Forest risk commodities


Biofuels are produced from biomass, renewable organic material from plants or animals. The most commonly used biofuels are fuel ethanol - made from crops like corn, wheat, sugarcane and sugar beet - and biodiesel, made from vegetable oils like soy, rapeseed and palm.

With the rapid growth of biodiesel production and consumption, and the proliferation of policy decisions supporting this expansion, especially in Brazil, the EU and the US, concerns about the long-term sustainability of biofuels are increasing. In particular, the US and EU have set targets for renewable energy to constitute 20% and 10%, respectively, of all transport fuel by 2020 – targets that will require large amounts of biofuels.

Driven by policy mandates and renewable energy goals around the world, global ethanol and biodiesel productions are projected to continue their rapid increase, creating powerful new pressures on forests.

Global Supply and Demand

  • Global biofuels production increased 17% in 2010, reaching 105 billion liters, up from 90 billion in 2009. The US and Brazil are the largest producers of ethanol, and the EU is the largest producer of biodiesel, generating 53% of all biodiesel in 20101.
  • Both the US and the EU have set targets for a biofuels mix in standard fuels. As of 2011, biofuels provided around 2% of total global transport fuel but this number is set to rise2. Increasing use in energy production is also stimulating the market.
  • Fuel ethanol is the most widely used biofuel globally. In 2008, ethanol became the most used motor fuel in Brazil, the first country in the world to achieve this3. In 2010, the U.S. EPA designated Brazilian sugarcane ethanol as an advanced biofuel due to its 61% reduction of total life cycle greenhouse gas emissions, including direct and indirect land use change emissions4.
  • In the US, corn ethanol production has grown from using less than 10% of the US corn crop to more than a third, driving up global crop prices and increasing the conversion of forest for agriculture. In 2011, federal ethanol subsidies expired, but because of the continued requirement for ethanol in the national fuel mix (the “mandate”) this had little impact on prices or production5.
  • Bioenergy plants are being developed across Europe and Asia. The Finnish company Neste Oil opened the world’s largest biofuel plant in Singapore in March, 2011. The plant has the capacity to produce 800,000 tons of biodiesel from palm oil from Malaysia and Indonesia as well as from animal fat, and will export to markets in Europe, Canada and the United States6.
  • High fossil fuel prices in the mid-2000s led Asian governments to turn to locally produced biofuels. This drove food prices higher and resulted in caps being imposed on the amount of palm oil being used for this purpose.
  • The Organisation for Economic Co-operation and Development (OECD) countries, including the EU, are currently promoting research and development into second-generation biofuels, derived from various types of biomass. There is increasing private investment in cellulosic and algal production systems. The first of these will require reliable new woody biomass supplies and could have a dramatic impact on natural forests, especially in regions like Africa and Asia, as they are cleared to make way for industrial wood plantations. Meanwhile biofuels made from algae cannot yet be produced at scale without using unsustainable amounts of energy, water and fertiliser7.

Land Conversion and Sustainability

  • The growth in the demand for biofuels has resulted in expansion of biofuel crop production on lands traditionally used for other purposes, such as food, feed and fiber. Future growth in demand is likely to divert more lands from their conventional production purposes. Increasing numbers of experts believe that this process encourages the use of other land to produce the original crops (this is the concept of Indirect Land Use Change, or ILUC).
  • According to Fargione et al. (2008), if the land converted to production of food crops for biofuels is rainforests, peatlands, savannahs or grasslands, this creates a “biofuel carbon debt” by releasing 17 to 420 times more CO2 than the annual greenhouse gas reductions that these biofuels would provide by displacing fossil fuels. In contrast, biofuels made from waste biomass, or from biomass grown on restored land that had been degraded, or abandoned agricultural lands, and especially if planted with perennial crops, will incur little or no carbon debt and can offer immediate and sustained emissions reductions8.
  • Many of the main crops used for biofuels are grown in large scale agricultural monocultures which can have serious environmental, social and economic impacts on local communities, including the depletion of water sources due to changes in the hydrological cycle, harm to rivers and streams, air and water pollution due to the unregulated use of pesticides and other agrochemicals, and the loss of biodiversity.
  • Large scale conversion of land for biofuel production is a major cause of concern where it is currently being used for food production. The loss of subsistence farming has severe social impacts, including community displacement and human rights violations.
  • Concerns about biofuels largely relate to deforestation, and whether agricultural land is best used for the purpose of energy generation. Current views in favor as well as against biofuels are largely influenced by perceptions of global food security, projected population growth and concerns about how conversion of vast carbon rich lands for biofuel plantations will contribute to climate change.
  • National, regional and global policy objectives often overlap and there is a lack of strategic planning for the use of land. Land is often cleared for market uses which are not sustainable longer-term, but once degraded, the productivity, biological diversity and carbon storage properties of land are extremely costly to regenerate.

