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PROMOTING SUSTAINABLE BIOFUELS

nsns

ru

What are biofuels Biofuels are made by processing food crops and other plants animal products or wastes (collectively known as biomass) These can be burnt to generate electricity or heat and are increasingly being used as transport fuels

Changes in government energy policies are accelerating demand for liquid or gaseous biofuels used in transport (see facing page)

Transport biofuels can be distributed using existing technology and used in todayrsquos vehicles without modification when mixed with petrol or diesel or in adapted vehicles if used neat or in high concentrations

There are many different biofuels made using a variety of production processes and feedstocks There are two categories

First-generation biofuels made from food crops These are widely used today

Second-generation biofuels made from non-food crops These are in development and will not be widely commercially available for at least five to ten years

First-generation biofuels

First-generation biofuels are made from food crops including wheat rapeseed corn soya and sugarcane

There are two main types of first-generation biofuels now in commercial use

Bioethanol Bioethanol is made by fermenting sugars produced by plants (similar to beer and wine production) Bioethanol accounts for around 851 of global biofuel production and is mainly produced from corn and sugarcane

Bioethanol is usually blended with petrol ndash todayrsquos fuel standards allow bioethanol to be mixed with petrol in volumes up to 5 in Europe and 10 in the USA Bioethanol can be used at higher concentrations or neat For example in Brazil all petrol contains at least 20ndash25 bioethanol and many vehicles have been adapted to run on 100 bioethanol

Bioethanol has a lower energy density than petrol This makes it about 402 less fuel efficient

[1] FIRST-GENERATION BIOFUELS BIOETHANOL Production process

Sugarcane

Sugar

Corn

Starch

Bioethanol

Fermentation

Petrol mix

Biodiesel Biodiesel is a blend of methyl esters (a type of biofuel) and diesel Methyl esters are produced by a chemical reaction between a vegetable oil and an alcohol They are made from rapeseed (primarily) palm oil and soybean oil and account for around 153

of global biofuel production

Biodiesel is the most commonly used biofuel in Europe where fuel standards allow 5 blends USA fuel standards allow

[2] FIRST-GENERATION BIOFUELS BIODIESEL Production process

Soybean oil Palm oil Rapeseed oil

Methyl esters

Transesterification

blends of up to 204 Specially designed vehicles can run on 100 biodiesel

Second-generation biofuels

Second-generation biofuels are made from non-food feedstocks such as wood and straw The production process uses the whole plant rather than just the plant starches or sugars that are used to make first-generation biofuels This means waste materials from agricultural and forestry can be used as feedstocks

[3] SECOND-GENERATION BIOFUELS

Biomass to liquid Celluose ethanol production process production process

Thermochemical treatment gasification

Synthesis gas

Biomass including agricultural

residues

Biochemical treatment

enzymatic hydrolysis

Sugar

Special crops such as fast growing woody plants

Synthesis Fermentation

Hydrocarbons Cellulose ethanol

Diesel mix Petrol mix

There are a number of second-generation biofuels under development These include cellulose ethanol which is produced from straw using enzymes and can be mixed with petrol biomass-to-liquid fuel which is made from wood feedstocks and can be blended with diesel and biomethane a gas made from organic material (such as manure and straw) which can be used in modified petrol and diesel engines

Diesel mix

Whatrsquos driving biofuels growth Biofuels have existed for over a hundred years ndash Henry Ford designed his Model T to run on bioethanol ndash but they have mostly been unable to compete with fuels derived from crude oil New government energy policies subsidies and tax exemptions are now stimulating biofuels production which has doubled since 1998 and is predicted to double again by 20115 There are a number of reasons why governments favour biofuels

[4] BIOFUEL CO2 LIFECYCLE IMPACTS

Fertilising

CO2

CO2

N2O Growing

Energy

Combating climate change

Transport is a significant contributor to climate change accounting for around 25 of man-made greenhouse gas emissions globally

In principle the use of biofuels can help reduce transportrsquos impact on climate change This is because the plants used to make the fuels absorb carbon dioxide (CO2) ndash the most important greenhouse gas ndash as they grow The gas is later released when the biofuels are used

However biofuels are not carbon neutral It takes energy to grow and harvest the plants and to process and distribute biofuels The entire process emits CO2 and fertilisers emit nitrous oxide (N2O) a powerful greenhouse gas (see graphic 4)

The amount of energy needed to make different biofuels varies considerably This makes it vital to take the entire production process into account when assessing the potential of biofuels to help reduce transport CO2 emissions Read more about CO2 performance overleaf

Technology and innovation

Unlike other renewable fuels such as hydrogen the infrastructure to

Processing

Harvesting Transporting

CO2

CO2 CO2

Energy

Energy Energy

manufacture and distribute biofuels is in place today Biofuels are also compatible with todayrsquos vehicles and power generation technology

In 2006 $26 billion6 was invested in biofuels The International Energy Agency (IEA)7 estimates that between 2005 and 2030 it will cost $160 billion to expand biofuel production to fuel 4 of global road transport and $225 billion to fuel 7

Energy security

Global energy demands are increasing rapidly The worldrsquos population has doubled in the last four decades ndash to around 66 billion in 2004 ndash and is expected to exceed 9 billion8 by 2050 Rapid development particularly in China and India is increasing wealth and this is boosting demands for energy and transport There were around 900 million vehicles on the road in 2000 but this is forecast to increase to over 2 billion by 20509

Fossil fuels (oil coal and gas) are expected to be the dominant source of energy for the foreseeable future But production has already peaked in many major oil-producing countries and new developments are increasingly located in environmentally challenging and politically

Transporting

CO2 Use

CO2

Energy

Energy

unstable parts of the world This has resulted in high oil prices which the IEA predicts will remain between $48ndash$62 until 203010 Some analysts predict 2030 prices could be as high as $10011 High oil prices hit developing countries the hardest ndash some spend six times as much on fuel as on health12

Biofuels are seen by governments as a secure source of energy and a way to reduce reliance on imported fossil fuels Brazil has replaced around 1513 of its petrol consumption with bioethanol according to the IEA The Washington Post puts this figure at 4014

Rural development

Biofuels can help boost farm incomes Globalisation and the industrialisation of farming have reduced the price farmers get for their produce Demand for the agricultural commodities used to make biofuels is reversing this trend In the developed world this is creating jobs and reducing the need for subsidies for farmers

100

Unintended consequences Biofuels could help boost rural development while reducing CO2 emissions and reliance on crude oil But if biofuel strategies are not fully evaluated they could do more harm than good stimulating poor performing biofuels and stifling innovation

CO2 performance

Biofuels can help fight climate change but CO2 savings vary significantly

between fuels (see graphic 5) This is because the amount of energy needed to produce different feedstocks (type of crop and where it is grown) and to process them into fuels varies considerably For example using US corn it takes 06ndash08 litres of fossil fuels to produce an amount of bioethanol equivalent to 1 litre of mineral oil whereas it takes less than 01 litres of fossil fuels to produce the same amount of bioethanol using Brazilian sugarcane15

[5] CO2 REDUCTION OF BIOFUELS COMPARED WITH FOSSIL FUELS ()

Biomass to liquid Bioethanol Fossil (2nd generation) (corn) fuel

USA Bioethanol

(wheat) EU

lt10 40-60 87

100

10 30

Bioethanol Biodiesel (sugarcane) (rapeseed)

Brazil EU

Source IEA Energy Technology Perspective 2006

Second-generation biofuels produce even less CO2 as their feedstocks require fewer agricultural inputs and production processes are much more efficient

Biofuels cost more than petrol or diesel per unit of energy because of the high cost of feedstocks and production Using biodiesel and bioethanol from crops grown in Europe

[6] BIOFUELS SAVINGS Biofuels cost per tonne GHG reduction ($ per tonne CO2 equivalent)

Bioethanol (sugarcane)

Bioethanol (corn)

Bioethanol (grain)

Bioethanol (cellulose)

Biodiesel (rapeseed)

Biodiesel (biomass)

2002 Post 2010

-50 0 200 400 600 800

Source IEA Biofuels for transportation An international perspective 2004

and the USA as a carbon reduction strategy will cost around $200-$250 per tonne of CO2 avoided at 2004 prices The cost of bioethanol from sugarcane as in Brazil can be comparable to that of fossil fuels (see graphic 6) Bioethanol from cellulose (a second-generation biofuel) could already provide CO2 reductions at less than $200 a tonne It is likely to remain expensive to reduce CO2 using biodiesel and bioethanol from US and European crops even after 2010 The cost of using second-generation biofuels could come down to under $100 a tonne with large-scale production

As more governments encourage the use of biofuels and set mandatory targets demand will outstrip supply leading to higher prices for first- and second-generation biofuels

Deforestation and land-use change

The demand for soya and palm oil threatens rainforests in Brazil

Indonesia and Malaysia which are being cleared for plantations These oils are used by a number of industries but the growth in biodiesel production is increasing demand significantly

[7] RAINFOREST DEFORESTATION IMPACTS Carbon storage and CO2 emissions per hectare in SE Asia

230 tonnes carbon

830 tonnes

CO2

48 tonnes carbon

Rainforest Deforestation Palm plantations Carbon stored Carbon released as Stores only 20 of above ground CO2 due to clearing carbon per hectare

and burning compared to rain-forest (equivalent to

165 tonnes CO2)

Sources see back page

Rainforests store large amounts of carbon above ground and in the soil which is released when they are cleared (see graphic 7) A much smaller amount of carbon

is absorbed by the plantations which replace the forests This means biofuels grown in tropical countries can contribute more to climate change than fossil fuels when their land-use impact is taken into account Studies have shown that biodiesel made from palm oil produces three16 to ten17 times more CO2 than an equivalent amount of fossil fuel The situation is even worse for biodiesel made from soya as the crop yields less oil and stores less carbon than palm plantations Peat lands wetlands and grasslands also release large amounts of carbon if converted to agricultural use Most biodiesel is made from rapeseed oil rather than palm oil and soya bean oil But as an increasing share of rapeseed oil is used for fuels rather than for food more soya and palm is being planted to compensate

Deforestation and land-use change means that while biofuels can appear to help governments meet their national greenhouse gas emissions reduction targets they could in reality be more damaging to climate change globally when land-use impact is considered This means that it is vital for national policies to take into account the full life-cycle climate impact of different biofuels

Biodiversity loss

The destruction of tropical forests and grasslands to make way for

soya and palm plantations causes significant destruction of plant and animal species including endangered species such as the orang-utan

Biofuel feedstocks are often grown as a single crop over a wide area Known as monoculture this brings high yields but harms biodiversity These impacts can be reduced to an extent through mixed planting and leaving wild areas

Water scarcity

Both first and second-generation biofuels require large amounts of

water to grow and process the feedstocks For example it takes between

1500 and 4600 litres of water18 to produce just one litre of bioethanol There are already water shortages in many regions and population growth and climate change will further increase competition for clean water and increase its cost

Land-use and food availability

The worldrsquos population is rapidly increasing and is expected to exceed 9 billion19 by 2050 To feed this

growing population will require 50 more food in the next 20 years

[8] PROJECTED GROWTH IN FOOD CONSUMPTION

Oil and oilseed meals

150 -

140 -Sugar Meat

130 -Cereals Dairy

120 -

110 -

100 -

2004 2009 2014 2019

Source OECD-FAO 2006

In the past farmers have increased production to meet growing demands But they are now finding it hard to keep up ndash in three of the four years20 between 2003 and 2007 demand for grains to feed people and livestock outstripped supply As countries such as China and India develop more people can afford meat and dairy products This is driving up demand for agricultural commodities The booming biofuels industry is contributing further to this escalation in demand

First-generation biofuels compete with food crops leading to rising food prices In future this could jeopardise the worldrsquos ability to feed its growing population Many other industries also rely on raw materials like palm oil which are being diverted to biofuel production

Increased demand higher prices

The biofuels industry is using an increasing share of the worldrsquos food crops (see graphic 9) which is driving

up prices Global food prices rose by 1021 in 2006 due to an increase in corn wheat and soya bean oil prices Prices are predicted to rise by 20ndash5022 over the next decade (compared with average levels over the last ten years)

Demand for biofuel feedstock increases prices of other crops For example high demand for corn to make bioethanol means US farmers are producing less soya and wheat which is boosting prices for those crops Biofuels are also raising meat and dairy prices by pushing up the price of animal feed

[9] PROPORTION OF CROP USED FOR BIOFUELS ()

Brazil sugarcane USA corn

39 43

70

45 20

50

1995 2005 2015 1995 2005 2015

EU rapeseedEU cereals

16

20

0

90

lt15

60

1995 2005 20151995 2005 2015

Source The German Marshall Fund of the USA

While higher food prices will benefit some producers they negatively impact the economies of food-importing countries Poor people who spend a large proportion of their income on food will suffer disproportionately compared with the wealthy Mexico has already experienced some of the negative consequences of the growing US bioethanol industry In 2006 Mexicans took to the streets to protest at the high price of tortillas (a corn bread staple) made more expensive by demand for maize from USA bioethanol producers

In 2007 the UN World Food Programme which fights famine in Africa announced that it could no longer afford to maintain its current level of support due to high commodity prices Its food purchasing costs rose by almost 50 between 2002 and 2007 854 million23 people suffer from hunger and this is increasing by an average of 4 million a year at current trends Increasing food prices will mean that even more people will depend on food aid

Land is a finite resource

Some biofuels are much more land efficient than others because of higher feedstock yields per hectare and

more efficient production processes (see graphic 10) If we are to feed a growing population using the finite amount of agricultural land available it is vital that governments choose to promote biofuels that deliver the maximum possible energy per hectare

First-generation biofuels

Bioethanol and biodiesel made from non-tropical feedstocks (rape wheat and corn) are not land efficient It would require a minimum of 26 of the worldrsquos arable land to run just 20 of its cars on these fuels

[10] BIOFUELS ENERGY DELIVERY (x 1000 litres of diesel equivalent per hectare)

Biodiesel Bioethanol (rapeseed oil) (sugar cane)

13 25 4 10405

Bioethanol Biomass- Biomethane (wheat) to-liquid (energy crops)

1st generation biofuel 2nd generation biofuel

Source FNR

Bioethanol and biodiesel made from palm oil and sugarcane are more land efficient but there is limited potential to expand production of the feedstocks without causing significant environmental damage through loss of natural forests and grasslands

Second-generation biofuels

To run 20 of the worldrsquos vehicles on second-generation biofuels would require 7 of its arable land The feedstocks for these fuels can also be grown on other types of land such as pastures and forests

Trade

Even at todayrsquos high oil prices most biofuels cannot compete on cost with petrol and diesel Biofuel producers

rely on government subsidies for their profits Governments are beginning to set mandatory targets to stimulate investment and demand for biofuels This is further boosting the price of agricultural commodities and contributing to trade distortions

