Sustainable Supply Chains for Bio-Based Fuels and Chemicals
3.3 Economics of Sustainability and the Environment
“Sustainability” is defined and measured by the particular stakeholder groups in- volved in the assessment (Powell 2010). A majority of stakeholders for Western civilization prior to the late twentieth century were primarily concerned with meeting basic needs of food, shelter, and clothing. This remains true for a subset of stake- holders in the “developed” world, and to a greater degree for those nations whose gross domestic product would be characterized as the “developing world”. Meeting basic needs continues to be a high priority for much of the world’s population.2
Feedback mechanisms for basic needs (hunger, cold, inconvenience) are more immediate than those for longer term impacts of environmental stressors (air and water quality). The feedback mechanisms for longer-term CO2impacts and climate change at a global level are generally less apparent than local environmental concerns.
This creates a fundamental challenge in mechanisms for the global community to deal
1ANL GREET Model (http://greet.es.anl.gov/results).
2http://en.wikipedia.org/wiki/Developed_country.
Table3.1Illustrativeexamplecalculationofenergyrequiredfortheproductionofonegallonofgasolineequivalentfromvarioussources. (http://greet.es.anl.gov/results) FuelGasolineEthanol FeedstockConventionalOilsandUSaverageCornSwitchgrassCornForestresidueSugarcane crudestover TotalenergyWTP20,65639,45523,25677,268122,016149,646106,130141,689 [Btu/gge]PTW113,602113,602113,602113,602113,602113,602113,602113,602 WTW134,257153,056136,858190,869235,617263,247219,731255,291 FossilenergyWTP19,83438,41522,40563,888−5,060−11,018−8,94117,252 [Btu/gge]PTW110,520110,520110,52000000 WTW130,354148,935132,92563,888−5,060−11,018−8,94117,252 CoalWTP2,0672,9092,18411,463−15,750−16,223−16,0051,457 [Btu/gge]PTW00000000 WTW2,0672,9092,18411,463−15,750−16,223−16,0051,457 NGWTP8,33326,45810,84145,0233,341−3,547−4755,638 [Btu/gge]PTW00000000 WTW8,33326,45810,84145,0233,341−3,547−4755,638 PetroleumWTP9,4349,0489,3817,4017,3488,7527,53810,157 [Btu/gge]PTW110,520110,520110,52000000 WTW119,954119,568119,9017,4017,3488,7527,53810,157 GHGWTP1,9763,4252,177−596−7,961−9,310−9,292−5,673 [gCO2e/gge]PTW8,8178,8178,8178,6058,6058,6058,6058,605 WTW10,79312,24210,9948,009644−704−6862,932 ResultscreatedbyANLon11/11/2010usingGREET1.8d.1version,August2010release;EnergyuseresultsinthistabareprovidedinunitsofBtuperequi- valentgallonsofgasoline(gge)oftheconsumedfuel;WTPwelltopump;PTWpumptowheels;WTWwelltowheels
with risks of CO2and climate change, where stakeholders from different economic backgrounds or perceived quality of life will assign different values and measures to what is the optimal choice for “sustainability”.
A key question is “who pays” for the environmental and planetary benefits of reduced carbon energy sources? As summarized in a recent treatise on Economics and the Environment (Goodstein1999), the economic behavior of the majority of consumers as environmental stakeholders is to want environmental burdens to be shared, as opposed to individually paying a premium for “greener” or environmen- tally advantaged products. This is true even for that segment of global population with wealth beyond what is needed to meet basic needs. The issue is one of fairness in sharing environmental burdens. Thus, cleaner air and water, or a move to renewable fuels to address climate change, are implemented by governmental intervention in the form of environmental permits, as well subsidies or mandates for environmentally advantaged fuels and products.
For the example of sustainable palm oil for biodiesel, Boons and Mendoza de- scribe the connection of the Netherlands with Columbia as the consumer market and supplier in the palm oil supply chain for renewable energy (Boons and Men- doza2010). Demand for renewable palm oil to address climate change has been driven by governmental policies in the Netherlands and the European Union (EU).
Permitting of new palm plantations in Columbia, with net impacts on carbon sinks and sources, is managed by the Columbian government, who must deal with the complexity of assessing indirect land use change (ILUC) impacts on CO2, as well as other sustainability metrics (Tan et al.2009). Technology transfer is thus highly important, such that knowledge of impacts of land use change on carbon balances can be transmitted to those engaged in production decision making. Smaller local producers need access to results from available tools for life cycle inventory and assessment, and awareness of how production methods (fertilizer use, harvesting) can impact the carbon intensity, in order to make sustainable decisions with positive benefit on carbon balances (Tan et al.2009). Validation or certification of carbon intensity of the biofuels product is an important metric for this supply chain.
In order to effect technology transfer and drive optimal environmental and social decisions, The Roundtable on Sustainable Palm Oil (RSPO) was formed in 2004 with the objective of promoting the growth and use of sustainable palm oil products through credible global standards and engagement of stakeholders. The seat of the association is in Zurich, Switzerland, while the secretariat is currently based in Kuala Lumpur. The non-profit association unites palm oil producers, processors or traders, as well as consumer goods manufacturers, retailers, banks and investors, environmental or nature conservation NGOs and social or developmental NGOs—to develop and implement global standards for sustainable palm oil.3
In 2010, the EU called for industry, governments and NGOs to set up “voluntary schemes” which certify that biofuels used in the EU meet sustainability criteria. The
3http://www.rspo.org/. Accessed 01 January 2011.
“sustainable biofuel certificates” will be policed by independent auditors. EU guide- lines for calculating carbon intensity of fuel products have been published.4Similarly in the US, the Environmental Protection Agency (EPA) has set up regulations for re- newable fuels mandates,5 which include Renewable Volume Obligations (RVO’s) which are managed by tradable Renewable Identification Numbers (RINS) that can be calculated basis the carbon intensity of the supply chain used to manufacture the renewable fuel.6
To date, sustainably produced sugarcane ethanol has reduced greenhouse gas emissions more than other competing biofuel supply chains. To ensure contin- ued value-added performance upon further expansion in production, sustainability standards have been established through Bonsucro (formerly the “Better Sugarcane Initiative”).7In addition, the Roundtable on Sustainable Biofuels (RSB)8has been established as an international initiative coordinated by the Energy Center at EPFL in Lausanne that brings together farmers, companies, non-governmental organizations, experts, governments, and inter-governmental agencies to ensure sustainability of the biofuels supply chain. The RSB has developed a third-party certification system for biofuels sustainability standards, encompassing environmental, social and eco- nomic principles and criteria through an open, transparent, and multi-stakeholder process.
The above examples highlight mechanisms for ensuring sustainability in biofuels supply chains. Key to success is the creation of mechanisms for technology and infor- mation transfer, with transparency in assessment of value and impacts, to ensure that optimal solutions are deployed, considering all three dimensions of sustainability.