Legislation and Third Party Certification

The rapid growth of biofuel production and consumption, combined with the increased number of policy decisions in support of the expansion, have raised concerns about the biofuel sector’s environmental and social impacts. Consequently, sustainability frameworks have been developed by governments, NGOs, multi-stakeholder industry groups and multilateral institutions.

  • In 2011, the EU Commission for Energy approved seven voluntary schemes through which the sustainability of biofuels entering the EU markets will be evaluated:
    1. Bonsucro EU - Roundtable initiative for sugarcane based biofuels
    2. RSB EU RED (Roundtable on Sustainable Biofuels EU RED)
    3. RTRS EU RED (Round Table on Responsible Soy EU RED)
    4. ISCC (International Sustainability and Carbon Certification) - German (government financed) scheme covering all types of biofuels
    5. 2BSvs (Biomass Biofuels voluntary scheme) -French industry scheme covering all types of biofuels
    6. RBSA (Abengoa RED Bioenergy Sustainability Assurance) - Industry scheme for Abengoa covering their supply chain
    7. Greenergy - Greenergy Brazilian Bioethanol verification programme
    These systems provide standards which aim to prevent the conversion of areas of high biodiversity and high carbon stocks for the production of raw materials for biofuels 9.
  • The Roundtable on Sustainable Biofuels (RSB) is one of these authorized schemes. It provides a robust set of Principles and Criteria, which was developed through a multi-stakeholder process, and an independent, third-party certification system. It covers the entire biofuel value chain from “farm to tank,” for any biofuel worldwide, and ensures that biofuel producers demonstrate compliance with stringent social and environmental criteria10.
  • In June 2012, the RSB announced its decision to recognize the standard of the Sustainable Agriculture Network (SAN), which is implemented by the Rainforest Alliance, to certify compliant farm operations11.
  • The EU Renewable Energy Directive (RED) currently requires that renewable energy should account for at least 10% of the energy used in road transport by 2020, which would stimulate a major increase in the use of conventional biofuels. In October 2012, the Commission published a proposed amendment that would reduce the EU’s use of crop-based biofuels to 5% of total EU road transport energy by 2020, and introduce a reporting obligation on GHG emissions from indirect land use change (ILUC)12.
  • The Forest Stewardship Council (FSC) provides standards for wood pellets, chips, or wood-based second generation liquid biofuels. In 2012, the RSB recognized FSC-certification of sustainably produced biomass13.

1 Worldwatch Institute's Climate and Energy Program. (2011) Biofuels make a comeback despite tough economy
2 IEA. (2011) Technology Roadmap: Biofuels for Transport
3 J. Inslee H, et al. (2007). "6. Homegrown Energy". Apollo's Fire. Island Press, Washington, D.C. 153–155, 160–161.
4 UN-Energy. (2011) Ethanol fuel in Brazil
5 Searchinger T, et al. (2008) Use of U.S. Croplands for biofuels increases greenhouse gases through emissions from land-use change. Science 29, 1238-1240.
6 Neste Oil. (2010) Neste Oil starts up its new renewable diesel plant in Singapore
7 Reuters. (2012) Algae biofuel not sustainable now-U.S. research council
8 Fargione J, et al. 2008. Land clearing and the biofuel carbon debt. Science 319, 1235-8.
9 Europa. (2011) First EU sustainability schemes for biofuels get the go-ahead
10 Iseal Alliance. (2012) Roundtable on sustainable biofuels
11 Iseal Alliance (2012) Roundtable on Sustainable Biofuels Recognises Rainforest Alliance Certified Farms
12 European Commission. (2012) Proposal for a Directive of the European Parliament and the Council
13 RSB. (2012) RSB Bulletin (December 2012)

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