In Brazil a well-established biofuel industry and low production costs means Brazilian bioethanol is cost competitive with petrol and diesel The EU and the USA have set trade barriers to protect domestic biofuel industries from cheap Brazilian bioethanol imports This is encouraging the development of less cost-effective and less sustainable biofuels This makes it more difficult for those developing countries that are better suited to biofuels production to compete on world markets

Many governments have proposed mandatory biofuel targets that exceed their countryrsquos production and land capacity In future this could make these countries dependent on foreign imports which will undermine their energy security Commodity prices will continue to rise as competition increases for limited global supplies

[11] GLOBAL IMPACTS AND UNINTENDED CONSEQUENCES

USA TARGET Biofuel as of transport fuel

2030 30 BIOETHANOL PRODUCTION (2005)

11800000 tonnes

USA accounts for 15 of global biodiesel production

China TARGET Biofuel as of transport fuel

2020 15 BIOETHANOL PRODUCTION (2005)

800000 tonnes

China has imposed a moratorium on projects making bioethanol fuel from corn and other basic food crops

Brazil TARGET Biofuel as of transport fuel

2010 10 BIOETHANOL PRODUCTION (2005)

12900000 tonnes

India TARGET Biofuel as of transport fuel

2020 20 BIOETHANOL PRODUCTION (2005)

240000 tonnes

EU TARGET Biofuel as of transport fuel

2020 10 BIOETHANOL PRODUCTION (2005)

730000 tonnes

Europe accounts for 85 of global biodiesel production

Reduction in US land used for food crops pushes production elsewhere potentially causing deforestation

Brazil sugarcane and soybean

European demand for biodiesel feedstock raises palm oil price causing deforestation

Europe doesnrsquot have enough land to meet its biofuels targets and will be dependent on imports

USA corn wheat and soybean

Bioethanol production has pushed up corn prices sparking protests in Mexico

The worldrsquos poorest are already being affected by higher food prices

98 of Indonesiarsquos natural rainforest will be degraded or gone by 2022

KEY

Issues with food security

Issues with GHGs

Issues with sustainability

Issues with trade

Areas of tropical rainforest

Trade

Unintended consequences

Feedstocks

Europe rapeseed oil and wheat

Sustainability criteria

The social and environmental impacts of biofuels vary considerably depending on the type of feedstock

used where it is grown and the processes needed to turn it into biofuels

Sustainability criteria are required to provide confidence in the labelling and identification of specific types of biofuel The criteria should

cover the lifecycle CO2 emissions and impacts on natural habitats as well as socio-economic factors such as the availability of food for the local population where feedstocks are produced

In 2007 the Dutch Government announced sustainability criteria and has proposed a system to enable traceability of feedstocks by 2020 The UK Government has proposed that 80 of biofuels meet sustainability standards including

Sources FOLicht UN

CO2 reduction requirements by 2010ndash11 The EU is developing sustainability criteria

Business is also developing sustainability standards through initiatives such as the Roundtable on Sustainable Palm Oil (chaired by Unilever) and the Roundtable on Sustainable Biofuels The latter aims to launch draft sustainability standards in early 2008

The Unilever position Unilever supports sustainable biofuels that deliver social and environmental benefits across their entire lifecycle

Unilever supports renewable energy initiatives that deliver benefits on a lifecycle basis helping to combat climate change and reduce dependency on fossil fuels Around 17 of the energy we use for our operations comes from renewable sources

Why the issue matters to Unilever

Two-thirds of the raw materials we use come from agriculture These materials are essential to our business and Unilever has a clear interest in how they are grown and in securing future supplies That is why we have worked to improve the social and environmental standards of agriculture for more than a decade Our sustainable agriculture programmes include palm oil oilseed rape sunflowers spinach tomatoes and tea We are also a member of several sustainability initiatives including the Roundtable on Sustainable Palm Oil

Demand for biofuels feedstock has already reduced the availability of raw materials and driven up prices We are concerned that increased demand will destabilise world food supply and undermine sustainable agriculture Use of vegetable oils such as rapeseed oil for biofuels could also create shortages driving consumers to less healthy animal fats

Lifecycle analysis

Unilever believes that individual biofuels should be examined carefully to ensure that the unintended environmental (deforestation and biodiversity loss) and socio-economic (food security) consequences do not undermine the positive impacts Biofuels must also be evaluated across their lifecycle to achieve genuine greenhouse gas (GHG) reductions

Biomass is a valuable resource Using it to generate heat and electricity is a more efficient and cost-effective way of reducing CO2 emissions than using it to make transport fuels24 New vehicle technologies such as electric and hybrid and more efficient engines offer significant scope to reduce greenhouse gas emissions from transport

First-generation biofuels

Unilever believes that some first-generation biofuels are neither environmentally efficient nor cost-effective ways to reduce emissions Many studies have shown that several first-generation biofuels have poor performance with regard to reducing GHG emissions and dependency on fossil fuels Some even cause more GHG emissions than the fossil fuels they replace25

We are concerned that the use of valuable food crops for energy purposes will increase pressure on ecosystems and biodiversity Deforestation particularly to make way for palm oil and soya beans could lead to the devastation of the last remaining rainforests in Borneo and the Amazon region

Second-generation biofuels

Unilever believes that the development of second-generation biofuels that donrsquot compete with food crops and have low carbon emissions is essential The mainstream market introduction of second-generation biofuels would provide a strong incentive for the application of renewable energy technologies while minimising the negative repercussions on food markets and food security Unilever believes there is a strong case for government and business investment in new technologies and further research on the sustainable use of biomass Support for second-generation biofuels could be accelerated through

RampD facilitation and technology transfer

Tax exemption andor subsidies

Phasing out support for poor performing first-generation biofuels

Second-generation biofuels should be required to achieve at least 50 GHG savings compared to fossil fuels

Assessing sustainability

We believe governments worldwide have the responsibility to subject their biofuel policies to a full impact assessment These assessments should cover environmental social and economic impacts from the

regions of production to the end use Policies which aim to reduce GHG emissions should contain full lifecycle assessments for individual biofuels This should ensure that change in land use is included in the carbon balance We propose that government targets should be based on CO2 reductions rather than volume as well as on availability of feedstocks

Sustainability standards

Unilever believes sustainability criteria should be introduced for the use of biomass within energy programmes These should include criteria at the production level as well as criteria at a macro-level such as overall GHG balance and energy efficiency food security and the protection of biodiversity and ecosystems The use of biomass for energy should not be stimulated by government programmes without the application of transparent sustainability criteria Proceeding without these safeguards will risk unintended consequences that could result in worse climate change impacts natural habitat loss and disruption of staple food supplies

Sources of information 1 International Energy Agency World Energy Outlook 2006

2 International Energy Agency httpieaorgtextbasework2004 eswg21_NCVpdf

3 International Energy Agency World Energy Outlook 2006

4 httpwwwbiodieselorgresourcesfuelfactsheetsstandards_ and_warrantiesshtm

5 United Nations Sustainable Bioenergy A Framework for Decision Makers 2007

6 United Nations Environment Programme Global Trends in Sustainable Energy Investment 2007

7 International Energy Agency World Energy Outlook 2006

8 United Nations World Population to 2300 2004

9 World Business Council for Sustainable Development Energy amp Climate Change Facts and Trends to 2050 2004

10 United Nations Sustainable Bioenergy A Framework for Decision Makers 2007

11 Energy Information Administration Annual Energy Outlook 2007

12 United Nations Sustainable Bioenergy A Framework for Decision Makers 2007

13 International Energy Agency World Energy Outlook 2006

14 Washington Post 200807

15 International Energy Agency Biofuels for Transport ndash An International Perspective 2004

16 Reijinders L amp Huijbrechts MAJ 2006

Unilever NV Weena 455 PO Box 760 3000 DK Rotterdam The Netherlands T +31 (0)10 217 4000 F +31 (0)10 217 4798

Commercial Register Rotterdam Number 24051830

Unilever PLC PO Box 68 100 Victoria Embankment London EC4P 4BQ United Kingdom T +44 (0)20 7822 5252 F +44 (0)20 7822 5951

Unilever PLC registered office Unilever PLC Port Sunlight Wirral Merseyside CH62 4ZD United Kingdom

Registered in England and Wales Company Number 41424

17 Delft Hydraulics

18 Based on Food and Agriculture Organization data available at wwwwaterfootprintorg

19 United Nations World Population to 2300 2004

20 Economist 23607

21 International Monetary Fund World Economic Report April 2007

22 Organisation for Economic Co-operation and Development Food and Agriculture Organization Agricultural Outlook 2007-2016

23 Food and Agriculture Organization State of Food Insecurity in the World 2006

24 International Energy Agency Biofuels For Transport An International Perspective 2004

25 Reijinders L amp Huijbrechts MAJ (2006) and Delft Hydraulics

Rainforest Deforestation Impacts [7] graphic

Journal of Cleaner Production 2006 Palm Oil and the Emission of Carbon-Based Greenhouse Gases Reijinders L amp Huijbrechts MAJ

Journal of Tropical Forest Science 2005 An Assessment of Changes in Biomass Carbon Stocks in Tree Crops and Forests in Malaysia Henson IE

Oil World Annual 2007 ISTA Mielke GmbH

Intergovernmental Panel on Climate Change Guidelines for National Greenhouse Gas Inventories Volume 2 Energy 2006

Writing and consultancy Context

Design and production Red Letter Design

Illustrations (Graphics 4 and 7) KJA-artistscom

Printing Scanplus (on paper made from responsibly managed forests)

wwwunilevercom

What are biofuels Biofuels are made by processing food crops and other plants animal products or wastes (collectively known as biomass) These can be burnt to generate electricity or heat and are increasingly being used as transport fuels

Changes in government energy policies are accelerating demand for liquid or gaseous biofuels used in transport (see facing page)

Transport biofuels can be distributed using existing technology and used in todayrsquos vehicles without modification when mixed with petrol or diesel or in adapted vehicles if used neat or in high concentrations

There are many different biofuels made using a variety of production processes and feedstocks There are two categories

First-generation biofuels made from food crops These are widely used today

Second-generation biofuels made from non-food crops These are in development and will not be widely commercially available for at least five to ten years

First-generation biofuels

First-generation biofuels are made from food crops including wheat rapeseed corn soya and sugarcane

There are two main types of first-generation biofuels now in commercial use

Bioethanol Bioethanol is made by fermenting sugars produced by plants (similar to beer and wine production) Bioethanol accounts for around 851 of global biofuel production and is mainly produced from corn and sugarcane

Bioethanol is usually blended with petrol ndash todayrsquos fuel standards allow bioethanol to be mixed with petrol in volumes up to 5 in Europe and 10 in the USA Bioethanol can be used at higher concentrations or neat For example in Brazil all petrol contains at least 20ndash25 bioethanol and many vehicles have been adapted to run on 100 bioethanol

Bioethanol has a lower energy density than petrol This makes it about 402 less fuel efficient

[1] FIRST-GENERATION BIOFUELS BIOETHANOL Production process

Sugarcane

Sugar

Corn

Starch

Bioethanol

Fermentation

Petrol mix

Biodiesel Biodiesel is a blend of methyl esters (a type of biofuel) and diesel Methyl esters are produced by a chemical reaction between a vegetable oil and an alcohol They are made from rapeseed (primarily) palm oil and soybean oil and account for around 153

of global biofuel production

Biodiesel is the most commonly used biofuel in Europe where fuel standards allow 5 blends USA fuel standards allow

[2] FIRST-GENERATION BIOFUELS BIODIESEL Production process

Soybean oil Palm oil Rapeseed oil

Methyl esters

Transesterification

blends of up to 204 Specially designed vehicles can run on 100 biodiesel

Second-generation biofuels

Second-generation biofuels are made from non-food feedstocks such as wood and straw The production process uses the whole plant rather than just the plant starches or sugars that are used to make first-generation biofuels This means waste materials from agricultural and forestry can be used as feedstocks

[3] SECOND-GENERATION BIOFUELS

Biomass to liquid Celluose ethanol production process production process

Thermochemical treatment gasification

Synthesis gas

Biomass including agricultural

residues

Biochemical treatment

enzymatic hydrolysis

Sugar

Special crops such as fast growing woody plants

Synthesis Fermentation

Hydrocarbons Cellulose ethanol

Diesel mix Petrol mix

There are a number of second-generation biofuels under development These include cellulose ethanol which is produced from straw using enzymes and can be mixed with petrol biomass-to-liquid fuel which is made from wood feedstocks and can be blended with diesel and biomethane a gas made from organic material (such as manure and straw) which can be used in modified petrol and diesel engines

Diesel mix

Whatrsquos driving biofuels growth Biofuels have existed for over a hundred years ndash Henry Ford designed his Model T to run on bioethanol ndash but they have mostly been unable to compete with fuels derived from crude oil New government energy policies subsidies and tax exemptions are now stimulating biofuels production which has doubled since 1998 and is predicted to double again by 20115 There are a number of reasons why governments favour biofuels

[4] BIOFUEL CO2 LIFECYCLE IMPACTS

Fertilising

CO2

CO2

N2O Growing

Energy

Combating climate change

Transport is a significant contributor to climate change accounting for around 25 of man-made greenhouse gas emissions globally

In principle the use of biofuels can help reduce transportrsquos impact on climate change This is because the plants used to make the fuels absorb carbon dioxide (CO2) ndash the most important greenhouse gas ndash as they grow The gas is later released when the biofuels are used

However biofuels are not carbon neutral It takes energy to grow and harvest the plants and to process and distribute biofuels The entire process emits CO2 and fertilisers emit nitrous oxide (N2O) a powerful greenhouse gas (see graphic 4)

The amount of energy needed to make different biofuels varies considerably This makes it vital to take the entire production process into account when assessing the potential of biofuels to help reduce transport CO2 emissions Read more about CO2 performance overleaf

Technology and innovation

Unlike other renewable fuels such as hydrogen the infrastructure to

Processing

Harvesting Transporting

CO2

CO2 CO2

Energy

Energy Energy

manufacture and distribute biofuels is in place today Biofuels are also compatible with todayrsquos vehicles and power generation technology

In 2006 $26 billion6 was invested in biofuels The International Energy Agency (IEA)7 estimates that between 2005 and 2030 it will cost $160 billion to expand biofuel production to fuel 4 of global road transport and $225 billion to fuel 7

Energy security

Global energy demands are increasing rapidly The worldrsquos population has doubled in the last four decades ndash to around 66 billion in 2004 ndash and is expected to exceed 9 billion8 by 2050 Rapid development particularly in China and India is increasing wealth and this is boosting demands for energy and transport There were around 900 million vehicles on the road in 2000 but this is forecast to increase to over 2 billion by 20509

Fossil fuels (oil coal and gas) are expected to be the dominant source of energy for the foreseeable future But production has already peaked in many major oil-producing countries and new developments are increasingly located in environmentally challenging and politically

Transporting

CO2 Use

CO2

Energy

Energy

unstable parts of the world This has resulted in high oil prices which the IEA predicts will remain between $48ndash$62 until 203010 Some analysts predict 2030 prices could be as high as $10011 High oil prices hit developing countries the hardest ndash some spend six times as much on fuel as on health12

