The Use of Biofuel for Sustainable Growth in Developing Countries

Abstract:

The biofuel industry is divided into four categories comprising of feedstocks used in 1^st and 2^nd generation bioethanol and biodiesel. In order to identify and quantify each biofuel feedstock’s potential for sustainable growth, each were evaluated according to self-developed social, financial, and environmental criteria.

From the investigation and analysis carried out, 1^st generation biodiesel and bioethanol were determined to be feedstocks not capable of facilitating sustainable growth. Results showed low earnings before interest, taxes, depreciation and amortization (EBITDA) of −0.5 to 1 USD per gallon for biodiesel and 0.25 to 0.5 USD per gallon for bioethanol. Results also showed a poor return on asset (ROA). The energy required to produce one MJ of 1^st generation biofuel fuel was at least 0.4 MJ, showing poor energy balance.

Furthermore, high land, water, pesticide, and fertilizer requirements strained surrounding ecosystems by affecting the food web, thus reducing biodiversity. Over 55% of land used by the biodiesel industry in Indonesia and Malaysia involved the deforestation of local rainforests. This not only displaced indigenous organisms from their habitat and decreased their scope of nutrition, but also contributed to soil erosion and increased the probability of flooding. If left unregulated, imbalances in the ecosystem due to unsustainable growth will result in a permanent reshaping of tropical rainforest ecosystems in Southeast Asia.

Algae, an example of 2^nd generation biodiesel feedstock, was concluded to be the biofuel feedstock most capable of supporting sustainable growth. This is due to its low production costs of $1-1.5/gal, high biological productivity of 5000 gallons of biodiesel per acre per year, and high ROA of 25-35%. Additionally, algae’s adaptability to varying environmental conditions also makes it an appealing candidate for businesses in developing countries, where access to resource supplies is unstable. Additionally, its reduced net greenhouse gas emissions and low impact on biodiversity makes it a feedstock highly capable of stimulating economic growth yet simultaneously resolving environmental issues and infrastructural restraints in developing countries.