As highlighted in the previous chapters, the different technological, economic, and social conditions around the world have led to diverse paths being taken in the pro­duction of fuels from renewable sources. In its essence, the production of energy from biomass of agricultural origin presents the challenge of integrating three impor­tant facets. One facet represents the energy needs of society, a system that is sensitive to changes in relative prices and to variations in the intensity of economic activities. The second facet represents the farmers, who normally take their decisions regarding land use based on their own mental maps that include the variations in the costs and possible returns implied in the major agricultural commodities they are accustomed to negotiate. Finally, the third facet, industrial production, requires a stable supply of raw materials provided at competitive levels (minimum efficiency scale) in order to ensure the feasibility of their production. The main challenges involving renewable energy are located within these three groups of actors. To deliver a competitive final product in the energy sector, there must be a robust and sustainable chain, without which bioenergy cannot compete with other forms of energy.

Although different paths have been taken in the production of ethanol and bio­diesel around the world, objectives and incentive mechanisms have been much the same, that is, governments have taken the initiative. In Brazil, for example, the Proalcool program was introduced to provide energy security, while the Biodiesel program, besides energy issues, is aimed at ensuring social inclusion and diversifi­cation of agricultural production.

The main policies used for this purpose, in both the above cases, have been the mandatory blending ethanol and biodiesel with conventional fuels (gasoline and die­sel, respectively), subsidies to farmers and industrial producers, and tax incentives throughout the supply chain. However, it is not yet clear, anywhere in the world, for how long the biofuel industry will be dependent on government incentives.

Some chains that are currently exploited for the production of biodiesel are likely to disappear in the future. Theoretically, the agricultural productivity level may be high, as in the case of castor beans, but the productive structure is frag­ile in many countries. The bioenergy industry, like other industries, is dependent on government incentives, but the productive structure is still very fragile. Even

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after several years in operation, the risks for the industrial producers remain high. The main problems associated with the production of biodiesel from castor beans in Brazil, for example, are technological difficulties in the manufacturing process, low productivity and low volume in the agricultural area, the presence of informal intermediaries in the chain, unstable prices for castor oil, lack of technical assis­tance to farmers, and lack of associative experience, which has led to poor coop­eration on the part of farmers with the biodiesel companies.

As for the production of biodiesel from alternative oilseeds such as canola, sunflower, palm, jatropha, and castor, their respective supply chains have not yet established a structure capable of meeting the objectives of government programs, are still far from being competitive, and do not demonstrate economic, environmental, and social viability. In this context, only the soybean chain achieves competitive lev­els in the economic sphere, although its productive structure does not benefit small farmers, and the high technology applied in the field does not provide the increased employment that government incentive programmes generally seek to ensure.

In terms of the production of ethanol, countries have developed different tech­nologies based on the available raw materials. In Brazil, ethanol from sugarcane is competitive, and in the USA, corn is used to meet the production needs, while in Europe, due to its climate and public policies, beet is the most widely used feed­stock for ethanol production.

The production and consumption of renewable energy has evolved rapidly around the world. Since the first commercially viable projects in Brazil, the USA and Europe new technologies have been developed and applied. One of the technological frontiers involves the harnessing algae for fuel production, as seen in Global Market Issues in the Liquid Biofuels Industry and Algae: Advanced Biofuels and Other Opportunities. Research undertaken in various parts of the world suggests enzymatic hydrolysis rep­resents a commercially exploitable frontier, with the use of lignocellulosic materials, which is the focus of American energy policy (Sorda et al. 2010).[19]

By optimizing the biomass-derived energy production chain, the use of lig — nocellulosic materials, together with the establishment of local/regional energy systems, could increase the share of renewables in the global energy mix. Such initiatives might benefit those locations where development has not fully occurred.

The speed with which new inputs are researched and introduced also poses new challenges for the industrial sector. The investments are high, and the adoption of new inputs assumes the need for changes or adaptations that are often uneconomi­cal for companies. This may explain the delay in adopting the hydrolysis and fuel synthesis technologies in developing countries.

For the industrial producer, the presence of sunk costs increases uncertainty, as do instability in the biomass supply and insecurity in relation to contracts with suppliers and buyers, which are mostly state-owned companies that also act as players in the energy market. Such uncertainties may endanger the continuity of private investment, so perpetuating dependence on public investments.

Throughout the chapters of the book, one can see that some authors believe that the developing countries, which have cheaper sources of biomass than the industri­alized countries, can achieve greater competitiveness in the production of biofuels and that they may even compete with fossil fuels in the future. On the other hand, in the developed countries, there is a transition toward new renewable fuel produc­tion technologies, employing production systems with multiple inputs and multi­ple conversion technologies for the production of different forms of end use—fuel, electricity, and heat.

From the point of view of society, the relevance of continuing to devote con­siderable subsidies to big industries in support of biofuel production needs to be debated in countries with serious regional distortions and high levels of pov­erty with unmet education, sanitation, and health needs. Globally, this may be an opportune moment to discuss program agendas, reset the project designs, reorga­nize the productive structure, and relocate resources to those areas where they are really efficient, effective, and efficacious.

In summary, there are doubts about the future of biofuels, mainly regarding the energy and economic policies related to the production and consumption of such fuels. The current level of subsidies will probably change substantially over the coming years. It may be interesting to think that in the future, the high levels of government resources currently provided may no longer be affordable. Energy companies throughout the world are making efforts to master the technologies necessary to improve efficiency. As pointed out in the introduction to this book, there are economic challenges that must be overcome, to establish levels of pro­ductivity and price competitiveness compared to oil. Maybe, allowing market rules to select which technologies survive may be a means of ensuring that biofuels become consolidated in the global energy mix.

Countries need to adopt energy policies that establish incentives for farmers to use land for both food and energy production. These policies could encourage the pro­duction of non-food crops in less noble areas in terms of soil quality. These policies should also seek to establish incentives and stable contracts for the industrial produc­ers, because uncertainty dramatically reduces the interest of companies in the market.

The various types of initiatives presented and discussed in this book show there is a need to consolidate the biofuel productive chains, with the adoption of improved production practices in all the links of the chain. There is an evident need for more effective relationships between the links in the biofuel supply chains. The structure and organization of bioenergy production chains must consider the need to reduce water consumption, reduce emissions by changing land use, rationalize the use of pesticides and other chemicals, lower emissions from the tractors and the trucks used to transport biomass to the biorefinery as well as in the transportation of fuel to the points of consumption. Finally, by establishing more effective manage­ment, biofuels could fulfill their role as promoters of sustainability in all its aspects.

Meeting current demands involves making technological, economic, and social choices. Meeting future demands involves anticipating and identifying trends and future needs, in an exercise of creative imagination. Overcoming current chal­lenges involves making decisions today that can only be evaluated in the future.