THE FUTURE ROLE OF BIOFUELS - AUAaoatools.aua.gr/pilotec/files/bibliography/The future role of...

P A C I F I C F O O D S Y S T E M O U T L O O K 2 0 0 6 – 2 0 0 7 1

P A C I F I C E C O N O M I C C O O P E R A T I O N C O U N C I L

P A C I F I C F O O D S Y S T E M O U T L O O K 2 0 0 6 - 2 0 0 7

THE FUTURE ROLEOF BIOFUELS

P A C I F I C F O O D S Y S T E M O U T L O O K 2 0 0 6 - 2 0 0 7

THE FUTURE ROLE OF BIOFUELS

P A C I F I C E C O N O M I C C O O P E R A T I O N C O U N C I L

ISBN: 0-9714610-0-7

Pacific Food System Outlook 2006-2007S P O N S O R S

The Pacific Food System Outlook extends thanks to its sponsors.For information about the activities of our sponsors, see page 28.


Foreword 2

Coordinators and Forecasting Panel 4

The Future Role of Biofuels 6

Growth of biofuels 6

Determinants of biofuel’s future 8

Lessons from Brazil 16

Environmental tradeoffs 16

Rural impacts 18

Implications for PECC government strategies 19

Appendix: Biofuel briefs 21

References 24

PECC Members 26

Sponsor Profiles 28

Pacific Economic Cooperation Council 30

CONTENTS

The Pacific Food System Outlook’s (PFSO) 10th anniversary report examines the current status of

and future prospects for biofuels in the region. Current ethanol and biodiesel production in the

PECC region is quite modest, even in the United States and China where programs are most

advanced. Yet, many economies across the region are developing biofuel programs to reduce dependence on

imported petroleum, mitigate harmful emissions, including greenhouse gases, and boost rural economies.

In the energy programs of most nations, biofuels will likely play an expanding but modest role as part

of a broad-based portfolio of solutions to high oil prices. In addition to biofuels, that portfolio may

include conservation, more efficient energy use, and expanded production of oil, non-conventional fossil

fuels, and other alternatives. Biofuels’ future role will be even more significant with the commercialization

of cellulosic ethanol.

In the May meeting in Singapore, the PFSO team was privileged to have as its guest of honor,

Mr. Choo Chiau Beng, Chairman and CEO, Keppel Offshore and Marine and Chairman, Singapore

Petroleum Company and Singapore Refining Company. His opening remarks on the future of global

energy markets set the stage for our discussions.

We acknowledge the pivotal role of Professor Tan Teck Meng, Chairman, Singapore National

Committee for Pacific Economic Cooperation (SINCPEC) in making this year’s meeting successful.

We also acknowledge the assistance of Mr. Yong Tack Meng, also of SINCPEC.

We are grateful to Associate Professor Pang Yang Hoong, Dean and Vice Provost of Singapore

Management University, for her participation in the opening ceremony.

We appreciate the excellent presentations of the leadoff energy panel which included Jason Feer, Vice

President and Singapore Bureau Chief, Argus Media Ltd; Hosein Shapouri, Senior Economist, Office of

Energy Policy and New Uses, US Department of Agriculture; Gary Blumenthal, President, World

Perspective Inc., USA; and Jaime del Río, Fideicomisos Instituidos en Relación con la Agricultura (Trust

Funds for Agriculture Development), Bank of Mexico.

We are especially grateful to Betty Ip, Director of Public and Business Affairs, PECC International

Secretariat, for her tireless efforts in promoting the PFSO, in making our meeting a success, and in

2 P A C I F I C F O O D S Y S T E M O U T L O O K 2 0 0 6 – 2 0 0 7

FOREWORD

enhancing our part of the PECC web site. We appreciate the critical role of Eduardo Pedrosa, Secretary

General, in developing the meeting’s energy panel, and the assistance of Daphenie Ho, Zakiah Kassim and

Anne Witheford, all of the PECC Secretariat.

We are most grateful to the individual economists representing the participating economies of the PECC

region for their contributions and continued support. As in previous years, the financial support of Farm

Foundation and USDA’s Economic Research Service, as well as support from the country PECC committees

has made this unique multinational project a reality. We thank the Singapore Manufacturers’ Federation, the

Singapore Management University, the Singapore Petroleum Corporation, the Singapore Ministry of Foreign

Affairs, and Tecman Holdings Pte, Ltd. for their generous support of our annual meeting.

We appreciate those who helped us with the review of early drafts of the report, including Brad

Gilmour, David Kelch, Matt Shane and Hosein Shapouri. Finally, we appreciate the work of Joe Yacinski

and Carol Hardy of Yacinksi Design; Mary Thompson of Farm Foundation; and Cheryl Christensen and

Neil Conklin of ERS for their important support for this project.

Walter J. Armbruster

President, Farm Foundation

Chairman, Pacific Food System Outlook, PECC

William T. Coyle

Senior Economist, Economic Research Service, USDA

Senior Coordinator, Pacific Food System Outlook, PECC

November 2006


PECC COORDINATORS

Walter J. ArmbrusterChairman, Pacific Food System

OutlookPresidentFarm Foundation [email protected]

William T. CoyleSenior Coordinator, Pacific Food

System OutlookSenior Economist, Market and

Trade Economics DivisionEconomic Research ServiceUS Department of [email protected]

AUSTRALIA

Don GunasakeraHead, International BranchAustralian Bureau of Agriculture

and Resource [email protected]

CANADA

Pierre CharleboisResearch and Analysis DirectorateAgriculture and Agrifood [email protected]

CHINA

Dinghuan HuProfessorInstitute of Chinese Agricultural

EconomicsChinese Academy of Agricultural

Sciences [email protected]

INDONESIA

Ronnie S. NatawidjajaDirector Center for Agricultural Policy and

Agribusiness Studies (CAPAS) Faculty of Agriculture -

Padjadjaran UniversityBandung [email protected]

KOREA

Yong Sun LeeSenior Fellow, Leader of

Agricultural Information TeamCenter for Agricultural PolicyKorea Rural Economic [email protected]

MALAYSIA

M. Nasir Shamsudin Professor of Agricultural and

Resource EconomicsDean, Faculty of Environmental

StudiesUniversiti Putra [email protected]

Fatimah Mohamed ArshadDirector

Institute of Agricultural andFood Policy Studies

Universiti Putra [email protected]

MEXICO

Juan Manuel GalarzaDirector GeneralServicio de Informacíon y

Estadistica Agroalimentaria y Pesquera

Secretaría de Agricultura,Ganadería, Desarrollo Rural,Pesca y Alimentacíon(SAGARPA)

[email protected]

Jaime del Río MongesEconomistFondos Instituidos con Relación

con la Agricultura (FIRA)Bank of [email protected]

NEW ZEALAND

Frank ScrimgeourActing Dean University of Waikato

Management [email protected]

THE PHILIPPINES

Salvador P. CateloDeanCollege of Economics and

ManagementUniversity of the Philippines

Los [email protected]

SINGAPORE

Tan Teck MengChairmanSingapore National Committee

for Pacific EconomicCooperation (SINCPEC)

Professor, School of AccountancySingapore Management [email protected]

Jason FeerVice President and Singapore

Bureau ChiefArgus Media Ltd [email protected]


COORDINATORS AND FORECASTING PANEL

Edwin KhewCEO and Managing Director

IUT Global Pte Ltd andActing Chairman

Singapore ManufacturingFederation

[email protected]

William GohCFO

IUT Global Pte [email protected]

Edward ChenVice President, Finance and

InvestmentIUT Global Pte Ltdechen@iutglobal

Ng San ChoyDeputy DirectorAgri-Food and Veterinary

[email protected]

CHINESE TAIPEI

Ching-Cheng ChangResearch Fellow The Institute of EconomicsAcademia [email protected]

THAILAND

Ruangrai TokrisnaAssociate ProfessorDepartment of Agricultural and

Resource EconomicsFaculty of Economics Kasetsart University, Bangkok [email protected]

UNITED STATES

Gary BlumenthalPresidentWorld Perspectives Inc. [email protected]

Matt ShaneSenior EconomistMarket and Trade Economics

DivisionEconomic Research ServiceUS Department of [email protected]

Hosein ShapouriAgricultural EconomistOffice of Energy Policy and

New Uses US Department of [email protected]

Bernard KongAgricultural Marketing ManagerUSDA, Singapore [email protected]

VIETNAM

Pham Quang DieuInstitute of Policy and Strategy

for Agricultural and RuralDevelopment (IPSARD)

Ministry of Agriculture and RuralDevelopment

[email protected]@gmail.com

APEC

Soonthorn ChaiyindeepumDirector (APEC Food System) APEC Secretariat [email protected]


In 2006, oil prices surpassedUS$75 per barrel for the firsttime in history, and in real

terms came very close to equalingthe record prices of 1980. Otherenergy prices followed suit.

For the Pacific food system,high energy prices have directcosts in outlays for fuel and elec-tricity and indirect impacts, suchas the cost of fertilizer needed toproduce crops. These increasefarm production costs but, moresignificantly, increase the costs oftransporting, processing and mar-keting food products to the

region’s 2.7 billion consumers. Unlike previous high-price

periods, the current increase in oilprices is having a fundamentallydifferent impact on the food sys-tem, creating a more sustainedinterest in agriculture as a supplierof energy, not just a consumer.

Prospects for Pacific Rim agri-culture to be a supplier of energyare the focus of this report, whichis based on two days of discussionat the 10th annual Pacific FoodSystem Outlook meeting inSingapore in May 2006.

Growth of Biofuels

Biofuels are made from agricultur-al and other organic materials.Ethanol, the biofuel produced ingreatest volume throughout theworld, is made primarily fromsugar or corn, though a variety of

other starch- or sugar-based feed-stocks can also be used. Ethanol isprimarily used as an additive,mixed with petrol as an octaneenhancer in blends up to 10 per-cent, or as a substitute in largerblended amounts. While ethanolproduction more than doubled to46.2 billion liters in 2005 from17.6 billion liters in 2000 (Figure1), ethanol still accounts for lessthan two percent of the world’stransportation petrol supply.

Global biodiesel productionhas also grown rapidly in recentyears, to 3.9 billion liters in 2005,

but is still less than 10 percent ofethanol production. Biodiesel isproduced from oil-bearing cropslike soybeans and the fruit of theAfrican palm, though it can alsobe made from animal fats andrecycled cooking oil. Blends of 20percent biodiesel and 80 percentdiesel can be used in unmodifieddiesel engines. Most biodiesel nowis produced in Europe.

Second-generation ethanolmade from cellulose is in a pilotproduction phase in someeconomies and will greatly broad-en feedstock availability when itbecomes commercially profitable.

Biofuels are not perfect substi-tutes for fossil fuels. Ethanol hasonly about 70 percent of the ener-gy content of petrol, and biodiesel80 percent of the energy contentof diesel (von Lampe, 2006).Shipping ethanol requires expen-

sive truck or rail transportation.Pipelines are not a feasible optionas ethanol absorbs water and dis-solves impurities encrusted on theinside surfaces of pipelines, poten-tially contaminating the fuel.

