posting regularly about IATP’s bioeconomy work and analysis—check back soon.

From Environmental Working Group's Web site.

1. Ensure that all policy incentives for renewable fuels, including mandates and subsidies, require attainment of minimum environmental performance standards for production and use, to ensure that publicly supported “renewable fuels” do not degrade our natural resources. Such standards would: certify net life-cycle greenhouse gas emission reductions through 2050, taking into account direct and indirect land use change; and do not cause or contribute to increased damage to soil quality, air quality, water quality, habitat protection and biodiversity loss. Compliance with these standards must be verified regularly.

2. Restrict the RFS to fuel options that do not cause environmental harm, adverse human health impacts or economic disruption.

o Cap the RFS at current levels and gradually phase out the mandate for biofuels, unless it is clearly demonstrated that such fuels can meet minimum environment, health and consumer protection standards.

 o Establish feedstock- and technology-neutral fuel and environmental performance standards for all biofuels and let the market devise ways of reaching them.

 o Periodically reevaluate the sustainability and performance of renewable fuels.

 o Provide a mechanism and requirement to mitigate unintended adverse effects, including authority to adjust any mandate downward.

3. Tie the biofuels tax credits to the performance standards

o Phase out the biofuels tax credit to blenders while phasing in tax credits or subsidies for renewable fuels that are scaled in accordance to the fuels’ relative environmental, health and consumer protection merits.

4. Rebalance the U.S. renewable energy and energy conservation portfolio to reflect the relative contribution these options can make to reducing fossil fuel use, enhancing the environment, spurring economic development and increasing energy security.

o Subsidies to renewable energy and conservation should be distributed more evenly between alternative energy sources, and should be allocated in a manner that is fuel- and feedstock-neutral; biofuels, particularly corn ethanol, must no longer receive the lion’s share of federal renewable energy subsidies.

 o New policy must:

         * Emphasize energy conservation; we cannot drill or grow our way out of the energy crisis.

         * Create a level playing field among renewable energy options; set fuel-, feedstock- and technology-neutral standards, so as to reduce fossil fuel consumption and greenhouse gas emissions, improve environmental quality and biodiversity, and reduce pressure on agricultural markets.

5. Support research to improve the analysis of net climate impacts, net non-climate environmental impacts, commodity price impacts and other social factors that are substantially affected by policies that promote biofuels. All of the previous policy asks must be based on better research on the impacts from biofuels; understanding these impacts are crucial to developing sound policies.

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The Tar Sands and NAFTA

Posted January 9, 2009

Ian Austen of the New York Times had an excellent article Wednesday on oil extraction from the tar sands in Alberta, Canada. Canada is now the largest oil supplier to the U.S. The article outlines the various environmental concerns of this extremely energy intensive operation, including impacts on greenhouse gas emissions, water pollution and migratory birds.

One important driver the article doesn't get into is the role of NAFTA in tar sands development, or more specifically the role of NAFTA's Proportionality Clause (see analysis by the Parkland Institute and the Canadian Centre for Policy Alternatives). This clause is so crazy it's hard to believe. It actually requires Canada to make two-thirds of its domestic oil production and 60 percent of its current natural gas production available for export to the U.S. These requirements stay in effect, even if Canada needs these supplies for domestic purposes. There is little question that Canada's NAFTA-burden is contributing to further tar sands development.

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Can Green Purchasing Change the World?

Posted October 31, 2008

Shifts in the marketplace toward more environmentally friendly products are happening because larger institutional buyers are demanding it. By working with local governments, hospitals, schools and large businesses, civil society groups are expanding markets for greener production and products.

Wp_xs The Mainstreet Media Project has put together a wonderful hour-long show on green purchasing. It features Chris Geiger (who discusses what the City of San Francisco is doing in green purchasing and non-toxic pest management), Gary Cohen (co-director of the coalition Healthcare Without Harm, of which IATP is a member) and Dean Edwards (of Kaiser Permanente).

