Biofuels and Its Implications on Food Security, Climate ...environment.tufts.edu/wp-content/uploads/ShaileePradhanReport.pdf · Biofuels and Its Implications on Food Security, Climate

Biofuels and Its Implications on Food Security, Climate Change, and Energy Security:

A Case Study of Nepal

By Shailee Pradhan

Master of Arts in Law and Diplomacy Candidate at The Fletcher School

Master of Science in Food Policy and Applied Nutrition Candidate at Friedman School of Nutrition Science and Policy

TUFTS UNIVERSITY

October 2009

Thesis Advisor:

Professor Steve Block, The Fletcher School

Table of Contents

Acknowledgments ...........................................................................................................................i Executive Summary...................................................................................................................... ii 1. Nepal: Country Background ....................................................................................................1

1. A. The Nepalese Economy ................................................................................................................... 1 1. B. Food Security in Nepal..................................................................................................................... 4 1. C. Climate Change in Nepal ................................................................................................................. 5

2. Renewable Energy Technologies (RETs) in Nepal .................................................................7 2. A. Main Sources of Alternative Energy in Nepal ................................................................................. 7 2. B. Alternative Fuels for Vehicles.......................................................................................................... 8

3. Biofuels......................................................................................................................................10 3. A. Biofuels and its Impact on Food Prices ......................................................................................... 11 3. B. Biofuels and the Environment........................................................................................................ 12 3. C. Jatropha Cultivation in Nepal......................................................................................................... 13 3. D. Biofuels in India............................................................................................................................. 14

4. The Trade-Offs Associated with Biofuels in Nepal...............................................................16 4. A. Large-Scale versus Small-Scale Production .................................................................................. 16 4. B. Biofuels and Food Security ............................................................................................................ 17 4. C. Biofuels and Climate Change......................................................................................................... 20 4. D. Biofuels and Energy Security ........................................................................................................ 22 4. E. Biofuels and Employment Generation ........................................................................................... 23 4. F. Biofuels and Health ........................................................................................................................ 24

5. Viability of Biofuel Production in Nepal ...............................................................................28 5. A. Potential of Jatropha Cultivation in Nepal..................................................................................... 28 5. B. Financial Viability of Jatropha Plantation...................................................................................... 28 5. C. Financing Biofuels Projects ........................................................................................................... 30 5. D. Case Study of Biofuel Projects in Nepal........................................................................................ 30

6. The Way Forward: Recommendations and Challenges ......................................................33 6. A. Nepal’s Biofuel Policy at Present .................................................................................................. 33 6. B. Recommendations .......................................................................................................................... 35 6. C. Looking Forward............................................................................................................................ 38

Works Cited..................................................................................................................................40

Tables

Table 1: Annual Growth Rate of GDP, 2000 - 05 (%) ................................................................... 2

Table 2: Summary Table of Trade-Offs Associated with Biofuels .............................................. 26

Table 3: The Sales Report of Petrol, Diesel, and Kerosene and Requirement of Biofuels in

Kiloliters ............................................................................................................................... 34

Table 4: Mitigating the Negative Impacts and Enhancing the Positive Impacts of Biofuels ....... 37

Figures

Figure 1: Map of Nepal................................................................................................................... 1

Figure 2: Trade-Offs among Biofuels, Food Security, Climate Change, and Energy Security.... 27

Exchange rate

1 USD = 78 NRS [June – July 2009]

Acronyms and Abbreviations

ADB Asian Development Bank ADB-UNCTAD Asian Development Bank – United Nations Conference on Trade and

Development AEPC Alternative Energy Promotion Center CBS Central Bureau of Statistics CDM Clean Development Mechanism ESAP Energy Sector Assistance Programme FAO Food and Agriculture Organisation GHG Greenhouse Gas GoN Government of Nepal ICIMOD International Centre for Integrated Mountain Development IFPRI International Food Policy Research Institute IPCC Intergovernmental Panel on Climate Change IRIN Integrated Regional Information Networks LPG Liquefied Petroleum Gas MDGs Millennium Development Goals MoEST Ministry of Environment, Science and Technology NGO Non-Governmental Organization NOC Nepal Oil Corporation NRS Nepalese Rupees OECD Organisation of Economic Co-operation and Development PAF Poverty Alleviation Fund RECAST Research Center for Applied Science and Technology RET Renewable Energy Technologies UNDP United Nations Development Programme UN-Energy United Nations – Energy USAID United States Agency for International Development USD United States Dollar WFP World Food Programme

Acknowledgments

This thesis is a culmination of three years of graduate work at The Fletcher School and the

Friedman School of Nutrition Science and Policy. I am deeply thankful to Professor Steve Block

at The Fletcher School and Professor Beatrice Rogers at the Friedman School for their guidance

and encouragement through out graduate school.

