Muddying Green Transport: The Unintended Consequences of Global Biofuel Policies for Grassland Areas

BeZero Carbon
Aug 19 · 6 min read

Oli Parker, BeZero’s Policy and Research Intern, discusses some of the inadvertent implications of policies that promote the production of biofuels.

  • Biofuel policies are driving widespread land-use change to meet growing demand, causing the release of greenhouse gas (GHG) emissions stored in soil carbon.
  • Crop quality and yield suffers on account of feedstock crops being cultivated increasingly on unsuitable land.
  • As grasslands are converted to croplands, natural habitats are lost and biodiversity is reduced.

A short-term fix

With the need to mitigate climate change and improve fuel security growing ever more urgent, in recent decades, the global transportation sector has turned increasingly to biofuels. These come in three forms.

  1. First-generation biofuels are most widely used and are produced directly from food crops like corn and sugarcane
  2. Second-generation biofuel feedstock is the non-edible by-product of food crops
  3. Third-generation biofuels use specially engineered crops such as algae as the energy source.

As fuels produced from renewable organic material, biofuels are viewed as an important stepping stone to achieving zero emission transport through the eventual scaling up of electric and hydrogen-powered vehicles. Indeed, first-generation biofuels engender GHG emissions reductions of 20–60% relative to fossil fuels, when produced using the most efficient systems¹.

Demand has been driven by high consumption primarily in the US, Brazil and the EU — which together account for 90% of global production — while aviation is the most biofuel-thirsty industry².

The value placed on biofuels at the turn of the century saw that production tripled between 2000 and 2007, from 18 billion litres to over 62 billion litres³. By 2019, this grew to 163 billion litres and this trajectory is expected to continue, with demand for palm oil and soy oil projected to rise by 90% and 75% respectively by 2030. Since biofuels have accounted for 90% of vegetable oil usage since 2015, their rapidly expanding demand requires increased production of such fuel crops worldwide⁴.

Figure 1. Global biofuel production 2000–2020. Source: Statista.

Policy considerations

Now, this is where policy comes into play. National biofuel policy decisions are, of course, made at the local level. However, in regions like the US, Brazil and the EU, policies are influenced by shared global drivers and utilise comparable mechanisms. Most commonly, policymakers mandate certain proportions of biofuels to be blended with conventional fossil fuels.

These vary between countries, with the US stipulating that biofuels must account for 10% of transport fuel, while the EU mandates blends of 5–7.5% and Brazil’s standard is set at 15–27%⁵. Additional policy levers include tax credits and subsidies to support farmers cultivating fuel crops⁶. Yet, whatever the elected tool, biofuel policies ultimately share the aim of boosting agricultural production to meet demand and provide a short-term replacement for conventional fuels. The unintended consequences of such policies are as follows.

For biofuel to burn, land must turn

First and foremost, the policies driving biofuel production result in widespread land use change, otherwise known as indirect land-use change (ILUC)⁵. Cropland conversion is the key strategy for boosting supplies and the proportion of cropland used for biofuels is anticipated to expand from 1% in 2004 to 4% by 2030¹. In the US, these land use conversions represent the greatest transformation of cropland since the ‘fencerow-to-fencerow’ era of the 1970s and the Dust Bowl of the 1930s⁷. In theory, such efforts to advance biofuels wield climate benefits by reducing reliance on conventional fuels with higher end-user emissions.

However, beneath the surface, this spells bad news. Given that 88% of the land converted to croplands for biofuels in the US has come from grasslands, the conversion frenzy undertaken in recent decades somewhat undermines the advantages of promoting biofuels in the first instance⁸. This is because, as a key carbon sink containing 12% of global terrestrial carbon stocks, carbon stored in the soil is released into the atmosphere when grasslands are converted to produce feedstock⁹.

If nitrogen fertilisers are used this damage is exacerbated, since emissions of nitrous oxide are 300 times stronger than carbon dioxide in terms of the greenhouse effect¹. While the implications of ILUC vary depending on the adopted processes and carbon stock of the converted land, the effects can be so great that they negate the benefits of biofuels and indeed release more emissions than some fossil fuels, on an energy-equivalent basis⁶.

