Biofuels in the Greater Mekong Subregion: Energy Sufficiency, Food Security, and Environmental Management

In the Greater Mekong Subregion (GMS), a growing demand for biofuels could help support the agriculture sector and provide an alternative source of energy. However, if deployed unsustainably, biofuels development can be associated with numerous risks that have negative ramifications for human development. This paper reviews existing literature and integrates various themes to provide an overview of four main issues related to biofuels deployment in the GMS: the need for alternative energy, risks to food security, considerations for environmental management, and opportunities for rural development. This paper was prepared as a discussion piece for the GMS 2020 International Conference (20–21 February 2012 in Bangkok, Thailand).

Biofuels have been the focus of intense interest, discussion, and debate in recent years. Spurred on by the adoption of policies and incentives to support their increased use in the European Union (EU) and the United States (US), both global production and trade of biofuels have expanded rapidly in the last decade (IEA 2010a). In response, several Asian governments announced ambitious plans to promote biofuels production for both domestic consumption and export (Zhou and Thomson 2009) and, as a result, the total production of biofuels in Asia increased from just over 5 billion liters in 2002 to almost 11 billion liters in 2010 (OECD-FAO 2011).

For decision makers in the Greater Mekong Subregion (GMS),1 growing global demand, particularly for first-generation biofuels,2 could provide a new market for existing agricultural products, and help support the agriculture sector, which sustains the majority of the region’s population. It has been argued that due to the availability of farm land, abundant labor, and favorable weather conditions in the subregion, biofuel expansion could help farmers diversify their activities and earn additional income (Malik et al. 2009). Conversely, experience from the subregion and elsewhere has shown that, if deployed unsustainably, biofuels development can be associated with numerous risks, particularly in terms of food security, impacts on soil and water quality, and biodiversity, which in turn have negative ramifications for human development (USAID 2009).

Much work has been done on the regional impacts of biofuel deployment in Southeast Asia (Elder et al. 2008, USAID 2009, Zhou and Thomson 2009). Much of the work considering the GMS, however, has either focused on an individual aspect of biofuel deployment, such as impacts on trade (Yang et al. 2009) and employment (Malik et al. 2009), or has presented results of case studies from individual countries (ERIA 2009, Shepley et al. 2009). This paper draws extensively on existing literature and integrates various themes to provide an overview of three main issues related to biofuels deployment within the overall context of energy demand and environmental trends in the GMS. The initial sections of the paper describe the energy utilization context and biofuels industry in the subregion, and analyze the extent to which biofuels development in the GMS could offset fossil fuel demand under different scenarios. Subsequent sections of the paper discuss three major issues related to biofuels development in the GMS—food security, environmental management, and rural development. Finally, recommendations are made on how policies need to be designed and implemented to ensure that the production and utilization of biofuels in the GMS may be sustainable.

ADB. Pradeep Tharakan, Naeeda Crishna, Jane Romero, and David Morgado No.8.January 2012

Biofuels in the Greater Mekong Subregion: Energy Sufficiency, Food Security, and Environmental Management x