Opening up the international biofuels market

by Dr. Corrado Clini, Director General of the Italian Ministry for the Environment Land and Sea and Chairman of the Global Bioenergy Partnership

Trade in biofuels and biofuels feedstocks is currently too low. European and US systems of subsidies and incentives for domestic production and of tariffs for imported feedstocks and final products are, de facto, reducing the potential biofuels production in tropical and subtropical countries, where biomass productivity is significantly higher than in temperate regions such as Europe and North America (according to some estimates up to five times higher).
Brazil beside “just” becoming the first producer of Ethanol, was able in the last 30 years to drive a flex technological revolution that contributed to its road to a complete development. Other examples of this dynamism are represented by those countries that without such internal markets are developing a biofuels industry that takes advantage of existing preferential trade agreements with US and Europe.

International trade, in fact, could provide win-win opportunities for all countries. For several importing countries, it is a necessary precondition for meeting self-imposed fuel blending targets; for exporting countries, especially small- and medium-sized developing countries, these markets are necessary to initiate their industries. Reducing and eliminating trade barriers and phasing out trade-distorting subsidies would contribute to establishing a level playing field. Investors in prospective biofuels export facilities need to be assured that markets are going to be open and that there will be scope for exports, allowing them to exploit economies of scale.

Labeling and certification of biofuels and related feedstocks may be instrumental to ensure that widespread biofuel production and use will indeed be conducive to environmental improvements. Certification and labeling remain, however, a rather complex issue. Efforts should be deployed to ensure that the development of sustainability criteria and certification systems contribute to reaching environmental objectives without creating unnecessary barriers to international trade, especially to exports from developing countries.

At the Doha Round, negotiations were launched for “the reduction or, as appropriate, elimination of tariff and non-tariff barriers to environmental goods and services.” However, although, according to WTO members, renewable energy products, like Ethanol, Biodiesel, and related products, could be classified as environmental goods, many disagreements have hampered any conclusive result.

New and innovative forums have to be utilized to reach consensus in order to create an open international market, necessary for the effective utilization of the potential benefits of biofuels in term of Sustainable Development, Technology Transfer, Climate Change mitigation, Energy, and Food Security.

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