Production and use of biofu-els are most advanced outside thePECC region. In Brazil, ethanolfrom sugarcane accounts forabout 20 percent of that econo-my’s transportation fuel, with theremaining 80 percent still fromoil products.

While biofuels in the PECCregion provide less than two per-

cent of transportation fuel, there ismuch interest in their potential tomeet three policy goals:

■ Reduce dependence on importedoil: Biofuels are viewed as apotential alternative fuel forreducing the region’s dependenceon oil, particularly imported oilfrom unstable parts of the world.Region-wide oil production hasbarely grown in 20 years (Figure2), yet consumption has grownrapidly in China and other mid-dle-income economies. US oilconsumption is at a high leveland has also grown rapidly in thelast 15 years. Some oil produc-tion growth is occurring inMexico, Canada, and severalSoutheast Asian and SouthAmerican economies, but this isoffset by production declines intwo of the region’s biggest pro-



Unlike previous high-price periods, the current increase in oil prices is

creating a more sustained interest in agriculture as a supplier of energy,

not just a consumer.


F i g u r e 1 Global Biofuel Production Doubles Since 2000

0

10

20

30

40

50

Source: Earth Policy Institute, http://www.earth-policy.org/Updates/2005/Update49_data.htm#table1

Ethanol Biodiesel

1980 1985 1990 1995 2000 2005

BIL

LIO

N L

ITE

RS

F i g u r e 2 PECC’s Growing Dependence on Oil Imports

0

10

20

30

40

50

60 60

50

40

30

20

10

0

Source: BP

MIL

LIO

N B

AR

RE

LS

PE

R D

AY

SH

AR

E I

MP

OR

TE

D F

RO

M O

UT

SID

E R

EG

ION

Production Consumption

Share imported from outside PECC region

1965 ’67 ’69 ‘71 ‘73 ‘75 ‘77 ‘79 ‘81 ‘83 ‘85 ‘87 ‘89 ‘91 ‘93 ‘95 ‘97 ‘99 ‘01 ‘03 ‘05

Oil imports

ceed in the future depends on thefollowing interrelated and dynam-ic factors:

■ High oil prices. Continuing highor rising oil prices will boost thecommercial prospects for alterna-tive fuels, while a decline will dothe reverse. The current increase inoil prices occurred over a span ofmore than six years. Prices are pro-jected to remain relatively high forthe next five years according to theUS Department of Energy (Shane2006). High prices should pro-long opportunities for efficiencygains, stimulate energy conserva-tion, and generate increased sup-ply from traditional and alterna-tive energy sources, including bio-fuels. While these adjustments willeventually lower oil prices, mostforecasts do not show real pricesfalling below US$40 per barrel.

Historically, high oil prices arenot sustained for long. The lastthree major oil price spikes wereinduced by military conflict—1973, Arab-Israeli war; 1980,Iran-Iraq war; and 1990, PersianGulf War. In these cases, pricesrose very sharply, peaked in amatter of weeks or months, andthen gradually declined or stabi-lized (Figure 4). Each high-pricedperiod was induced by cutbacksin global oil production—4.8 per-cent in 1974; 13.4 percent in1980-82; and less than .5 percentin 1991 (Econbrowser.com) andled to significant slowdowns inthe world economy.

Following these price spikes,rapid declines in petroleum pricesmade it difficult to sustain alter-native fuels programs andreduced incentives for consumersto curb use of petroleum prod-ucts. Declining oil prices in the1980s, for example, made it diffi-cult for Brazil to sustain its pro-

gram promoting the use of alco-hol-burning vehicles. In theUnited States, declining petrolprices through the 1980s and1990s contributed to the prolifer-ation of gas-guzzling sports utilityvehicles (SUVs) and growingdependence on oil imports.

The current market has beenaffected by supply-side constraintsand uncertainties. A high-risk pre-mium for potential supply disrup-tions, limited production andrefining capacity, and environmen-tal concerns limit new production.The market has also been drivenby significant demand-side factors.These include strong world eco-nomic growth and rising oildemand from rapidly growingmiddle-income economies, whereconsumers are demanding a higherstandard of living and are exhibit-ing big appetites for energy. Risingoil prices have not yet slowed thepace of global income growth,which has actually accelerated since2001 (Figure 5). Almost two-thirdsof recent global growth in oildemand has come from China andother middle-income economiesalthough China’s growth clearly isin a class of its own (Figure 6).China’s oil consumption nowranks ahead of Japan and is secondonly to the United States (Feer 2006).

The coexistence of acceleratingglobal economic growth and highoil prices is explained in part bydeclining energy intensities—thatis, lower levels of energy use perdollar of output. In the past 20years, the United States and Japanhave made considerable progress inreducing energy use per dollar ofGDP output. Gains are also beingmade by less developed economies.China’s declining energy intensity is“unmatched by any other majormodernizing economy” (Smil



ducers, the United States andIndonesia.

■ Reduce green house gas emissionsand pollutants: Use of biofuels isviewed as a means to help mitigateserious pollution problems. Theregion has 40 percent of theworld’s population, generates 50percent of global gross domesticproduct (GDP) and consumes 60percent of global oil supplies.Rapid economic growth has led toenvironmental degradation, now akey concern in many of the PECCeconomies. Eighteen of the 20most polluted major cities in theworld are in the PECC region.

■ Revitalize rural areas: Biofuel pro-duction is viewed as a tool for ruraleconomic development by promot-ing value-adding activity, creatingemployment opportunities, andgenerating new markets for agricul-tural raw materials. Given prospectsfor rapid urbanization in theregion’s developing economies inthe next 20 years, biofuel produc-tion could help retain or evenattract new resources to rural areas.

Two PECC economies—theUnited States and China—accountfor more than 90 percent of theregion’s total ethanol production(Figure 3); others have muchsmaller programs but are planningto expand them. While biodieselproduction is miniscule in thePECC region, Malaysia andIndonesia are initiating ambitiousprograms to develop biodieselfrom palm oil, a plentiful and low-cost feedstock in those economies.

Determinants of Biofuels’Future

The extent to which the region’sbiofuel programs develop and suc-


F i g u r e 3 PECC Ethanol Production, 2005

0 5 10 15 20

Source: Renewable Fuels Association, http://www.ethanolrfa.org/industry/statistics/#C

F i g u r e 4 Current Run-Up in World Oil Prices More Gradual Than Previous High-Price Periods

0

10

20

30

40

50

60

1970 ‘72 ‘74 ‘76 ‘78 ‘80 ‘82 ‘84 ‘86 ‘88 ‘90 ‘92 ‘94 ‘96 ‘98 ‘00 ‘02 ‘04 ‘06

Source: Federal Reserve of St. Louis.* Deflated West Texas Intermediate Crude using Producer Price Index for all commodities, U.S. Department of Labor, Bureau of Labor Statistics, not seasonally adjusted, Index 2002=100

China 8.3% U.S.

China

Thailand

Canada

Indonesia

Australia

Japan

Philippines

Korea

Ecuador

Mexico

Other

PECC

2.6%

U.S. 35.1%

Brazil 34.8%

Other

19.3%

More than three-fourths of production is

in three countries: Brazil, United States,

and China; 46% is in the PECC region.

Iranian

revolution

in 1979 and

the Iran-

Iraq war

in 1980

Yom Kippur war followed

by Arab oil embargo,

October 1973

Iraqi invasion of

Kuwait in the

summer of 1990

Recent run-up in oil prices driven by

booming world demand from developing

and developed economies, particularly

China and the United States

Asia financial

crisis,

1997-99

September 11, 2001

terrorist attacks on the

US and global slowdown

20

02

$ P

ER

BA

RR

EL

*

B ILL ION L ITERS

16.14

3.8

.30

.23

.17

.13

.11

.08

.06

.05

.05

percent for corn ethanol in theUnited States, depending onwhether produced using a dry orwet milling process. Sugar beetsrepresent 34 percent of the cost ofproduction of sugar-based ethanolin the European Union (EU)(Shapouri et al. 2006).

Using net exports as an indica-tor of low-cost availability in theregion, the following commoditiesmay support commercially viablebiofuel production beyond modestlevels: Australia, grain and sugar;Canada, grain and oilseeds;Indonesia and Malaysia, palm oil;Thailand, sugar and cassava; andthe United States, grain andoilseeds (Table 1).

The ratio of biofuel prices tofeedstock prices offers an indica-tion of the profitability of biofuelproduction. The ratio of ethanol to

the only ones with viable or near-viable biofuel programs, givenUS$39 per barrel oil prices in2004, the base period for theanalysis. Brazil’s sugar ethanol sec-tor was economically viable atUS$29 per barrel and the UScorn ethanol sector without sub-sidy at US$44. At that time, esti-mates of biofuel profitability forother OECD economies depend-ed on oil prices between US$65and US$145 per barrel (vonLampe 2006).

There are other significant pro-duction inputs in biofuel produc-tion. Energy may account for 20percent of biofuel operating costs,but feedstocks are by far the mostsignificant cost. According to aUSDA study, feedstock costs canrange from 37 percent for sugarcane ethanol in Brazil, to 40 to 50

2004) and is now less than half ofwhat it was in 1980, but still threeto four times greater than theUnited States’ (Smil 2003). China’sprogress results from replacing oldmanufacturing plants and processeswith modern ones, and efficiencygains in consumer energy use,including home cooking appli-ances. With energy intensities high-er than in developed economies,developing economies are generallymore vulnerable to higher energyprices but become less so with eco-nomic development.

■ Low-cost feedstocks. The twoleading producers of ethanol inthe world are the United Statesand Brazil. Both have plentifuland low-cost supplies of feed-stocks. An OECD report foundthat these two economies were



F i g u r e 5 Unlike Previous High Price Periods, Global GDP and Oil Prices Have Risen Together Since 2001

0

1

2

3

4

5

6

7

8

0

10

20

30

40

50

60

Source: U.S. Federal Reserve of St. Louis, and World Bank, World Development Indicators. Growth rates based on GDP in 2000 US dollars.

1971 ‘73 ‘75 ‘77 ‘79 ‘81 ‘83 ‘85 ‘87 ‘89 ‘91 ‘93 ‘95 ‘97 ‘99 ‘01 ‘03 ‘05

■G

LO

BA

L G

DP

GR

OW

TH

(%

)

OIL

PR

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S,

20

02

U.S

.$ P

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F i g u r e 6 China’s Growth in Oil Use Fastest Among Middle-Income Economies

0

1

2

3

4

5

6

7

8

1965 ‘68 ‘71 ‘74 ‘77 ‘80 ‘83 ‘86 ‘89 ‘92 ‘95 ‘98 ‘01 ‘05

Source: BP

China’s per capita oil use is still very low,

but aggregate consumption is growing

much faster than in other large middle-

income economies.

