Friedrich-Ebert-Stiftung 2009 –
a decade ago, Western politicians started presenting biofuels as a major
achievement for the global environment: Fuels derived from biomass were
celebrated as a relatively simple way to decrease the dependency on fossil
fuels and to reduce harmful greenhouse gas emissions. At the beginning of the
21st century, governments in Europe and North America introduced
subsidies and tax breaks for biofuels production and implemented gradually
rising mandates for the use of biofuels.
The challenge of sustainability
In recent years, however, it has become clear that the production of many biofuels will turn out to be far from sustainable or even beneficial for the fight against climate change. Palm oil for example – once considered the most economical feedstock for biodiesel – is the main reason for staggering deforestation in Indonesia and Malaysia. Even its carbon balance, currently the main argument in favour of the use of biofuels, is not at all positive when natural areas are converted into plantations and forests destroyed. Especially the burning of peat swamps causes an immense output of carbon dioxide.
Apart from their negative environmental effects, biofuels also affect the world’s food supply. Even before utilizing food crops such as corn, soy or sugar cane as energy resources, many countries were already suffering from food shortages. The rapid increase of global food prices in 2008 led to social unrest in several developing countries.
In the meantime, some governments and organisations have started reacting to the food-versus-energy discussion as well as to the strong protests against the destruction of rainforests: European countries for example downsized their initial targets for the mandatory use of biofuels and enacted by-laws for a certified sustainability of feedstocks. China has stopped all subsidies for grain-based biofuels and is currently switching to the production of non-edible crops.
Critics, however, see the downsizing of production rather in the context of the global financial crisis: Low petrol oil prices in combination with high feedstock costs have made the production of biofuel far less profitable than the outlook promised only a few years ago. Especially biodiesel from palm oil led to a series of bankruptcies of biodiesel producers in Australia, Germany and the USA due to high feedstock prices in 2008.
Bioethanol from sugarcane is by far the cheapest option at the moment, but it has recently become rather infamous due to reports about horrible working conditions on Brazilian plantations, the world’s largest producers of this feedstock.
New dynamics in biofuel development
Nevertheless, the prospects for biofuels production are improving again: Driven by the mandatory use of biofuels in more and more countries and due to massive over-capacities in production facilities, the market is expected to explode in years to come – especially for biodiesel from so-called second-generation feedstocks such as Jatropha curcas and algae.
2010 will see increasing mandates in the European Union, the USA and Brazil, currently still the world’s largest biofuels consumers. Asia’s biofuels markets are expected to grow even faster. China, South Korea, Indonesia, the Philippines and Thailand are currently increasing their already implemented mandates. India, Malaysia and Vietnam announced the introduction of biofuel mandates by 2010. Japan will follow in 2012.
To provide the world’s most populated nations with biofuels requires vast resources: While China, Japan and South Korea are heavily investing in their own biofuels industry, most of the feedstock will be produced in Southeast Asia and the Pacific countries. Due to the available landmass and favourable climate conditions, the region has a huge potential for crops such as oil palm, coconut, cassava and Jatropha curcas.
Land conversion and its consequences
This development in biofuel markets implicates the conversion of giant areas of agricultural or natural land to energy crops. Conservative estimations go up to 166 million hectares worldwide being converted to biofuels plantations by 2020. A study by the Cornell University even states that up to a third of all available cropland on earth could be required, in order to produce 10 percent of all transport fuels from energy crops in 2030.
While government officials and industrial players in developing countries expect huge revenues from leasing out land to their industrial neighbours, the communities originally inhabiting these areas often become homeless and jobless and fall victim to the global market mechanisms. The United Nations warned that around 60 million people are in danger of being displaced because of biofuel plantations. Most of the local communities and workers affected by the biofuels development are promised good jobs and huge profits, but they never receive what they expected. Protests are often oppressed by violence. Most of these people either migrate to bigger cities and end up in slums or work under very poor conditions as day labourers on the very same land they formerly owned.