Special thanks to the Tufts Institute of Environment for their support through the Graduate

Student Fellowship, the Tufts Institute of Global Leadership for making me part of their

Empower Program for Social Entrepreneurship, and the International Center for Integrated

Mountain Development for their research support.

I would also like to thank my family for their love and support and Paribesh for always being

there.

ii

Executive Summary

Some of the biggest challenges the world is facing today are climate change and energy insecurity. The situation of a warming planet, further exacerbated by the use of fossil fuels, and the fluctuating prices of fuel have led us to search for alternative sources of fuel. The production of biofuels raised hopes around the world as a solution to mitigate climate change and ensure energy security. The debate on whether biofuels fulfill such promises is both active and evolving; with links being drawn between the global food crisis of 2008 and biofuel production, the discourse has taken a different turn. The global food crisis is said to have pushed back developing countries further towards poverty. While advanced economies like the United States and the European Union countries are investing heavily in biofuel production, international research institutes are still ringing words of caution against biofuel production. This has left many, particularly in developing countries, unsure about pursuing biofuels as an alternative source of energy. Hence, it is important to examine trade-offs associated with biofuels before making any recommendations on biofuels. Biofuels can potentially contribute to mitigating climate change, increasing employment opportunities, providing access to energy, and improving indoor pollution associated with firewood use, thereby improving population health in rural areas. At the same time, food security and water security may be negatively affected by biofuel production. The trade-offs among environment, energy access, employment creation, health, food security, and water security present complex and challenging questions. Adding to this complexity is the fact that biofuels are not the sole cause of the global food crisis. The rising food prices were also a result of 1) reduction of production capacity in developing countries, 2) population and income growth in emerging economies and associated dietary changes, 3) the surge in oil prices in 2008, which drove up prices of fertilizers and fuels, and 4) unfavorable weather in key producing countries, among others (ADB, 2008; South Center, 2008; Timmer, 2008). The fact is without access to energy, production capacity in developing countries is bound to remain stagnant, if not fall even further, as the availability of agricultural land is not increasing. Secondly, population growth in emerging economies will put further pressure on energy security and energy demand will increase. Thirdly, as oil prices rise, food prices will rise. Fourthly, the current pace of emissions could multiply destructive climate events, negatively affecting crop yields and thus increasing food prices further. Hence, if energy security, environment, and employment generation are sacrificed at the cost of saving food security, we may not be helping food security in the long run. The trade-offs are also country-specific. For a country that has a large segment of its population living in extreme poverty, food security may be the top priority. However, if that country is also seriously energy insecure, especially vulnerable to the impacts of climate change, has stagnant agricultural productivity, and has extremely high unemployment rate, then the question of trade-offs becomes even more difficult to answer. This is the case of Nepal, a developing country in South Asia, a region particularly vulnerable to climate change.