China

Mexico

India

Brazil

Indonesia

F i g u r e 7 A “Perfect Storm”* of Rising Ethanol Prices and Stable Corn Prices

0

50

100

150

200

250

300

Source: Ethanol rack prices from Shapouri; sugar price is sugar-11, world spot cash price; and corn is No. 2 yellow, Central Illinois, USA. *Dave Swenson. “Input-Outrageous: The Economic Impacts of Modern Biofuels Production.” Department of Economics, Iowa State University. June 2006.

2000 2001 2002 2003 2004 2005 2006

Ethanol/sugar price ratio Ethanol/corn price ratio

IND

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AN

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20

00

= 1

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corn prices, for example, rosesharply after 2004 as oil andethanol prices rose, but corn pricesremained relatively stable (Figure7). This contrasts with sugarethanol and biodiesel from veg-etable oil, where feedstock pricesrose along with fuel prices. Worldsugar prices in 2006 were at aquarter-century high because ofthe strengthening linkages betweensugar and energy markets, amongother factors (del Río 2006). Therelatively faster growth in cornethanol margins versus sugar

ethanol margins may explain themore rapid expansion in US thanin Brazilian ethanol production inrecent years (Figure 8).

Biofuel producers must be con-cerned about the uncertainty ofboth feedstock and output prices.Futures markets are increasinglybeing used in the United States tohedge against future corn priceincreases and ethanol pricedeclines. Some estimate that withUS$70 oil, U.S. ethanol plants canpay as much as US$6.00 perbushel for corn under current poli-

cies and still break even (WallStreet Journal, July 26, 2006).

An economic variable affectingthe profitability of biofuels is theprice of by-products, each of whichhas its own market (Shapouri et al.2006). Dried distillers grain(DDG), a by-product of cornethanol production, can be used asa protein-rich feed additive in dairyand beef rations and, in more limit-ed amounts, in hog and poultryrations. Carbon dioxide, usuallyreleased into the atmosphere, is cap-tured by some ethanol plants and

T a b l e 1 Avai labi l i ty of Crops for Biofuel Product ion Based on Net

VegetableEconomy Grain Oilseeds oil Sugar Cassava

Net exports (million tons)

Australia 19.0 1.3 -0.1 3.3 —

Canada 12.2 3.6 0.3 -1.2 —

Chile -1.6 -0.2 -0.1 -0.2 —

China 2.5 -19.3 -5.5 -1.3 -10.6

Colombia -3.6 -0.5 -0.1 1.1 —

Ecuador -0.8 0.1 — 0.1 —

Hong Kong, China -0.6 — — -0.2 —

Indonesia -7.0 -1.2 8.3 -1.2 0.2

Japan -25.8 -7.5 -0.7 -1.5 -0.6

Korea -12.8 -1.7 -0.5 -1.3 -0.8

Malaysia -5.5 -1.0 11.6 -0.9 -0.5

Mexico -12.9 -5.5 -0.7 -0.1 —

New Zealand -0.4 — -0.1 -0.3 —

Peru -2.5 -0.1 -0.3 -0.1 —

Philippines -3.9 -0.4 1.0 0.1 -0.2

Singapore -0.6 -0.1 -0.2 -0.3 -0.2

Chinese Taipei -6.6 -2.4 -0.2 -0.9 -0.4

Thailand 8.1 -1.1 0.1 4.8 14.9

United States 78.7 28.8 -0.1 -1.4 -0.3

Vietnam 2.6 0.1 — — 1.4

Brazil -3.20 17.5 2.2 14.5 -0.1

Trade numbers are averages for 2002-04; a positive number = net exports; — = negligible, less than 50,000 tons

Source: Food and Agriculture Organization; World Bank, World Development Indicators, 2006.

sold for use in the food and bever-age sector. Bagasse, the fibrousmaterial left over from pressing sug-arcane, can be burned to provideheat for distillation and electricity topower machinery, or sold to localutilities. The sale or productive useof each of these by-products adds toa plant’s profitability.

■ Other biofuel options. DuPontand British Petroleum recentlyannounced plans to develop andmarket biobutanol. Unlikeethanol, biobutanol has the same

energy density as petrol, can useexisting pipeline infrastructure, andcan be used in cars with practicallyno modification. A bacterium con-verts the starch into a mixture ofacetone and butanol, which differsin chemical structure from ethanolin being a four-carbon versus atwo-carbon alcohol (Forbes.com. A Competitor for Ethanol?).

Even more attention, primari-ly in the United States, Canadaand China, is focused on cellulosicethanol, a so-called second-genera-tion biofuel. Cellulosic ethanol is

made from breaking down intosugar molecules the tough cellularmaterial that gives plants rigidityand structure. That sugar is thenconverted into ethanol (USDepartment of Energy 2006).

Economical conversion of cel-lulose into ethanol has greatpromise. Cellulose is the mostwidely available biological materi-al in the world, present in suchlow-value materials as wood chipsand wood waste, fast-growinggrasses, crop residues like cornstover, and municipal waste(Worldwatch Institute 2006).These sources could be producedas by-products (corn stover) or onmarginal lands and not in directcompetition with agriculturalcrops. Since all ethanol is thesame, cellulosic ethanol could pig-gyback on the infrastructure nowbeing put in place for ethanol.However, questions remain aboutwhat impacts harvesting grasses,trees and crop residues wouldhave on erodibility and fertility ofland resources. There are alsoquestions regarding logistical andenvironmental costs of harvesting,transporting and storing huge vol-umes of bulky cellulosic feedstockfor processing into ethanol.

Converting cellulose toethanol is not currently economi-cal and is not likely to be so foranother five years by the mostoptimistic forecasts. Productioncosts are estimated at US$2.20 pergallon (US$0.58 per liter) in theUnited States (Wall Street Journal,June 29, 2006). This is still signifi-cantly more than corn ethanol atUS$1.10 per gallon (US$0.29 perliter) (Collins 2006) but could gomuch lower in the long run, “cost-ing as little as US$0.60 a gallon(US$.16 per liter) to produce andselling for less than US$2.00 gal-lon (US$0.53 per liter) at the


Exports

Energy consumption Arable land GDP

Net exports of per capita per capita per capitafood and ag prods 2003 2003 2004

Billion US$ United States = 100

13.5 72 400 76

4.2 105 240 79

2.3 21 20 27

-8.0 14 18 15

1.3 8 8 18

1.3 9 22 10

-4.6 31 — 78

2.9 10 17 9

-35.7 52 5 74

-7.9 55 5 52

4.5 30 12 26

-3.6 20 40 25

6.7 55 62 59

-0.3 6 23 14

-1.0 7 12 12

-1.3 68 — 71

-4.6 51 7 55

6.7 18 37 20

7.8 100 100 100

1.0 7 13 7

18.1 14 55 21

pump” (Gillis 2006). Geneticengineering and biotechnologyhave reduced the cost of cellulase,a key family of enzymes for break-ing down cellulose into sugar,from about US$5.00 (US $1.32)to about US$0.50 per gallon(US$.13 per liter) of ethanol(Aspen Institute 2006).

According to one study, theUnited States could produce a sus-tainable supply of more than onebillion tons of biomass, whichcould yield 60 billion gallons (227billion liters) of fuel ethanol (160billion liters on a petrol-equivalentbasis). That would be about one-third of the transportation fuelnow used annually in the UnitedStates, and 15 times current USethanol output (US Departmentof Energy and US Department ofAgriculture 2005).

A public research role will con-tinue to be essential given theuncertainties about findingenzymes and processes to makecellulosic ethanol economicallyviable. A recent comprehensive“roadmap” by the US Departmentof Energy calls for coordination ofpublic and private research effortsto further reduce costs of enzymesand increase the supply of biomasswith crop varieties bred for higheryields per hectare (US Departmentof Energy 2006). Research is alsofocused on finding or developingvarieties that grow well on margin-al lands, have drought and pestresistance, are inexpensive to har-vest, and are more easily convertedto ethanol.

■ Competitive fossil fuel alterna-tives. Oil overtook coal as theworld’s most important source ofenergy in the 1960s (Smil 2003),supporting the rapidly expandinguse of the internal combustionengine. Even at high prices, con-

sumers around the world are reluc-tant to shift to other energysources because of petrol’s anddiesel’s high energy density, ease ofstorage and transport, and lowproduction costs (Smil 2003).Most energy experts contend oilreserves will last for more than 40years at current rates of production(Aspen Institute 2006) and thatnon-conventional fossil fuels could“…extend the hydrocarbon erainto the second half of the 21stcentury” (Smil 2003). World oiloutput is forecasted to rise by 15million barrels per day by 2015, asignificant increase in light of cur-rent concerns about shortages (TheEconomist, April 20, 2006).

High oil prices have drawnattention to biofuels, as well as toother energy alternatives. Largeinvestments are being made indeveloping more difficult-to-accessconventional oil resources locatedin remote areas or deeper waters,and in non-conventional sourcessuch as tar sands, heavy crude oiland synthetic fuels. Many of thesefossil fuel alternatives have lowercosts of production than biofuels(Figure 9). Canada’s oil sands, forexample, can produce oil forUS$25-30 per barrel. Huge invest-ments in technology and infra-structure are required to exploitthese resources (Choo Chiau Beng2006). More than C$100 billionin projects are planned or underconstruction in Alberta’s oil sandsregion, where reserves are estimat-ed at 150 to 300 billion barrels ofoil (Urstadt 2006). This compareswith Saudi Arabia’s conventionaloil reserves of 260 billion barrels.

Another alternative is convert-ing coal to oil. This is of particularinterest to economies with abun-dant coal resources, such as Chinaand the United States. This tech-nology dates back to the 1920s

but has been used to the greatestextent by South Africa’s Sasol Ltd.,a partially state-owned energycompany, for the last 30 years.Sasol is exporting the technologyto China. With Sasol’s assistance,China’s largest coal producer hasstarted to build its first coal-to-oilfacility. Royal Dutch Shell Grouphas proposed building two plantsin Shanxi Province, China, costingUS$6-8 billion. Oil prices ofUS$30-35 per barrel may be suffi-cient to make coal to oil profitabledespite the high investment costs,but the process faces a doubleuncertainty: fluctuating oil andcoal prices (Wall Street Journal,August 16, 2006).

This focus on processing/transforming resources like tarsands or coal to oil underscoresthe growing investment requiredin the production of alternativefuels. Energy companies arechanging their orientation frommining and exploration to tech-nology-intensive processing andmanufacturing. New technologiesare also increasing output fromold oil reservoirs using steam-injection, deeper drilling (morethan 5,000 meters), and direction-al drilling that increases drillingproductivity.

