Countries in Latin America and the Caribbean are increasingly looking at biofuels as a means to diversify their energy and export portfolios. But survival and maintaining a competitive edge requires careful policy planning. Governments and industry must consider the various aspects of a biofuels policy, both domestically and in an increasingly globalized market.
A comprehensive biofuels policy combines policy priorities that often compete or overlap. Energy security, trade, agriculture, environment, and transport are just a few of the areas to consider. Looking beyond specific sectors, international markets, trends, and standards are also key components to effectively putting forth a competitive and sustainable long-term approach. This is especially relevant in countries that intend to promote both exports and foreign investment in the biofuel sector. Survival in the international biofuels market today goes far beyond the capacity to produce ethanol or biodiesel; rather, the key determinant is the ability of policymakers and industry leaders to develop a national biofuels strategy.
The biofuels industry is no longer a new phenomenon. In the last few years, it has transitioned from obscurity to becoming one of the world’s fastest growing industries. This has led to a deeper set of experiences, new and more efficient technologies, significant investment in research and development, and a larger biofuels market. At the same time, the industry is now subject to increased scrutiny—a growing international consensus is calling for higher production standards and codes. Combined with greater competition, conditions have become more challenging for all producers.
International cooperation is essential for the biofuels industry to move forward. Working together, industry leaders can facilitate the transfer and development of new technologies, the development of international standards and codes, and access to markets and financial resources. Brazil and the U.S. can play an important role in the Western Hemisphere. Both are recognized as hemispheric leaders that can help other countries to develop clear objectives and realistic expectations in terms of trade, development, and environmental targets.
It is important to work together to differentiate the country-specific conditions for biofuel development. The extent to which a country pursues biofuels can vary significantly based on the type of feedstock suitable for its production and the social, economic, and environmental impacts of production. Clearly, it is not the same to produce corn-based ethanol in a country with a highly developed agribusiness sector as it is to produce sugar cane-based ethanol.
New biofuels producers in Latin America also need to be more actively engaged with Europe, Brazil, the U.S., and other members of the International Biofuels Forum. This would give producers a better opportunity for contributing to the development of international standards and sustainability schemes.
Pablo Reyes is Director of the Center for Latin American Strategic Studies (CEELAT) in Bogota, Colombia. On April 24, CEELAT will be hosting its second annual conference on energy cooperation, titled "Building a Sustainable Biofuels Strategy for Colombia and the Region." For more information, please visit: http://www.ceelat.org