115
and water in order to produce a significant quantity of biofuels. In any case it is not
clear how much wasteland actually exists, and often it is actually being used for
some other economically valuable purpose, especially by lower income people, or
providing ecosystem services. Farmers have various crop alternatives, and biofuel
crops, especially nonfood crops with limited alternative uses, are often not very
attractive options without significant economic support, which governments have
been reluctant to provide.
Regarding energy security, these case studies of relatively large countries show
that the ability of biofuels to contribute to energy security could be modest but is
fundamentally limited. Biofuels may contribute to supply diversification to some
extent. However, even the achievement of modest targets in China, Japan, and India
will require imports. In Indonesia, despite the ambitions of some for the country to
become the “Middle East of biofuels,” the main large-scale crop, palm oil, is too
important for food purposes for the government to allow its significant diversion to
other uses, and this was the case even before the biofuel boom. It is already a significant challenge for Indonesia to produce enough fuel domestically to meet its targets.
Moreover, other than Brazil, potential sources for imports are unclear.
Biofuels do seem useful for recycling waste materials, especially in Japan,
although in some cases, biofuels compete with alternative uses for recycling the
wastes. In developing countries like India, cooking oil is often reused until it disappears, so other waste sources would have to be considered.
Several policy implications can be drawn from these cases. First, it may be desirable to adopt a cautious stance and avoid setting high unrealistic targets. Largescale, rapid expansion of biofuels could pose high risks of food–fuel conflict and
may not be feasible due to limited supplies of land, water, and labor. If targets cannot be met by domestic production, imports would be necessary. Too high targets
risk encouraging unsustainable production, deforestation, water shortages, food–
fuel conflict, and inappropriate appropriation of land used by poor people. Modest
targets, near existing utilization rates, may be more sustainable.
Second, all countries dealt with the question of how much biofuels should be
promoted through special economic incentives such as subsidies, mandatory targets, or price regulations. This is an especially important issue in countries like
India and Indonesia, where many sectors receive special treatment—particularly
fossil fuels, which is the main sector competing with biofuels. Therefore, a lack of
special promotion measures becomes in effect a disincentive policy, so the governments of India and Indonesia in particular have been under strong pressure from
businesses interested in promoting biofuels to adopt these kinds of measures. In
principle, such measures could be justified if biofuels provide important social benefits, but since these benefits have been shown to be still unclear, the caution displayed by India and Indonesia seems justified. To be sure, subsidies and other
special promotion measures for fossil fuels are also problematic from the point of
view of environment and sustainability (UNEP 2008), and reducing them is widely
viewed as beneficial, but nevertheless, reducing fossil fuel subsidies would serve to
make agricultural prices more closely linked to fuel prices in these countries and
create a more level playing field with biofuels.
8 Socioeconomic Impacts of Biofuels in East Asia
and water in order to produce a significant quantity of biofuels. In any case it is not
clear how much wasteland actually exists, and often it is actually being used for
some other economically valuable purpose, especially by lower income people, or
providing ecosystem services. Farmers have various crop alternatives, and biofuel
crops, especially nonfood crops with limited alternative uses, are often not very
attractive options without significant economic support, which governments have
been reluctant to provide.
Regarding energy security, these case studies of relatively large countries show
that the ability of biofuels to contribute to energy security could be modest but is
fundamentally limited. Biofuels may contribute to supply diversification to some
extent. However, even the achievement of modest targets in China, Japan, and India
will require imports. In Indonesia, despite the ambitions of some for the country to
become the “Middle East of biofuels,” the main large-scale crop, palm oil, is too
important for food purposes for the government to allow its significant diversion to
other uses, and this was the case even before the biofuel boom. It is already a significant challenge for Indonesia to produce enough fuel domestically to meet its targets.
Moreover, other than Brazil, potential sources for imports are unclear.
Biofuels do seem useful for recycling waste materials, especially in Japan,
although in some cases, biofuels compete with alternative uses for recycling the
wastes. In developing countries like India, cooking oil is often reused until it disappears, so other waste sources would have to be considered.
Several policy implications can be drawn from these cases. First, it may be desirable to adopt a cautious stance and avoid setting high unrealistic targets. Largescale, rapid expansion of biofuels could pose high risks of food–fuel conflict and
may not be feasible due to limited supplies of land, water, and labor. If targets cannot be met by domestic production, imports would be necessary. Too high targets
risk encouraging unsustainable production, deforestation, water shortages, food–
fuel conflict, and inappropriate appropriation of land used by poor people. Modest
targets, near existing utilization rates, may be more sustainable.
Second, all countries dealt with the question of how much biofuels should be
promoted through special economic incentives such as subsidies, mandatory targets, or price regulations. This is an especially important issue in countries like
India and Indonesia, where many sectors receive special treatment—particularly
fossil fuels, which is the main sector competing with biofuels. Therefore, a lack of
special promotion measures becomes in effect a disincentive policy, so the governments of India and Indonesia in particular have been under strong pressure from
businesses interested in promoting biofuels to adopt these kinds of measures. In
principle, such measures could be justified if biofuels provide important social benefits, but since these benefits have been shown to be still unclear, the caution displayed by India and Indonesia seems justified. To be sure, subsidies and other
special promotion measures for fossil fuels are also problematic from the point of
view of environment and sustainability (UNEP 2008), and reducing them is widely
viewed as beneficial, but nevertheless, reducing fossil fuel subsidies would serve to
make agricultural prices more closely linked to fuel prices in these countries and
create a more level playing field with biofuels.
8 Socioeconomic Impacts of Biofuels in East Asia