"Certification Strategies, Industrial Development and a Global Market for Biofuels" Discussion Paper

Belfer Center Harvard
January 13, 2010
Authors: Ricardo Hausmann, Rodrigo Wagner

Belfer Center Programs or Projects: Environment and Natural Resources

INTRODUCTION
A disproportionately large amount of the world's agronomic potential for the production of bio-ethanol is concentrated in a subset of developing countries. This phenomenon represents a rare opportunity to help countries that rank among the poorest in the world to make progress towards industrialization and export-led growth. The list of potential biofuel competitors includes small, tropical economies where the current denominator of total exports is low, so the development of even a small biofuel industry could represent a large proportion of exports. By creating demand for relatively complex inputs and capabilities, the industry's development may also make it easier for these countries to develop other more sophisticated industries in its wake. The emergence of a biofuels industry, therefore, may not only be meaningful for global energy supply, but may also promote the competitiveness of some of the world's most vulnerable communities.

This opportunity is being threatened, however, by the complexity of the coordination challenges, like standardization and the building of an integrated supply chain, as well as by the large number of policy priorities that are shaping the industry's emerging structure. This paper will discusses all these tensions in the context of the international policy debate.

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