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Land grab for renewable energy production could impact beef capacity

Jon Condon, 26/09/2011

Rising demand for the dominant form of renewable energy worldwide – wood – could drive yet more foreign acquisitions of land, particularly in developing countries where food insecurity is rising and land rights are weak, researchers say.

In a recent briefing paper, the International Institute for Environment and Development warned that this new trend needed greater public scrutiny and debate.

Wood accounts for 67 percent of global renewable energy supplies, and many northern hemisphere countries were increasing their use of it both to reduce their reliance on costly fossil fuels and to mitigate climate change.

Such countries were setting ambitious targets for using renewable energy, including biomass, but with demand for wood set to outstrip supply by up to 600pc in some countries, and high tree growth rates in the tropics, investors are beginning to look towards the southern hemisphere.

New tree plantations in developing countries designed to be harvested to export wood could spell good news in terms of jobs, investment, climate change and conversation — if they were well managed, the IIED report said. But there was also a risk that plantations would displace poor and marginalised communities from land they had tended to for generations.

The paper, aimed at policymakers in both developed and developing countries, warned that rising demand for wood could harm food security and the livelihoods of the world’s poorest and most vulnerable people if governments leased large areas of land for fuel wood plantations.

"All eyes are turned to food and biofuels, but tree plantations for biomass energy may soon become an important driver in the global land rush," said one of the report’s co-authors, Dr Lorenzo Cotula.

Biomass energy: Another driver of land acquisitions?

In the search for renewable energy sources to diversify economies away from fossil fuel and mitigate climate change, governments in Europe, North America and East Asia were turning to woody biomass, in some cases setting concrete targets for increasing the share of biomass energy.

These plans were rapidly increasing the demand for materials such as wood chips and pellets, the latter being compacted and dried to reduce transport costs.

Meeting national 2020 targets in Europe would require northern hemisphere governments to diversify their economies away from fossil fuel and mitigate climate change, meaning plans for biomass-based energy generation were growing fast.

In the UK, plans to expand biomass energy will push demand for biomass up to as much as 60 million tonnes a year, compared with the one million tonnes burnt or co-fired in the country’s biomass power stations today. In Asia, the South Korea Forest Service forecasts that pellet demand could rise from 20,000 tonnes in 2010 to five million tonnes in 2020.

Securing sources

In the face of such rapidly escalating demand, securing reliable sources of woody biomass will be key. Some countries such as France, Germany and the US were pursuing models that mainly relied on domestic supplies. But for many OECD countries, demand for biomass will outstrip national supply capacity and local sourcing would not be an option.

Some OECD countries, including Italy, Japan, the Netherlands, Sweden and the UK already imported increasing volumes of wood pellets, and others may quickly have to follow suit.

Europe is already driving major investment in new biomass pellet production units — in 2011 alone at least five major pellet facilities in Canada, Norway, Russia and the US went into production, with a total capacity of three million tonnes. Sourcing from other exporters, including Australia, Chile, South Africa and Vietnam, is hindered by high transport costs.

The extent to which supplies from these sources can keep expanding is uncertain. For example, plans to reduce the use of fossil fuels in both Canada and the US are expected to divert supplies of wood pellets away from export markets. It is likely that countries in Europe and elsewhere will have to look to non-traditional southern hemisphere suppliers to plug their biomass gap.

Operators in Brazil, for example, are increasingly interested in exporting to Europe and some analysts see the country as one of Europe’s most promising future sources of wood pellets because of its good infrastructure and relative proximity.

Africa is also likely to play a big role in feeding European demand for biomass. Already, some companies are moving to service or replant existing tree plantations for this purpose. For example, deals have been signed to produce woodchips for export markets in Europe and elsewhere by replanting old rubber plantations in Ghana and Liberia.

But the sheer scale of projected global demand means that new plantations will also have to be developed to fuel biomass power stations. Africa is attractive in this regard because it is perceived to be abundant in land.

And there is another reason for biomass suppliers to acquire land and develop plantations in the southern hemisphere: tree growth rates (and consequent financial returns) are much higher in warmer climates.

The rise of biomass plantations

Energy companies are already developing plantations on available land in Canada, Europe, Russia and the US using fast-growing material supported by stable policy environments and sustainability standards. While such sources can meet demand, land acquisitions for biomass plantations in the global South are likely to remain limited.

But evidence suggests that private operators increasingly consider sourcing from other regions a viable business option. Land is already being acquired in South America, Africa, India, Southeast Asia and Australia to establish tree plantations wholly or partly for biomass energy for export or domestic markets.

One Canadian company operating in Africa runs a eucalyptus plantation in Congo that in 2009 supplied 350,000 tonnes of wood chip to Europe. It is not just the private sector taking the lead in land deals for biomass plantations — in 2009, the South Korean and Indonesian Governments signed an MOU allocating 200,000 hectares of Indonesian forest land to the production of wood pellets and included a 99-year lease on separate land, with private companies expected to construct and operate a pellet-making plant.

Several factors are expected to increase the attractiveness of investing in biomass plantations in coming years: fossil fuel prices are expected to rise; and the cost of biomass production is likely to fall as strategic breeding and production methods develop.

Biomass plantations may also be able to generate additional revenue streams, for example through selling carbon credits. They can also sell into different markets such as timber or pulp if energy prices fall.

Some tree plantations are already doing this. One European company is acquiring land in Mozambique and Tanzania for tree plantations that involve several economic activities — supplying wood products and pulp but also carbon credits and biomass energy.

Social implications

What are the implications of expanding biomass plantations for recipient countries?

Some benefits may materialise, the IIED report says — for example, apart from creating hoped-for jobs, biomass plantations could open the door to improved energy access.

But there are also real concerns. In particular, that the search for cheap land, suitable climates and competitive transport costs will increasingly lead investors to focus on Africa and Southeast Asia, where many countries are characterised by food insecurity and vulnerable land rights.

Biomass plantations may also compete for the best lands with food crops and livestock (and with biofuel feedstocks), adversely affecting local food security and further marginalising smallholder farming.

Little attention has been paid to the wider implications of biomass plantations, but if left unchecked, the growing pressure on land access could undermine livelihoods and food security in some of the world’s poorest countries, the report suggests.

“It may be early days, but the sheer pace and scale of growth in biomass energy makes this no ground for complacency. We certainly need greater public scrutiny and debate about what the plans for biomass energy in the northern hemisphere will mean for developing countries in the south,” it concludes.

  • • The International Institute for Environment and Development (IIED) is an independent, non-profit research institute working in the field of sustainable development. IIED provides expertise and leadership in researching and achieving sustainable development at local, national, regional and global levels.

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