Biofuels are seen by governments as a secure source of energy and a way to reduce reliance on imported fossil fuels Brazil has replaced around 1513 of its petrol consumption with bioethanol according to the IEA The Washington Post puts this figure at 4014

Rural development

Biofuels can help boost farm incomes Globalisation and the industrialisation of farming have reduced the price farmers get for their produce Demand for the agricultural commodities used to make biofuels is reversing this trend In the developed world this is creating jobs and reducing the need for subsidies for farmers

100

Unintended consequences Biofuels could help boost rural development while reducing CO2 emissions and reliance on crude oil But if biofuel strategies are not fully evaluated they could do more harm than good stimulating poor performing biofuels and stifling innovation

CO2 performance

Biofuels can help fight climate change but CO2 savings vary significantly

between fuels (see graphic 5) This is because the amount of energy needed to produce different feedstocks (type of crop and where it is grown) and to process them into fuels varies considerably For example using US corn it takes 06ndash08 litres of fossil fuels to produce an amount of bioethanol equivalent to 1 litre of mineral oil whereas it takes less than 01 litres of fossil fuels to produce the same amount of bioethanol using Brazilian sugarcane15

[5] CO2 REDUCTION OF BIOFUELS COMPARED WITH FOSSIL FUELS ()

Biomass to liquid Bioethanol Fossil (2nd generation) (corn) fuel

USA Bioethanol

(wheat) EU

lt10 40-60 87

100

10 30

Bioethanol Biodiesel (sugarcane) (rapeseed)

Brazil EU

Source IEA Energy Technology Perspective 2006

Second-generation biofuels produce even less CO2 as their feedstocks require fewer agricultural inputs and production processes are much more efficient

Biofuels cost more than petrol or diesel per unit of energy because of the high cost of feedstocks and production Using biodiesel and bioethanol from crops grown in Europe

[6] BIOFUELS SAVINGS Biofuels cost per tonne GHG reduction ($ per tonne CO2 equivalent)

Bioethanol (sugarcane)

Bioethanol (corn)

Bioethanol (grain)

Bioethanol (cellulose)

Biodiesel (rapeseed)

Biodiesel (biomass)

2002 Post 2010

-50 0 200 400 600 800

Source IEA Biofuels for transportation An international perspective 2004

and the USA as a carbon reduction strategy will cost around $200-$250 per tonne of CO2 avoided at 2004 prices The cost of bioethanol from sugarcane as in Brazil can be comparable to that of fossil fuels (see graphic 6) Bioethanol from cellulose (a second-generation biofuel) could already provide CO2 reductions at less than $200 a tonne It is likely to remain expensive to reduce CO2 using biodiesel and bioethanol from US and European crops even after 2010 The cost of using second-generation biofuels could come down to under $100 a tonne with large-scale production

As more governments encourage the use of biofuels and set mandatory targets demand will outstrip supply leading to higher prices for first- and second-generation biofuels

Deforestation and land-use change

The demand for soya and palm oil threatens rainforests in Brazil

Indonesia and Malaysia which are being cleared for plantations These oils are used by a number of industries but the growth in biodiesel production is increasing demand significantly

[7] RAINFOREST DEFORESTATION IMPACTS Carbon storage and CO2 emissions per hectare in SE Asia

230 tonnes carbon

830 tonnes

CO2

48 tonnes carbon

Rainforest Deforestation Palm plantations Carbon stored Carbon released as Stores only 20 of above ground CO2 due to clearing carbon per hectare

and burning compared to rain-forest (equivalent to

165 tonnes CO2)

Sources see back page

Rainforests store large amounts of carbon above ground and in the soil which is released when they are cleared (see graphic 7) A much smaller amount of carbon

is absorbed by the plantations which replace the forests This means biofuels grown in tropical countries can contribute more to climate change than fossil fuels when their land-use impact is taken into account Studies have shown that biodiesel made from palm oil produces three16 to ten17 times more CO2 than an equivalent amount of fossil fuel The situation is even worse for biodiesel made from soya as the crop yields less oil and stores less carbon than palm plantations Peat lands wetlands and grasslands also release large amounts of carbon if converted to agricultural use Most biodiesel is made from rapeseed oil rather than palm oil and soya bean oil But as an increasing share of rapeseed oil is used for fuels rather than for food more soya and palm is being planted to compensate

Deforestation and land-use change means that while biofuels can appear to help governments meet their national greenhouse gas emissions reduction targets they could in reality be more damaging to climate change globally when land-use impact is considered This means that it is vital for national policies to take into account the full life-cycle climate impact of different biofuels

Biodiversity loss

The destruction of tropical forests and grasslands to make way for

soya and palm plantations causes significant destruction of plant and animal species including endangered species such as the orang-utan

Biofuel feedstocks are often grown as a single crop over a wide area Known as monoculture this brings high yields but harms biodiversity These impacts can be reduced to an extent through mixed planting and leaving wild areas

Water scarcity

Both first and second-generation biofuels require large amounts of

water to grow and process the feedstocks For example it takes between

1500 and 4600 litres of water18 to produce just one litre of bioethanol There are already water shortages in many regions and population growth and climate change will further increase competition for clean water and increase its cost

Land-use and food availability

The worldrsquos population is rapidly increasing and is expected to exceed 9 billion19 by 2050 To feed this

growing population will require 50 more food in the next 20 years

[8] PROJECTED GROWTH IN FOOD CONSUMPTION

Oil and oilseed meals

150 -

140 -Sugar Meat

130 -Cereals Dairy

120 -

110 -

100 -

2004 2009 2014 2019

Source OECD-FAO 2006

In the past farmers have increased production to meet growing demands But they are now finding it hard to keep up ndash in three of the four years20 between 2003 and 2007 demand for grains to feed people and livestock outstripped supply As countries such as China and India develop more people can afford meat and dairy products This is driving up demand for agricultural commodities The booming biofuels industry is contributing further to this escalation in demand

First-generation biofuels compete with food crops leading to rising food prices In future this could jeopardise the worldrsquos ability to feed its growing population Many other industries also rely on raw materials like palm oil which are being diverted to biofuel production

Increased demand higher prices

The biofuels industry is using an increasing share of the worldrsquos food crops (see graphic 9) which is driving

up prices Global food prices rose by 1021 in 2006 due to an increase in corn wheat and soya bean oil prices Prices are predicted to rise by 20ndash5022 over the next decade (compared with average levels over the last ten years)

Demand for biofuel feedstock increases prices of other crops For example high demand for corn to make bioethanol means US farmers are producing less soya and wheat which is boosting prices for those crops Biofuels are also raising meat and dairy prices by pushing up the price of animal feed

[9] PROPORTION OF CROP USED FOR BIOFUELS ()

Brazil sugarcane USA corn

39 43

70

45 20

50

1995 2005 2015 1995 2005 2015

EU rapeseedEU cereals

16

20

0

90

lt15

60

1995 2005 20151995 2005 2015

Source The German Marshall Fund of the USA

While higher food prices will benefit some producers they negatively impact the economies of food-importing countries Poor people who spend a large proportion of their income on food will suffer disproportionately compared with the wealthy Mexico has already experienced some of the negative consequences of the growing US bioethanol industry In 2006 Mexicans took to the streets to protest at the high price of tortillas (a corn bread staple) made more expensive by demand for maize from USA bioethanol producers

In 2007 the UN World Food Programme which fights famine in Africa announced that it could no longer afford to maintain its current level of support due to high commodity prices Its food purchasing costs rose by almost 50 between 2002 and 2007 854 million23 people suffer from hunger and this is increasing by an average of 4 million a year at current trends Increasing food prices will mean that even more people will depend on food aid

Land is a finite resource

Some biofuels are much more land efficient than others because of higher feedstock yields per hectare and

more efficient production processes (see graphic 10) If we are to feed a growing population using the finite amount of agricultural land available it is vital that governments choose to promote biofuels that deliver the maximum possible energy per hectare

First-generation biofuels

Bioethanol and biodiesel made from non-tropical feedstocks (rape wheat and corn) are not land efficient It would require a minimum of 26 of the worldrsquos arable land to run just 20 of its cars on these fuels

[10] BIOFUELS ENERGY DELIVERY (x 1000 litres of diesel equivalent per hectare)

Biodiesel Bioethanol (rapeseed oil) (sugar cane)

13 25 4 10405

Bioethanol Biomass- Biomethane (wheat) to-liquid (energy crops)

1st generation biofuel 2nd generation biofuel

Source FNR

Bioethanol and biodiesel made from palm oil and sugarcane are more land efficient but there is limited potential to expand production of the feedstocks without causing significant environmental damage through loss of natural forests and grasslands

Second-generation biofuels

To run 20 of the worldrsquos vehicles on second-generation biofuels would require 7 of its arable land The feedstocks for these fuels can also be grown on other types of land such as pastures and forests

Trade

Even at todayrsquos high oil prices most biofuels cannot compete on cost with petrol and diesel Biofuel producers

rely on government subsidies for their profits Governments are beginning to set mandatory targets to stimulate investment and demand for biofuels This is further boosting the price of agricultural commodities and contributing to trade distortions

In Brazil a well-established biofuel industry and low production costs means Brazilian bioethanol is cost competitive with petrol and diesel The EU and the USA have set trade barriers to protect domestic biofuel industries from cheap Brazilian bioethanol imports This is encouraging the development of less cost-effective and less sustainable biofuels This makes it more difficult for those developing countries that are better suited to biofuels production to compete on world markets

Many governments have proposed mandatory biofuel targets that exceed their countryrsquos production and land capacity In future this could make these countries dependent on foreign imports which will undermine their energy security Commodity prices will continue to rise as competition increases for limited global supplies

[11] GLOBAL IMPACTS AND UNINTENDED CONSEQUENCES

USA TARGET Biofuel as of transport fuel

2030 30 BIOETHANOL PRODUCTION (2005)

11800000 tonnes

USA accounts for 15 of global biodiesel production

China TARGET Biofuel as of transport fuel

2020 15 BIOETHANOL PRODUCTION (2005)

800000 tonnes

China has imposed a moratorium on projects making bioethanol fuel from corn and other basic food crops

Brazil TARGET Biofuel as of transport fuel

2010 10 BIOETHANOL PRODUCTION (2005)

12900000 tonnes

India TARGET Biofuel as of transport fuel

2020 20 BIOETHANOL PRODUCTION (2005)

240000 tonnes

EU TARGET Biofuel as of transport fuel

2020 10 BIOETHANOL PRODUCTION (2005)

730000 tonnes

Europe accounts for 85 of global biodiesel production

Reduction in US land used for food crops pushes production elsewhere potentially causing deforestation

Brazil sugarcane and soybean

European demand for biodiesel feedstock raises palm oil price causing deforestation

Europe doesnrsquot have enough land to meet its biofuels targets and will be dependent on imports

USA corn wheat and soybean

Bioethanol production has pushed up corn prices sparking protests in Mexico

The worldrsquos poorest are already being affected by higher food prices

98 of Indonesiarsquos natural rainforest will be degraded or gone by 2022

KEY

Issues with food security

Issues with GHGs

Issues with sustainability

Issues with trade

Areas of tropical rainforest

Trade

Unintended consequences

Feedstocks

Europe rapeseed oil and wheat

Sustainability criteria

The social and environmental impacts of biofuels vary considerably depending on the type of feedstock

used where it is grown and the processes needed to turn it into biofuels

Sustainability criteria are required to provide confidence in the labelling and identification of specific types of biofuel The criteria should

cover the lifecycle CO2 emissions and impacts on natural habitats as well as socio-economic factors such as the availability of food for the local population where feedstocks are produced

In 2007 the Dutch Government announced sustainability criteria and has proposed a system to enable traceability of feedstocks by 2020 The UK Government has proposed that 80 of biofuels meet sustainability standards including

Sources FOLicht UN

CO2 reduction requirements by 2010ndash11 The EU is developing sustainability criteria

Business is also developing sustainability standards through initiatives such as the Roundtable on Sustainable Palm Oil (chaired by Unilever) and the Roundtable on Sustainable Biofuels The latter aims to launch draft sustainability standards in early 2008

The Unilever position Unilever supports sustainable biofuels that deliver social and environmental benefits across their entire lifecycle

Unilever supports renewable energy initiatives that deliver benefits on a lifecycle basis helping to combat climate change and reduce dependency on fossil fuels Around 17 of the energy we use for our operations comes from renewable sources

Why the issue matters to Unilever

Two-thirds of the raw materials we use come from agriculture These materials are essential to our business and Unilever has a clear interest in how they are grown and in securing future supplies That is why we have worked to improve the social and environmental standards of agriculture for more than a decade Our sustainable agriculture programmes include palm oil oilseed rape sunflowers spinach tomatoes and tea We are also a member of several sustainability initiatives including the Roundtable on Sustainable Palm Oil

Demand for biofuels feedstock has already reduced the availability of raw materials and driven up prices We are concerned that increased demand will destabilise world food supply and undermine sustainable agriculture Use of vegetable oils such as rapeseed oil for biofuels could also create shortages driving consumers to less healthy animal fats

Lifecycle analysis

Unilever believes that individual biofuels should be examined carefully to ensure that the unintended environmental (deforestation and biodiversity loss) and socio-economic (food security) consequences do not undermine the positive impacts Biofuels must also be evaluated across their lifecycle to achieve genuine greenhouse gas (GHG) reductions

Biomass is a valuable resource Using it to generate heat and electricity is a more efficient and cost-effective way of reducing CO2 emissions than using it to make transport fuels24 New vehicle technologies such as electric and hybrid and more efficient engines offer significant scope to reduce greenhouse gas emissions from transport

First-generation biofuels

Unilever believes that some first-generation biofuels are neither environmentally efficient nor cost-effective ways to reduce emissions Many studies have shown that several first-generation biofuels have poor performance with regard to reducing GHG emissions and dependency on fossil fuels Some even cause more GHG emissions than the fossil fuels they replace25

We are concerned that the use of valuable food crops for energy purposes will increase pressure on ecosystems and biodiversity Deforestation particularly to make way for palm oil and soya beans could lead to the devastation of the last remaining rainforests in Borneo and the Amazon region

Second-generation biofuels

Unilever believes that the development of second-generation biofuels that donrsquot compete with food crops and have low carbon emissions is essential The mainstream market introduction of second-generation biofuels would provide a strong incentive for the application of renewable energy technologies while minimising the negative repercussions on food markets and food security Unilever believes there is a strong case for government and business investment in new technologies and further research on the sustainable use of biomass Support for second-generation biofuels could be accelerated through

RampD facilitation and technology transfer

Tax exemption andor subsidies

Phasing out support for poor performing first-generation biofuels

Second-generation biofuels should be required to achieve at least 50 GHG savings compared to fossil fuels

