In less than 20 years, biofuels have grown from a novel idea into a lucrative industry. Liquid biofuels produced from crops such as corn, sugar cane and palm oil have been hailed as possible clean, safe alternatives to more polluting forms of fuel for transport such as oil.
But as the industry has grown, both within the APEC region and beyond, so too have concerns. Debate has intensified among experts, environmentalists, industry and government about the impact of biofuels on the world. They have been blamed for unintended environmental damage, for displacing production of food crops and, according to the Food and Agriculture Organization of the UN and other groups, contributing to a rise in world food prices.
The APEC Biofuels Task Force, of which 17 of the 21 economies participate, has been working to produce numerous studies on the subject, to provide Asia-Pacific economies, their policy makers and stake-holders with key information on the state and the future direction of the industry. With officials worldwide also addressing climate change, including at UN-sponsored talks in Cancun, Mexico in December, the work of the taskforce is more relevant than ever.
“The central goal of the task force has been to assess the extent to which biofuels might displace the use of oil in transport,” says task force chair Jeff Skeer, from the US Department of Energy.
“The task force was created because APEC Energy Ministers meeting in 2005 were extremely concerned about high and volatile oil prices and growing oil dependency in the region as a whole,” he says.
“Our energy ministers wanted to know whether biofuels could put a significant dent in our oil dependency and give us a useful option going forward.”
Mr Skeer says biofuels are an “important option for the transport sector – to help us diversify away from imported oil to fuels that are produced domestically within the APEC region and also have a smaller carbon footprint.”
The biofuel industry in the APEC region consists of two distinct sectors, ethanol and biodiesels. Worldwide, 52 billion litres of ethanol (primarily converted from corn and sugarcane) were produced for fuel in 2007, triple the level in 2000. Within the APEC region, United States, China, Canada, Australia and Thailand were the main producers. Around 10 billion litres of biodiesel (converted from vegetable oils such as soybean, rapeseed and palm) were produced worldwide in 2007, up 11-fold since 2000.  Most of the APEC production came from the United States, Indonesia, Malaysia and Canada.
The industry has grown with the support of governments for both production and consumption. In 2009, government backing worldwide for the industry amounted to USD 20 billion.  Support in the APEC region includes fuel tax exemptions, loan guarantees and research and development investments, but the most common policy is mandates for compulsory blending with fossil fuels to a certain percentage. Although demand for biofuels has been growing rapidly, globally ethanol and biodiesel only accounted for less than two percent of transport fuels in 2007, although this is projected to rise to between three and 10 percent by 2030. 
Mr Skeer says while biofuels can make an important contribution to reducing reliance on fossil fuels, they are not a “silver bullet.” Advocates argue that biofuels can reduce greenhouse gas emissions, relative to fossil fuels, since the carbon released during fuel combustion can be recaptured during plant growth. There are concerns, however, from experts, that changes in land use by the expansion of biofuels may in some cases lead to the release of carbon stored in soil, offsetting the positive benefits. The clearance of rainforests to allow for the expansion of crops such as palm oil could also impact on climate change and biodiversity.
Mr Skeer acknowledges the concerns, saying biofuels “can help the environment if we produce them correctly – for example if we grow them on existing farmland or on algae ponds without opening up new lands to cultivation – but will hurt the environment if we grow them on virgin rain forest or peat bogs.”
A new taskforce study has found that APEC economies are introducing practices that allow biofuels to be planted and harvested in a sustainable way. One key type of initiative is more sophisticated planning, including mapping to assess the sustainability of land and water use for biofuel crops. Another is voluntary programs and initiatives to make land production more efficient (and therefore reducing the need for new land) as well as to reduce carbon emissions from biofuel production. Examples include efforts to capture and reuse the waste streams from methane gas released in palm oil mills. Good agricultural practices such as using high-yielding seeds is another example, along with more efficient irrigation, producing biofuels on marginal lands that are not suitable for food crops and more sophisticated planting practices and crop rotation systems.
“Almost all of the sustainable practices described are ones that have already been adopted in one or more APEC economies – so they show what can be done – and done in a way that is practical and efficient,” Mr Skeer says.
He also points to research and development of a new generation of biofuels, produced from cellulosic biomass such as farm and forest waste. These so called “second-generation” biofuels hold greater promise for the future than the biofuels currently on the market, according to experts, although the industry is not yet commercially viable.
A concern about first-generation biofuels is their impact on food production and prices. But second-generation biofuels are defined as crops that do not compete for land, water and other resources with food crops.
A taskforce study has looked at the potential of farm and forest waste, and concluded that these fuels could potentially displace as much as two-fifths of the petrol use in APEC or one-fifth of the region’s overall crude oil imports (since petrol represents about half of the overall oil use in transport). This is because such residue is abundant and does not compete with food production.
Then there are “third generation” fuels such as algae. Widely available and quick growing, algae crops also do not involve destruction of natural habitats, nor compete with food production on agricultural land. The APEC task force is currently conducting an assessment on the potential of converting algae into biofuel – which could in the future provide cost effective diesel fuel for cars, trucks and airplanes.
“A number of pilot-scale and commercial scale bio-refineries will be demonstrating the practical and commercial potential of a wide variety of second-generation feed stocks in the next few years,” Mr Skeer says.
“Together with electric vehicles, more developed urban transit systems, and more efficient freight transport, they hold the potential to transform our transport sector from an oil-guzzling burden to a carbon-lean asset.”
 The State of Food and Agriculture 2008, FAO
 World Energy Outlook 2010, International Energy Agency