■ The role of government policy.Almost nowhere are energy mar-kets free of government interven-tion. Biofuels are no exception.Strong policy support is a com-mon feature in major biofuel-producing economies—Brazil(Box), the United States, and theEU. The governments of theseand most PECC economies(Appendix) use a variety of poli-cy tools to encourage develop-ment and commercialization ofbiofuels (von Lampe, 2006).These tools include mandated




F i g u r e 8 Ethanol Production Expanding More Rapidly in United States Than Brazil

0

5

10

15

20

Source: Earth Policy Institute:http://www.earth-policy.org/Updates/2005/Update49_data.htm#table1 and Renewable Fuels Association,http://www.ethanolrfa.org/industry/statistics/#E

1980 ‘82 ‘84 ‘86 ‘88 ‘90 ‘92 ‘94 ‘96 ‘98 ‘00 ‘02 ‘04 ‘06

F i g u r e 9 High Oil Prices Make Biofuels and Other Alternatives Competitive

0

20

40

60

80

100

120

Source: Penm and Kinsella; Doornbosch and Upton; Aspen Institute; The Economist; Charlebois; and Financial Times.

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blending requirements, produc-tion and use subsidies and, in theUnited States and elsewhere,replacing the oil-based methyltertiary butyl ether (MTBE), anoctane enhancer, with ethanol toreduce negative environmentalrisks. Policy is essential in pro-moting the development of infra-structure to deliver biofuels aswidely as possible throughout themarket and to promote the man-ufacture or retro-fitting of vehi-cles that can use them. It isimportant in supporting researchand development of second-gen-eration ethanol. Policy can alsohave a role in meeting environ-mental objectives by increasingthe cost of fossil fuel use by tax-

ing CO2 or by requiring carboncapture and sequestration.

Environmental Tradeoffs

A key interest in developing orexpanding production and use ofbiofuels is the environmental ben-efits, including the potential toreduce emissions, such as green-house gases (GHG). An estimated25 percent of man-made globalcarbon dioxide (CO2) emissions,the principal GHG, comes fromroad transport. Road transporthas grown rapidly over the past40 years and is projected to con-tinue to increase. This is especiallytrue in developing parts of thePECC region where economic

growth, middle-class expansionand urbanization will be rapid inthe next 20 years.

Both biofuels and petrol giveoff CO2 when burned. Biofuelsare theoretically carbon neutral,releasing CO2 recently absorbedfrom the atmosphere by the cropsused to produce the biofuel. Petroland other fossil fuels add to theCO2 supply in the atmosphere bygiving off CO2 absorbed andtrapped in plant material millionsof years ago.

The advantage of biofuels isless clear in a “life-cycle” analysisthat examines not just combus-tion, but the production and pro-cessing of the feedstock into fuel.Most studies indicate that the net


LESSONS FROM BRAZIL

The largest biofuel program in the world is in Brazil. More than half of the nation’s sugarcane crop isprocessed into ethanol, which now accounts for about 20 percent of total motor vehicle fuel use. Brazilnow is expanding into biodiesel, capitalizing on plentiful supplies of oil-bearing crops, primarily soybeans,

with a target of 5 percent blend with petroleum-based diesel by 2013. A long-term policy commitment sustained Brazil’s ethanol program through decades of volatile petroleum and

sugar prices. Initiated in the 1970s after the Arab oil embargo, when petroleum prices were high and sugar priceslow, the policy program was designed to promote the nation’s energy independence and to create an alternativeand value-added market for sugar producers. The government has spent billions of dollars to support sugarcaneproducers, develop distilleries, develop a distribution infrastructure and promote production of pure-ethanol-burn-ing and later flex-fuel vehicles (able to run on petrol or an ethanol-petrol blend that is up to 85 percent ethanol).Advocates contend that while the costs were high, the program saved the economy far more in foreign exchangefrom reduced petroleum imports (Sandalow 2006).

In the mid to late 1990s, Brazil eliminated direct subsidies and price-setting for ethanol. It pursued a less-intru-sive approach with two main elements—a blending requirement now about 20 percent and tax incentives favoringethanol use and the purchase of ethanol-using or flex-fuel vehicles (USDA 2006). Flex-fuel vehicles have becomevery popular. Today more than 70 percent of Brazil’s current automobile production has flexible-fuel capability, upfrom 30 percent in 2004. With ethanol widely available at Brazil’s 32,000 gas stations, Brazilian consumers havegreat flexibility in choosing the ethanol-petrol blend that best suits their needs on the basis of relativeethanol/petrol prices and other criteria (Lula 2006).

Brazil’s biofuel program is a transitional model relevant to PECC economies with abundant low-cost agricultur-al feedstocks but with relatively low fuel demand. Approximately 20 percent of current fuel use in Brazil isethanol, not because ethanol supply is so great, but because overall fuel demand is quite limited. Brazil is a mid-dle-income economy with per capita energy consumption only 15 percent that of the United States and Canada(Figure 10). Sustaining a 20-percent ethanol fuel share as Brazil transitions to higher levels of income and energyconsumption may be difficult given current technology and resource constraints. Brazil already is having difficultyraising the ethanol share, having lowered the mandated level from 25 to 20 percent of transportation fuel use thisyear. Current production levels are not much higher than those in the late 1990s. Production of domestic off- andon-shore petroleum resources has grown more rapidly during this time than ethanol and is more responsible forBrazil’s progress toward energy independence (Figure 11).


F i g u r e 1 1 Expanding Oil Production in Brazil More Responsible for Fuel Self-sufficiency Than Ethanol

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1980 ‘82 ‘84 ‘86 ‘88 ‘90 ‘92 ‘94 ‘96 ‘98 ‘00 ‘02 ‘04 ‘06

F i g u r e 1 0 Per Capita Annual Energy Consumption Varies Across the Region

0 1 2 3 4 5 6 7 8

Source: World Resources Institute, http://earthtrends.wri.org/pdf_library/data_tables/ene2_2005.pdf

ENERGY CONSUMPTION (TONS OF O IL EQUIVALENTS)

United States

Canada

Singapore

Australia

New Zealand

Japan

Korea

Malaysia

Chile

Mexico

Thailand

China

Colombia

Ecuador

Indonesia

Philippines

Vietnam

Peru

Brazil

■ Oil

■ Coal/products

■ Natural gas

■ Nuclear

■ Hydro

■ Solid Biomass

■ Renewables


energy balance of biofuels is posi-tive (Farrell et al. 2006), but thereis considerable variability. Net bal-ances are small for corn ethanoland more significant for biodieselfrom soybeans, ethanol from sug-arcane, and ethanol from cellulose(Hill et al. 2006). The variabilityarises from differences in the feed-stocks used, the cultural practicesemployed to produce them, andthe kinds of inputs used in pro-cessing. A high net balance for abiofuel’s “life cycle” indicates a rel-atively less-polluting impact onthe environment.

The biofuel with the lowestnet energy balance—corn

ethanol—reduces GHG the leastof all the biofuels when comparedto petrol. It also has other poten-tial environmental consequences.For example, the cultivation ofcorn in the United States usesmore fertilizer and pesticides thansoybeans, leading to greater poten-tial for runoff and groundwatercontamination. In general, agricul-ture is the biggest source of anoth-er GHG, nitrous oxide (N2O),which is released by naturally-occurring bacteria stimulated bythe cultivation of soil and fromthe application of nitrogen andanimal waste fertilizers.

Biofuel production may haveother environmental consequences,including heavy water use andtoxic and odorific emissions byindividual plants. Another impor-tant consideration is potential land

requirements if biofuels become amore mainstream fuel. While aver-age crop and biofuel yields areimproving, biofuel production isstill a very land-intensive energysource. According to the OECD,the EU would have to convert 70percent of its agricultural land areato meet 10 percent of its fuelneeds; the United States 30 per-cent; Canada 36 percent; andBrazil 3 percent (von Lampe2006). According to the Universityof Minnesota, if all US corn andsoybean acreage were devoted toethanol and biodiesel production,it would offset only 12 percent and6 percent of petrol and diesel con-

sumption for transportation fuel,respectively, and only 2.4 percentand 2.9 percent, respectively, on anet energy basis, adjusting for thefossil fuel requirements for produc-ing the biofuels (Hill et al. 2006).

Use of so much land to meet arelatively small share of transporta-tion fuel demand is improbable.The resource commitment wouldbe much less in a lower-incomeeconomy because of lower fueldemand. But there are still con-cerns in economies like Indonesiaabout expanding palm oil produc-tion encroaching on fragile rain-forest areas. There are also poten-tial ethical concerns about thediversion of crops, land and otherresources in very large quantitiesfor the production of fuel insteadof food.

Technological advances and

efficiency gains—higher biomassyields per hectare and more litersof biofuel per ton of biomass—willsteadily reduce the economic costand environmental impacts of bio-fuel production. In Brazil, forexample, the ethanol yield perhectare of sugarcane productionhas tripled to 6,000 liters since1975. The integration of ethanoland livestock production couldincrease efficiency and reduce theenvironmental impact by using themethane from cow manure topower the distillery and using theby-products in its wet form to sup-plement feed requirements fordairy or beef animals. In this sce-

nario, the estimated energy balancefor corn ethanol would improvesignificantly (Howie 2006).

Biofuel production will likelybe most profitable and environ-mentally benign in tropical areaswhere per-hectare biomass yieldsare higher, and fossil fuel inputsand other input costs are lower.For example, Brazil uses bagasse,which is a by-product from sugarproduction, to power ethanol dis-tilleries while in the United Statesnatural gas and coal are used(Worldwatch Institute 2006).

Rural Impacts

Biofuel plants will boost localemployment and economic activi-ty. Construction will have tempo-rary benefits, while operation willhave more sustained economic


Biofuel production in the PECC region will likely play an expanding

but modest role in most every economy, but only as one element of a

broad-based portfolio of energy policies. Biofuels’ future role may become

more significant with the commercialization of cellulosic ethanol.

impacts. One study estimates thatan average-sized plant in theUnited States (150-190 millionliters per year) generates one jobfor every three to four million litersof production (Swenson 2006).

Introducing biofuel produc-tion leads to tradeoffs in the localeconomy. Increased demand for abiofuel feedstock will raise itsprice, making it more expensivefor competing users. This is seenmost clearly with sugar. Brazil isthe world’s largest sugar producer(20 percent of production andalmost 40 percent of exports).More than half of that nation’ssugar crop now goes to ethanolproduction, so sugar prices arehighly correlated with the price ofpetrol and affect the cost of sugarfor human consumption.

US corn prices have been rela-tively stable in recent years. Wereit not for large carryover stocks,prices would have been higherfrom the rapid expansion inethanol production. The share ofUS corn used in ethanol produc-tion is rising quickly and isexpected to nearly equal the 20-percent share of corn exported in2006. Corn prices tend to beUS$0.05 higher per bushel inareas near ethanol processingplants. Higher corn prices raisefeed costs for livestock producers.At the same time, dried distillersgrain, a protein-rich by-product ofethanol production, lowers pro-tein meal costs for dairy and beeffeeding. However, according toone study, the savings would notbe enough to offset the impact ofhigher corn prices on feed costs(Marshall and Greenhalgh 2006).Biofuel production also tends torestructure the agricultural econo-my in terms of the types of cropsproduced, the intensity of

resource use (fertilizer, water), andthe nature of local storage andtransportation services.

