Reference no: EM133155406
MINI CASE: BIOFUELS: A CASE FOR SUSTAINABLE DEVELOPMENT AND ENERGY SECURITY
Concern over politically controlled supply and finite availability of nonrenewable energy resources, such as crude oil and natural gas, has prompted large crude-oil-consuming nations to seek alternative renewable energy sources. Furthermore, environmental concerns associated with carbon dioxide and other greenhouse gas emissions have prompted countries with large agricultural tracts of land to seek and develop clean, renewable biofuels that are not only environmentally friendly, but which also contribute to sustainable economic growth and energy security. Developing biofuels does not need to be a panacea; however, real challenges must be overcome to prevent economic costs from exceeding social benefits. For example, countries should take extreme care in implementing national biofuel policies because in the rush to energy independence, more pollution may occur, and resources may be misallocated.
Biofuels can be described as one of two major types. Bioethanol, which has a global production of some 50 billion liters and which can be blended with gasoline (as is done in China, Europe, and the United States) or used as a substitute for gasoline (as done in Brazil). Note that industrial ethanol is distillate or byproduct of crude oil and not a nonrenewable energy source, and bioethanol is purely from plants (sugar cane, corn, etc.) and is a renewable energy resource. Sugar cane provides the raw materials for nearly half of the global bioethanol production, with Brazil being the dominant producer, followed far behind by the Philippines. The other raw materials used for extracting bioethanol are corn (maize) and wheat. U.S. bioethanol production is corn-based, and Europe's bioethanol is wheat-based. Bioethanol derived from sugar cane will be much more cost and pollution efficient because its single-cycle processing remains relatively inexpensive, and it consumes less energy than what is produced by burning the resulting bioethanol. In contrast, bioethanol from corn and wheat undergo a more expensive double-stage process. Moreover, critics of corn-based bioethanol argue that the energy used in its production and the corresponding pollution it creates may exceed the energy content of corn-based bioethanol.
Biodiesel has a global production of some 13 billion liters, has often been used as a substitute for diesel, and has mainly been produced in Indonesia, India, Malaysia, Thailand, as well as some European countries. The major raw materials used for biodiesel product include soybeans, rapeseed, sunflower seed, and palm oil; more recently, biodiesel producers in India have also begun using plants, such as jatropha and pongamia, which are weeds that grow wild along high-ways and on arid land.
Variations in climatic and soil conditions in Asia explain the wide range of crops (including coconut in the Philippines and jatropha and pongamia in India) used in biodiesel production in the region. Their national goals also differ. Palm oil has been the most energy-efficient crop for biodiesel production to date, and Malaysia exports 90 percent of its output to earn foreign exchange. For India, where imports cover 73 percent of its petroleum needs, developing domestic biodiesel can help to achieve energy security. India's government believes that some 70 million hectares of wasteland could be targeted to grow biodiesel crops. Cultivating these low-maintenance arid land crops could also become a source of income for the rural poor without displacing prime agricultural land. Their benefits are many and significant: easing poverty, reducing air pollution, mitigating global warming and rehabilitating degraded wasteland. In Indonesia, forests and swamps have been stripped to make way for palm plantations, enabling the country to become the largest producer of palm oil in the world.
As the demand for biofuels (bioethanol and biodiesel) increases, sugar, corn, and palm oil prices will increase, which in turn will help exporters at the expense of higher sugar corn, and cooking oil prices to domestic consumers. Much of East Asia's push to biofuels is based upon the promise of huge shipments to Europe.
What are the key elements that should be considered before making courses of action? and what are these alternative courses that could be taken in this case?