Biofuels and its Implications on Food Security, Climate Change, and Energy Security: A Case Study of Nepal

By Shailee Pradhan Master of Arts in Law and Diplomacy Candidate at The Fletcher School

Master of Science in Food Policy and Applied Nutrition Candidate at Friedman School of Nutrition Science and Policy

Tufts University

Research Background The solution to the problem of energy scarcity is to become more efficient in our use of energy, which in advanced economies can be achieved through mass transit systems and energy-efficient appliances. In developing countries, the need still remains in providing affordable, reliable, and accessible energy through diverse sources.

Biofuels can play an important role in supplying energy in rural transport sector without negatively affecting food security and the environment. The key is to distinguish between large-scale biofuel production that diverts water, labor, land, and food crops like maize and sugarcane away from food to fuel and small to medium-scale local biofuel production for local energy needs using non-food crops, marginalized land, and labor where there is minimal employment opportunities.

Research Objective and Methodology This research was undertaken to examine the case of biofuels in Nepal and to provide recommendations on pursuing biofuel production in a way that does not compromise food security.

The research was carried out through extensive literature review, interviews with key stakeholders, cost-benefit analysis of biofuels production, and case studies of existing biofuel projects in Nepal.

Why Biofuels? “No country in modern times has substantially reduced poverty in the absence of massive increases in energy use” - (UN-Energy 2007, 6)

The alternative energy sources in Nepal focus primarily on rural electrification through micro-hydro power and solar energy and on cooking and heating through biogas and biomass. However, there has been very little focus on alternative energy for transportation.

Because diesel-run irrigation pumps and tractors are important input in agriculture and are cheaper than electric or solar vehicles, this makes biodiesel a popular alternative fuel for vehicles.

If we ensure that land, water, and food crops are not diverted away from food, then the negative impact of biofuels on food security could be mitigated. Furthermore, small-scale local production done in a sustainable manner will reduce GHG emissions.

What are Biofuels? Biofuels have been defined as any fuel of biological and renewable origin, including biomass. Much of the public debate has focused on liquid biofuels for transportation, namely bioethanol and biodiesel. Biofuel currently come in two forms:

1. Ethanol: Ethanol can be made from sugars (e.g., sugar beets, sugarcane and sweet sorghum), grains (such as maize and wheat), root crops (such as cassava), cellulose and waste products

2. Biodiesel: Biodiesel can be manufactured by the transesterification of vegetable oil. It can be blended with diesel to reduce the consumption of diesel.

The Biofuel Debate The world faced its worst food crisis in 2008 since the 1970s. Of the factors that are widely accepted as having led to the rise in food prices, biofuels are possibly the most controversial. Biofuel production is charged with diverting land, food, and feed away from food to fuel.

Additonally, Cohen et al. (2008) argue that biofuels offer only a very small gain in energy efficiency and their production minimally reduces GHG emissions. A study by Crutzen et al. (2007) show that some of biofuels can contribute as much if not more to climate change as fossil fuels.

However, before dismissing biofuels as leading to food security and environmental degradation, it is important to make the distinction between large-scale biofuel production that diverts water, labor, land, and food crops like maize and sugarcane away from food to fuel and small to medium-scale local biofuel production for local energy needs using non-food crops, marginalized land, and labor where there is minimal employment opportunities. The former relates to the way biofuel production is pursued in advanced economies and the latter relates to how biofuel production can be pursued in developing countries, under proper policy guidelines

The Nepalese Scenario ImplicationsCostsDiversion of food and land to biofuels may cause food prices to rise

- High poverty and low nutritional indicators - Net importer of food- Stagnant productivity in agriculture and lowest crop yields in South Asia

- If biofuel production diverts land, food, water, and labor, this will have negative implications for food security- However, energy security is crucial to improve food security. Energy security can improve ag r i cu l t u r a l product iv i ty, provide employment opportunities, and improve health

Benefits E n e r g y access

- Nepalese Oil Company (NOC) runs at a monthly loss of more than USD 2.2 million (Republica 2009)

- Only 48% population has access to electricity (Adhikari 2008)

- Agriculture characterized by slow and variable growth and low productivity

- If local energy needs can be met through biofuels, it would lower the monthly losses of NOC

-Energy services through biofuels may improve agricultural productivity by m a k i n g m e c h a n i z e d agricultural inputs available, thus contributing to food security

Employment generation

- Unemployment is at 42% (Ghimire 2008)- Population is growing at a rate of 2.2% annually (ibid)

- Job creation in rural areas is even more important in the face of rising food prices - Small-scale production of biodiesel could meet energy needs of a village while providing employment opportunities

R e d u c i n g G H G emissions

- With climate change impacts, crop yields could decrease up to 30 percent in South Asia by mid- 21st century (IPCC 2007)- Nepal can take advantage of the Clean Development Mechanism (CDM) and sell carbon credits to countries with reduction commitments

- Biofuel production has generally been shown to have a positive effect in mitigating climate change, so this may have positive implications on food security in the long run- Under CDM, the Nepalese government can earn revenue

R e d u c i n g i n d o o r -pollution and i m p r o v i n g health

- The vast majority of the population rely on biomass energy- Biomass makes up for 92% of the basic energy services such as cooking and heating (World Bank 2007)

- Biofuels can reduce indoor-pollution and improve women’s health-Women’s health have significant impact on food security of the entire household

Cost-Benefit Analysis for Biofuel Production in Nepal There are costs and benefits associated with biofuel production, and a careful analysis is needed to devise biofuel policies.