The social destruction and human rights violations caused by converting land to the production of energy crops are widely neglected by the consumers. They are also not adequately taken into consideration in the new bylaws for sustainability in Europe. Currently practiced certification methods concentrate on energy efficiency, carbon balance and environmental impacts. The pressure on local residents and indigenous people to sell or even leave their homeland without any compensation is not taken into account.
Harsh working conditions on the plantations are insufficiently reflected and so is the impact of environmental destruction on social life: Polluted water, acidified and ozone-depleted soil lead to food scarcity, cause health problems and can result in poverty and social unrest. Often entire communities are destroyed, because their members migrate to big cities in search of a better life.
Outline of the study
The following analysis provides an overlook of biofuel production and consumption in Southeast and East Asia and looks at the social impacts including land conflicts as well as living and working conditions in and around the plantation areas. Although India and other South Asian countries are also important players in the global biofuels business, they are not included in this study, since they are not influencing the plantation development in Southeast Asia as much as East Asian countries. They are therefore less responsible for its social consequences. Although India is a huge buyer of palm oil for example (mainly for its food and cosmetics industry), it is not yet investing in land use projects or production facilities for biofuels in Southeast Asia.
The study is a compilation of facts and data on the subject and each country profile starts with implemented and planned state policies. This is followed by an overview of production facilities and feedstock as well as an outline of local and international markets for the respective products including a table of related investor projects. These lists, however, are not intended to be exhaustive. The country profiles close with insights into land use practices and living and working conditions at and around the plantation areas.A final conclusion gives an outlook on the possible development of biofuels production in the region and the impacts it will have on the social development of Southeast Asian countries.
 There are controversial perceptions of the term biofuel versus agrofuel: While government and industry sources use biofuel, many NGOs – especially if opposing the development – prefer agrofuels. They argue that people might be misled by the syllable “bio” and imagine a clean, environmentally sound product. Without intending to evaluate it, this analysis will use the term biofuel in the sense of the very root of the word: fuel derived from a biological mass.
 The US Energy Policy Act of 2005 requested the introduction of a Renewable Fuel Standard Programme starting with a 2.78 percent share of bioethanol in the national gasoline consumption by 2006 (US Environmental Protection Agency). For 2010, the USA have set a 100-million-gallon bioethanol mandate, which most probably will be reduced, because there is not enough feedstock available. The European Biofuels Directive of 2003 set a first target of a 2-percent-share of biofuels in the energy consumption of the European Union by 2005, which then was not met. The target for 2010 is 5.75 percent biofuels.
 Adnan, Hanim: High CPO price hurting biodiesel industry, The Star Online, 14 October 2009
 See chapter “What are biofuels?”
 In 2008, Europe still dominated the biodiesel market with 80 percent (Biodiesel 2020: Global Market Survey, Feedstock Trends and Forecasts, Multi- Client Study 2nd Edition, Emerging Markets Online, 2008). The biofuel consumption in Europe will increase by mandates to an average of 6 percent in 2010. The biggest producers and consumers of bioethanol are the USA and Brazil.
 UNEP: Towards sustainable production and use of resources: Assessing Biofuels. A summary presentation from a report conducted by the International Panel for Sustainable Resource Management, September 2009.
 Ravindranath, N.H. et al.: Greenhouse Gas Implications of Land Use and Land Conversion to Biofuel Crops. In: R. W. Howarth and S. Bringezu: Biofuels: Environmental Consequences and Interactions with Changing Land Use. Report of the International SCOPE Biofuels Project, 2009 (http://cip.cornell.edu/biofuels/)
 The analysis covers all Southeast Asian countries with the exception of Brunei, since the sultanate on the island of Borneo is currently involved in only one small biofuels project outside its borders. Instead, Papua New Guinea is included, as it is closely connected to the palm oil and biodiesel producing conglomerates of Indonesia, Malaysia and Singapore and will receive new biofuel investment from East Asian countries. As main investors from East Asia, the analysis covers China, Japan and South Korea.