Assessing sustainability

We believe governments worldwide have the responsibility to subject their biofuel policies to a full impact assessment These assessments should cover environmental social and economic impacts from the

regions of production to the end use Policies which aim to reduce GHG emissions should contain full lifecycle assessments for individual biofuels This should ensure that change in land use is included in the carbon balance We propose that government targets should be based on CO2 reductions rather than volume as well as on availability of feedstocks

Sustainability standards

Unilever believes sustainability criteria should be introduced for the use of biomass within energy programmes These should include criteria at the production level as well as criteria at a macro-level such as overall GHG balance and energy efficiency food security and the protection of biodiversity and ecosystems The use of biomass for energy should not be stimulated by government programmes without the application of transparent sustainability criteria Proceeding without these safeguards will risk unintended consequences that could result in worse climate change impacts natural habitat loss and disruption of staple food supplies

Sources of information 1 International Energy Agency World Energy Outlook 2006

2 International Energy Agency httpieaorgtextbasework2004 eswg21_NCVpdf

3 International Energy Agency World Energy Outlook 2006

4 httpwwwbiodieselorgresourcesfuelfactsheetsstandards_ and_warrantiesshtm

5 United Nations Sustainable Bioenergy A Framework for Decision Makers 2007

6 United Nations Environment Programme Global Trends in Sustainable Energy Investment 2007

7 International Energy Agency World Energy Outlook 2006

8 United Nations World Population to 2300 2004

9 World Business Council for Sustainable Development Energy amp Climate Change Facts and Trends to 2050 2004

10 United Nations Sustainable Bioenergy A Framework for Decision Makers 2007

11 Energy Information Administration Annual Energy Outlook 2007

12 United Nations Sustainable Bioenergy A Framework for Decision Makers 2007

13 International Energy Agency World Energy Outlook 2006

14 Washington Post 200807

15 International Energy Agency Biofuels for Transport ndash An International Perspective 2004

16 Reijinders L amp Huijbrechts MAJ 2006

Unilever NV Weena 455 PO Box 760 3000 DK Rotterdam The Netherlands T +31 (0)10 217 4000 F +31 (0)10 217 4798

Commercial Register Rotterdam Number 24051830

Unilever PLC PO Box 68 100 Victoria Embankment London EC4P 4BQ United Kingdom T +44 (0)20 7822 5252 F +44 (0)20 7822 5951

Unilever PLC registered office Unilever PLC Port Sunlight Wirral Merseyside CH62 4ZD United Kingdom

Registered in England and Wales Company Number 41424

17 Delft Hydraulics

18 Based on Food and Agriculture Organization data available at wwwwaterfootprintorg

19 United Nations World Population to 2300 2004

20 Economist 23607

21 International Monetary Fund World Economic Report April 2007

22 Organisation for Economic Co-operation and Development Food and Agriculture Organization Agricultural Outlook 2007-2016

23 Food and Agriculture Organization State of Food Insecurity in the World 2006

24 International Energy Agency Biofuels For Transport An International Perspective 2004

25 Reijinders L amp Huijbrechts MAJ (2006) and Delft Hydraulics

Rainforest Deforestation Impacts [7] graphic

Journal of Cleaner Production 2006 Palm Oil and the Emission of Carbon-Based Greenhouse Gases Reijinders L amp Huijbrechts MAJ

Journal of Tropical Forest Science 2005 An Assessment of Changes in Biomass Carbon Stocks in Tree Crops and Forests in Malaysia Henson IE

Oil World Annual 2007 ISTA Mielke GmbH

Intergovernmental Panel on Climate Change Guidelines for National Greenhouse Gas Inventories Volume 2 Energy 2006

Writing and consultancy Context

Design and production Red Letter Design

Illustrations (Graphics 4 and 7) KJA-artistscom

Printing Scanplus (on paper made from responsibly managed forests)

wwwunilevercom

Whatrsquos driving biofuels growth Biofuels have existed for over a hundred years ndash Henry Ford designed his Model T to run on bioethanol ndash but they have mostly been unable to compete with fuels derived from crude oil New government energy policies subsidies and tax exemptions are now stimulating biofuels production which has doubled since 1998 and is predicted to double again by 20115 There are a number of reasons why governments favour biofuels

[4] BIOFUEL CO2 LIFECYCLE IMPACTS

Fertilising

CO2

CO2

N2O Growing

Energy

Combating climate change

Transport is a significant contributor to climate change accounting for around 25 of man-made greenhouse gas emissions globally

In principle the use of biofuels can help reduce transportrsquos impact on climate change This is because the plants used to make the fuels absorb carbon dioxide (CO2) ndash the most important greenhouse gas ndash as they grow The gas is later released when the biofuels are used

However biofuels are not carbon neutral It takes energy to grow and harvest the plants and to process and distribute biofuels The entire process emits CO2 and fertilisers emit nitrous oxide (N2O) a powerful greenhouse gas (see graphic 4)

The amount of energy needed to make different biofuels varies considerably This makes it vital to take the entire production process into account when assessing the potential of biofuels to help reduce transport CO2 emissions Read more about CO2 performance overleaf

Technology and innovation

Unlike other renewable fuels such as hydrogen the infrastructure to

Processing

Harvesting Transporting

CO2

CO2 CO2

Energy

Energy Energy

manufacture and distribute biofuels is in place today Biofuels are also compatible with todayrsquos vehicles and power generation technology

In 2006 $26 billion6 was invested in biofuels The International Energy Agency (IEA)7 estimates that between 2005 and 2030 it will cost $160 billion to expand biofuel production to fuel 4 of global road transport and $225 billion to fuel 7

Energy security

Global energy demands are increasing rapidly The worldrsquos population has doubled in the last four decades ndash to around 66 billion in 2004 ndash and is expected to exceed 9 billion8 by 2050 Rapid development particularly in China and India is increasing wealth and this is boosting demands for energy and transport There were around 900 million vehicles on the road in 2000 but this is forecast to increase to over 2 billion by 20509

Fossil fuels (oil coal and gas) are expected to be the dominant source of energy for the foreseeable future But production has already peaked in many major oil-producing countries and new developments are increasingly located in environmentally challenging and politically

Transporting

CO2 Use

CO2

Energy

Energy

unstable parts of the world This has resulted in high oil prices which the IEA predicts will remain between $48ndash$62 until 203010 Some analysts predict 2030 prices could be as high as $10011 High oil prices hit developing countries the hardest ndash some spend six times as much on fuel as on health12

Biofuels are seen by governments as a secure source of energy and a way to reduce reliance on imported fossil fuels Brazil has replaced around 1513 of its petrol consumption with bioethanol according to the IEA The Washington Post puts this figure at 4014

Rural development

Biofuels can help boost farm incomes Globalisation and the industrialisation of farming have reduced the price farmers get for their produce Demand for the agricultural commodities used to make biofuels is reversing this trend In the developed world this is creating jobs and reducing the need for subsidies for farmers

100

Unintended consequences Biofuels could help boost rural development while reducing CO2 emissions and reliance on crude oil But if biofuel strategies are not fully evaluated they could do more harm than good stimulating poor performing biofuels and stifling innovation

CO2 performance

Biofuels can help fight climate change but CO2 savings vary significantly

between fuels (see graphic 5) This is because the amount of energy needed to produce different feedstocks (type of crop and where it is grown) and to process them into fuels varies considerably For example using US corn it takes 06ndash08 litres of fossil fuels to produce an amount of bioethanol equivalent to 1 litre of mineral oil whereas it takes less than 01 litres of fossil fuels to produce the same amount of bioethanol using Brazilian sugarcane15

[5] CO2 REDUCTION OF BIOFUELS COMPARED WITH FOSSIL FUELS ()

Biomass to liquid Bioethanol Fossil (2nd generation) (corn) fuel

USA Bioethanol

(wheat) EU

lt10 40-60 87

100

10 30

Bioethanol Biodiesel (sugarcane) (rapeseed)

Brazil EU

Source IEA Energy Technology Perspective 2006

Second-generation biofuels produce even less CO2 as their feedstocks require fewer agricultural inputs and production processes are much more efficient

Biofuels cost more than petrol or diesel per unit of energy because of the high cost of feedstocks and production Using biodiesel and bioethanol from crops grown in Europe

[6] BIOFUELS SAVINGS Biofuels cost per tonne GHG reduction ($ per tonne CO2 equivalent)

Bioethanol (sugarcane)

Bioethanol (corn)

Bioethanol (grain)

Bioethanol (cellulose)

Biodiesel (rapeseed)

Biodiesel (biomass)

2002 Post 2010

-50 0 200 400 600 800

Source IEA Biofuels for transportation An international perspective 2004

and the USA as a carbon reduction strategy will cost around $200-$250 per tonne of CO2 avoided at 2004 prices The cost of bioethanol from sugarcane as in Brazil can be comparable to that of fossil fuels (see graphic 6) Bioethanol from cellulose (a second-generation biofuel) could already provide CO2 reductions at less than $200 a tonne It is likely to remain expensive to reduce CO2 using biodiesel and bioethanol from US and European crops even after 2010 The cost of using second-generation biofuels could come down to under $100 a tonne with large-scale production

As more governments encourage the use of biofuels and set mandatory targets demand will outstrip supply leading to higher prices for first- and second-generation biofuels

Deforestation and land-use change

The demand for soya and palm oil threatens rainforests in Brazil

Indonesia and Malaysia which are being cleared for plantations These oils are used by a number of industries but the growth in biodiesel production is increasing demand significantly

[7] RAINFOREST DEFORESTATION IMPACTS Carbon storage and CO2 emissions per hectare in SE Asia

230 tonnes carbon

830 tonnes

CO2

48 tonnes carbon

Rainforest Deforestation Palm plantations Carbon stored Carbon released as Stores only 20 of above ground CO2 due to clearing carbon per hectare

and burning compared to rain-forest (equivalent to

165 tonnes CO2)

Sources see back page

Rainforests store large amounts of carbon above ground and in the soil which is released when they are cleared (see graphic 7) A much smaller amount of carbon

is absorbed by the plantations which replace the forests This means biofuels grown in tropical countries can contribute more to climate change than fossil fuels when their land-use impact is taken into account Studies have shown that biodiesel made from palm oil produces three16 to ten17 times more CO2 than an equivalent amount of fossil fuel The situation is even worse for biodiesel made from soya as the crop yields less oil and stores less carbon than palm plantations Peat lands wetlands and grasslands also release large amounts of carbon if converted to agricultural use Most biodiesel is made from rapeseed oil rather than palm oil and soya bean oil But as an increasing share of rapeseed oil is used for fuels rather than for food more soya and palm is being planted to compensate

Deforestation and land-use change means that while biofuels can appear to help governments meet their national greenhouse gas emissions reduction targets they could in reality be more damaging to climate change globally when land-use impact is considered This means that it is vital for national policies to take into account the full life-cycle climate impact of different biofuels

Biodiversity loss

The destruction of tropical forests and grasslands to make way for

soya and palm plantations causes significant destruction of plant and animal species including endangered species such as the orang-utan

Biofuel feedstocks are often grown as a single crop over a wide area Known as monoculture this brings high yields but harms biodiversity These impacts can be reduced to an extent through mixed planting and leaving wild areas

Water scarcity

Both first and second-generation biofuels require large amounts of

water to grow and process the feedstocks For example it takes between

1500 and 4600 litres of water18 to produce just one litre of bioethanol There are already water shortages in many regions and population growth and climate change will further increase competition for clean water and increase its cost

Land-use and food availability

The worldrsquos population is rapidly increasing and is expected to exceed 9 billion19 by 2050 To feed this

growing population will require 50 more food in the next 20 years

[8] PROJECTED GROWTH IN FOOD CONSUMPTION

Oil and oilseed meals

150 -

140 -Sugar Meat

130 -Cereals Dairy

120 -

110 -

100 -

2004 2009 2014 2019

Source OECD-FAO 2006

In the past farmers have increased production to meet growing demands But they are now finding it hard to keep up ndash in three of the four years20 between 2003 and 2007 demand for grains to feed people and livestock outstripped supply As countries such as China and India develop more people can afford meat and dairy products This is driving up demand for agricultural commodities The booming biofuels industry is contributing further to this escalation in demand

First-generation biofuels compete with food crops leading to rising food prices In future this could jeopardise the worldrsquos ability to feed its growing population Many other industries also rely on raw materials like palm oil which are being diverted to biofuel production

Increased demand higher prices

The biofuels industry is using an increasing share of the worldrsquos food crops (see graphic 9) which is driving

up prices Global food prices rose by 1021 in 2006 due to an increase in corn wheat and soya bean oil prices Prices are predicted to rise by 20ndash5022 over the next decade (compared with average levels over the last ten years)

Demand for biofuel feedstock increases prices of other crops For example high demand for corn to make bioethanol means US farmers are producing less soya and wheat which is boosting prices for those crops Biofuels are also raising meat and dairy prices by pushing up the price of animal feed

[9] PROPORTION OF CROP USED FOR BIOFUELS ()

Brazil sugarcane USA corn

39 43

70

45 20

50

1995 2005 2015 1995 2005 2015

EU rapeseedEU cereals

16

20

0

90

lt15

60

1995 2005 20151995 2005 2015

Source The German Marshall Fund of the USA

While higher food prices will benefit some producers they negatively impact the economies of food-importing countries Poor people who spend a large proportion of their income on food will suffer disproportionately compared with the wealthy Mexico has already experienced some of the negative consequences of the growing US bioethanol industry In 2006 Mexicans took to the streets to protest at the high price of tortillas (a corn bread staple) made more expensive by demand for maize from USA bioethanol producers

In 2007 the UN World Food Programme which fights famine in Africa announced that it could no longer afford to maintain its current level of support due to high commodity prices Its food purchasing costs rose by almost 50 between 2002 and 2007 854 million23 people suffer from hunger and this is increasing by an average of 4 million a year at current trends Increasing food prices will mean that even more people will depend on food aid

Land is a finite resource

Some biofuels are much more land efficient than others because of higher feedstock yields per hectare and

more efficient production processes (see graphic 10) If we are to feed a growing population using the finite amount of agricultural land available it is vital that governments choose to promote biofuels that deliver the maximum possible energy per hectare

First-generation biofuels

Bioethanol and biodiesel made from non-tropical feedstocks (rape wheat and corn) are not land efficient It would require a minimum of 26 of the worldrsquos arable land to run just 20 of its cars on these fuels

[10] BIOFUELS ENERGY DELIVERY (x 1000 litres of diesel equivalent per hectare)

Biodiesel Bioethanol (rapeseed oil) (sugar cane)

13 25 4 10405

Bioethanol Biomass- Biomethane (wheat) to-liquid (energy crops)

1st generation biofuel 2nd generation biofuel

Source FNR

Bioethanol and biodiesel made from palm oil and sugarcane are more land efficient but there is limited potential to expand production of the feedstocks without causing significant environmental damage through loss of natural forests and grasslands