Implications for PECCGovernment Strategies

Relatively high oil prices will continue to sustain a keen regional interest in alternativefuels, including biofuels. Biofuelproduction will likely play anexpanding but modest role inmost every country, but only asone element of a broad-basedportfolio of energy policies. Otherpolicy elements include promo-tion of energy conservation,development and promotion ofmore efficient uses of energy, andexpanded production of oil andnon-conventional fossil fuels.Biofuels’ future role may becomemore significant with the com-mercialization of cellulosicethanol.

Promoting biofuel develop-ment is a relatively low-risk strate-gy for diversifying energy sourcesin economies with low-cost feed-stocks. Expanding production anduse of first-generation biofuels likesugar and corn ethanol or palmdiesel may help advance the time-line for cellulosic ethanol by low-ering up-front risks and costs.

Biofuels do not require com-plete overhaul of existing infra-structure channels. With little orno engine modifications, biofuelscan be used in existing petrol anddiesel engines in blends of up to 10percent in the case of ethanol and20 percent for biodiesel. For higherblends, engines require some rela-tively low-cost modifications. Incontrast, hydrogen fuel cell tech-nology requires radically differentenergy distribution systems.

Environmental impacts of bio-

fuels must be weighed. Biofuelsmay reduce harmful emissions,including GHG, relative to fossilfuels, but there is considerable vari-ability depending on the feedstockused and the production methodsand inputs used to produce thosefeedstocks. The resource-intensivenature of biofuel production gen-erates land and water use impacts.

Biofuels may have moreimpact on local and regionaleconomies than on energy mar-kets. Biofuel production has thepotential to generate new jobs,raise commodity prices and boostfarm incomes. But policy makersmust be mindful of economictradeoffs, such as higher feedprices in the case of corn ethanol,or higher sugar prices in the caseof sugar ethanol. Considerationmust also be given to impacts onthe intensity of land use and thestructure of transportation, storageand local service sectors. In someremote or isolated areas, biofuelscould help meet local energy needsand reduce dependence on fossilfuels from distant sources.

As countries in the regionassess policy options relative to bio-fuels, here are strategies to consider:

■ Policy commitments: A criticalfactor in successful implementa-tion of biofuels programs is strongpolicy commitments to sustaindevelopment through periods ofhigh feedstock prices and/or lowoil prices. Policy tools PECCeconomies might consider include:

■ Tax incentives to biofuel pro-ducers and mandated blend-ing targets to reduce invest-ment risk from input andoutput price fluctuations.

■ Preferential taxes for con-sumers to encourage use ofbiofuels and purchase of bio-


fuel-using vehicles, and forfuel distributors to offer bio-fuels at petrol/diesel stations.

■ Support public- and private-sector research tolower the cost of second-generation biofuel produc-tion by raising feedstockyields per area and biofuelyields per ton of feedstock.

■ Economy-specific strategies: The most desirable combinationof government policy and pri-vate-sector actions to supportexpanded use of biofuels will betailored to the specific economy.Key issues will be the uniqueenergy and agricultural marketconditions of each economy, aswell as the public’s commitmentto such plans.

Indonesia, Malaysia andThailand are similar to Brazil interms of agricultural resources,labor costs and energy use. Allare surplus producers of potentialfeedstocks for biofuel production.Indonesia and Malaysia, theworld’s leading exporters of palm

oil, are initiating ambitious biofu-els programs for domestic use andexport. Thailand is a surplus pro-ducer of grain, sugar and cassava,and is ready to mandate a 10 per-cent blend of ethanol in petrol bythe end of 2006. These economies,like Brazil, have low-to-mediumper capita incomes and limitedenergy needs. Here, policy struc-tures similar to those of Brazil maybe appropriate.

China’s growing interest inbiofuels, including cellulosicethanol, is driven by rapid growthin domestic energy consumptionand rising dependence on import-ed oil. China is also exploring non-conventional fossil fuels like coal-to-liquid, and nuclear energy.

In the richly endowed agricul-tural economies of North Americaand Oceania, biofuel developmentsare most advanced in the UnitedStates. Both Mexico and Canadahave major fossil fuel resources andare net exporters of oil. Australia, a net importer of oil but a netexporter of other energy resources,faces drought-induced variability

in biomass supplies.In East Asia, limited biomass

supplies constrain the potentialscope of biofuel programs, whichcurrently focus on niche uses likepowering public vehicles. Japanand Korea are developing ties withsurplus biomass economies—Brazil and Indonesia—as importsources for ethanol and biodiesel.

■ Share technology: APEC’s OpenFood System initiative establishedthe principle of cultivating a “foodtechnology culture” to diffusedevelopments in food production,storage, shipping, packaging andprocessing across the region. Thesame concept should apply to bio-fuel technologies. Improved accessto these technologies could resultin broader application, spurgrowth in biofuel production andhelp lower energy costs.

Biofuels have much potential,but the rewards depend on thenatural resources and economics ofeach economy and the commit-ment of policy makers and citizensto implement needed strategies.



APEC— Asia Pacific Economic Cooperation forumEU— European CommunityCO2— Carbon DioxideGHG— Greenhouse gasGTL— Gas-to-liquidGDP— Gross Domestic ProductMTBE— Methyl tertiary butyl ether

MFN— Most Favored NationN2O— Nitrous OxideOECD— Organization of Economic Cooperation and

DevelopmentPECC— Pacific Economic Cooperation CouncilRFS— Renewable fuel standardUSDA— US Department of Agriculture

ABBREVIATIONS USED IN THE PACIF IC FOOD SYSTEM OUTLOOK

AustraliaETHANOL FEEDSTOCK: grain,molassesNUMBER OF PLANTS: 3 existing; 7planned or under constructionBIODIESEL FEEDSTOCK: mainlyused cooking oil or tallowNUMBER OF PLANTS: 6 existing(including 4 that have just come online in recent months); 5 planned orunder constructionPRODUCTION: ethanol productioncapacity 75.2 million liters in 2005/06; biodiesel production capacity179.9 million liters in 2005/06

In December 2005, the governmentannounced a Biofuels Action Plan forachieving the target of 350 millionliters of biofuel production by 2010.Based on individual company actionplans, biofuel production in 2010could be in the range 403–532 mil-lion liters (1-2 percent of fuel con-sumption). The excise tax paid bybiofuel producers on ethanol andbiodiesel is currently fully refundedto producers under a system of pro-duction grants. From 2011 to 2015the excise tax effectively payable onethanol and biodiesel will be raisedin five equal annual steps. Under theBiofuels Capital Grants Program,A$37.6 million had been made avail-able to encourage investment in newethanol and biodiesel capacity. Theimport tax on imported ethanol willbe reduced in 2011 in line with taxa-tion on domestically producedethanol. More than 400 service sta-tions now sell ethanol or biodieselblends. Under the Renewable EnergyDevelopment Initiative, A$100 millionhas been made available for newtechnologies, including ones appliedto biofuels.

State governments are encourag-ing the use of biodiesel in trains andbuses in South Australia and the useof ethanol in government vehicles inNew South Wales.

CanadaETHANOL FEEDSTOCK: corn, wheat,barleyNUMBER OF PLANTS: 7; 3 under constructionPRODUCTION: current productionapproximately 200 million litersCONSUMPTION: 316 liters

Biodiesel production in Canada is in apilot phase. There are three plants,but they are not fully commercializedyet. Production in 2004 was estimat-ed at 6 million liters. There are plansto develop additional plant capacity inthe next couple of years.

In May 2006, the governmentannounced a Renewable FuelsStrategy, which includes a 5 percentbiofuels use target by 2010 (approxi-mately 3 billion liters). Full details ofthe strategy are expected in the fallof 2006. The Strategy is part of thegovernment’s plans to reduce green-house gas emissions. Tariff barrierson ethanol are limited: none with theUnited States under NAFTA and onlyC$0.0492 /liter with MFN countriesand Brazil. Many provinces exemptrenewable fuels from road taxes. Thefederal government provides a fuelexcise tax exemption of C$0.10/literfor ethanol, and C$0.4/liter forbiodiesel (OECD). Saskatchewan,Manitoba and Ontario have passedlegislation requiring ethanol use whensupply becomes available. The federalgovernment is providing capital assis-tance through the Ethanol ExpansionProgram (EEP). Saskatchewan hasmandated a 7.5 percent blend byOctober 2006. Ontario has mandateda 5 percent blend by January 2007.

ChinaETHANOL FEEDSTOCK: corn (78percent), wheat (22 percent); poten-tial feedstock: cassava, sweet pota-toes, and riceNUMBER OF PLANTS: 4; 3 under constructionPRODUCTION: 3.8 billion liters(2005); 1.13 billion liters for fuelethanol, the rest for the beverage/chemical sectors BIODIESEL FEEDSTOCK: waste palmand other vegetable oils and animalfatsPRODUCTION: Very limited becauseof scarce oil-bearing feedstocks

China is the third-largest ethanol pro-ducer in the world, after the UnitedStates and Brazil. It is in the midst of a$5 billion, 10-year program to expandethanol production as part of a broad-er effort to raise the energy share ofrenewables (biofuels, nuclear, hydro-electric and solar power) from 7 per-cent to 16 percent by 2020 to meet

growing energy demands and environ-mental challenges. Currently, there aremandates in five provinces for 10 per-cent ethanol and 90 percent petrolblends (E10) to create a new marketfor surplus grain in major corn-pro-ducing areas and to displace oilimports. The government plans toexpand E10 use in nine cities in Hubei,seven in Shandong, five in Jiangsu,and six in Hebei. Ethanol producersdepend on government subsidies tomake production profitable. China’sResources Alcohol Corp. will set up apilot demonstration facility inZhaodong, Heilongjiang province,where an ethanol facility alreadyexists, to produce cellulosic ethanolfrom wheat straw, grasses and otherorganic material.

ColombiaETHANOL FEEDSTOCK: sugarcaneNUMBER OF PLANTS: Unknown

Starting in 2006, the government ismandating the use of 10 percentethanol in fuel in cities with popula-tions of more than 500,000. Thegovernment is also requiring the cul-tivation of an additional 150,000hectares of sugarcane and nine newethanol plants to produce the neces-sary 985 million liters per year.

IndonesiaBIODIESEL FEEDSTOCK: palm oil,castor, coconut, Jatropha curcas, andcotton seedNUMBER OF PLANTS: 6PRODUCTION: 3.5 million litersETHANOL FEEDSTOCK: cassava,sugarcane, corn, Manihot esculenta,sweet potato, sago NUMBER OF PLANTS: 10PRODUCTION: 200 million liters, sofar not fuel grade

Indonesia is the world’s second-largest palm oil producer and the onlyOPEC country that is a net importerof oil. Petrol use is heavily subsidized.The government recently announceda $22 billion, five-year program todiversify energy sources, alleviate therising cost of petroleum product sub-sidies, and mitigate environmentalpollution problems. Plans have beenannounced to invest $1.1 billion in


APPENDIX: B IOFUEL BRIEFS

expanding palm oil production and indeveloping 8 to 11 biodiesel plants,targeting up to 10 percent biofuel con-tent of diesel by 2010. Governmenthas a similar target for ethanol use inpetrol. State-owned petroleum com-pany, Pertamina, currently is market-ing a 5 percent biodiesel product at afew outlets in Jakarta.