Also on the show, IATP's David Wallinga, M.D., discusses the role of local food purchasing by larger institutions to help spur demand and meet healthier food objectives. You can listen to David's interview or the whole show.

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Canadian Groups Call For NAFTA Renegotiation

Posted October 3, 2008

Earlier this week, ten Canadian civil society groups called on political candidates running in Canada's October 14 election to "stop ducking Obama's NAFTA challenge." Specifically, the groups asked for candidates to respond to U.S. Senator Barack Obama's pledge to renegotiate the North American Free Trade Agreement (NAFTA) if elected President.

The Canadian groups zeroed in on a number of key provisions of NAFTA that need renegotiation, including the energy chapter's "proportionality clause," which compels Canada to export oil and natural gas at a set rate to the U.S., even if it results in domestic shortages. It is NAFTA's proportionality clause that is partially driving the controversial and energy-intensive development of oil tar sands in Alberta. IATP's newsletter, Tar Sands Oil Review, is monitoring the issue.

The Canadian groups also called for the renegotiation of NAFTA's investment chapter (also known as Chapter 11), which grants corporations the right to sue governments in all three countries (through unelected and secret trade tribunals) to challenge regulations they disagree with. There have been over 50 such Chapter 11 cases filed under NAFTA.

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Lessons from Forest Biomass

Posted June 19, 2008

The "chicken or the egg" challenge of expanding renewable energy based on biomass has to do with finding a reliable source of biomass itself. We can't make the transition to using more biomass without a reliable supply. But it's difficult to find the supply, without the facilities to send it to?

One way out of this conundrum is to look where biomass is already being harvested and discarded as waste. A new IATP study released today reports on a series of test forest biomass harvests that target the removal of understory vegetation and dead material. An excess of this material can increase fire risks and hinder the health of the forest. Traditionally, that material (known ominously as the fuel load) has been removed and just disposed of or burned near the site.

The study found that at six of the nine test harvests, removing the biomass to reduce fire risks and using it for renewable energy production reduced overall costs. Researchers also found that by following sustainable harvest guidelines established by the Minnesota Forest Resource Council, adverse environmental effects on the soil, wildlife and other natural resources can be avoided.

IATP worked with the University of Minnesota, University of Wisconsin-Stevens Point, and the U.S. Forest Service on the project. You can read the Executive Summary, press release, and an interview with lead author, IATP's Don Arnosti.

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Growing Minnesota Biodiesel - Responsibly

Posted May 16, 2008

Minnesota recently passed legislation to increase the biodiesel content of diesel fuel sold in the state from the current 2 percent to 20 percent by 2015. The Institute for Agriculture and Trade Policy, together with Minnesota farm and environmental organizations, worked with legislators to make sure that the mandate, which is the highest in the nation, will not only support the biodiesel industry, but will also specifically benefit Minnesota’s economy and environment and help us move forward towards the next generation of biofuels.

While the merits of mandates are debatable, if they are going to be put in place, they must incorporate provisions to ensure that Minnesota's farmers, economy and environment are the beneficiaries - not just a few multinational processors.

In particular the legislation included:

  • A first–in-the-country palm oil ban (and possibly first in the world - if you know of others, let us know). Virgin palm oil cannot be used to produce biodiesel to meet the mandate, which will help assure that Minnesota does not contribute to environmental destruction and rainforest clearing associated with new palm oil production - a practice outlined in our recent report Biofuels and Global Biodiversity.
  • Focus on Minnesota and Midwest production. The increasing levels of biodiesel content can only go into effect if Minnesota is producing at least 50 percent of mandated production level in-state from feedstocks produced in the US and Canada, assuring that this market share will benefit Minnesota farmers and biodiesel producers.
  • Opening the door for the next generation. Five percent of the mandate needs to be met with biodiesel produced from non-traditional feedstocks (waste oil, algae, etc.), which will help diversify biodiesel production and assist with a shift away from food and feed crops such as soybeans.
  • Assessing the costs and benefits. Reports to the legislature are required annually on price and supply of biodiesel, as well as the impacts of the mandate on the Minnesota biodiesel industry and the use of Minnesota crops and materials used for biodiesel production.