Second-generation biofuels

To run 20 of the worldrsquos vehicles on second-generation biofuels would require 7 of its arable land The feedstocks for these fuels can also be grown on other types of land such as pastures and forests

Trade

Even at todayrsquos high oil prices most biofuels cannot compete on cost with petrol and diesel Biofuel producers

rely on government subsidies for their profits Governments are beginning to set mandatory targets to stimulate investment and demand for biofuels This is further boosting the price of agricultural commodities and contributing to trade distortions

In Brazil a well-established biofuel industry and low production costs means Brazilian bioethanol is cost competitive with petrol and diesel The EU and the USA have set trade barriers to protect domestic biofuel industries from cheap Brazilian bioethanol imports This is encouraging the development of less cost-effective and less sustainable biofuels This makes it more difficult for those developing countries that are better suited to biofuels production to compete on world markets

Many governments have proposed mandatory biofuel targets that exceed their countryrsquos production and land capacity In future this could make these countries dependent on foreign imports which will undermine their energy security Commodity prices will continue to rise as competition increases for limited global supplies

[11] GLOBAL IMPACTS AND UNINTENDED CONSEQUENCES

USA TARGET Biofuel as of transport fuel

2030 30 BIOETHANOL PRODUCTION (2005)

11800000 tonnes

USA accounts for 15 of global biodiesel production

China TARGET Biofuel as of transport fuel

2020 15 BIOETHANOL PRODUCTION (2005)

800000 tonnes

China has imposed a moratorium on projects making bioethanol fuel from corn and other basic food crops

Brazil TARGET Biofuel as of transport fuel

2010 10 BIOETHANOL PRODUCTION (2005)

12900000 tonnes

India TARGET Biofuel as of transport fuel

2020 20 BIOETHANOL PRODUCTION (2005)

240000 tonnes

EU TARGET Biofuel as of transport fuel

2020 10 BIOETHANOL PRODUCTION (2005)

730000 tonnes

Europe accounts for 85 of global biodiesel production

Reduction in US land used for food crops pushes production elsewhere potentially causing deforestation

Brazil sugarcane and soybean

European demand for biodiesel feedstock raises palm oil price causing deforestation

Europe doesnrsquot have enough land to meet its biofuels targets and will be dependent on imports

USA corn wheat and soybean

Bioethanol production has pushed up corn prices sparking protests in Mexico

The worldrsquos poorest are already being affected by higher food prices

98 of Indonesiarsquos natural rainforest will be degraded or gone by 2022

KEY

Issues with food security

Issues with GHGs

Issues with sustainability

Issues with trade

Areas of tropical rainforest

Trade

Unintended consequences

Feedstocks

Europe rapeseed oil and wheat

Sustainability criteria

The social and environmental impacts of biofuels vary considerably depending on the type of feedstock

used where it is grown and the processes needed to turn it into biofuels

Sustainability criteria are required to provide confidence in the labelling and identification of specific types of biofuel The criteria should

cover the lifecycle CO2 emissions and impacts on natural habitats as well as socio-economic factors such as the availability of food for the local population where feedstocks are produced

In 2007 the Dutch Government announced sustainability criteria and has proposed a system to enable traceability of feedstocks by 2020 The UK Government has proposed that 80 of biofuels meet sustainability standards including

Sources FOLicht UN

CO2 reduction requirements by 2010ndash11 The EU is developing sustainability criteria

Business is also developing sustainability standards through initiatives such as the Roundtable on Sustainable Palm Oil (chaired by Unilever) and the Roundtable on Sustainable Biofuels The latter aims to launch draft sustainability standards in early 2008

The Unilever position Unilever supports sustainable biofuels that deliver social and environmental benefits across their entire lifecycle

Unilever supports renewable energy initiatives that deliver benefits on a lifecycle basis helping to combat climate change and reduce dependency on fossil fuels Around 17 of the energy we use for our operations comes from renewable sources

Why the issue matters to Unilever

Two-thirds of the raw materials we use come from agriculture These materials are essential to our business and Unilever has a clear interest in how they are grown and in securing future supplies That is why we have worked to improve the social and environmental standards of agriculture for more than a decade Our sustainable agriculture programmes include palm oil oilseed rape sunflowers spinach tomatoes and tea We are also a member of several sustainability initiatives including the Roundtable on Sustainable Palm Oil

Demand for biofuels feedstock has already reduced the availability of raw materials and driven up prices We are concerned that increased demand will destabilise world food supply and undermine sustainable agriculture Use of vegetable oils such as rapeseed oil for biofuels could also create shortages driving consumers to less healthy animal fats

Lifecycle analysis

Unilever believes that individual biofuels should be examined carefully to ensure that the unintended environmental (deforestation and biodiversity loss) and socio-economic (food security) consequences do not undermine the positive impacts Biofuels must also be evaluated across their lifecycle to achieve genuine greenhouse gas (GHG) reductions

Biomass is a valuable resource Using it to generate heat and electricity is a more efficient and cost-effective way of reducing CO2 emissions than using it to make transport fuels24 New vehicle technologies such as electric and hybrid and more efficient engines offer significant scope to reduce greenhouse gas emissions from transport

First-generation biofuels

Unilever believes that some first-generation biofuels are neither environmentally efficient nor cost-effective ways to reduce emissions Many studies have shown that several first-generation biofuels have poor performance with regard to reducing GHG emissions and dependency on fossil fuels Some even cause more GHG emissions than the fossil fuels they replace25

We are concerned that the use of valuable food crops for energy purposes will increase pressure on ecosystems and biodiversity Deforestation particularly to make way for palm oil and soya beans could lead to the devastation of the last remaining rainforests in Borneo and the Amazon region

Second-generation biofuels

Unilever believes that the development of second-generation biofuels that donrsquot compete with food crops and have low carbon emissions is essential The mainstream market introduction of second-generation biofuels would provide a strong incentive for the application of renewable energy technologies while minimising the negative repercussions on food markets and food security Unilever believes there is a strong case for government and business investment in new technologies and further research on the sustainable use of biomass Support for second-generation biofuels could be accelerated through

RampD facilitation and technology transfer

Tax exemption andor subsidies

Phasing out support for poor performing first-generation biofuels

Second-generation biofuels should be required to achieve at least 50 GHG savings compared to fossil fuels

Assessing sustainability

We believe governments worldwide have the responsibility to subject their biofuel policies to a full impact assessment These assessments should cover environmental social and economic impacts from the

regions of production to the end use Policies which aim to reduce GHG emissions should contain full lifecycle assessments for individual biofuels This should ensure that change in land use is included in the carbon balance We propose that government targets should be based on CO2 reductions rather than volume as well as on availability of feedstocks

Sustainability standards

Unilever believes sustainability criteria should be introduced for the use of biomass within energy programmes These should include criteria at the production level as well as criteria at a macro-level such as overall GHG balance and energy efficiency food security and the protection of biodiversity and ecosystems The use of biomass for energy should not be stimulated by government programmes without the application of transparent sustainability criteria Proceeding without these safeguards will risk unintended consequences that could result in worse climate change impacts natural habitat loss and disruption of staple food supplies

Sources of information 1 International Energy Agency World Energy Outlook 2006

2 International Energy Agency httpieaorgtextbasework2004 eswg21_NCVpdf

3 International Energy Agency World Energy Outlook 2006

4 httpwwwbiodieselorgresourcesfuelfactsheetsstandards_ and_warrantiesshtm

5 United Nations Sustainable Bioenergy A Framework for Decision Makers 2007

6 United Nations Environment Programme Global Trends in Sustainable Energy Investment 2007

7 International Energy Agency World Energy Outlook 2006

8 United Nations World Population to 2300 2004

9 World Business Council for Sustainable Development Energy amp Climate Change Facts and Trends to 2050 2004

10 United Nations Sustainable Bioenergy A Framework for Decision Makers 2007

11 Energy Information Administration Annual Energy Outlook 2007

12 United Nations Sustainable Bioenergy A Framework for Decision Makers 2007

13 International Energy Agency World Energy Outlook 2006

14 Washington Post 200807

15 International Energy Agency Biofuels for Transport ndash An International Perspective 2004

16 Reijinders L amp Huijbrechts MAJ 2006

Unilever NV Weena 455 PO Box 760 3000 DK Rotterdam The Netherlands T +31 (0)10 217 4000 F +31 (0)10 217 4798

Commercial Register Rotterdam Number 24051830

Unilever PLC PO Box 68 100 Victoria Embankment London EC4P 4BQ United Kingdom T +44 (0)20 7822 5252 F +44 (0)20 7822 5951

Unilever PLC registered office Unilever PLC Port Sunlight Wirral Merseyside CH62 4ZD United Kingdom

Registered in England and Wales Company Number 41424

17 Delft Hydraulics

18 Based on Food and Agriculture Organization data available at wwwwaterfootprintorg

19 United Nations World Population to 2300 2004

20 Economist 23607

21 International Monetary Fund World Economic Report April 2007

22 Organisation for Economic Co-operation and Development Food and Agriculture Organization Agricultural Outlook 2007-2016

23 Food and Agriculture Organization State of Food Insecurity in the World 2006

24 International Energy Agency Biofuels For Transport An International Perspective 2004

25 Reijinders L amp Huijbrechts MAJ (2006) and Delft Hydraulics

Rainforest Deforestation Impacts [7] graphic

Journal of Cleaner Production 2006 Palm Oil and the Emission of Carbon-Based Greenhouse Gases Reijinders L amp Huijbrechts MAJ

Journal of Tropical Forest Science 2005 An Assessment of Changes in Biomass Carbon Stocks in Tree Crops and Forests in Malaysia Henson IE

Oil World Annual 2007 ISTA Mielke GmbH

Intergovernmental Panel on Climate Change Guidelines for National Greenhouse Gas Inventories Volume 2 Energy 2006

Writing and consultancy Context

Design and production Red Letter Design

Illustrations (Graphics 4 and 7) KJA-artistscom

Printing Scanplus (on paper made from responsibly managed forests)

wwwunilevercom

100

Unintended consequences Biofuels could help boost rural development while reducing CO2 emissions and reliance on crude oil But if biofuel strategies are not fully evaluated they could do more harm than good stimulating poor performing biofuels and stifling innovation

CO2 performance

Biofuels can help fight climate change but CO2 savings vary significantly

between fuels (see graphic 5) This is because the amount of energy needed to produce different feedstocks (type of crop and where it is grown) and to process them into fuels varies considerably For example using US corn it takes 06ndash08 litres of fossil fuels to produce an amount of bioethanol equivalent to 1 litre of mineral oil whereas it takes less than 01 litres of fossil fuels to produce the same amount of bioethanol using Brazilian sugarcane15

[5] CO2 REDUCTION OF BIOFUELS COMPARED WITH FOSSIL FUELS ()

Biomass to liquid Bioethanol Fossil (2nd generation) (corn) fuel

USA Bioethanol

(wheat) EU

lt10 40-60 87

100

10 30

Bioethanol Biodiesel (sugarcane) (rapeseed)

Brazil EU

Source IEA Energy Technology Perspective 2006

Second-generation biofuels produce even less CO2 as their feedstocks require fewer agricultural inputs and production processes are much more efficient

Biofuels cost more than petrol or diesel per unit of energy because of the high cost of feedstocks and production Using biodiesel and bioethanol from crops grown in Europe

[6] BIOFUELS SAVINGS Biofuels cost per tonne GHG reduction ($ per tonne CO2 equivalent)

Bioethanol (sugarcane)

Bioethanol (corn)

Bioethanol (grain)

Bioethanol (cellulose)

Biodiesel (rapeseed)

Biodiesel (biomass)

2002 Post 2010

-50 0 200 400 600 800

Source IEA Biofuels for transportation An international perspective 2004

and the USA as a carbon reduction strategy will cost around $200-$250 per tonne of CO2 avoided at 2004 prices The cost of bioethanol from sugarcane as in Brazil can be comparable to that of fossil fuels (see graphic 6) Bioethanol from cellulose (a second-generation biofuel) could already provide CO2 reductions at less than $200 a tonne It is likely to remain expensive to reduce CO2 using biodiesel and bioethanol from US and European crops even after 2010 The cost of using second-generation biofuels could come down to under $100 a tonne with large-scale production

As more governments encourage the use of biofuels and set mandatory targets demand will outstrip supply leading to higher prices for first- and second-generation biofuels

Deforestation and land-use change

The demand for soya and palm oil threatens rainforests in Brazil

Indonesia and Malaysia which are being cleared for plantations These oils are used by a number of industries but the growth in biodiesel production is increasing demand significantly

[7] RAINFOREST DEFORESTATION IMPACTS Carbon storage and CO2 emissions per hectare in SE Asia

230 tonnes carbon

830 tonnes

CO2

48 tonnes carbon

Rainforest Deforestation Palm plantations Carbon stored Carbon released as Stores only 20 of above ground CO2 due to clearing carbon per hectare

and burning compared to rain-forest (equivalent to

165 tonnes CO2)

Sources see back page

Rainforests store large amounts of carbon above ground and in the soil which is released when they are cleared (see graphic 7) A much smaller amount of carbon

is absorbed by the plantations which replace the forests This means biofuels grown in tropical countries can contribute more to climate change than fossil fuels when their land-use impact is taken into account Studies have shown that biodiesel made from palm oil produces three16 to ten17 times more CO2 than an equivalent amount of fossil fuel The situation is even worse for biodiesel made from soya as the crop yields less oil and stores less carbon than palm plantations Peat lands wetlands and grasslands also release large amounts of carbon if converted to agricultural use Most biodiesel is made from rapeseed oil rather than palm oil and soya bean oil But as an increasing share of rapeseed oil is used for fuels rather than for food more soya and palm is being planted to compensate

Deforestation and land-use change means that while biofuels can appear to help governments meet their national greenhouse gas emissions reduction targets they could in reality be more damaging to climate change globally when land-use impact is considered This means that it is vital for national policies to take into account the full life-cycle climate impact of different biofuels

Biodiversity loss

The destruction of tropical forests and grasslands to make way for

soya and palm plantations causes significant destruction of plant and animal species including endangered species such as the orang-utan

Biofuel feedstocks are often grown as a single crop over a wide area Known as monoculture this brings high yields but harms biodiversity These impacts can be reduced to an extent through mixed planting and leaving wild areas

Water scarcity

Both first and second-generation biofuels require large amounts of

water to grow and process the feedstocks For example it takes between

1500 and 4600 litres of water18 to produce just one litre of bioethanol There are already water shortages in many regions and population growth and climate change will further increase competition for clean water and increase its cost

Land-use and food availability

The worldrsquos population is rapidly increasing and is expected to exceed 9 billion19 by 2050 To feed this

growing population will require 50 more food in the next 20 years

[8] PROJECTED GROWTH IN FOOD CONSUMPTION

Oil and oilseed meals

150 -

140 -Sugar Meat

130 -Cereals Dairy

120 -

110 -

100 -

2004 2009 2014 2019

Source OECD-FAO 2006

In the past farmers have increased production to meet growing demands But they are now finding it hard to keep up ndash in three of the four years20 between 2003 and 2007 demand for grains to feed people and livestock outstripped supply As countries such as China and India develop more people can afford meat and dairy products This is driving up demand for agricultural commodities The booming biofuels industry is contributing further to this escalation in demand