iii

The solution to the problem of energy scarcity is to become more efficient in our use of energy. The efficiency in energy use can be achieved in advanced economies through mass transit systems and energy-efficient appliances. In developing countries, the need still remains in providing affordable, reliable, and accessible energy through diverse sources. To ensure energy security and sustainability, it is critical for developing countries to diversify their fuel options such as kerosene, biogas, solar, and electricity for household sector and liquid biofuels such as ethanol and biodiesel in the transport sector. Diversifying fuel sources puts less pressure on each fuel source and lessens the risks involved as well. Biofuels can play an important role in supplying energy in rural transport sector without negatively affecting food security and the environment. The key is to distinguish between large-scale biofuel production that diverts water, labor, land, and food crops like maize and sugarcane away from food to fuel and small to medium-scale local biofuel production for local energy needs using non-food crops, marginalized land, and labor where there is minimal employment opportunities. Biofuel production carried out in small-scale in rural areas is financially viable, which is very important since the Government of Nepal is not in a position to subsidize biofuel production. Jatropha oil expellers are simple, affordable, and portable, making it suitable to meet the energy needs of a small rural community. Where national electric lines cannot reach due to the difficult mountain terrain and lack of proper infrastructures, local biofuel production provides some hope in reaching these communities. Biofuels should not be taken as a solution to energy insecurity and global warming; it is that given proper policy space and coordinated policies biofuel production can contribute to meeting some of these challenges. Recommendations In Nepal, the Alternative Energy Promotion Center under the Ministry of Environment, Science and Technology (MoEST) is responsible for biofuel policies. The recommendations are specifically directed towards them: 1. Formation of a Biodiesel Board Given the lack of coordination among the different government bodies regarding biofuel policies, a Biodiesel Board should be formed. Instead of closed-door policy formulation, AEPC should promote transparency and public debate by publishing its reports and policy drafts. Large-scale production proposals should be evaluated and approved by the Biodiesel Board. 2. Pro- Food Security Approach Assigning Wasteland for Growing Energy Crops AEPC should work with the Ministry of Agriculture in identifying wasteland for biofuel production and seek support from district- and village level government entities in collecting information regarding land use. Army and police barracks can be involved as well, as they have manpower, technical expertise, and land needed for biofuel programs.

iv

A Community-based Biofuel Production Biofuel program should be inclusive of landless and unemployed. District and village-level government entities should be involved in the monitoring process. Growing Non-edible Energy Crops The scope of crop use should be limited to non-food crops until more research is done in the food versus fuel debate. AEPC should propose banning the use of food crops for biofuel production to the Ministry of Agriculture. It is also crucial to connect with national and international research institutes to continue researching other non-edible crops. 3. Private Investments The scope of land use and crop use policy should be limited to wasteland and non-edible crops. Large-scale production proposals should go through the Biodiesel Board. If the Board cannot act in such a capacity immediately, the government should place a restriction on private investments until such an evaluation mechanism can be created. 4. Investing in Research and Development Some biofuel production experiments had been conducted by scientists at RECAST in the early 1980s but very little has happened since then. AEPC should partner with universities at home and abroad and building public-private partnerships that would allow shared investments. 5. Awareness Programs and Trainings Many even in the biofuel sector are unaware of successes and failures of biofuel programs in Nepal and in other parts of the world. By compiling project updates and creating either newsletters or putting it on the AEPC website, knowledge can be shared and best practices learned. Looking Forward The following are some immediate challenges to implementing biofuel programs in Nepal: 1. Identifying Wasteland Because the last land use survey in Nepal is about thirty years old, there is not enough data for identifying wasteland through GIS mapping yet. Presently wasteland can be identified through consulting district and village level government entities. 2. Availability of Technology for Biofuel Production Technology transfer is still a big part of even a small-scale project. This can be met through agricultural extension workers who can disseminate best practices and respond to farmers’ needs and requests for technical advice. 3. Land Tenure Biofuel production could drive away small farmers from their land in the absence of clear land ownership, further marginalizing the poor. Land tenure is a very sensitive issue in Nepal, but it needs to be tackled at some point if the country is to move ahead without another civil war breaking out again.

1. Nepal: Country Background

Nepal is characterized by rampant poverty, slow and declining GDP growth, heavy dependence

on slow growing agriculture, high unemployment rates, minimal energy security, and high

vulnerability to climate change given its geographical location. These conditions are inter-linked,

and to achieve improvement in any one sector, each of these conditions have to be addressed.

1. A. The Nepalese Economy

Nepal is a small landlocked country lying between China to the north and India on the other

three sides. Nepal has a population of 25 million (PAF 2007). 82.5% of the population is below

the international poverty line of USD 2 per day (World Bank 2003).

Figure 1: Map of Nepal

Source: www.sanog.org/sanog4/country.htm

Nutritional indicators are also among the lowest in the world. Almost half of the children are

either under weight or stunted, and 75 percent of pregnant women and 50 percent of women aged

15-59 are anemic (FAO 2003).

