UN report stresses factors influencing future of biofuels

As biofuels now account for 1% of global energy use, a report on the 'State of the Global Biofuels Market' released by the United Nations Conference on Trade and Development (UNCTAD) says second generation technologies, climate change concerns and economic pressures are carving the future of the growing biofuels sector.

'While alternative energy sources are growing faster than any other source, they still account for a very limited share of primary energy demand. Therefore they are not expected to replace fossil fuels but to play a complementary role in satisfying the world energy demand,' it says.

The report contains policy recommendations for developing countries to make beneficial use of biofuels, and suggests creation of regulatory frameworks tailored to national resource endowments which do not antagonise food and energy supplies but rather enhance agricultural productivity, rural income and workers' skills.

The development of competitive second generation biofuels, made from woody crops, agricultural residues or waste (unlike first generation biofuels made from the sugars and vegetable oils found in arable crops) will pose a number of challenges to developing countries, it says.

One key recommendation of the report is a call for international strategies to avoid the emergence of a technological gap between land-intensive first generation and capital-intensive second generation biofuels.

It advises developing countries to ensure that the cost of sustainability certification is spread along supply chains in a way which protects small farmers from undue cost burdens and promotes a continuous inflow of private investment and process technologies, particularly through predictable business environments.

The report says a large potential remains to be exploited in the sustainable production of first generation biofuels in developing countries. Efficiency considerations continue to indicate that feedstock and biofuel production can be done most favourably in developing countries, where the climate to grow them and low-cost farm labour exist.