First-generation biofuels compete with food crops leading to rising food prices In future this could jeopardise the worldrsquos ability to feed its growing population Many other industries also rely on raw materials like palm oil which are being diverted to biofuel production

Increased demand higher prices

The biofuels industry is using an increasing share of the worldrsquos food crops (see graphic 9) which is driving

up prices Global food prices rose by 1021 in 2006 due to an increase in corn wheat and soya bean oil prices Prices are predicted to rise by 20ndash5022 over the next decade (compared with average levels over the last ten years)

Demand for biofuel feedstock increases prices of other crops For example high demand for corn to make bioethanol means US farmers are producing less soya and wheat which is boosting prices for those crops Biofuels are also raising meat and dairy prices by pushing up the price of animal feed

[9] PROPORTION OF CROP USED FOR BIOFUELS ()

Brazil sugarcane USA corn

39 43

70

45 20

50

1995 2005 2015 1995 2005 2015

EU rapeseedEU cereals

16

20

0

90

lt15

60

1995 2005 20151995 2005 2015

Source The German Marshall Fund of the USA

While higher food prices will benefit some producers they negatively impact the economies of food-importing countries Poor people who spend a large proportion of their income on food will suffer disproportionately compared with the wealthy Mexico has already experienced some of the negative consequences of the growing US bioethanol industry In 2006 Mexicans took to the streets to protest at the high price of tortillas (a corn bread staple) made more expensive by demand for maize from USA bioethanol producers

In 2007 the UN World Food Programme which fights famine in Africa announced that it could no longer afford to maintain its current level of support due to high commodity prices Its food purchasing costs rose by almost 50 between 2002 and 2007 854 million23 people suffer from hunger and this is increasing by an average of 4 million a year at current trends Increasing food prices will mean that even more people will depend on food aid

Land is a finite resource

Some biofuels are much more land efficient than others because of higher feedstock yields per hectare and

more efficient production processes (see graphic 10) If we are to feed a growing population using the finite amount of agricultural land available it is vital that governments choose to promote biofuels that deliver the maximum possible energy per hectare

First-generation biofuels

Bioethanol and biodiesel made from non-tropical feedstocks (rape wheat and corn) are not land efficient It would require a minimum of 26 of the worldrsquos arable land to run just 20 of its cars on these fuels

[10] BIOFUELS ENERGY DELIVERY (x 1000 litres of diesel equivalent per hectare)

Biodiesel Bioethanol (rapeseed oil) (sugar cane)

13 25 4 10405

Bioethanol Biomass- Biomethane (wheat) to-liquid (energy crops)

1st generation biofuel 2nd generation biofuel

Source FNR

Bioethanol and biodiesel made from palm oil and sugarcane are more land efficient but there is limited potential to expand production of the feedstocks without causing significant environmental damage through loss of natural forests and grasslands

Second-generation biofuels

To run 20 of the worldrsquos vehicles on second-generation biofuels would require 7 of its arable land The feedstocks for these fuels can also be grown on other types of land such as pastures and forests

Trade

Even at todayrsquos high oil prices most biofuels cannot compete on cost with petrol and diesel Biofuel producers

rely on government subsidies for their profits Governments are beginning to set mandatory targets to stimulate investment and demand for biofuels This is further boosting the price of agricultural commodities and contributing to trade distortions

In Brazil a well-established biofuel industry and low production costs means Brazilian bioethanol is cost competitive with petrol and diesel The EU and the USA have set trade barriers to protect domestic biofuel industries from cheap Brazilian bioethanol imports This is encouraging the development of less cost-effective and less sustainable biofuels This makes it more difficult for those developing countries that are better suited to biofuels production to compete on world markets

Many governments have proposed mandatory biofuel targets that exceed their countryrsquos production and land capacity In future this could make these countries dependent on foreign imports which will undermine their energy security Commodity prices will continue to rise as competition increases for limited global supplies

[11] GLOBAL IMPACTS AND UNINTENDED CONSEQUENCES

USA TARGET Biofuel as of transport fuel

2030 30 BIOETHANOL PRODUCTION (2005)

11800000 tonnes

USA accounts for 15 of global biodiesel production

China TARGET Biofuel as of transport fuel

2020 15 BIOETHANOL PRODUCTION (2005)

800000 tonnes

China has imposed a moratorium on projects making bioethanol fuel from corn and other basic food crops

Brazil TARGET Biofuel as of transport fuel

2010 10 BIOETHANOL PRODUCTION (2005)

12900000 tonnes

India TARGET Biofuel as of transport fuel

2020 20 BIOETHANOL PRODUCTION (2005)

240000 tonnes

EU TARGET Biofuel as of transport fuel

2020 10 BIOETHANOL PRODUCTION (2005)

730000 tonnes

Europe accounts for 85 of global biodiesel production

Reduction in US land used for food crops pushes production elsewhere potentially causing deforestation

Brazil sugarcane and soybean

European demand for biodiesel feedstock raises palm oil price causing deforestation

Europe doesnrsquot have enough land to meet its biofuels targets and will be dependent on imports

USA corn wheat and soybean

Bioethanol production has pushed up corn prices sparking protests in Mexico

The worldrsquos poorest are already being affected by higher food prices

98 of Indonesiarsquos natural rainforest will be degraded or gone by 2022

KEY

Issues with food security

Issues with GHGs

Issues with sustainability

Issues with trade

Areas of tropical rainforest

Trade

Unintended consequences

Feedstocks

Europe rapeseed oil and wheat

Sustainability criteria

The social and environmental impacts of biofuels vary considerably depending on the type of feedstock

used where it is grown and the processes needed to turn it into biofuels

Sustainability criteria are required to provide confidence in the labelling and identification of specific types of biofuel The criteria should

cover the lifecycle CO2 emissions and impacts on natural habitats as well as socio-economic factors such as the availability of food for the local population where feedstocks are produced

In 2007 the Dutch Government announced sustainability criteria and has proposed a system to enable traceability of feedstocks by 2020 The UK Government has proposed that 80 of biofuels meet sustainability standards including

Sources FOLicht UN

CO2 reduction requirements by 2010ndash11 The EU is developing sustainability criteria

Business is also developing sustainability standards through initiatives such as the Roundtable on Sustainable Palm Oil (chaired by Unilever) and the Roundtable on Sustainable Biofuels The latter aims to launch draft sustainability standards in early 2008

The Unilever position Unilever supports sustainable biofuels that deliver social and environmental benefits across their entire lifecycle

Unilever supports renewable energy initiatives that deliver benefits on a lifecycle basis helping to combat climate change and reduce dependency on fossil fuels Around 17 of the energy we use for our operations comes from renewable sources

Why the issue matters to Unilever

Two-thirds of the raw materials we use come from agriculture These materials are essential to our business and Unilever has a clear interest in how they are grown and in securing future supplies That is why we have worked to improve the social and environmental standards of agriculture for more than a decade Our sustainable agriculture programmes include palm oil oilseed rape sunflowers spinach tomatoes and tea We are also a member of several sustainability initiatives including the Roundtable on Sustainable Palm Oil

Demand for biofuels feedstock has already reduced the availability of raw materials and driven up prices We are concerned that increased demand will destabilise world food supply and undermine sustainable agriculture Use of vegetable oils such as rapeseed oil for biofuels could also create shortages driving consumers to less healthy animal fats

Lifecycle analysis

Unilever believes that individual biofuels should be examined carefully to ensure that the unintended environmental (deforestation and biodiversity loss) and socio-economic (food security) consequences do not undermine the positive impacts Biofuels must also be evaluated across their lifecycle to achieve genuine greenhouse gas (GHG) reductions

Biomass is a valuable resource Using it to generate heat and electricity is a more efficient and cost-effective way of reducing CO2 emissions than using it to make transport fuels24 New vehicle technologies such as electric and hybrid and more efficient engines offer significant scope to reduce greenhouse gas emissions from transport

First-generation biofuels

Unilever believes that some first-generation biofuels are neither environmentally efficient nor cost-effective ways to reduce emissions Many studies have shown that several first-generation biofuels have poor performance with regard to reducing GHG emissions and dependency on fossil fuels Some even cause more GHG emissions than the fossil fuels they replace25

We are concerned that the use of valuable food crops for energy purposes will increase pressure on ecosystems and biodiversity Deforestation particularly to make way for palm oil and soya beans could lead to the devastation of the last remaining rainforests in Borneo and the Amazon region

Second-generation biofuels

Unilever believes that the development of second-generation biofuels that donrsquot compete with food crops and have low carbon emissions is essential The mainstream market introduction of second-generation biofuels would provide a strong incentive for the application of renewable energy technologies while minimising the negative repercussions on food markets and food security Unilever believes there is a strong case for government and business investment in new technologies and further research on the sustainable use of biomass Support for second-generation biofuels could be accelerated through

RampD facilitation and technology transfer

Tax exemption andor subsidies

Phasing out support for poor performing first-generation biofuels

Second-generation biofuels should be required to achieve at least 50 GHG savings compared to fossil fuels

Assessing sustainability

We believe governments worldwide have the responsibility to subject their biofuel policies to a full impact assessment These assessments should cover environmental social and economic impacts from the

regions of production to the end use Policies which aim to reduce GHG emissions should contain full lifecycle assessments for individual biofuels This should ensure that change in land use is included in the carbon balance We propose that government targets should be based on CO2 reductions rather than volume as well as on availability of feedstocks

Sustainability standards

Unilever believes sustainability criteria should be introduced for the use of biomass within energy programmes These should include criteria at the production level as well as criteria at a macro-level such as overall GHG balance and energy efficiency food security and the protection of biodiversity and ecosystems The use of biomass for energy should not be stimulated by government programmes without the application of transparent sustainability criteria Proceeding without these safeguards will risk unintended consequences that could result in worse climate change impacts natural habitat loss and disruption of staple food supplies

Sources of information 1 International Energy Agency World Energy Outlook 2006

2 International Energy Agency httpieaorgtextbasework2004 eswg21_NCVpdf

3 International Energy Agency World Energy Outlook 2006

4 httpwwwbiodieselorgresourcesfuelfactsheetsstandards_ and_warrantiesshtm

5 United Nations Sustainable Bioenergy A Framework for Decision Makers 2007

6 United Nations Environment Programme Global Trends in Sustainable Energy Investment 2007

7 International Energy Agency World Energy Outlook 2006

8 United Nations World Population to 2300 2004

9 World Business Council for Sustainable Development Energy amp Climate Change Facts and Trends to 2050 2004

10 United Nations Sustainable Bioenergy A Framework for Decision Makers 2007

11 Energy Information Administration Annual Energy Outlook 2007

12 United Nations Sustainable Bioenergy A Framework for Decision Makers 2007

13 International Energy Agency World Energy Outlook 2006

14 Washington Post 200807

15 International Energy Agency Biofuels for Transport ndash An International Perspective 2004

16 Reijinders L amp Huijbrechts MAJ 2006

Unilever NV Weena 455 PO Box 760 3000 DK Rotterdam The Netherlands T +31 (0)10 217 4000 F +31 (0)10 217 4798

Commercial Register Rotterdam Number 24051830

Unilever PLC PO Box 68 100 Victoria Embankment London EC4P 4BQ United Kingdom T +44 (0)20 7822 5252 F +44 (0)20 7822 5951

Unilever PLC registered office Unilever PLC Port Sunlight Wirral Merseyside CH62 4ZD United Kingdom

Registered in England and Wales Company Number 41424

17 Delft Hydraulics

18 Based on Food and Agriculture Organization data available at wwwwaterfootprintorg

19 United Nations World Population to 2300 2004

20 Economist 23607

21 International Monetary Fund World Economic Report April 2007

22 Organisation for Economic Co-operation and Development Food and Agriculture Organization Agricultural Outlook 2007-2016

23 Food and Agriculture Organization State of Food Insecurity in the World 2006

24 International Energy Agency Biofuels For Transport An International Perspective 2004

25 Reijinders L amp Huijbrechts MAJ (2006) and Delft Hydraulics

Rainforest Deforestation Impacts [7] graphic

Journal of Cleaner Production 2006 Palm Oil and the Emission of Carbon-Based Greenhouse Gases Reijinders L amp Huijbrechts MAJ

Journal of Tropical Forest Science 2005 An Assessment of Changes in Biomass Carbon Stocks in Tree Crops and Forests in Malaysia Henson IE

Oil World Annual 2007 ISTA Mielke GmbH

Intergovernmental Panel on Climate Change Guidelines for National Greenhouse Gas Inventories Volume 2 Energy 2006

Writing and consultancy Context

Design and production Red Letter Design

Illustrations (Graphics 4 and 7) KJA-artistscom

Printing Scanplus (on paper made from responsibly managed forests)

wwwunilevercom

1500 and 4600 litres of water18 to produce just one litre of bioethanol There are already water shortages in many regions and population growth and climate change will further increase competition for clean water and increase its cost

Land-use and food availability

The worldrsquos population is rapidly increasing and is expected to exceed 9 billion19 by 2050 To feed this

growing population will require 50 more food in the next 20 years

[8] PROJECTED GROWTH IN FOOD CONSUMPTION

Oil and oilseed meals

150 -

140 -Sugar Meat

130 -Cereals Dairy

120 -

110 -

100 -

2004 2009 2014 2019

Source OECD-FAO 2006

In the past farmers have increased production to meet growing demands But they are now finding it hard to keep up ndash in three of the four years20 between 2003 and 2007 demand for grains to feed people and livestock outstripped supply As countries such as China and India develop more people can afford meat and dairy products This is driving up demand for agricultural commodities The booming biofuels industry is contributing further to this escalation in demand

First-generation biofuels compete with food crops leading to rising food prices In future this could jeopardise the worldrsquos ability to feed its growing population Many other industries also rely on raw materials like palm oil which are being diverted to biofuel production

Increased demand higher prices

The biofuels industry is using an increasing share of the worldrsquos food crops (see graphic 9) which is driving

up prices Global food prices rose by 1021 in 2006 due to an increase in corn wheat and soya bean oil prices Prices are predicted to rise by 20ndash5022 over the next decade (compared with average levels over the last ten years)

Demand for biofuel feedstock increases prices of other crops For example high demand for corn to make bioethanol means US farmers are producing less soya and wheat which is boosting prices for those crops Biofuels are also raising meat and dairy prices by pushing up the price of animal feed

[9] PROPORTION OF CROP USED FOR BIOFUELS ()