Responding to the liberalizing reforms of the 1990s, the Nepalese economy grew at an annual

rate of 4.93 percent between 1990 and 1998, although growth varied widely between years (FAO

2

2003). However, the growth of agricultural sector remained at 2.5%, less than the population

growth (ADB-UNCTAD 2008). Therefore, the income level of rural households where the

incidence of poverty is the highest did not improve even when the economy was growing

positively.

Since 2001, the Nepalese economy has been on a downward path because of loss of momentum

in exports (ADB-UNCTAD 2008). From a growth rate of 6% in 2000-01, for the first time since

the 1980s, Nepali economy suffered a negative growth rate of -0.5% in 2002-03. This was also

the lowest growth rate in South Asia. Domestic security problems further slowed down the

service sector growth, particularly the tourism sector.

Table 1: Annual Growth Rate of GDP, 2000 - 05 (%) Years 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06

Annual Growth Rate of GDP 6.0 4.6 (-0.5) 3.04 3.19 2.05

Source: ADB-UNCTAD 2008

An Agriculture-Driven Economy

Growth of the Nepalese economy is determined mainly by the growth of its agriculture. The

share of agriculture in GDP is declining about 1% annually since 1974-75 in favor of the non-

agricultural sector (ADB-UNCTAD 2008). Despite its declining relative importance, it is still the

single largest sector of the economy and the main source of livelihood for the bulk of the

population. Agriculture also provides a livelihood to 76% of the labor force (ibid). Heavy

dependence on an agricultural sector in which there is little technological progress is a major

factor contributing to persistent poverty and food insecurity, especially in rural areas.

Slow and Variable Growth in Agriculture and Low Productivity

The most important reason for the decline in competitiveness is the stagnation in agricultural

productivity. Sharma (2002) compares the yield trends of in Nepal to rest of South Asia. From

the 1960s till date, the average yield in Nepal has fallen from 157 to 61% of the South Asian

average. The crop yield in Nepal grew by about 1.25% per annum while growth rates in India,

Bangladesh, Pakistan and Sri Lanka were 5.28, 1.92, 5.5 and 2.7%, respectively (ibid). Nepal

3

had the highest crop yields in South Asia during the early 1960s, but the situation in the late

1990s was the reverse of this (FAO 2003). Poor irrigation facilities and access is one of the

major reasons for low agricultural productivity in the country.

Net Importer of Food

The export of agricultural products was a major source of foreign exchange until 1979. In

1975/76 Nepal exported food grains, but with production failing to keep pace with population

growth, exports declined drastically in the 1980s (Koirala and Thapa 1997).

It is important to note that being a net importer of food is not an indicator of being food insecure.

It also does not mean that the country should be food self-sufficient. However, even with

importing food, Nepal is largely food insecure and rising food prices have severe negative

implications for the country’s budget. The lack of complementary exports that could finance

food imports has led to budgetary imbalances.

Labor Force

The Nepalese economy is characterized by rampant unemployment at 42% (2004 estimate)

(CIA 2009). Two third of Nepalese people are involved in farming business exploiting only 21%

of cultivable land for their livelihood (Ghimire 2008). An increase in population by 2.2%

annually is producing additional labor force in the national labor market (ibid).

Energy

At present, 48.5% of the total population is electrified (Adhikari 2008). While 90% of Nepal’s

urban population is connected to a power grid, only some 27% of rural households have access

to electricity (World Bank 2007). Biomass is a vital energy source in Nepal, comprising about

92% of the share of the total primary energy consumption in 1994-95 (ibid).

Nepal depends on fuel imports from India and sells petrol, diesel and kerosene at highly

subsidized rates, at huge financial cost to the government's Nepal Oil Corporation (NOC). In

September 2009, the NOC ran on a monthly loss of more than USD 2.4 million, a trend since the

past few years (Republica 2009). Transportation costs increased by more than 25 percent in the

4

first six months of 2008 alone, because of the global oil price rise, in turn feeding into food

prices (IRIN 2008).

Nepal is becoming more dependent on imports of petroleum products for meeting daily energy

requirements. While the country’s total merchandise export value was NRS 6.2 billion (USD

7.94 million) in 2005/06, its petroleum imports alone were 53 percent of the total export value.

