194
8 Bioeconomy Lessons from Biofuel Policies …
Chap. 5). Second, biofuels have saved foreign exchange and reduced Brazil’s vulnerability to international oil price fluctuations by cutting gasoline and diesel imports.
Third, ethanol has brought both absolute and relative economic benefits through—
until recently, and potentially again in the future—exports of a value-added product
to developed countries. Indirectly, higher edible oil and sugar prices partly caused
by large-scale supply diversion to biofuels also are beneficial to Brazil’s exports, if
not necessarily to low-income food consumers.
Indonesia’s situation is somewhat similar, though with an important caveat. Its
biodiesel sector has reduced petroleum consumption, the import bill, and its vulnerability to international price volatility. Biodiesel policy has also promoted value-chain
development and the creation of downstream industries based on palm oil, even if it is
still primarily sold in its crude form (CPO) (Wiyono and Slette 2013). Nevertheless,
being largely export-oriented and dependent on foreign investments, Indonesia’s
biodiesel industry has been particularly vulnerable to policy decisions outside its
reach. For instance, they include the unilateral standard-setting of foreign importers
(e.g., the EU) and occasional restrictions from multilateral financing organizations
such as the World Bank. Such vulnerability seems characteristic of developing countries’ weaker positions and an aspect that Indonesia has not yet left behind in its
development. Although this country has become increasingly assertive, as seen in its
defiance of (the mostly Europe-led) RSPO certification, this attitude relies much more
on the availability of other emerging markets (namely India and China) operating
as less stringent importers than on Indonesia’s domestic economy. Its vulnerability
would surface at once if the EU were to articulate a joint position with China and
India on oil palm sustainability. Indonesia, surely, is gambling on the improbability
of that.
Finally, India has profited from its ethanol industry but faced an unfavorable situation in its jatropha-biodiesel strategy. India’s ethanol production has reduced oil
consumption, the need for imports, and vulnerability to price fluctuations, as in the
other countries. Biofuels have also promoted value addition and development of
downstream industries on sugarcane molasses, which otherwise were sold as feed to
Europe (see Chap. 6). Meanwhile, its biodiesel policy has so far been counterproductive to India’s efforts to reduce disparities with developed countries. First, because
jatropha biotechnology, processing, and biodiesel manufacturing have been mostly
owned and controlled by North-based private companies. Second, by restricting
biodiesel exports, the Indian policy has provided a perverse incentive for such companies to keep exporting raw materials and perform all value addition abroad. Third,
it has given these companies control and use of India’s scarce land and freshwater
resources. In exchange, only minor economic gains have locally accrued, from rawmaterial cultivation, the least income-generating and most resource-intensive stage
of the value chain—and still, no biodiesel has been commercialized in the country
so far.
Table 8.4 compares Brazil’s, India’s, and Indonesia’s biofuel sectors based on their
socio-environmental performance and their contribution to equalizing development.
The socio-environmental criteria were selected as the most crucial issues identified
in Chap. 2 and assessed through the case study analyses (see Chaps. 5–7). The scores
8 Bioeconomy Lessons from Biofuel Policies …
Chap. 5). Second, biofuels have saved foreign exchange and reduced Brazil’s vulnerability to international oil price fluctuations by cutting gasoline and diesel imports.
Third, ethanol has brought both absolute and relative economic benefits through—
until recently, and potentially again in the future—exports of a value-added product
to developed countries. Indirectly, higher edible oil and sugar prices partly caused
by large-scale supply diversion to biofuels also are beneficial to Brazil’s exports, if
not necessarily to low-income food consumers.
Indonesia’s situation is somewhat similar, though with an important caveat. Its
biodiesel sector has reduced petroleum consumption, the import bill, and its vulnerability to international price volatility. Biodiesel policy has also promoted value-chain
development and the creation of downstream industries based on palm oil, even if it is
still primarily sold in its crude form (CPO) (Wiyono and Slette 2013). Nevertheless,
being largely export-oriented and dependent on foreign investments, Indonesia’s
biodiesel industry has been particularly vulnerable to policy decisions outside its
reach. For instance, they include the unilateral standard-setting of foreign importers
(e.g., the EU) and occasional restrictions from multilateral financing organizations
such as the World Bank. Such vulnerability seems characteristic of developing countries’ weaker positions and an aspect that Indonesia has not yet left behind in its
development. Although this country has become increasingly assertive, as seen in its
defiance of (the mostly Europe-led) RSPO certification, this attitude relies much more
on the availability of other emerging markets (namely India and China) operating
as less stringent importers than on Indonesia’s domestic economy. Its vulnerability
would surface at once if the EU were to articulate a joint position with China and
India on oil palm sustainability. Indonesia, surely, is gambling on the improbability
of that.
Finally, India has profited from its ethanol industry but faced an unfavorable situation in its jatropha-biodiesel strategy. India’s ethanol production has reduced oil
consumption, the need for imports, and vulnerability to price fluctuations, as in the
other countries. Biofuels have also promoted value addition and development of
downstream industries on sugarcane molasses, which otherwise were sold as feed to
Europe (see Chap. 6). Meanwhile, its biodiesel policy has so far been counterproductive to India’s efforts to reduce disparities with developed countries. First, because
jatropha biotechnology, processing, and biodiesel manufacturing have been mostly
owned and controlled by North-based private companies. Second, by restricting
biodiesel exports, the Indian policy has provided a perverse incentive for such companies to keep exporting raw materials and perform all value addition abroad. Third,
it has given these companies control and use of India’s scarce land and freshwater
resources. In exchange, only minor economic gains have locally accrued, from rawmaterial cultivation, the least income-generating and most resource-intensive stage
of the value chain—and still, no biodiesel has been commercialized in the country
so far.
Table 8.4 compares Brazil’s, India’s, and Indonesia’s biofuel sectors based on their
socio-environmental performance and their contribution to equalizing development.
The socio-environmental criteria were selected as the most crucial issues identified
in Chap. 2 and assessed through the case study analyses (see Chaps. 5–7). The scores