Brazil sugarcane USA corn

39 43

70

45 20

50

1995 2005 2015 1995 2005 2015

EU rapeseedEU cereals

16

20

0

90

lt15

60

1995 2005 20151995 2005 2015

Source The German Marshall Fund of the USA

While higher food prices will benefit some producers they negatively impact the economies of food-importing countries Poor people who spend a large proportion of their income on food will suffer disproportionately compared with the wealthy Mexico has already experienced some of the negative consequences of the growing US bioethanol industry In 2006 Mexicans took to the streets to protest at the high price of tortillas (a corn bread staple) made more expensive by demand for maize from USA bioethanol producers

In 2007 the UN World Food Programme which fights famine in Africa announced that it could no longer afford to maintain its current level of support due to high commodity prices Its food purchasing costs rose by almost 50 between 2002 and 2007 854 million23 people suffer from hunger and this is increasing by an average of 4 million a year at current trends Increasing food prices will mean that even more people will depend on food aid

Land is a finite resource

Some biofuels are much more land efficient than others because of higher feedstock yields per hectare and

more efficient production processes (see graphic 10) If we are to feed a growing population using the finite amount of agricultural land available it is vital that governments choose to promote biofuels that deliver the maximum possible energy per hectare

First-generation biofuels

Bioethanol and biodiesel made from non-tropical feedstocks (rape wheat and corn) are not land efficient It would require a minimum of 26 of the worldrsquos arable land to run just 20 of its cars on these fuels

[10] BIOFUELS ENERGY DELIVERY (x 1000 litres of diesel equivalent per hectare)

Biodiesel Bioethanol (rapeseed oil) (sugar cane)

13 25 4 10405

Bioethanol Biomass- Biomethane (wheat) to-liquid (energy crops)

1st generation biofuel 2nd generation biofuel

Source FNR

Bioethanol and biodiesel made from palm oil and sugarcane are more land efficient but there is limited potential to expand production of the feedstocks without causing significant environmental damage through loss of natural forests and grasslands

Second-generation biofuels

To run 20 of the worldrsquos vehicles on second-generation biofuels would require 7 of its arable land The feedstocks for these fuels can also be grown on other types of land such as pastures and forests

Trade

Even at todayrsquos high oil prices most biofuels cannot compete on cost with petrol and diesel Biofuel producers

rely on government subsidies for their profits Governments are beginning to set mandatory targets to stimulate investment and demand for biofuels This is further boosting the price of agricultural commodities and contributing to trade distortions

In Brazil a well-established biofuel industry and low production costs means Brazilian bioethanol is cost competitive with petrol and diesel The EU and the USA have set trade barriers to protect domestic biofuel industries from cheap Brazilian bioethanol imports This is encouraging the development of less cost-effective and less sustainable biofuels This makes it more difficult for those developing countries that are better suited to biofuels production to compete on world markets

Many governments have proposed mandatory biofuel targets that exceed their countryrsquos production and land capacity In future this could make these countries dependent on foreign imports which will undermine their energy security Commodity prices will continue to rise as competition increases for limited global supplies

[11] GLOBAL IMPACTS AND UNINTENDED CONSEQUENCES

USA TARGET Biofuel as of transport fuel

2030 30 BIOETHANOL PRODUCTION (2005)

11800000 tonnes

USA accounts for 15 of global biodiesel production

China TARGET Biofuel as of transport fuel

2020 15 BIOETHANOL PRODUCTION (2005)

800000 tonnes

China has imposed a moratorium on projects making bioethanol fuel from corn and other basic food crops

Brazil TARGET Biofuel as of transport fuel

2010 10 BIOETHANOL PRODUCTION (2005)

12900000 tonnes

India TARGET Biofuel as of transport fuel

2020 20 BIOETHANOL PRODUCTION (2005)

240000 tonnes

EU TARGET Biofuel as of transport fuel

2020 10 BIOETHANOL PRODUCTION (2005)

730000 tonnes

Europe accounts for 85 of global biodiesel production

Reduction in US land used for food crops pushes production elsewhere potentially causing deforestation

Brazil sugarcane and soybean

European demand for biodiesel feedstock raises palm oil price causing deforestation

Europe doesnrsquot have enough land to meet its biofuels targets and will be dependent on imports

USA corn wheat and soybean

Bioethanol production has pushed up corn prices sparking protests in Mexico

The worldrsquos poorest are already being affected by higher food prices

98 of Indonesiarsquos natural rainforest will be degraded or gone by 2022

KEY

Issues with food security

Issues with GHGs

Issues with sustainability

Issues with trade

Areas of tropical rainforest

Trade

Unintended consequences

Feedstocks

Europe rapeseed oil and wheat

Sustainability criteria

The social and environmental impacts of biofuels vary considerably depending on the type of feedstock

used where it is grown and the processes needed to turn it into biofuels

Sustainability criteria are required to provide confidence in the labelling and identification of specific types of biofuel The criteria should

cover the lifecycle CO2 emissions and impacts on natural habitats as well as socio-economic factors such as the availability of food for the local population where feedstocks are produced

In 2007 the Dutch Government announced sustainability criteria and has proposed a system to enable traceability of feedstocks by 2020 The UK Government has proposed that 80 of biofuels meet sustainability standards including

Sources FOLicht UN

CO2 reduction requirements by 2010ndash11 The EU is developing sustainability criteria

Business is also developing sustainability standards through initiatives such as the Roundtable on Sustainable Palm Oil (chaired by Unilever) and the Roundtable on Sustainable Biofuels The latter aims to launch draft sustainability standards in early 2008

The Unilever position Unilever supports sustainable biofuels that deliver social and environmental benefits across their entire lifecycle

Unilever supports renewable energy initiatives that deliver benefits on a lifecycle basis helping to combat climate change and reduce dependency on fossil fuels Around 17 of the energy we use for our operations comes from renewable sources

Why the issue matters to Unilever

Two-thirds of the raw materials we use come from agriculture These materials are essential to our business and Unilever has a clear interest in how they are grown and in securing future supplies That is why we have worked to improve the social and environmental standards of agriculture for more than a decade Our sustainable agriculture programmes include palm oil oilseed rape sunflowers spinach tomatoes and tea We are also a member of several sustainability initiatives including the Roundtable on Sustainable Palm Oil

Demand for biofuels feedstock has already reduced the availability of raw materials and driven up prices We are concerned that increased demand will destabilise world food supply and undermine sustainable agriculture Use of vegetable oils such as rapeseed oil for biofuels could also create shortages driving consumers to less healthy animal fats

Lifecycle analysis

Unilever believes that individual biofuels should be examined carefully to ensure that the unintended environmental (deforestation and biodiversity loss) and socio-economic (food security) consequences do not undermine the positive impacts Biofuels must also be evaluated across their lifecycle to achieve genuine greenhouse gas (GHG) reductions

Biomass is a valuable resource Using it to generate heat and electricity is a more efficient and cost-effective way of reducing CO2 emissions than using it to make transport fuels24 New vehicle technologies such as electric and hybrid and more efficient engines offer significant scope to reduce greenhouse gas emissions from transport

First-generation biofuels

Unilever believes that some first-generation biofuels are neither environmentally efficient nor cost-effective ways to reduce emissions Many studies have shown that several first-generation biofuels have poor performance with regard to reducing GHG emissions and dependency on fossil fuels Some even cause more GHG emissions than the fossil fuels they replace25

We are concerned that the use of valuable food crops for energy purposes will increase pressure on ecosystems and biodiversity Deforestation particularly to make way for palm oil and soya beans could lead to the devastation of the last remaining rainforests in Borneo and the Amazon region

Second-generation biofuels

Unilever believes that the development of second-generation biofuels that donrsquot compete with food crops and have low carbon emissions is essential The mainstream market introduction of second-generation biofuels would provide a strong incentive for the application of renewable energy technologies while minimising the negative repercussions on food markets and food security Unilever believes there is a strong case for government and business investment in new technologies and further research on the sustainable use of biomass Support for second-generation biofuels could be accelerated through

RampD facilitation and technology transfer

Tax exemption andor subsidies

Phasing out support for poor performing first-generation biofuels

Second-generation biofuels should be required to achieve at least 50 GHG savings compared to fossil fuels

Assessing sustainability

We believe governments worldwide have the responsibility to subject their biofuel policies to a full impact assessment These assessments should cover environmental social and economic impacts from the

regions of production to the end use Policies which aim to reduce GHG emissions should contain full lifecycle assessments for individual biofuels This should ensure that change in land use is included in the carbon balance We propose that government targets should be based on CO2 reductions rather than volume as well as on availability of feedstocks

Sustainability standards

Unilever believes sustainability criteria should be introduced for the use of biomass within energy programmes These should include criteria at the production level as well as criteria at a macro-level such as overall GHG balance and energy efficiency food security and the protection of biodiversity and ecosystems The use of biomass for energy should not be stimulated by government programmes without the application of transparent sustainability criteria Proceeding without these safeguards will risk unintended consequences that could result in worse climate change impacts natural habitat loss and disruption of staple food supplies

Sources of information 1 International Energy Agency World Energy Outlook 2006

2 International Energy Agency httpieaorgtextbasework2004 eswg21_NCVpdf

3 International Energy Agency World Energy Outlook 2006

4 httpwwwbiodieselorgresourcesfuelfactsheetsstandards_ and_warrantiesshtm

5 United Nations Sustainable Bioenergy A Framework for Decision Makers 2007

6 United Nations Environment Programme Global Trends in Sustainable Energy Investment 2007

7 International Energy Agency World Energy Outlook 2006

8 United Nations World Population to 2300 2004

9 World Business Council for Sustainable Development Energy amp Climate Change Facts and Trends to 2050 2004

10 United Nations Sustainable Bioenergy A Framework for Decision Makers 2007

11 Energy Information Administration Annual Energy Outlook 2007

12 United Nations Sustainable Bioenergy A Framework for Decision Makers 2007

13 International Energy Agency World Energy Outlook 2006

14 Washington Post 200807

15 International Energy Agency Biofuels for Transport ndash An International Perspective 2004

16 Reijinders L amp Huijbrechts MAJ 2006

Unilever NV Weena 455 PO Box 760 3000 DK Rotterdam The Netherlands T +31 (0)10 217 4000 F +31 (0)10 217 4798

Commercial Register Rotterdam Number 24051830

Unilever PLC PO Box 68 100 Victoria Embankment London EC4P 4BQ United Kingdom T +44 (0)20 7822 5252 F +44 (0)20 7822 5951

Unilever PLC registered office Unilever PLC Port Sunlight Wirral Merseyside CH62 4ZD United Kingdom

Registered in England and Wales Company Number 41424

17 Delft Hydraulics

18 Based on Food and Agriculture Organization data available at wwwwaterfootprintorg

19 United Nations World Population to 2300 2004

20 Economist 23607

21 International Monetary Fund World Economic Report April 2007

22 Organisation for Economic Co-operation and Development Food and Agriculture Organization Agricultural Outlook 2007-2016

23 Food and Agriculture Organization State of Food Insecurity in the World 2006

24 International Energy Agency Biofuels For Transport An International Perspective 2004

25 Reijinders L amp Huijbrechts MAJ (2006) and Delft Hydraulics

Rainforest Deforestation Impacts [7] graphic

Journal of Cleaner Production 2006 Palm Oil and the Emission of Carbon-Based Greenhouse Gases Reijinders L amp Huijbrechts MAJ

Journal of Tropical Forest Science 2005 An Assessment of Changes in Biomass Carbon Stocks in Tree Crops and Forests in Malaysia Henson IE

Oil World Annual 2007 ISTA Mielke GmbH

Intergovernmental Panel on Climate Change Guidelines for National Greenhouse Gas Inventories Volume 2 Energy 2006

Writing and consultancy Context

Design and production Red Letter Design

Illustrations (Graphics 4 and 7) KJA-artistscom

Printing Scanplus (on paper made from responsibly managed forests)

wwwunilevercom

[11] GLOBAL IMPACTS AND UNINTENDED CONSEQUENCES

USA TARGET Biofuel as of transport fuel

2030 30 BIOETHANOL PRODUCTION (2005)

11800000 tonnes

USA accounts for 15 of global biodiesel production

China TARGET Biofuel as of transport fuel

2020 15 BIOETHANOL PRODUCTION (2005)

800000 tonnes

China has imposed a moratorium on projects making bioethanol fuel from corn and other basic food crops

Brazil TARGET Biofuel as of transport fuel

2010 10 BIOETHANOL PRODUCTION (2005)

12900000 tonnes

India TARGET Biofuel as of transport fuel

2020 20 BIOETHANOL PRODUCTION (2005)

240000 tonnes

EU TARGET Biofuel as of transport fuel

2020 10 BIOETHANOL PRODUCTION (2005)

730000 tonnes

Europe accounts for 85 of global biodiesel production

Reduction in US land used for food crops pushes production elsewhere potentially causing deforestation

Brazil sugarcane and soybean

European demand for biodiesel feedstock raises palm oil price causing deforestation

Europe doesnrsquot have enough land to meet its biofuels targets and will be dependent on imports

USA corn wheat and soybean

Bioethanol production has pushed up corn prices sparking protests in Mexico

The worldrsquos poorest are already being affected by higher food prices

98 of Indonesiarsquos natural rainforest will be degraded or gone by 2022

KEY

Issues with food security

Issues with GHGs

Issues with sustainability

Issues with trade

Areas of tropical rainforest

Trade

Unintended consequences

Feedstocks

Europe rapeseed oil and wheat

Sustainability criteria

The social and environmental impacts of biofuels vary considerably depending on the type of feedstock

used where it is grown and the processes needed to turn it into biofuels

Sustainability criteria are required to provide confidence in the labelling and identification of specific types of biofuel The criteria should

cover the lifecycle CO2 emissions and impacts on natural habitats as well as socio-economic factors such as the availability of food for the local population where feedstocks are produced

In 2007 the Dutch Government announced sustainability criteria and has proposed a system to enable traceability of feedstocks by 2020 The UK Government has proposed that 80 of biofuels meet sustainability standards including

Sources FOLicht UN

CO2 reduction requirements by 2010ndash11 The EU is developing sustainability criteria

Business is also developing sustainability standards through initiatives such as the Roundtable on Sustainable Palm Oil (chaired by Unilever) and the Roundtable on Sustainable Biofuels The latter aims to launch draft sustainability standards in early 2008

The Unilever position Unilever supports sustainable biofuels that deliver social and environmental benefits across their entire lifecycle

Unilever supports renewable energy initiatives that deliver benefits on a lifecycle basis helping to combat climate change and reduce dependency on fossil fuels Around 17 of the energy we use for our operations comes from renewable sources

Why the issue matters to Unilever

Two-thirds of the raw materials we use come from agriculture These materials are essential to our business and Unilever has a clear interest in how they are grown and in securing future supplies That is why we have worked to improve the social and environmental standards of agriculture for more than a decade Our sustainable agriculture programmes include palm oil oilseed rape sunflowers spinach tomatoes and tea We are also a member of several sustainability initiatives including the Roundtable on Sustainable Palm Oil

Demand for biofuels feedstock has already reduced the availability of raw materials and driven up prices We are concerned that increased demand will destabilise world food supply and undermine sustainable agriculture Use of vegetable oils such as rapeseed oil for biofuels could also create shortages driving consumers to less healthy animal fats

