Biofuels Initiative
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CDM in Least Developed Countries
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Biofuels Initiative

The BioFuels Initiative of UNCTAD

2006-7 Work plan flyer

The Expert Meeting on the New and Dynamic Sectors of World Trade, 7-9 February 2005, held in Geneva, Switzerland, recommended that UNCTAD give higher priority attention to work on bio-fuels, including further research, analysis, technical cooperation, and consensus building. In response to this need, UNCTAD launched, on 21 June 2005, the BioFuels Initiative by convening a "small" international advisory Expert Group to assist developing countries in capturing the multiple-win advantages of greater production, use, and trade in bio-fuels resources and technology.

In July 2005, the United Nations Foundation board decided to support the programme Biofuels Initiative - Trade, Investment, and Capacity Building Opportunities. This grant supports UNCTAD's efforts to promote the use and production of biofuels as an emerging trade and investment opportunity for developing countries. It is designed to assess the trade competitiveness of developing countries in the growing worldwide use and trade in biofuels, as well as market access and market entry issues related to imports of biofuels in developing countries. UNCTAD is undertaking a few country assessments to evaluate real potential for greater use, production and trade in biofuels. Initial surveys have started for India, Thailand, Brazil and the Philippines and a few more will be prepared in the coming months. The Initiative will seek partnerships with other relevant UN and non-UN partners such as the FAO, UNEP, World Bank as well as NGO's and think tanks such as Earth Council Geneva, CENBIO - São Paulo and the Tata Group in India.

Rationale

Conventional fossil fuels such as petroleum and its derivatives, coal and natural gas are the primary sources of energy worldwide. Increasing greenhouse gas emissions stemming from ever-escalating dependence on fossil fuel combustion is the single most important source of greenhouse gas concentration in the atmosphere, causing human-induced climate change. Continued over-dependence on fossil fuels has economic, social, climate and biodiversity impacts, especially to the most vulnerable developing countries. Greater awareness on climate change, its linkages with options available for energy and transportation policies, the entering into force of the Kyoto Protocol and the emerging carbon market open new opportunities for developing countries to move towards a sustainable energy future.

Bioenergy fuels derived from sustainable agricultural practices provide an opportunity for developing countries to utilize their own resources and attract the necessary foreign and domestic investment to achieve sustainable development goals. Greater biofuel production, domestic use and eventual trade bring multiple benefits. In the context of the current (and increasing) historically high oil prices, the economics is sound, as a greater share of biofuels in total primary energy supply can help reduce dependency on oil imports and promote nationally-developed energy sources. From a developmental perspective, it fosters the agricultural production of well-known energy crops and promotes rural development thanks to the availability of accessible technologies to a large extent developed and tested in developing country regions. And, from an environmental standpoint, it offers an alternative lower carbon intensive development path, by offering a way to reduce greenhouse gas emissions, while pursuing energy development goals and by taking advantage of the financial incentive embodied in the Clean Development Mechanism (CDM). Lastly, paragraph 31(iii) of the Doha Ministerial Declaration encourages negotiations on “the reduction or, as appropriate, elimination of tariff and non-tariff barriers to environmental goods and services” (EGS). Biofuels derived from sustainable agricultural practices have many attributes that might qualify them as environmental goods and may provide an opportunity for developing and middle-income countries to create substantial export markets.

The opportunity at hand is to provide action-oriented assessment tools that, together with domestic policy and innovative financial instruments, will enhance the role of bioenergy as part of a successful development strategy. The programme will coordinate economic and trade policy analysis, capacity building activities and consensus building efforts towards the ultimate goal of providing the case for increased production, domestic use, and trade in biofuels.

Contribution to the United Nations Millennium Development Goals (MDGs)

Goal 1 - Eradicate extreme poverty and hunger

Promoting the use and production of biofuels in developing countries would provide greater energy security, improved quality of life and economic development, opportunities for job creation, and poverty alleviation especially in rural areas. It also fosters the agricultural production of well-known energy crops and promotes rural development.

Goal 7 - Ensure environmental sustainability

The use of biofuels derived from sustainable agricultural practices provides an alternative lower carbon intensive development path, by offering a way to reduce greenhouse gas emissions, while pursuing energy development goals and by taking advantage of the financial incentive embodied in the Clean Development Mechanism (CDM).

UN Value Added

The promotion of greater production, domestic use and eventual trade of biofuels help achieve trade liberalization, greater market access for developing country exports, development gains, energy diversification and climate change benefits. UNF has been leading several initiatives in each of these areas and such programme aims to contribute in bringing tangible results in terms of actual CDM investment projects submitted and approved by the UNFCCC Executive Board and in terms of a measurable increase in the percentage of biofuels in total energy supply.

The Initiative is also in line with UNF's interest in identifying, developing and implementing sustainable clean energy solutions in addressing global climate change.

Beneficiaries

Developing countries are the primary beneficiaries of the programme. The programme will initially be implemented in Brazil, India, Mozambique, Philippines, and Uganda. Assuming that the greatest potential for the production of biofuels can be found in the developing countries, the Initiative will benefit those countries with a clear commitment to introduce biofuels, those interest in assessing their potential and those interested in increasing exports, as well as CDM project developers in developing countries. Whereas developed countries, in meeting their Kyoto commitments, are likely to procure sound CDM projects or increase importation of biofuels, the initiative will also indirectly benefit developed country markets.

Major activities from 1 November 2005 to 30 June 2006: