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Biofuels, agriculture and poverty reduction

Leo Peskett, Rachel Slater, Chris Stevens and Annie Dufey

Overseas Development Institute (ODI)

June 2007

SARPN acknowledges ODI as the source of this document:
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Sweeping claims have been made about the role of biofuels in development and poverty reduction (see Peskett et al, 2007 for a review). For example, it has been argued that

  • energy crops are beginning a green revolution in Brazil;
  • a bioproduct-based agro-revolution can offer a new development paradigm;
  • biofuels can provide a solution to the twin problems of poverty and climate change; and
  • countries in the tropics have comparative advantage in biofuels production which can play a role in job creation and food security.
But there is also scepticism. Researchers have recently questioned whether the net energy benefits of biofuels production may be negative for many crops because their energy outputs are less than the fossil energy inputs required to produce them. Others (see Peskett et al 2007) suggest that biofuels will be a ‘pandora’s box’ and question whether large-scale biofuel production can be environmentally, socially and economically sustainable and efficient.

This paper does not consider the broader questions about biofuels and energy policy, nor their environmental implications, but is concerned mainly with their potential contribution to agricultural sector development and to rural growth and poverty reduction.

Biofuels are defined here as organic primary and/or secondary fuels derived from biomass which can be used for the generation of thermal energy by combustion or by other technology. They comprise both purpose-grown energy crops, as well as multipurpose plantations and by-products (residues and wastes) (FAO 2000). This paper focuses on two types of liquid biofuels produced from purpose-grown crops:

  • Bioethanol is an alcohol derived from sugar or starch crops (e.g. sugar beet, sugar cane or corn) by fermentation. Ethanol can be used in either neat form in specially designed engines, or blended with petroleum fuel.
  • Biodiesel is derived from vegetable oils (e.g. rapeseed oil, jatropha, soy or palm oil) by reaction of the oil with methanol. Biodiesel can either be burnt directly in diesel engines or blended with diesel derived from fossil fuels.

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