Argentinean soy-based biodiesel: An introduction to production and impacts

Abstract

This paper explores the economic, social and environmental context, drivers and impacts of increased demand for Argentine soy-based biodiesel. It is based on extensive stakeholder interviews in Argentina, including those in government, academia and the third sector; as well as participant observation with communities in soy cultivation areas; and review of relevant academic and grey literatures. Given Argentina's history of political instability and relatively weak levels of environmental protection, there is reason to be sceptical of the likely effectiveness of biofuel sustainability certification as applied to Argentine soy. Direct contracts between feedstock producers and biodiesel retailers may be a more reliable approach to minimise adverse environmental and social impacts than certification alone.

Introduction

A limited level of indigenous feedstock production potential within the EU means that much of the production of liquid biofuels for transportation is expected to occur in the global south. Higher biomass productivity and lower production costs will also encourage production in the tropics. Therefore, biofuels have the potential to provide opportunities for economic development and improved energy access for developing countries. However, the negative impacts of increased global demand for biofuels are of increasing concern, and include direct and indirect land use change, competition with food production, and land tenure conflicts (e.g., Doornbosch and Steenblik, 2007; Searchinger et al., 2008; Renewable Fuels Agency, 2008; Sylvester-Bradley, 2008; Wiggins et al., 2008; Ivanic and Martin, 2008; Semino et al., 2007). Growing concern about the potential negative impacts of biofuels has led to calls for global certification of biofuels in order to ensure that sustainability is a precondition to their production. For example, in order to count toward the EU target, biofuels must deliver life-cycle CO₂ savings of initially 35%. And then, from 2017 onwards, biofuels must deliver 50% for existing refineries or 60% for new refineries (European Parliament, 2008). Current initiatives to certify biofuels are dominated by institutions from developed countries. Moreover, considerable doubts remain as to whether such initiatives will be able to address stakeholder concerns and deliver low carbon fuels, without jeopardising food security, the environment, or causing adverse social impacts. This paper provides an overview of the Argentinean situation with respect to biofuel production and comments briefly on the implications for sustainability certification. A longer version is available as Tomei and Upham (2009).

Despite being a relative latecomer to the industry, Argentina is well-placed to meet growing international demand for biofuels, particularly for biodiesel. Due to its size and geographical diversity, Argentina has significant bioenergy potential. It also has a large, export oriented agricultural sector. Globally, Argentina is one of the top three producers and exporters of vegetable oils, and is the largest global exporter of both soy and sunflower oils (FAO, 2008). Although Argentina is also a major producer of several other crops, such as sunflower and wheat, this paper focuses on soy due to its central role in the developing biodiesel industry.

Soybean production accounts for more than 50% of the area cultivated with grains (Panichelli et al., 2009), and is concentrated in the central provinces of Santa Fe, Buenos Aires, Entre Rios and Córdoba. Fig. 1 shows the soybean production area.

The majority of the soy processing industry is also located in this central region, which enables easy access to the Paraná River – a waterway with deep water suitable for large, export bound vessels. In 2007, Argentina was ranked third in a list of countries with potential for biodiesel production due to availability of feedstock (principally soy), low production costs, an export focused industry, and a favourable policy environment (Johnston and Holloway, 2007).