Negotiations at the upcoming World Climate Summit in Copenhagen will, in many ways, influence the future development of the global biofuels industry. Subsidy schemes, cap and trade legislation and other carbon credit mechanisms are all on the agenda as delegates and politicians increasingly look to technology for ways to curb the world’s emissions of carbon dioxide (CO2).
One of the biggest challenges for those negotiating the COP15 World Climate Summit in Copenhagen is to ensure that essential agreements on addressing climate change can be implemented quickly and efficiently when both global population growth and economic development are placing increasing demands on our planet.
A price on CO2 and other greenhouse gases can be an effective instrument to reduce emissions. This view has already made it into legislation in the European Union, Australia and Japan,and legislation is on its way in the U.S. and China. A CO2 pricing system can help reduce emissions at the lowest possible cost. At the same time it enables different regions to gravitate towards different solutions based on their natural resource set and the competitiveness of different CO2 reducing technologies. But to really be effective, CO2 pricing needs to be global in scope and cover all major CO2 emitting sectors. The transportation sector is the second largest CO2 emitter and is growing the fastest. There is consensus that global CO2 emissions need to start declining by 2012 if global warming is not to become self-accelerating. Therefore, negotiators at COP15 need to find a solution for the transportation sector. And it has to be a solution that will deliver a change today.
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Biofuels such as ethanol are the only currently available option to significantly limit CO2 emissions from road transportation. They can readily be implemented in the current infrastructure and car fleet and they can deliver up to a 90 percent greenhouse gas reduction compared to gasoline. Furthermore, biofuels will also become a viable solution for the shipping and the aviation industry that make up a growing share of the transportation sector.
According to McKinsey & Co., biofuels are among the most cost-efficient ways to reduce CO2 emissions in the transportation sector. At the same time, biofuels are the only way to address emissions from the current car fleet. With political mandates and a carbon price on all fuel (gasoline, biofuel and electricity), a low-carbon car fleet would drive the market for the best low-carbon fuels.
Biofuels regulation and consumption vary greatly across the globe. In the U.S., changing administrations have offered strong support for biofuels and, as a result, the U.S. uses more biofuels than any other country. This is in large part thanks to the renewable fuel standard, which mandates biofuels use through 2022. In sharp contrast, many other governments have lacked a committed, consistent and coherent biofuels policy, which has led to “fits and starts” in investments.
It is important that negotiators at COP15 realize we need global incentives to promote green fuels. Today, there are 750 million cars on the planet. In 2020, we’ll have 2 billion cars and in 2050 there will be 3 billion cars; most of which will be driving on roads in developing countries. Biofuels legislation in the U.S. and Europe is necessary, but if India and China do not have incentives to build a low-carbon car fleet, we will not meet the emission reduction targets.
A “Sectorial Crediting Mechanism” is one way of incentivizing developing countries to promote clean biofuels. Today, carbon credits are given to specific projects. This mechanism is criticized for being inefficient and overly bureaucratic. An SCM would award countries with carbon credits for implementing carbon reducing legislation. If China, for example, implements national mandates for biofuels use, it would receive carbon credits reflecting the mandates. This would strongly incentivize countries all over the world to promote a low-carbon transportation sector.
The global potential of biofuels will be the topic when Gen. Wesley Clark, Poet CEO Jeff Broin, Novozymes CEO Steen Riisgaard and other experts from around the world and across the value chain meet in Copenhagen on Dec. 16. At the meeting, participants will discuss how biofuels can play a role in a Copenhagen agreement in terms of reaching the overall targets, contributing to achieving the specific targets for the transportation sector and in terms of creating jobs and economic development.
EDITOR'S NOTE: The preceding article was contributed by Novozymes North America President Adam Monroe. The claims and statements made in this article belong exclusively to the author and do not necessarily reflect the views of EPM or its advertisers.