Here is the full text of the bill:

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Biofuels and Biodiversity

Posted May 6, 2008

The biofuel sector has grown so rapidly around the world, we are all still coming to grips with its impact - both good and bad - on the farm and food economy. A new report by IATP's Dr. Dennis Keeney and Claudia Nanninga finds that the first generation of biofuel feedstocks is exacerbating many of the environmentally-destructive practices of the current industrial model of agriculture. Specifically, the biodiversity of several of the major biofuel-producing countries is being threatened as feedstock production extends onto native vegetation.

Below is a press release from today:

Biofuels Contributing to Changing Land-Use Patterns, Affecting Biodiversity – New Report

Minneapolis – Increasing production of crops for biofuels is exacerbating agriculture’s impact on biodiversity in many parts of the world, finds a new report by the Institute for Agriculture and Trade Policy (IATP).

The report, “Biofuel and Global Biodiversity,” is by Dr. Dennis Keeney and Claudia Nanninga and is available at: The paper includes case studies of three regions that have been growing much of the feedstock for biofuels around the world: the U.S., Brazil and Malaysia/Indonesia.

“Ethanol and biodiesel are being overlaid on a broken agricultural production system,” said Dr. Keeney. “Many of the biodiversity impacts of biofuel feedstock production are not inherent to biofuel, but are more a symptom of damaging agricultural production systems and policies.”

The report found that in the U.S., increased corn planting is reducing the diversity of crop rotations and threatening wetlands and acreage set aside for conservation. In Brazil, greater sugarcane production for ethanol is moving into the fragile, diverse Cerrado region, and soy production for biodiesel is contributing to significant destruction of the Amazon rainforest. Perhaps the largest loss of biodiversity is occurring in the rainforests of Malaysia and Indonesia, where palm oil plantations are rapidly being established to feed the growing demand for biodiesel in Europe and elsewhere.

The paper found that the biofuel industry has expanded due to two complementary drivers: the increase in the price of crude oil and national policies to encourage the production and use of biofuel. It concluded that future policy solutions need to focus on:

  • Protecting rainforests and fragile, native ecosystems and indigenous lands – The most significant biodiversity threat is from biofuel feedstock production that extends onto native vegetation;
  • Making sustainability a priority in all biofuel production – Policies should encourage more sustainable production of existing biofuel feedstocks – and accelerate the transition to more sustainable next generation biofuel feedstocks;
  • Moderating price volatility in agricultural commodities – An updated supply management system could stabilize market prices and reduce incentives to encroach on native vegetation;
  • Redesigning our agricultural and energy sectors – Agriculture and energy policies should prioritize local production and use.

“Public policy has been a major driver in the development of the biofuel industry,” said Jim Harkness, IATP President. “In moving forward, smarter policy is crucial if biofuel production is going to protect and enhance – rather than decimate – global biodiversity.”

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Trade Rules and Biofuels

Posted April 14, 2008

The global biofuel market has grown so quickly that international trade and investment rules aren’t prepared to handle the multiple challenges arising from this new sector. As an example, the World Trade Organization treats ethanol and biodiesel very differently under its rules. At the same time, the clearing of land to meet the growing need for biofuel feedstocks is causing a host of environmental problems, including threats to water and biodiversity (a topic IATP will tackle in an upcoming report). 