JapanETHANOL FEEDSTOCK: sugarcane(Okinawa)NUMBER OF PLANTS: 6 ethanolplants, 4 synthesis ethanolPRODUCTION: 294 million liters,mainly non-fuel uses IMPORTS: 509 million litersBIODIESEL FEEDSTOCK: Used vegetable oilNUMBER OF PLANTS: 3

Japan’s government has promotedlow-level ethanol blends in prepara-tion for a possible blending mandate,with the long-term intention of replac-ing 20 percent of the nation’s oildemand with biofuels or gas-to-liquid(GTL) fuels by 2030. It is also promot-ing the development of ethanol pro-cessing in six prefectures. In June2006, Japan’s Environment Ministryannounced intentions to require thatbiofuels account for 10 percent of alltransportation fuels by 2030 (notsupported yet by other ministries).Since feedstock supplies are limited inJapan, the government will promoteclose ties with Brazil as a source ofethanol imports. Japan is promotingproduction of biodiesel from usedvegetable oil to be blended with dieselfor use by public buses, official cars,and municipal garbage trucks.

KoreaBIODIESEL FEEDSTOCK: importedsoy oil (85 percent), used frying oil (15 percent) NUMBER OF PLANTS: 8 PRODUCTION: 340 million liters

The government is pursuing energypolicies aimed at increasing the useof new and renewable energysources to reduce greenhouse gasemissions, a serious problem in Seouland other urban areas. As of the endof 2005, new and renewable energysources accounted for only 2.2 per-

cent of the nation’s total energy con-sumption. The goal is to achieve 5percent by 2011. Starting in July2006, diesel fuel users will be able tobuy diesel blended with a smallamounts of biodiesel (0.5 percent)from a limited number of petrol sta-tions. After further testing, the gov-ernment plans to target B20 by2008. Currently, B20 is only beingproduced for use in trucks and buses.After consumer complaints, the gov-ernment required lowering of thebiodiesel share in diesel fuel to lessthan 5 percent for private vehicles. Inresponse to growing interest inethanol, the Korean government isconducting feasibility studies and dis-cussing joint ventures with Indonesia.

MalaysiaBIODIESEL FEEDSTOCK: palm oilNUMBER OF PLANTS: 3; 10 plantsunder construction. Government hasgranted licenses for 32 biodieselplants, with potential annual capacityof 3.3 billion liters PRODUCTION: 200 million liters now;1.7 billion liters in 2007

The National Biofuel Policy,announced in August 2005, will spurthe Malaysia biofuel industry. The pol-icy calls for rapid growth of the biofu-els sector, using a four-prong strate-gy: production of a target biofuelblend of 5 percent processed palm oiland 95 percent diesel (B5), use of B5by public vehicles, development of aquality standard, and promotion ofexports. As a product encouragedunder the Promotion of InvestmentsAct of 1986, biodiesel projects are eli-gible for tax exemption on at least 70percent of the income derived fromproduction for five years, with morerevenue eligible under certain provi-sions. Palm-based biodiesel became aviable fuel option when crude oil sur-passed US$50 per barrel.

MexicoETHANOL FEEDSTOCK: corn, sugarcanePRODUCTION: 45 million liters; toachieve 10 percent fuel blend targetoutlined in pending legislation forthree largest cities would require 640 million litersBIODIESEL FEEDSTOCK: soyoil,

avocado, coconut, sunflowerPRODUCTION: 6 million liters

There are no specific biofuels promo-tion programs in effect; pending legis-lation, if enacted, would encouragethe use of biofuels as part of a broad-er program to promote renewableenergy sources and to phase in theuse of ethanol in petrol, with no spe-cific target blend ratio. The cities ofJalisco and Mexico City are collabo-rating on a project to convert severalbeverage alcohol production facilitiesto fuel production, using sugarcane asthe feedstock. By expanding use offuel ethanol, policy makers aim toreduce pollution in Mexico City andGuadalajara.

New ZealandETHANOL FEEDSTOCK: whey (lactose) from casein PRODUCTION: 16-20 million litersBIODIESEL FEEDSTOCK: tallowPRODUCTION: voluntary target of 65 million liters for 2012.

The National Energy Efficiency andConservation Strategy has estab-lished targets to increase the share ofenergy from renewables by 2012. InAugust 2003, the Environmental RiskManagement Authority (ERMA)approved the use of petrol-ethanolblends not to exceed 10 percentethanol. This is an important steptowards meeting the 7 percent of therenewable energy target expected tocome from transport fuels.

PeruETHANOL FEEDSTOCK: sugarcane

In 2002, Peru announced a plan tobuild 20 distilleries and an ethanolpipeline from the interior to the portof Bayovar. Up to 245,000 hectaresof sugarcane will be planted in forestareas now used for coca leaf produc-tion. The government hopes toexport 1.1 billion liters of ethanol by2010. A 2005 law promotes use ofethanol as 5 percent to 10 percentadditive in petrol.

PhilippinesBIODIESEL FEEDSTOCK: coconutNUMBER OF PLANTS: 3



PRODUCTION: 110 million liter capacityETHANOL FEEDSTOCK: sugarcaneNUMBER OF PLANTS: plans for 10 in two yearsPRODUCTION: 360 million liters intwo years

Current biofuel production is very lim-ited. Government is subsidizing theuse of biodiesel for public transporta-tion and a 1 percent blend in govern-ment vehicles. Legislation is pendingto require 5 percent to 10 percent bio-fuel blend with petrol and 1 percent to5 percent with diesel. Tariff exemp-tions are made for imports of biofuelequipment and possible financial sup-port extended to producers and down-stream players. In 2005, the importtariff for ethanol was lowered from 1percent to 10 percent. All ethanol isnow imported, primarily from Brazil.Shell will distribute E10 at 50 stationsby the end of 2006. Surplus sugar-cane will be used for domestic ethanolplants. There are plans to establish 12new sugarcane plantations for ethanolproduction. Plantation biomass couldsupply 2 percent to 11 percent of econ-omy’s projected energy consumptionby 2010.

Chinese TaipeiPOTENTIAL ETHANOL FEEDSTOCK:sugarcane, sweet potatoes; plan to use1 billion liters, or 10 percent of petrolconsumptionBIODIESEL FEEDSTOCK: recycledcooking oil, sunflower, soybean andrapeseed oilNUMBER OF PLANTS: 3 PRODUCTION: 1 million liters; plan touse 100 million liters, or 1 percent ofprojected diesel consumption

As a major net importer of food andagricultural imports, Taiwan has littlesurplus biomass for biofuels produc-tion. There is some attention to moreefficient uses of fallowed riceland forproduction of biofuel feedstocks suchas sweet potatoes, sunflower, soy-bean, and rapeseed. Modest biodieselproduction is used to power city sani-tation trucks. Taiwan’s sugarcaneethanol costs of production are morethan twice Brazil’s. Some govern-ment-sponsored research is promot-ing development of cellulosic ethanoltechnologies.

ThailandETHANOL FEEDSTOCK: cassava,molasses, sugarcane NUMBER OF PLANTS: 6 in produc-tion; 18 added in 2006 PRODUCTION: 300 million litersBiodiesel feedstock: palm oil, reusedcooking oilNUMBER OF PLANTS: small-scaletrial programsPRODUCTION: 1.8 million liters

Thailand, the world’s second-largestsugar exporter after Brazil, wants toreduce the cost of oil imports whilesupporting domestic sugar and cas-sava growers. Its ethanol program,begun in 1985, will be strengthenedthis year by requiring a 10-percentethanol-petrol blend. This along witha ban on the petrol-based fuel addi-tive, methyl tertiary butyl ether(MTBE), will promote expansion ofethanol production, requiring 1 billionliters per year production capacity.Incentives to encourage productionand marketing include waiving excisetax on ethanol blends, investmentconcessions for new plant construc-tion, and an eight year corporate taxholiday for ethanol producers. TheBiodiesel Promotion Program, estab-lished in July 2001, plans to raisebiodiesel production to 3.1 billionliters by 2012, accounting for 10 per-cent of expected diesel consumption.

United StatesETHANOL FEEDSTOCK: corn,sorghum, barley, cheese whey, bever-age and brewery waste, sugar, andvarious starchesNUMBER OF PLANTS: 101; 7 expand-ing and 42 under construction PRODUCTION: 16.4 billion liters(2005) BIODIESEL FEEDSTOCK: soybeans,other oilseed crops, animal fats, recycled fats and oil NUMBER OF PLANTS: 65 in opera-tion; 58 plants under constructionPRODUCTION: 345 million liters(2005)

Production is promoted with US$0.135per liter (US$0.51 per gallon) federaltax credit on ethanol production andUS$0.143 per liter (US$0.54 per gal-lon) tariff on imported ethanol. Phaseout is planned in 2006 of methyl terti-ary butyl ether (MTBE), a petroleum-

based oxygenate found to contami-nate ground water; ethanol is thepreferred substitute. Fourteen statesprovide producer incentives, rangingfrom US$0.0026 per liter toUS$0.106 per liter. Incentives arealso offered for small ethanol plants(up to 227 million liters per year)US$0.0264 per liter (US$0.10 pergallon), covering up to 57 millionliters per year.

The Energy Policy Act (EPACT)of 2005 established a RenewableFuels Standard (RFS), requiring useof 28.4 billion liters (7.5 billion gal-lons) of biofuels by 2012. This targetshould be reached well ahead ofschedule and should account formore than five percent of near-termpetrol consumption. It also providesfunds to develop commerciallyviable technologies for convertingcellulose to ethanol, incentives topromote production of cellulosicethanol, and incentives for expandedbiodiesel production. EPACT pro-vides petrol station owners a 30 per-cent tax credit up to $30,000 toinstall pumps and tanks for E85(estimated total cost of $200,000per station).

STATE POLICIES: Iowa targets anethanol blend of 10 percent in 2009and 25 percent in 2019. The MissouriRenewable Fuel Standard Actrequires that all gasoline sold inMissouri contains at least 10 percentagriculturally derived, denaturedethanol by volume unless exemptedby the federal EnvironmentalProtection Agency, by Jan. 1, 2008.Hawaii, Montana and Minnesotarequire that petrol must contain 10percent ethanol. Washington Staterequires petrol and diesel to contain2 percent renewable fuel.

