BIOMASS HUB

The biofuel land march is going global. Investments by multinationals raise questions about the role of ethics, international law, and oversight.

As the international appetite for biofuels has grown in the last several years — due in part to rising oil prices and efforts to mitigate greenhouse gas emissions — major corporations are eying investments in fertile land around the world and circumventing national laws aimed at protecting marginalized people.

Hilaire Avril writing for Inter Press Service News Agency reports in a particularly insightful article:

A year after the purchases of vast swathes of farm land in Africa first drew public attention, transactions remain as opaque as ever.

This shroud of secrecy has obscured many of the dark secrets behind biofuels: labor abuses, fresh water depletion, and the subject of this article, the nationalization of extra-territorial land.

Land Ho!

Land acquisition abroad has been linked to “indirect land use change” (ILUC) but the mechanics can be fairly complex, which partly explains why there is so much resistance to attempts to quantify ILUC (see Effects of Biofuel on Indirect Land Use Change Study Released).

More rigorous inquiries into the indirect implications of commercialized biofuel production have boiled to the surface in recent years (see Searchinger).  What is revealed: in the wake of the U.S. corn, Brazilian sugar, and EU rapeseed juggernauts lie the world’s marginalized, caught up in the turbulence of a global frenzy to commercialize vast quantities of “energy feedstock.”

Nikolaz Kozloff, casting a light on the ‘dark underbelly’ of Brazil’s clean energy revolution in a Foreign Policy article, explains:

Today the Brazilian sugar cane industry is centered in the state of São Paulo — drive just an hour out of the city and you can see sugar cane fields stretching for hundreds of miles. Palmares Paulista is a rural agricultural town 230 miles from São Paulo. Behind rusty gates lies a squalid red-brick tenement building. Inside, weary migrant workers breathe the stale air and try to prepare themselves as best they can for the long day ahead. The cortadores de cana, or sugar cane workers, are crammed into tiny cubicles filled with rickety bunk beds and unpacked bags. They hail from the poverty-stricken, drought-plagued northeast and earn paltry wages.

As demonstrated in Brazil and many other parts of the developing world, the increasing number of million-dollar “agricultural investments” have pitted host countries and corporations against local subsistence farmers.

Out of Sight, Out of Mind

Backed by investments from national governments, private companies acquiring land abroad are resisting a global code of conduct that would ensure transparency as well as facilitate emerging sustainability certifications (see Emerging Biopower and Biofuel Sustainability Standards).

Camilla Toulmin, who heads up International Institute for Environment and Development (IIED), a not-for-profit sustainable development research organization , adds:

A lot of these contracts are being negotiated behind closed doors. Some are pathetically thin and a few grant substantial preferential rights to access water to the investors.

Meanwhile, “local elites continue to benefit from deals that encourage corruption and increase food insecurity,” Avril explains. As advocated by ActionAid — more recently in connection to EU’s efforts to advance biofuel mandates — the million-dollar investments can exacerbate local food production challenges.

IIED notes in its report Land grab or development opportunity? Agricultural investment and international land deals in Africa:

As governments or markets make land available to prospecting investors, local people could lose access to the resources on which they depend – not just land, but also water, wood and grazing…Effective safeguards in national law, and skillfully and transparently negotiated contracts, are key to securing local land and water rights.

CSR and the Pursuit of Goodwill

The IIED recently published a guide detailing how to draw up contracts for fairer and more sustainable natural resource investments.  It notes:

Government capacity to negotiate and manage contracts and civil society capacity to scrutinize government dealings can make a real difference to getting a better deal from natural resource investment.

Although international standards to protect the marginalized poor are elucidated by international organizations, including the United Nations, and corporate social responsibility standards offer some protection against the worst abuses from multinationals, a sufficiently binding regulatory framework compelling investors to account for local populations’ interests has not yet developed.

As noted earlier, sustainability criteria do and will go a long way towards mitigating some of the externalities linked to biofules.  While international laws are on the march, through bilateral and multilateral treaties as well as nonbinding “soft law,” these regimes remain piecemeal at best.

Where voluntary criteria lack punch and international law is vague, the application of corporate social responsibility standards will play an important role softening the blow from the global biofuel industry.  Multinationals doing business abroad will need to preserve goodwill among citizens while preserving their “social license” to pursue business opportunities.  This will go a long way towards managing risk while also mitigating social and environmental abuses.

For more on geopolitics and biofuels:

• Biofuels and the Growing Specter of Water Wars
• Resource Wars: 3 Constraints that Could Make or Break Biofuels

Image: Flickr/El Marto