In a new paper published with our friends at the International Institute for Environment and Development,  IATP’s Sophia Murphy outlines how global rules will shape the biofuel market and how new rules are needed to support environmental sustainability, rural development and human rights. Below is our press release on the paper from today:

Global Trade Rules to Shape Biofuel Market

Minneapolis – The long-term sustainability of the fast-moving global biofuel market will depend on changes to international trade and investment rules that govern energy, environment, agriculture and rural development, according to a new paper published by the Institute for Agriculture and Trade Policy (IATP) and the London-based International Institute for Environment and Development (IIED).

“This industry has developed so quickly that governments at all levels, but particularly at the global level, have been slow to set rules on how to manage its growth,” said Sophia Murphy, IATP Senior Advisor and author of the paper. “It is critical that governments set global rules that support environmental sustainability and economic development for more than just a few companies.”

The paper, “The Multilateral Trade and Investment Context for Biofuels: Issues and Challenges,” outlines the different interests of the largest global players in the biofuel market, including the U.S., European Union and Brazil. The paper analyzes biofuel trade within the context of World Trade Organization rules governing agriculture, environmental goods, services, patents and investment. Biofuels raise a number of tricky trade questions, including: the acceptability of production and processing methods (PPMs) as a basis for discrimination among goods; the legitimacy of trade restrictive measures that support goals set in multilateral environmental agreements; and the effects of private standards on market access.

Current biofuel feedstocks are energy-intensive and involve largely industrial-scale monocultural production. In parts of the world, biofuel feedstock production is taking a heavy environmental toll on water, soil, and ecological biodiversity. Investment from foreign firms seeking biofuel feedstock is also aggravating land disputes and intensifying the political fight to protect food security. The paper discusses some of the issues on developing sustainability standards for biofuel production and calls for a multilateral discussion to set trade and investment rules that support a fair and sustainable biofuel sector.

“International guidelines could complement what will ultimately be local and national decisions,” said Murphy. “Such guidelines could carve out space for policies that are dictated by human rights and environmental norms, and could help to reshape trade and investment obligations to be more supportive of sustainable development.”

The paper can be read at:

The Institute for Agriculture and Trade Policy works at the intersection of policy and practice to ensure fair and sustainable food, farm and trade systems for all people. IIED is an independent, non-profit research institute working in the field of sustainable development at the local, national, regional and global level.

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Good Jobs, Green Jobs... for everyone!

Posted March 14, 2008

IATPers Jim Harkness, Lindsay Dahl and I are all at the "Green Jobs, Good Jobs" conference in Pittsburgh today and it has been a very powerful and uplifting experience. Organized by the Blue-Green Alliance, which brings together the United Steelworkers and the Sierra Club, this is the first national conference to focus not only on the global warming and environmental challenges we face, but more importantly, on how we need to restructure our economy and create jobs to address these challenges.

Yesterday was a great start, with multiple speakers and panels on issues ranging from public policy and investment to the role of green chemistry and energy in rebuilding rural and urban economies. Carl Pope of the Sierra Club gave a stirring speech to help open the conference and place it in context, by asking the essential question: how do we ensure, as we move into a green jobs economy, that poor people, people of color and rural communities aren't left out? The response from Lou Schorsch, CEO of Flat Caron America and ArcelorMittal North America, the world's largest steel company, was emblematic of the problems we face: "I'm a business guy, so that's a hard question for me." 

Minnesota is the home of Dave Foster, the Executive Director of the Blue-Green Alliance, so it's not surprising that much of the work here has been highlighted. Minnesotan presenters included Minneapolis Mayor R.T. Rybak, Minnesota State Senator Ellen Anderson, and Piper Jaffrey's Lois Quam yesterday, with Senator Amy Klobuchar scheduled to speak today. While we know things aren't perfect back home and we still face many challenges in moving toward green and good jobs, it's clear that Minnesota has lessons and approaches that other states and regions can learn from, so a little "Minnesota-pride" is deserved!

