Africa, Latin America, China and the biofuel revolution: Lester Brown versus Lula

The debate on whether biofuels are a boon for poor countries, continues. Lester Brown, founder and president of the non-profit Earth Policy Institute, recently spoke about how China's growing resource consumption and the rise in oil prices pushes up food prices around the world. If biofuels are added to this equation, Brown thinks we will have difficulties in feeding the world. Brown addressed the CIES World Food Business Summit in Shanghai where spoke about the coming 'Ethanol Shock' and its impact on global food prices.

Technically speaking, Brown's vision is not entirely correct, because there is vast potential for biofuels, both in Africa and Latin America, without threatening food production. The long-term technical potential is estimated to be around 1500 Exajoules per year, under a high input, high efficiency scenario. The entire world currently consumes 400Exajoules of energy, from all sources (coal, natural gas, oil, hydro, renewables). These projections have been produced by researchers who work for the IEA Bioenergy Task 40 study group (earlier post).

But there is of course a large difference between what is technically possible, and what actually happens on the ground. Policies, economics, and trade rules determine who will benefit from this potential, and who stands to lose. To be taken into production, the vast expanses of non-forest land in Africa require more than good intentions. In principle many African countries should be net food exporters, but in the real world a whole range of factors makes that the contrary is true. In this context, Brown may be right in thinking that biofuels made from crops such as corn may cost the poor dearly:

In effect, the price of oil is beginning to set the price of food. If the price of oil jumps from $60 a barrel to $80 a barrel, the price of grain will follow it up. If it jumps to $120 a barrel, the price of grain will continue to follow. We are in a new economic era now where oil and food are interchangeable commodities because we can convert grain, sugar cane, soy bean – anything – into fuel for cars. This is an entirely new issue – one that we’ve never faced before. The ethanol lobby in Washington likes to say we (Americans) don’t eat very much corn and that is true. Mexicans eat a lot of corn – Mexican cuisine is a corn based cuisine and when the price of corn doubled the price of tortillas went up 60% and we had food riots and demonstrations in cities throughout Mexico.

Brazil's president Luiz Inacio Lula da Silva however, has an entirely different vision, and thinks biofuels offer the opportunity of the century to help fight poverty, especially in Africa. In an IPS text, he writes that food insecurity is not a matter of physical food scarcity, as Brown seems to suggest, it is a matter of a lack of purchasing power.

But the potential of biofuels go far beyond providing a new source of clean and renewable energy. The ethanol industry has created 1.5 million jobs directly and 4.5 million indirectly in Brazil. In its first phase, the biodiesel programme created more than 250,000 jobs, especially for small-scale farmers in semi-arid areas, generating income and helping to settle people on the land.

It is also important to point out that biofuel production does not threaten food security, because it affects only 2 percent of our agricultural land. Moreover, by generating new income that can be used to buy food it helps combat hunger.

Lula sums up several other advantages of biofuels, for the poor:

These programmes also put a damper on chaotic migration, staunching the exodus from rural to urban areas, reducing the pressure on major cities, and providing a disincentive to small-scale miners and farmers to raze forests.
In addition, the expansion of sugar cane production has helped restore overgrazed pasture land that had little or no potential for agriculture.
Developing countries thus stand to benefit significantly from biofuels. Given their enormous potential for creating jobs and generating income, they offer a real option of sustainable development., especially in countries that depend on the export of scarce natural resources. At the same time, ethanol and biodiesel open up new paths of development, especially in the bio-chemical industries, in the form of social, economic, and technological alternatives for countries that are economically poor but rich in sun and arable land.

Moreover, biofuels help reduce the threat of dangerous climate change, which is set to affect poor people most, and threatens biodiversity on a global scale. Finally, oil importing developing countries suffer heavily under rising oil prices, with some now spending twice as much on importing oil, than on health care.

For the time being, biofuels may be the only pragmatic and feasible way to reduce greenhouse gas emissions. According to Lester Brown, climate change will come at a huge cost, and this may ultimately destroy economies, especially if oil prices keep going up at the same time. But putting a price on carbon now, can change this dark prospect:
energy :: sustainability :: ethanol :: biodiesel :: biomass :: bioenergy :: biofuels :: agriculture :: poverty alleviation :: China :: Latin America :: Africa ::

I don’t know what the cost will be of beating climate change – but what will the cost be of climate change? The study concluded that we are looking at a massive market failure. The market does not tell you the truth about the cost of burning fossil fuels. The cost of burning a gallon of gasoline is closed to $10 than $3. The cost of burning coal huge compared with market prices.