SOURCES: Presentations at the 10thPacific Food System Outlook meet-ing in Singapore, May 17-18, 2006,including those by FatimahMohamed Arshad, Ching-ChengChang, Pierre Charlebois, DonGunasakera, Ronnie Natawidjaja,Hosein Shapouri, and RuangraiTokrisna; Renewable FuelsAssociation website; F.O. Lichts,World Ethanol and Biofuels Reports;Bangkokpost.com


The Financial Times. Various issues.

Food and Agriculture Organizationdatabase: http://faostat.fao.org/.

Gillis, Justin 2006. “New FuelSource Grows on the Prairie, WithOil Prices Up, Biomass Looks MoreFeasible.” The Washington Post.June 22.

Gunasekera, Don (2006).“Production and Use of Biofuels:Australian Perspective.” Presentationat the tenth annual Pacific FoodSystem meeting, Singapore, May 17-18.

Hill, Jason, Erik Nelson, et al.(2006). Environmental, Economic,and Energy Costs and Benefits ofBiodiesel and Ethanol Biofuels.Proceedings of the NationalAcademy of Sciences of the UnitedStates of America. Washington, DC.July 12.

Howie, Michael (2006). “Closed-looped Ethanol Plant Planned.”Feedstuffs. July 7.

Khosla, Vinod (2006). “My BigBiofuels Bet.” Wired. October.

Lula da Silva, Luiz Ignacio (2006).“Fuel for Thought.” The Wall StreetJournal. July 14.

Marshall, Liz and Suzie Greenhalgh(2006). “Beyond the RFS: TheEnvironmental and EconomicImpacts of Increased Grain EthanolProduction in the U.S.” WRI PolicyNote, No. 2. Washington, DC:World Resources Institute. August.

Natawidjaja, Ronnie S (2006).“Impact of Rising Energy Costs onthe Food System in Indonesia.”Presentation at the tenth annualPacific Food System meeting,Singapore, May 17-18.

Arshad, Fatimah Mohamed andMad Nasir Shamsudin (2006).“Implications of Oil Price Increaseon the Malaysian Food System.”Presentation at the tenth annualPacific Food System meeting,Singapore, May 17-18.

The Aspen Institute (2006). A HighGrowth Strategy for Ethanol, TheReport of An Aspen Institute PolicyDialogue. Program on Energy, theEnvironment, and the Economy.Washington, DC.

Blumenthal, Gary (2006). “Energyand Agriculture.” Presentation at thetenth annual Pacific Food Systemmeeting, Singapore, May 17-18.

BP (2006). Statistical Review ofWorld Energy. http://www.bp.com/productlanding.do?categoryId=91&contentId=7017990.

Chang, Ching-Cheng (2006).“Energy Outlook and Impact ofEnergy Price Hike on the FoodSystem in Chinese Taipei.”Presentation at the tenth annualPacific Food System meeting,Singapore, May 17-18.

Charlebois, Pierre (2006). “RisingEnergy Costs: Consequences for theRegion’s Food System.” Presentationat the tenth annual Pacific FoodSystem meeting, Singapore, May17-18.

Choo Chiau Beng (2006).“Opening Remarks.” Tenth annualPacific Food System meeting,Singapore, May 17-18.

Collins, Keith (2006). Statement by USDA Chief Economist beforethe US Senate Committee onEnvironment and Public Works.Washington, September 6.

del Río, Jaime Arturo (2006).“Long-run Linkage Between Fuels’and Commodities’ Prices: A Co-integration Approach.” Presentationat the tenth annual Pacific FoodSystem meeting, Singapore, May 17-18.

Doornbosch, Richard and SimonUpton (2006). Do We Have theRight R&D Priorities andProgrammes to Support the EnergyTechnologies of the Future? Paris:Organization for EconomicCooperation and Development.June.

Earth Policy Institute: http://www.earth-policy.org/Updates/2005/Update49_data.htm#table1.

The Economist. Various issues.

F.O. Lichts, World Ethanol andBiofuels Reports (2006). Kent,United Kingdom. Various issues.

Farrell, Alexander E., Richard J.Plevin et al (2006). “Ethanol CanContribute to Energy andEnvironmental Goals.” Science, vol 311. January 27.

Feer, Jason (2006). “Global EnergyMarkets Overview.” Presentation atthe tenth annual Pacific FoodSystem meeting, Singapore, May 17-18.

Federal Reserve of St. Louis: http://research.stlouisfed.org/fred2/series/OILPRICE.

Fialka, John J. and Scott Kilman(2006). “Big Players Join Race to PutFarm Waste into Your Gas Tank.”The Wall Street Journal. June 29.

REFERENCES


Outlaw, J. K.J. Collins and J.A.Duffield (eds.) (2005). Agriculture asa Producer and Consumer of Energy.Cambridge, Massachusetts: CABIPublishing.

Penm, Jammie and Stuart Kinsella(2006). “Oil Prices to Remain High,Encouraging Search for Alternatives.”Australian Commodities. Canberra:Australian Bureau of Agricultural andResource Economics. June.

Renewable Fuels Association:http://www.ethanolrfa.org/industry/statistics/#C.

Sandalow, David (2006). “Ethanol:Lessons from Brazil.” A HighGrowth Strategy for Ethanol, TheReport of An Aspen Institute PolicyDialogue. Washington, DC: TheAspen Institute. Pp 67-74.

Shane, Matthew (2006). “TheImplications of High Energy Priceson US Agriculture.” Presentation atthe tenth annual Pacific FoodSystem meeting, Singapore, May 17-18.

Shapouri, Hosein (2006). “Viabilityof Alternative Energy Sources—Ethanol and Other Biofuels—andTheir Potential Impacts on FoodSystem.” Presentation at the tenthannual Pacific Food System meet-ing, Singapore, May 17-18.

Shapouri, Hosein, Michael Salassi,and J.Nelson Fairbanks (2006). TheEconomic Feasibility of EthanolProduction from Sugar in the UnitedStates. Washington, DC: Office ofChief Economist. USDA.

Smil, Vaclav (2003). Energy at theCrossroads, Global Perspectives andUncertainties. Cambridge,Massachusetts: The MIT Press.

Smil, Vaclav (2004). China’s Past,China’s Future: Energy, Food,Environment. New York, NY:RoutledgeCurzon.

Swenson, Dave. “Input-Outrageous:The Economic Impacts of ModernBiofuels Production.” Unpublishedpaper. Department of Economics,Iowa State University. June, p.18.

Tokrisna, Ruangrai (2006). “GeneralEnergy Outlook: Implications onFood Production in Thailand.”Presentation at the tenth annualPacific Food System meeting,Singapore, May 17-18.

US Department of Agriculture,Foreign Agricultural Service (2006).Ethanol Update: Brazil. GAINReport BR6001. February 8.

US Department of Energy (2006).Breaking the Biological Barriers toCellulosic Ethanol, A Joint ResearchAgenda. A research roadmap result-ing from The Biomass to BiofuelsWorkshop (Dec. 7-9, 2005).Rockville, Maryland, USA. June.

US Department of Energy and USDepartment of Agriculture (2005).Biomass as Feedstock for a Bioenergyand Bioproducts Industry: TheTechnical Feasibility of a Billion-TonAnnual Supply. Oak Ridge,Tennessee, USA. April.

Urstadt, Bryant (2006). “The OilFrontier.” Technology Review.Boston: Massachusetts Institute ofTechnology. July 18.

von Lampe, Martin (2006).Agricultural Market Impacts of FutureGrowth in the Production of Biofuels.Paris: Agriculture and Fisheries,Committee for Agriculture,Organization for EconomicCooperation and Development.February.

The Wall Street Journal. Variousissues.

World Bank (2006). WorldDevelopment Indicators database.

World Resources Institute: http://earthtrends.wri.org/pdf_library/data_tables/ene2_2005.pdf.

Worldwatch Institute (2006).Biofuels for Transportation, GlobalPotential and Implications forSustainable Agriculture and Energy inthe 21st Century. Report preparedfor the German Federal Ministry ofFood, Agriculture and ConsumerProtection, in cooperation with theAgency for Technical Cooperationand the Agency of RenewableResources. Washington, DC. June.


PACIFIC ECONOMIC COOPERATION COUNCILPacific Economic Cooperation

Council InternationalSecretariat

4 Nassim RoadSingapore 258372Tel: 65-6737 9822Fax: 65-6737 9824http://www.pecc.org

AUSTRALIAAustralian Pacific Economic

Cooperation Committee(AUSPECC)JG Crawford BuildingAustralian National UniversityCanberra ACT 0200AustraliaTel: 61-2-6125 0567Fax: 61-2-6125 0169http://apseg.anu.edu.au/auspecc/

index.html

BRUNEI DARUSSALAMBrunei Darussalam National

Committee for PacificEconomic Cooperation(BDCPEC)

Department of MultilateralEconomics

Ministry of Foreign AffairsBandar Seri Begawan BD 2710Brunei DarussalamTel: 673-2-261 177Fax: 673-2-261 620

CANADACanadian National Committee

for Pacific EconomicCooperation (CANCPEC)

Asia Pacific Foundation ofCanada

Suite 220-890 West PenderStreet,

Vancouver, B.C, V6C 1J9Canada

Tel: 1-604-684-5986Fax: 1-604-681-1370http://www.asiapacific.ca/

CHILEChilean National Committee for

Pacific EconomicCooperation (CHILPEC)

Chile Pacific FoundationAv. Los Leones 382, Of. 701ProvidenciaSantiago, ChileTel: 56-2-334 3200Fax: 56-2-334 3201http://www.funpacifico.cl/

english/english1.html

CHINAChina National Committee for

Pacific EconomicCooperation (CNCPEC)

China Institute of InternationalStudies

3 Toutiao TaijichangBeijingChina 100005Tel: 86-10- 8511 9648Fax: 86-10- 8511 9647http://www.pecc.net.cn/

COLOMBIAColombia National Committee

for Pacific EconomicCooperation (COLPECC)

Ministry of Foreign AffairsCalle 10 No. 5-51Santafe de BogotaColombiaTel: 57-1- 5667 140Fax: 57-1- 5667 145

ECUADOREcuadorian Committee for the

Pacific EconomicCooperation Council(ECPECC)

Av. Carrión & Páez Str. (corner),ZURITA Bldg, Mezzanine

Ministry of Foreign Affairs, Quito, Pichincha,Ecuador, South AmericaTel: 593-2-2501-197/2561-215

(ext. 253) Fax: 593-2-2508987

HONG KONG, CHINAHonk Kong Committee for

Pacific EconomicCooperation (HKCPEC)

Trade & Industry Department 17/F, Trade & Industry

Department Tower700 Nathan RoadKowloonHong Kong, ChinaTel: 852-2398-5305Fax: 852-2787-7799http://www.hkcpec.org/

INDONESIAIndonesia National Committee

for Pacific EconomicCooperation (INCPEC)

Centre for Strategic andInternational Studies (CSIS)

Jalan Tanah Abang III/23-27 Jakarta 10160IndonesiaFax: 62-21-386 5532Tel: 62-21-384 7517http://www.csis.or.id/regpart_

view.asp?id=3&tab=0

JAPANJapan National Committee for

Pacific EconomicCooperation (JANCPEC)