The Trade-Offs Associated with Biofuels The trade-offs are depicted in the graphical representation below. It shows how food security is affected by climate change and biofuel production as well as how climate change and biofuel production are related. Climate change will negatively affect food security. However, if we can emphasize the positive signs and reduce the negative signs, biofuel production can improve food security and mitigate climate change.

Jatropha Cultivation in Nepal The seeds of jatropha curcas contain up to 30 percent oil, which once processed into biodiesel and blended with conventional diesel can be used in standard diesel cars (Kuikel 2009). Jatropha offers the following advantages: 1. Requires low water and fertilizer for cultivation 2. Not grazed by cattle or sheep because it is mildly toxic 3. Pest resistant 4. Produces high protein manure

In Nepal, Jatropha is found widely in the wild in over 70 of the 75 districts of Nepal. High oil yielding Jatropha is found in all tropical and subtropical districts up to 1200 m. Rural communities can cultivate their own Jatropha plants in the community wastelands or as hedges in their private land.

Potential of Jatropha Cultivation As Sharma and Banskota (2006) calculate, Nepal has 14.7 million hectares of land of which 4.41 million ha (30%) has favorable climatic conditions for cultivation of jatropha. Even if only 10% of this potential land is used for jatropha cultivation, with the yield assumption of 10 tons per hectare, 4.41 million tons of jatropha seed can be produced annually, which is equivalent to 1.1 million tons of jatropha oil or biodiesel assuming oil yield is 25% of weight of the seeds. This is almost twice the amount of total petroleum products (i.e. 0.67 million kiloliters) imported into the country in 2004/05.

Financing Biofuels Projects Oil from jatropha can be expelled using a simple mustard oil expeller that either uses manual labor or diesel. Mustard oil expellers are available in most rural areas of the country. For a small-scale, locally run jatropha production, most communities are able to finance their own projects, with help from microcredit institutions. Already programs like USAID’s Nepal Biogas Microfinance Capacity Building Program, UNDP’s Small Grant Program, and Biogas Sector Partnership Nepal, to name a few, have used microcredit to finance biogas and solar energy projects in Nepal .

Recommendations Nepal has no national biofuel policy so far, and any activity in this area is limited to academic or R&D levels with no support from the government. In January 2004, the cabinet had decided to blend 10 percent ethanol in petrol being used in the country, however, this decision has not yet materialized.

In Nepal, the Alternative Energy Promotion Center (AEPC) under the Ministry of Environment, Science and Technology (MoEST) is responsible for biofuel policies. The recommendations are directed towards them:

1. Formation of a Biodiesel Board - Coordinate policies amongst different government agencies - Promote transparency and public debate instead of closed-door policy formulation - Evaluate and approve large-scale production proposals

2. Pro- Food Security Approach Assigning Wasteland for Growing Energy Crops - Identify wasteland for biofuel production - Seek support from village level government entities to collect land use information - Involve army and police barracks for their manpower, technical expertise, and land A Community-based Biofuel Production - Include landless farmers - Involve district and village-level government entities in the monitoring process Growing Non-edible Energy Crops - Ban the use of edible crops for a limited time

3. Private Investments - Limit the scope of land use and crop use policy to wasteland and non-edible crops - Evaluate and approve the projects through the Biodiesel Board

4. Investing in Research and Development - Partner with universities at home and abroad and build public-private partnerships for shared risks

5. Awareness Programs and Trainings - Compile project updates and create flyers to share knowledge on best practices

References: Adhikari, K D. "NEA Half-Year Bulletin." Vidyut 10, no. 1 (August 2008). Cohen, M J, C Tirado, N Aberman, and B Thompson. Impact of Climate Change and Bioenergy on Nutrition. Washington DC: International Food Policy and Research Institute (IFPRI), 2008. Crutzen, P J, A R Mosier, K A Smith, and W Winiwarter. "N2O Release From Agro-Biofuel Production Negates Global Warming Reduction by Replacing Fossil Fuels." Atmospheric Chemistry and Physics 7, no. 4 (2007): 11191-11205. Ghimire, S R. "Environmental Concern in Nepalese Agriculture." The Journal of Agriculture and Environment 9 (June 2008). IPCC. Climate Change 2007. Geneva: Intergovernmental Panel on Climate Change (IPCC), 2007. Kuikel, Jagadish Chandra, Senior Research Associate, Winrock International Nepal, interview by Shailee Pradhan. (August 15, 2009). Republica. NOC brings down diesel imports. September 13, 2009. http://www.myrepublica.com/portal/index.php?action=news_details&news_id=9755 (accessed October 10, 2009). UN-Energy. Sustainable Bioenergy: A Framework for Decision Makers. New York: United Nations-Energy, 2007, 6. World Bank. Nepal Renewable Energy Project to Reduce Greenhouse Gas Emissions. July 2, 2007. Washington DC: World Bank, 2007.

Winrock International Nepal’s Biofuel Project: Bio-diesel Irrigation Pump; photo courtesy: Kuikel (2009)

Source: http://www.sanog.org/sanog4/images/nepal_map.gif Jatropha plant; photo courtesy: Kuikel (2009)

A jatropha Nursery in Kathmandu that encourages growing jatropha sustainably and a woman making jute bags for jatropha plants; photo courtesy: Kashish Das Shrestha