For me, however, it is the focus on jobs, people and justice that has me most excited. Marko Trbovich of the United Steel Workers, gave a rousing speech to end yesterday's program, where he spoke directly to the connections between climate change and international trade. Some of the key points include:
- Climate change is the most pervasive form of globalization.
- Climate change is inextricably linked to international trade.
- To really make the policy changes we need to address global warming, we need to reform our trade system.

These connections with people and justice were brought into sharp focus this morning by an incredibly emotional and powerful speech given by Van Jones, Director of "Green for All" in Oakland, CA. Van spoke of the victories our movement has already achieved, shown most starkly in the fact that "polluters" are trying to sound just like us now on climate issues. But he emphasized that as we move forward politically and as a movement from the margins to the center, we need to make sure that we use this opportunity to bring all folks forward -- that the green economy isn't just about reclaiming "stuff," but more importantly a chance to reclaim thrown away children and lives. As Van said, those communities pushed down by a pollution-based economy need to be lifted up by the green economy -- we have the chance and obligation to create a green wave that can lift all boats and has a place for everyone. 

To create this "green pathway out of poverty," Van pointed to the need for the right policies, politics and principles. We need to create a green workforce to meet our new labor needs, but one that is open and accessible to our marginalized community members. Van then talked about some of the programs in Oakland that have offered training to the undereducated and formerly incarcerated, and how these opportunities -- including the chance to join a union -- are helping raise people out of poverty and bring them in from the margins. The Green Jobs Act of 2007, a part of the Energy and Security Act, can help us get there, through training 30,000 people a year in skills needed for our new economy.

Van also spoke to the need for a new politics, whereby we create a movement and the political will to truly address the problems we face - a "Green New Deal" that can provide the kind of governance we need at this critical time. And finally, we need the right principles, which means sticking up for the little people and not leaving anyone behind. As Van so eloquently stated, evoking the brutal abandonment of the poor in New Orleans after Katrina, and in the process the whole principle of climate justice: "We reject the politics of sink-or-swim in the time of floods." 

For me, Van and his work reflects the real challenges we face as we try to build this new green economy -- simply replacing an inequitable fossil fuel economy with a biobased or renewable economy based on the same power and political structures won't get us where we need to go. For the green economy to truly succeed, it is clear that it needs to start and end with justice for all. That means continuing to make sure that people of all classes and races are engaged in this work, and that we build the bridges and coalitions with farmers, inner city residents, indigenous communities, and others to make sure that the solutions put forward to our global warming and environmental crises are crafted to ensure that we move from hurting poor people and the planet to helping them both.

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Farmer Agreement Offers Alternative to NAFTA's Failures

Posted February 4, 2008

On January 1, 2008, the North American Free Trade Agreement (NAFTA) came into full effect after a 15-year phase-in for more sensitive agricultural products like sugar, white corn, beans and dairy. This means the last remaining tariffs are no longer legally binding, including those on sugar imported from Mexico to the U.S., and vice versa. Additionally, the Mexican government will no longer block imported high fructose corn syrup from the U.S., which competes directly with sugar in the Mexican sweetener markets.

The expected fallout threatens to hurt sugar farmers on both sides of the border. This threat is so dire, that it has provided an impetus for Mexican and American sugar growers to reach an historic agreement to modify the final implementation of NAFTA. 

First, let’s look at the chaos NAFTA is expected to bring to sugar markets in the U.S. and Mexico.

An expected import surge of U.S. corn syrup will likely displace Mexican sugar from the Mexican sweetener market. Mexican sugar growers also face the prospect of increased U.S sugar imports, because the current U.S. cost of production for sugar is less than in Mexico. Moreover, increased imports from other countries have created a substantial U.S. surplus of sugar that could be dumped into Mexico.

In the U.S., sugar displaced from the Mexican market by corn syrup could be exported to the U.S. This could overwhelm the delicately balanced U.S. inventory management system, already under siege by increased imports from World Trade Organization (WTO) and Central American Free Trade Agreement (CAFTA) obligations. 