The Japan Institute ofInternational Affairs (JIIA)

11F Kasumigaseki Building3-2-5 Kasumigaseki, ChiyodakuTokyo 100JapanTel: 81-3-3503 7744Fax: 81-3-3503 6707 http://www.jiia.or.jp/pecc/

PECC MEMBERS

KOREA Korea National Committee for

Pacific EconomicCooperation (KOPEC)

Korea Institute for InternationalEconomic Policy (KIEP)

300-4, Yeorngok-Dong, Seocho-Gu

Seoul 137-747KoreaTel: 82-2-3460 1242Fax: 82-3-3460 1244 http://www.kopec.or.kr/eng/

index.php

MALAYSIAMalaysia National Committee

for PacificEconomic Cooperation

(MANCPEC)Institute of Strategic and

InternationalStudies (ISIS)No. 1 Pesiaran Sultan SalahuddinP.O. Box 12424 50778

Kuala LumpurMalaysia Tel: 60-3-2693 9366Fax: 60-3-2693 9430

MEXICOMexico National Committee for

Pacific EconomicCooperation (MXCPEC)

Paseo de la Reforma No. 175 Piso 10, Col. Cuauhtemoc06500 Mexico, DFTel: 52-55- 5327 3001Fax: 52-55- 5327 3134

NEW ZEALANDNew Zealand National

Committee for PacificEconomic Cooperation(NZPECC)

Te Whare Wananga o te Upokoo te Ika a Maui,P.O. Box 600, Wellington,New Zealand

Tel: 64-(4)-463 5794Fax: 64-(4)-463 5454

PERUPeruvian National Committee

for Pacific EconomicCooperation (PERUPEC)

Ministry of Foreign AffairsJr. Lampa 545, 4th FloorLimaPeru Tel: 51-1-311 2570Fax: 51-1-311 2564

THE PHILIPPINESPhilippine Pacific Economic

CooperationCommittee (PPECC)c/o Philippine Foundation

for GlobalConcerns43/F, Philamlife Tower 8767 Paseo de RoxasMakati City, PhilippinesTel: 632-885 0924Fax: 632-845 4832

PACIFIC ISLANDS FORUM(PIF)Pacific Islands Forum SecretariatPrivate Mail BagSuva, FijiTel: 679-3312600/ 3302375

(Direct)Fax: 679-3300102

SINGAPORESingapore National Committee

for Pacific EconomicCooperation (SINCPEC)

c/o School of AccountancySingapore ManagementUniversity60 Stamford Road #05-41Singapore 178900

Tel: 65-6822-0150Fax: 65-6338 0596/ 6338 8236

CHINESE TAIPEIChinese Taipei Pacific Economic

Cooperation Committee(CTPECC)

Taiwan Institute of EconomicResearch (TIER)

5F, 16-8, Tehwei Street TaipeiChinese TaipeiTel: 886-2-2586 5000Fax: 886-2-2594 6528 http://www.tier.org.tw/

11english/english.htm

THAILANDThailand National Committee

for Pacific EconomicCooperation (TNCPEC)

Department of Economic AffairsMinistry of Foreign AffairsSri Ayudhya RoadBangkok 10400ThailandTel: 662-643-5248 Fax: 662-643-5247

UNITED STATESUnited States Asia Pacific

Council1819 L Street, Second FloorWashington, DC 20036USATel: 1-202-293-3995Fax: 1-202-293-1402http://www.usapc.org/

VIETNAMDepartment of Multilateral

Economic CooperationMinistry of Foreign Affairs#8 Khuc Hao StreetHa Noi, Viet NamTel: 84 (4) 199 3617Fax: 84-4-199 3618



Economic Research Servicehttp://www.ers.usda.govThe Economic Research Service(ERS) is the main source of eco-nomic information and research inthe U.S. Department ofAgriculture. ERS economists andsocial scientists develop and dis-tribute a broad range of economicand other social science informa-tion and analysis to inform publicand private decision making onagriculture, food, environmental,and rural issues.

The ERS’s timely reports aredistributed to public and privatedecision makers to assist them inconducting business, formulatingpolicy, and learning about thefarm, rural, and food sectors. ERSpublications are available to thepublic and the news media inboth print and electronic form.

The agency’s three divisions—Food and Rural Economics,Market and Trade Economics, andResource Economics—conductresearch, perform commoditymarket and policy analysis, anddevelop economic and statisticalindicators. The executive and leg-islative branches of the US federalgovernment use ERS informationto help develop, administer, andevaluate farm, food, rural, andresource policies and programs.

In addition to research reportsand commodity analyses, ERSpublishes AmberWaves, a maga-zine covering the full range of theagency’s research and analysis,including the economics of agri-culture, food, rural America, tradeand the environment.

Farm Foundationhttp://www.farmfoundation.orgFarm Foundation is a publiclysupported nonprofit organizationworking to improve the economicand social well-being of U.S. agri-culture, the food system and ruralcommunities by assisting privateand public sector decision makersin identifying and understandingforces that will shape the future.Serving as a catalyst, FarmFoundation partners with privateand public sector stakeholders,sponsoring conferences and work-shops to understand forces shap-ing the competitiveness of agricul-ture and the food system; encour-aging transfer of research intopractical tools for increasinghuman capital; promotinginformed dialogue on public issuesand policies; and building knowl-edge-based networks for U.S. agri-culture and rural people. FarmFoundation does not lobby, oradvocate positions or policies. Its73-year reputation for objectivityallows it to bring together diversestakeholders for quality discussionson issues and policies, providing asolid basis for informed privateand public-sector decisions.

Singapore ManagementUniversityhttp://www.smu.edu.sgOfficially incorporated in January2000, Singapore ManagementUniversity (SMU) is Singapore’sthird largest university. Its educa-tional and administrative practicesare modeled after American insti-tutions, in particular the WhartonSchool of the University ofPennsylvania, which has played acentral role in SMU’s develop-ment. To deliver its world-classcurriculum, an outstanding facultyhas been selected to advance itsteaching and research programs.Besides recruiting some of the bestacademics in their field, SMU alsotaps successful businessmen fortheir specific expertise and man-agement skills to combine aca-demic rigor with hands-on busi-ness savvy.

Singapore Manufacturers’Federationhttp://www.smafederation.org.sg/control.cfmThe Singapore Manufacturers’Federation (SMa) was establishedin 1932 by 17 founding mem-bers. Its main aim is to promotemanufacturing and the manufac-turing sector in Singapore. Withmore than 2,800 corporate mem-bers ranging from multinationalcorporations to small and medi-um-sized enterprises, SMa carriesout a myriad of activities toenhance the competitive edge of its members.

SPONSOR PROFILES


Singapore Ministry ofForeign Affairs http://www.mfa.gov.sgThe Singapore Ministry ofForeign Affairs advances and safe-guards the interests of Singaporeand its citizens through effectivediplomacy and support for causesthat promote diplomacy. ItsForeign Service has its headquar-ters in Singapore and operates anetwork of diplomatic missionsaround the world.

Singapore PetroleumCorporationhttp://www.spc.com.sgThe Singapore PetroleumCorporation (SPC) is a regional oiland gas company with interest inoil and gas exploration and pro-duction, refining, terminaling anddistribution, marketing and trad-ing of crude and refined petroleumproducts. It is an associated com-pany of Keppel Oil and GasServices Pte Ltd, a wholly-ownedsubsidiary of Keppel CorporationLimited. SPC was established in1969 to promote Singapore’sdevelopment as a refining center.

Tecman Holdings Pte Ltdhttp://www.tecman.com.sgTecman Holdings Pte Ltd is alocal Singaporean company withinterests in corporate manage-ment, business and financial con-sultancy, Christian book rooms,and supply of a wide range ofchurch-related products.


The Pacific Economic Cooperation Council (PECC) is an independent, policy-oriented organizationdevoted to promoting economic cooperation in the Pacific Rim. PECC brings together senior gov-ernment, academic, and business representatives from 23 economies to share perspectives andexpertise in search of broad-based answers to economic problems in the Asia Pacific region.

Founded in 1980, PECC now comprises member committees from the economies of Australia; Brunei;Canada; Chile; China; Colombia; Ecuador; Hong Kong, China; Indonesia; Japan; Korea; Malaysia; Mexico;New Zealand; Pacific Islands Forum Secretariat, Peru; the Philippines; Singapore; Chinese Taipei; Thailand; theUnited States; and Vietnam as well as the Pacific Island Nations. France (Pacific Territories) and Mongolia wereadmitted as associate members in April 1997 and April 2000, respectively. The Pacific Basin Economic Council(PBEC) and Pacific Trade and Development Conference (PAFTAD) are institutional members of PECC.

PECC’s governing body is the Standing Committee, which meets once a year and consists of the chairs ofthe PECC committees from each member economy. The day-to-day administrative and coordinating functionsare carried out by an International Secretariat based in Singapore. Each member committee sends a high-leveltripartite delegation from government, business, and academia to the PECC General Meeting held annually.

In 2005 PECC reorganized its work program into two types of activities. PECC will focus on 2 to 3 signa-ture projects known as task forces on issues of importance to policy makers in the near and medium term.PECC’s flagship publication will be its annual State of the Region report. The report will include analysis ofthe current economic situation in the region as well as an examination of emerging issues.

A number of other studies undertaken by PECC Member Committees are self-funded, addressing transpa-cific issues of interest to the PECC organization.

At the regional level, PECC’s most important link with government is through APEC. PECC is the onlynongovernmental organization among the three official APEC observers. PECC representatives attend APECministerial meetings, senior officials meetings, and working group meetings. PECC also works with otherinternational organizations such as the World Trade Organization, the Organization for Economic Cooperationand Development, the Asian Development Bank, the World Bank, and United Nations’ agencies.

For more information, contact the PECC International Secretariat, 4 Nassim Road, Singapore 258372, Tel:65-6737 9823, Fax: 65-6737 9824, email: [email protected]

PACIFIC ECONOMIC COOPERATION COUNCIL

PHOTO CREDITS: COVER, PHOTO COLLAGE BY DOUG STERN. INSIDE FRONT COVER, A FARM WORKER CUTS SUGAR CANE TO BE USED IN THE PRODUCTION OF REFINEDSUGAR AND ETHANOL IN THE CARTAVIO SUGAR ESTATE IN THE NORTHEREN CITY LA LIBERTAD, PERU. NEWSCOM.COM. INSIDE BACK COVER, BIODIESEL PLANT IN SINGAPORE. TIM CHONG/NEWSCOM.COM

The Pacific Food System Outlook represents the first regionwide coordinated effort toprovide the outlook for the Pacific food system. The food system includes not just pro-duction agriculture, but also the whole complex of economic relationships and link-ages that tie the region’s food consumers to producers. The goal of the Pacific FoodSystem Outlook is to help increase knowledge about the diverse components of thisvital segment of the global economy.

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