Lifecycle analysis

Unilever believes that individual biofuels should be examined carefully to ensure that the unintended environmental (deforestation and biodiversity loss) and socio-economic (food security) consequences do not undermine the positive impacts Biofuels must also be evaluated across their lifecycle to achieve genuine greenhouse gas (GHG) reductions

Biomass is a valuable resource Using it to generate heat and electricity is a more efficient and cost-effective way of reducing CO2 emissions than using it to make transport fuels24 New vehicle technologies such as electric and hybrid and more efficient engines offer significant scope to reduce greenhouse gas emissions from transport

First-generation biofuels

Unilever believes that some first-generation biofuels are neither environmentally efficient nor cost-effective ways to reduce emissions Many studies have shown that several first-generation biofuels have poor performance with regard to reducing GHG emissions and dependency on fossil fuels Some even cause more GHG emissions than the fossil fuels they replace25

We are concerned that the use of valuable food crops for energy purposes will increase pressure on ecosystems and biodiversity Deforestation particularly to make way for palm oil and soya beans could lead to the devastation of the last remaining rainforests in Borneo and the Amazon region

Second-generation biofuels

Unilever believes that the development of second-generation biofuels that donrsquot compete with food crops and have low carbon emissions is essential The mainstream market introduction of second-generation biofuels would provide a strong incentive for the application of renewable energy technologies while minimising the negative repercussions on food markets and food security Unilever believes there is a strong case for government and business investment in new technologies and further research on the sustainable use of biomass Support for second-generation biofuels could be accelerated through

RampD facilitation and technology transfer

Tax exemption andor subsidies

Phasing out support for poor performing first-generation biofuels

Second-generation biofuels should be required to achieve at least 50 GHG savings compared to fossil fuels

Assessing sustainability

We believe governments worldwide have the responsibility to subject their biofuel policies to a full impact assessment These assessments should cover environmental social and economic impacts from the

regions of production to the end use Policies which aim to reduce GHG emissions should contain full lifecycle assessments for individual biofuels This should ensure that change in land use is included in the carbon balance We propose that government targets should be based on CO2 reductions rather than volume as well as on availability of feedstocks

Sustainability standards

Unilever believes sustainability criteria should be introduced for the use of biomass within energy programmes These should include criteria at the production level as well as criteria at a macro-level such as overall GHG balance and energy efficiency food security and the protection of biodiversity and ecosystems The use of biomass for energy should not be stimulated by government programmes without the application of transparent sustainability criteria Proceeding without these safeguards will risk unintended consequences that could result in worse climate change impacts natural habitat loss and disruption of staple food supplies

Sources of information 1 International Energy Agency World Energy Outlook 2006

2 International Energy Agency httpieaorgtextbasework2004 eswg21_NCVpdf

3 International Energy Agency World Energy Outlook 2006

4 httpwwwbiodieselorgresourcesfuelfactsheetsstandards_ and_warrantiesshtm

5 United Nations Sustainable Bioenergy A Framework for Decision Makers 2007

6 United Nations Environment Programme Global Trends in Sustainable Energy Investment 2007

7 International Energy Agency World Energy Outlook 2006

8 United Nations World Population to 2300 2004

9 World Business Council for Sustainable Development Energy amp Climate Change Facts and Trends to 2050 2004

10 United Nations Sustainable Bioenergy A Framework for Decision Makers 2007

11 Energy Information Administration Annual Energy Outlook 2007

12 United Nations Sustainable Bioenergy A Framework for Decision Makers 2007

13 International Energy Agency World Energy Outlook 2006

14 Washington Post 200807

15 International Energy Agency Biofuels for Transport ndash An International Perspective 2004

16 Reijinders L amp Huijbrechts MAJ 2006

Unilever NV Weena 455 PO Box 760 3000 DK Rotterdam The Netherlands T +31 (0)10 217 4000 F +31 (0)10 217 4798

Commercial Register Rotterdam Number 24051830

Unilever PLC PO Box 68 100 Victoria Embankment London EC4P 4BQ United Kingdom T +44 (0)20 7822 5252 F +44 (0)20 7822 5951

Unilever PLC registered office Unilever PLC Port Sunlight Wirral Merseyside CH62 4ZD United Kingdom

Registered in England and Wales Company Number 41424

17 Delft Hydraulics

18 Based on Food and Agriculture Organization data available at wwwwaterfootprintorg

19 United Nations World Population to 2300 2004

20 Economist 23607

21 International Monetary Fund World Economic Report April 2007

22 Organisation for Economic Co-operation and Development Food and Agriculture Organization Agricultural Outlook 2007-2016

23 Food and Agriculture Organization State of Food Insecurity in the World 2006

24 International Energy Agency Biofuels For Transport An International Perspective 2004

25 Reijinders L amp Huijbrechts MAJ (2006) and Delft Hydraulics

Rainforest Deforestation Impacts [7] graphic

Journal of Cleaner Production 2006 Palm Oil and the Emission of Carbon-Based Greenhouse Gases Reijinders L amp Huijbrechts MAJ

Journal of Tropical Forest Science 2005 An Assessment of Changes in Biomass Carbon Stocks in Tree Crops and Forests in Malaysia Henson IE

Oil World Annual 2007 ISTA Mielke GmbH

Intergovernmental Panel on Climate Change Guidelines for National Greenhouse Gas Inventories Volume 2 Energy 2006

Writing and consultancy Context

Design and production Red Letter Design

Illustrations (Graphics 4 and 7) KJA-artistscom

Printing Scanplus (on paper made from responsibly managed forests)

wwwunilevercom

The Unilever position Unilever supports sustainable biofuels that deliver social and environmental benefits across their entire lifecycle

Unilever supports renewable energy initiatives that deliver benefits on a lifecycle basis helping to combat climate change and reduce dependency on fossil fuels Around 17 of the energy we use for our operations comes from renewable sources

Why the issue matters to Unilever

Two-thirds of the raw materials we use come from agriculture These materials are essential to our business and Unilever has a clear interest in how they are grown and in securing future supplies That is why we have worked to improve the social and environmental standards of agriculture for more than a decade Our sustainable agriculture programmes include palm oil oilseed rape sunflowers spinach tomatoes and tea We are also a member of several sustainability initiatives including the Roundtable on Sustainable Palm Oil

Demand for biofuels feedstock has already reduced the availability of raw materials and driven up prices We are concerned that increased demand will destabilise world food supply and undermine sustainable agriculture Use of vegetable oils such as rapeseed oil for biofuels could also create shortages driving consumers to less healthy animal fats

Lifecycle analysis

Unilever believes that individual biofuels should be examined carefully to ensure that the unintended environmental (deforestation and biodiversity loss) and socio-economic (food security) consequences do not undermine the positive impacts Biofuels must also be evaluated across their lifecycle to achieve genuine greenhouse gas (GHG) reductions

Biomass is a valuable resource Using it to generate heat and electricity is a more efficient and cost-effective way of reducing CO2 emissions than using it to make transport fuels24 New vehicle technologies such as electric and hybrid and more efficient engines offer significant scope to reduce greenhouse gas emissions from transport

First-generation biofuels

Unilever believes that some first-generation biofuels are neither environmentally efficient nor cost-effective ways to reduce emissions Many studies have shown that several first-generation biofuels have poor performance with regard to reducing GHG emissions and dependency on fossil fuels Some even cause more GHG emissions than the fossil fuels they replace25

We are concerned that the use of valuable food crops for energy purposes will increase pressure on ecosystems and biodiversity Deforestation particularly to make way for palm oil and soya beans could lead to the devastation of the last remaining rainforests in Borneo and the Amazon region

Second-generation biofuels

Unilever believes that the development of second-generation biofuels that donrsquot compete with food crops and have low carbon emissions is essential The mainstream market introduction of second-generation biofuels would provide a strong incentive for the application of renewable energy technologies while minimising the negative repercussions on food markets and food security Unilever believes there is a strong case for government and business investment in new technologies and further research on the sustainable use of biomass Support for second-generation biofuels could be accelerated through

RampD facilitation and technology transfer

Tax exemption andor subsidies

Phasing out support for poor performing first-generation biofuels

Second-generation biofuels should be required to achieve at least 50 GHG savings compared to fossil fuels

Assessing sustainability

We believe governments worldwide have the responsibility to subject their biofuel policies to a full impact assessment These assessments should cover environmental social and economic impacts from the

regions of production to the end use Policies which aim to reduce GHG emissions should contain full lifecycle assessments for individual biofuels This should ensure that change in land use is included in the carbon balance We propose that government targets should be based on CO2 reductions rather than volume as well as on availability of feedstocks

Sustainability standards

Unilever believes sustainability criteria should be introduced for the use of biomass within energy programmes These should include criteria at the production level as well as criteria at a macro-level such as overall GHG balance and energy efficiency food security and the protection of biodiversity and ecosystems The use of biomass for energy should not be stimulated by government programmes without the application of transparent sustainability criteria Proceeding without these safeguards will risk unintended consequences that could result in worse climate change impacts natural habitat loss and disruption of staple food supplies

Sources of information 1 International Energy Agency World Energy Outlook 2006

2 International Energy Agency httpieaorgtextbasework2004 eswg21_NCVpdf

3 International Energy Agency World Energy Outlook 2006

4 httpwwwbiodieselorgresourcesfuelfactsheetsstandards_ and_warrantiesshtm

5 United Nations Sustainable Bioenergy A Framework for Decision Makers 2007

6 United Nations Environment Programme Global Trends in Sustainable Energy Investment 2007

7 International Energy Agency World Energy Outlook 2006

8 United Nations World Population to 2300 2004

9 World Business Council for Sustainable Development Energy amp Climate Change Facts and Trends to 2050 2004

10 United Nations Sustainable Bioenergy A Framework for Decision Makers 2007

11 Energy Information Administration Annual Energy Outlook 2007

12 United Nations Sustainable Bioenergy A Framework for Decision Makers 2007

13 International Energy Agency World Energy Outlook 2006

14 Washington Post 200807

15 International Energy Agency Biofuels for Transport ndash An International Perspective 2004

16 Reijinders L amp Huijbrechts MAJ 2006

Unilever NV Weena 455 PO Box 760 3000 DK Rotterdam The Netherlands T +31 (0)10 217 4000 F +31 (0)10 217 4798

Commercial Register Rotterdam Number 24051830

Unilever PLC PO Box 68 100 Victoria Embankment London EC4P 4BQ United Kingdom T +44 (0)20 7822 5252 F +44 (0)20 7822 5951

Unilever PLC registered office Unilever PLC Port Sunlight Wirral Merseyside CH62 4ZD United Kingdom

Registered in England and Wales Company Number 41424

17 Delft Hydraulics

18 Based on Food and Agriculture Organization data available at wwwwaterfootprintorg

19 United Nations World Population to 2300 2004

20 Economist 23607

21 International Monetary Fund World Economic Report April 2007

22 Organisation for Economic Co-operation and Development Food and Agriculture Organization Agricultural Outlook 2007-2016

23 Food and Agriculture Organization State of Food Insecurity in the World 2006

24 International Energy Agency Biofuels For Transport An International Perspective 2004

25 Reijinders L amp Huijbrechts MAJ (2006) and Delft Hydraulics

Rainforest Deforestation Impacts [7] graphic

Journal of Cleaner Production 2006 Palm Oil and the Emission of Carbon-Based Greenhouse Gases Reijinders L amp Huijbrechts MAJ

Journal of Tropical Forest Science 2005 An Assessment of Changes in Biomass Carbon Stocks in Tree Crops and Forests in Malaysia Henson IE

Oil World Annual 2007 ISTA Mielke GmbH

Intergovernmental Panel on Climate Change Guidelines for National Greenhouse Gas Inventories Volume 2 Energy 2006

Writing and consultancy Context

Design and production Red Letter Design

Illustrations (Graphics 4 and 7) KJA-artistscom

Printing Scanplus (on paper made from responsibly managed forests)

wwwunilevercom

Sources of information 1 International Energy Agency World Energy Outlook 2006

2 International Energy Agency httpieaorgtextbasework2004 eswg21_NCVpdf

3 International Energy Agency World Energy Outlook 2006

4 httpwwwbiodieselorgresourcesfuelfactsheetsstandards_ and_warrantiesshtm

5 United Nations Sustainable Bioenergy A Framework for Decision Makers 2007

6 United Nations Environment Programme Global Trends in Sustainable Energy Investment 2007

7 International Energy Agency World Energy Outlook 2006

8 United Nations World Population to 2300 2004

9 World Business Council for Sustainable Development Energy amp Climate Change Facts and Trends to 2050 2004

10 United Nations Sustainable Bioenergy A Framework for Decision Makers 2007

11 Energy Information Administration Annual Energy Outlook 2007

12 United Nations Sustainable Bioenergy A Framework for Decision Makers 2007

13 International Energy Agency World Energy Outlook 2006

14 Washington Post 200807

15 International Energy Agency Biofuels for Transport ndash An International Perspective 2004

16 Reijinders L amp Huijbrechts MAJ 2006

Unilever NV Weena 455 PO Box 760 3000 DK Rotterdam The Netherlands T +31 (0)10 217 4000 F +31 (0)10 217 4798

Commercial Register Rotterdam Number 24051830

Unilever PLC PO Box 68 100 Victoria Embankment London EC4P 4BQ United Kingdom T +44 (0)20 7822 5252 F +44 (0)20 7822 5951

Unilever PLC registered office Unilever PLC Port Sunlight Wirral Merseyside CH62 4ZD United Kingdom

Registered in England and Wales Company Number 41424

17 Delft Hydraulics

18 Based on Food and Agriculture Organization data available at wwwwaterfootprintorg

19 United Nations World Population to 2300 2004

20 Economist 23607

21 International Monetary Fund World Economic Report April 2007

22 Organisation for Economic Co-operation and Development Food and Agriculture Organization Agricultural Outlook 2007-2016

23 Food and Agriculture Organization State of Food Insecurity in the World 2006

24 International Energy Agency Biofuels For Transport An International Perspective 2004

25 Reijinders L amp Huijbrechts MAJ (2006) and Delft Hydraulics

Rainforest Deforestation Impacts [7] graphic

Journal of Cleaner Production 2006 Palm Oil and the Emission of Carbon-Based Greenhouse Gases Reijinders L amp Huijbrechts MAJ

Journal of Tropical Forest Science 2005 An Assessment of Changes in Biomass Carbon Stocks in Tree Crops and Forests in Malaysia Henson IE

Oil World Annual 2007 ISTA Mielke GmbH

Intergovernmental Panel on Climate Change Guidelines for National Greenhouse Gas Inventories Volume 2 Energy 2006

Writing and consultancy Context

Design and production Red Letter Design

Illustrations (Graphics 4 and 7) KJA-artistscom

Printing Scanplus (on paper made from responsibly managed forests)

wwwunilevercom