All these threats taken together would likely depress sugar prices below the cost of production on both sides of the border, resulting in a shutdown of most of the North American sugar industry. 

However, there is more at stake here than the fate of an agricultural commodity. Sugar is Mexico’s largest remaining agricultural industry. According to the U.S. Department of Agriculture Foreign Agricultural Service, there are an estimated 158,000 sugar farms in Mexico that average 10 acres in size. These farms supply 58 mills located in 15 of the country’s poorest 35 states. The Mexican sugar industry directly employs more than 300,000 workers, including cane cutters, seasonal field workers, and factory workers; and indirectly supports another 2.2 million jobs. 

The NAFTA-mandated destruction of the Mexican sugar industry would likely cause a new wave of immigrants to try to find work in the United States. This new migration would rival the well documented surge of Mexican migration caused by U.S. export dumping of yellow corn into Mexico facilitated by NAFTA over the last decade.

Thus far, Mexican sugar farmers have been spared the devastating effects of dumped imports because the Mexican government has refused for 15 years to deregulate their sweetener market.  Just as importantly, U.S. sugar growers have had enough political clout to defend their own sugar program that—unlike other U.S. farm programs—manages inventories, prevents overproduction and export dumping, and guarantees farmers a fair price at no cost to U.S. taxpayers.   

For decades, high fructose corn syrup has competed with sugar in an increasingly integrated sweetener market. In fact, the rules for this sweetener war under NAFTA have been continually in dispute literally since the signing of the agreement in 1994. As NAFTA forced Mexico to deregulate its sweetener market, cheaper U.S. corn syrup began taking market share away from Mexican sugar growers, especially in the soft drink market. Mexico tried to protect its sugar growers: first with anti-dumping measures; and then with a tax on corn syrup. However, the U.S. government, on behalf of the Corn Refiners Association (including Cargill and Archer Daniels Midland), dutifully challenged Mexico’s actions before international trade tribunals under both NAFTA and the WTO, and won.

Significantly, the agreement reached by U.S. and Mexican sugar growers sets the stage for managing the sweetener market between the two countries in a way that could benefit farmers in both countries. Specifically, the deal would modify the implementation of full NAFTA deregulation of Mexican and U.S. sweetener markets by:

·         Building on a provision currently included in the pending Farm Bill that would allow the use of some sugar to produce ethanol as a means to manage excess supplies.

·         Managing sugar supplies used for ethanol production separately from sugar used for human consumption; a prudent step given the growing controversy over fuel versus fuel.   

·         Limiting import surges of Mexican sugar exports to the U.S. caused by displacement of Mexican sugar from the anticipated import surges of high fructose corn syrup being dumped by multinational agribusinesses into Mexico.

·         Managing the two countries’ sugar re-export programs to provide a smoother and more predictable transition to a more integrated North American sweetener market. 

·         Providing Mexican and U.S. sugar growers with preferential market access to North American sugar markets—both for human and ethanol consumption—while still fulfilling the two countries’ existing WTO and other international trade commitments.

·         Establishing a Joint Mexico-United States Sugar Commission to resolve future disputes, rather than leaving them up to secret NAFTA tribunals.

The agreement has been circulated among appropriate government officials in both countries, and various options have been suggested for moving the agreement forward.

The mutual threat of lost markets and livelihoods has compelled Mexican and U.S. sugar farmers to work out an agreement that will give both sides a fighting chance to survive. The deal could help resolve the endless trade disputes and uncertainty that have wreaked havoc in the sweetener market since NAFTA was signed. It could curtail the otherwise inevitable increase in cross-border dumping of sweeteners that threatens to irrevocably damage the North American sugar industry, which is so important to both the Mexican and the U.S. economies. Finally, it could help us avoid another displacement of Mexican agricultural workers who will be forced to migrate north if we allow NAFTA to be implemented unencumbered.

For more information on the connections between agriculture, trade and immigration, go to Trade Observatory.

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