Conceding quality

Reduced crop quality and yield presents a further by-product of the indiscriminate cropland conversion arising from biofuel policies. Several studies have revealed that, particularly in the US, croplands are increasingly moving onto lower-quality land in less-suitable, more arid regions⁷. For instance, between 2008 and 2016, new croplands were 10% less likely to be planted on hydric soils (permanently water-saturated soils) and experienced 3.3% higher climate water deficit than existing croplands⁸.

Perhaps unsurprisingly, these unfavourable growing conditions leave yields considerably reduced. This is illustrated by yields for corn, soybeans and wheat in the US being less than their corresponding national averages on 78%, 69%, and 59% of new croplands, respectively⁸. As such, though the pursuit of fuel crop production appears to be generating sufficient biofuel supplies to keep pace with rising demand, the policies expanding production to land less suited to cultivation have also created worrying inefficiencies in the process.

Biodiversity takes a hit

Another key unintended consequence of biofuel policies is biodiversity loss. With the United Nations identifying agricultural land use change as a primary driver of global biodiversity loss, the ILUC resulting from biofuel policies represents a central culprit of habitat destruction⁸. Although biofuel production can positively affect wildlife and agricultural biodiversity through the restoration of degraded lands, commonly-converted grassland areas are biodiversity hotspots housing many pollinators, birds and plant species — so overwhelmingly the result is a loss¹.

Drawing on the US experience once more, the typical grassland harbours over 60 times more milkweed pods — the sole food source for Monarch butterfly larvae — than converted croplands⁸. Meanwhile, the grasslands in the US Prairie Pothole Region alone support over 50% of the North American breeding ducks⁸. The upshot of such regions being subject to cropland conversion is devastating biodiversity loss, with 220 million (or 8.5%) milkweed stems being lost to monoculture produce such as corn and soybean in the year 2008 alone, creating ripples further down the food chain⁸.

Concluding remarks

In sum, the unintended consequences of global biofuel policies expose current practices to be misguided and at odds with their fundamental purpose. The imposition of mandates requiring blends of biofuels has certainly succeeded in promoting their global production and distribution, however a lack of foresight has given rise to the conversion of carbon-rich grasslands, among other carbon sinks, and the release of their associated emissions.

The process is highly inefficient on account of excessive cropland expansion onto unsuitable land, rendering crop yields significantly reduced. Meanwhile, plant and wildlife biodiversity suffers as natural habitats are replaced by crops for biofuels. The land-use and biodiversity leakage that these implications represent must be considered when evaluating the efficacy of technological means for carbon sequestration, such as bioenergy with carbon capture and storage (BECCS).

Although land conversion and its knock-on effects are driven by other factors too, such as fuel prices and dietary shifts, the overwhelming majority of global land-use change has been shown to stem from biofuel production¹⁰. As the world faces twin ecological crises in climate change and biodiversity loss, global biofuel policies straddle the nexus between the two and thus hold prime position to effect meaningful change.

Policy recommendations

In order to produce feedstocks with less associated damage, it is crucial that perverse incentives encouraging arbitrary land conversion are removed. One avenue through which this could be achieved is the expansion of payment for environmental services (PES) schemes. These initiatives compensate farmers for providing environmental services by adopting production methods that optimise crop yields.

Payments can be secured from either one of two sources. State grants based on compliance with standards are available in some regions, for example the US Department of Agriculture provided critical funding in 2015 to help launch a Colorado-based conservation project which prevents land conversion and sequesters 8,000 tonnes of carbon per year¹¹.

Alternatively, the voluntary carbon offset market can play a key role. Through tapping into the offset market, landowners can gain compensation for their environmental services by generating and selling carbon credits at competitive rates. Some landowners are already benefiting from this, such as the May Ranch in Colorado, where funds are sourced through carbon credits in return for the conservation of 14,500 acres of native prairies¹². By improving production efficiencies and reducing incentives to convert cropland, the widespread institution of PES schemes — either through compliance markets or the voluntary offset market — could help to minimise the footprint of the global transportation sector until electrification enables true carbon neutrality.

Written by Oli Parker, Policy and Research Intern


¹GreenFacts (2021)

²Zhang et al. (2013)

³OECD (2008)

Hansen (2020)

Giuntoli (2018)

EPA (2013)

Lark et al. (2015)

Lark et al. (2020)

Ontl & Janowiak (2008)

¹⁰Delzeit et al. (2018)

¹¹Parkhurst (2018)

¹²Climate Action Reserve (2018)

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