We are all economic decision makers as consumers, corporate planners, government policy makers, bankers. We rely on the information of the market to make our decisions. It is telling that burning coal is cheap but in fact it is not. It tells us a gallon of gasoline in the US costs us $3 when in fact when you incorporate all of the costs it is closer to $10 per gallon. The challenge is to get the market to tell the truth and the way to do that is to adjust the taxation system. Lowering income taxes and offset that by introducing carbon taxes. In the process we get the economy steered in an environmentally sustainable direction.

President Lula thinks biofuels offer one of the few practical and feasible energy systems that allow us to tackle climate change in a straightforward, sustainable and affordable way:

Brazil has over thirty years of success in its production of fuels that combine energy security and broad economic, social, and environmental benefits. The one-quarter ethanol and three-quarter gasoline mix used by regular cars and the use of alcohol by flex-fuel cars, made it possible for Brazil to cut the consumption and imports of fossil fuels by 40 percent. Since 2003, we have reduced our carbon dioxide emissions by over 120 million tonnes, thus helping slow global warming.

Interestingly, to achieve large scale biofuel production in Africa and Latin America, the president calls for something we have called 'triangular' cooperation, novel 'South-North-South' forms of collaboration:

I am convinced that biofuels should be at the centre of a planetary strategy to preserve the environment. Agreements like that signed by Brazil and the US and now being negotiated with European countries would provide for the creation of three-way projects in Central America, the Caribbean, and Africa, combining Brazilian technology with these regions' favourable climates and soils.

The Brazilian government and business class are already offering bilateral technical co-operation in the production of biofuels in Mozambique in a marriage of Brazilian technology and British financing. This formula could be adapted throughout sub-Saharan Africa.

For a world facing environmental degradation and the increase of energy prices, biofuel offers real promise. It can help poor countries combine economic growth with social inclusion, and environmental conservation. In short, it is a valiant ally in the fight against social and political instability, violence, and migratory chaos.

On a most important point, the contradiction between Lester Brown's vision and that of Lula may be overcome. Because, as said earlier, ultimately it is policies and trade rules which determine whether biofuels benefit society or only a small group of multinationals:

However, this revolution can only occur if the rich countries open their markets to the poorest and eliminate agro-subsidies and barriers to the import of biofuels.

It is a win-win situation. Developing countries will generate jobs for marginalised populations and funds to energise their economies while developed countries can tap into a source of competitively-priced clean energy instead of investing in massively expensive innovations to make conventional fuels more green.

The creation of a rigorous system of public certification of biofuels backed by multi-lateral agreements and the commitment of the public will help protect the environment and guarantee dignified working conditions.

Biofuels offer us a way to allow all humanity to prosper without mortgaging the future of generations to come. This is the message I will carry to the World Conference on Biofuels that Brazil is organising for 2008. Together Brazil and Africa can help forge a just, lasting, and truly global solution to the major challenges of the 21st century.

Finally, president Lula sketches the steps which have led his country to cooperate with Africa, in a way that both the U.S. and the E.U. could learn from. After all, until recently Brazil was called a 'third world' country itself; today, and conscious of its own history, it is actively helping really poor developing countries kickstaring a new economic and social mode of production that Brazil thinks will bring social and economic justice:

It was clear from the discussions during the recent G8 Summit in Heiligendamm, Germany, that issues like climate change, sustainable development, new and renewable sources of energy, and development financing are global matters which the countries of the South must have a say in.

Ultimately, it is our populations that are directly affected. Moreover, our countries are generating innovative and creative proposals to resolve the problems. The contributions of leaders from South Africa, Brazil, China, India, and Mexico during the Broader G8 Summit made the importance of real North-South dialogue clearer than ever.

Africa has a central role to plan in this debate. The continent is undergoing profound transformations which are laying the groundwork for a new cycle of political stability and economic dynamism. With 53 countries, vast natural resources, and a young population, it is anxious to realise its full potential for development and prosperity.

This Africa, which I have visited five times during my first term and will certainly return to, is strengthening its economic, trade, and political ties with Brazil.

In the Africa-South American Summit in 2005, and in the two sessions of the Brazil-Africa Forum, we explored in depth the great potential of this alliance, which can be further strengthened and improved by biofuels.

Luiz Inacio Lula da Silva is the president of Brazil. Lester R. Brown is founder and president of the Earth Policy Institute.

References:
IPS: Africa, Latin America and the Biofuel Revolution, by Luiz Inacio Lula da Silva - July 16, 2007

FoodWeek Online: Ethanol Shock: Lester Brown’s rationale - July 16, 2007.