Petroleum import was just 27 percent of the merchandise export in 2000/01 (Ministry of Finance

2006).

As a landlocked developing country, Nepal is especially vulnerable to rise in fossil fuel prices. It

is crucial to diversify its fuel options such as kerosene, Liquefied Petroleum Gas (LPG), biogas,

solar, and electricity for household sector and liquid biofuels such as ethanol and bio-diesel in

the transport sector.

1. B. Food Security in Nepal

As in many developing countries, food accounts for a major share in total consumption for most

Nepalese families. According to Nepal’s National Living Standard Survey 2003/04, the share of

food stands at 73 percent in the lowest quintile in contrast to 40 percent in the highest quintile

(CBS 2004). Increases in food prices exposes those in the bottom quintile to further food

insecurity as food expenditure takes up a bigger portion of their total expenditure. The lowest

quintile is also comprised of net food buyers, making them more vulnerable to soaring food

prices (Karkee 2008).

What is food security?

Food security has been understood in different forms and very often it has been defined narrowly to mean food self-sufficiency, but it is much more than this. The FAO defines food security as a state when all people, at all times, have physical and economic access to sufficient, safe and nutritious food to meet their dietary needs and food preferences for active and healthy life. Indicators of food security can be defined at different levels – for the world as a whole, for individual countries, or for households (ibid). At the national level, adequate food availability means that on average sufficient food supplies are available, from domestic production and/or imports, to meet the consumption needs of all in the country. Similarly, as in the case of individuals, purchasing power at the national level is a determinant of national food security. Source: (FAO 1996)

5

Impacts of Rising Food Prices in Nepal

The impacts of the rising food prices in 2008 were felt in many ways because of these factors:

Net Importer of Food

In Nepal, as a net importer, the rising food prices meant that it greatly increased the budgetary

costs of maintaining food subsidies, leading to a rise in food insecurity. This also led to a decline

in the capacity of the state to fund other public goods and services such as medical facilities and

infrastructure that may also contribute to food insecurity.

Recovering from Armed Conflict

Nepal just emerged from a decade-long armed conflict (1996-2006) and the government

structures are very weak. The food crisis further posed significant challenges to any lasting peace

process. Improvements in living standards are urgently needed to avoid civil unrest that may

threaten the new government.

Excessive Dependency on India

Many countries in the region are dependent on India for food. Countries like Nepal and

Bangladesh rely heavily on food imports from India. Moreover, India is the only country in the

region with a food surplus (Babu 2005). This means that the Indian food market has a huge

influence on the entire South Asian region.

1. C. Climate Change in Nepal

The Intergovernmental Panel on Climate Change (IPCC), the world’s leading authority on

climate science, in its fourth assessment report noted that the evidence of global warming is now

“unequivocal” (2007). A rise of 4C would be enough to wipe out hundreds of species, bring

extreme flood and water shortages in vulnerable countries and cause catastrophic floods that

would displace hundreds of millions of people, warns the IPCC.

The Himalayan region is the most critical region in the world in which melting glaciers will have

a negative affect on water supplies in the next few decades (Barnett, Adam and Lettenmaier

6

2005). The region, with over 1.3 billion people, is demonstrating a number of noticeable impacts

related to global climate change with the most widely reported being rapid reduction in many

glaciers, which has implications for water resources (ICIMOD 2007).

As home to the Himalayas, Nepal is particularly vulnerable to the impacts of climate change. In

Nepal, temperature observations from 1977-1994 show a general warming trend (Shrestha, et al.

1999). There is some evidence of more intense precipitation events in Nepal (Shakya 2003).

Stream flow patterns in certain rivers show an increase in the number of flood days (ibid). Some

rivers are also exhibiting a trend towards a reduction in dependable flows in the dry season,

which has implications both for water supply and energy generation (ibid). Significant glacier

retreat as well as significant area expansion of several glacial lakes has also been documented in

recent decades that have been linked to rising temperatures (OECD 2003).

The IPCC report (2007) has provided specific information for South Asia region concerning the

nature of future impacts. Some of the future impacts include:

• Glacier melting in the Himalayas will increase flooding as well as affect water resources

• Sea-level rise will exacerbate inundation, storm surge, erosion and other coastal hazards

• Mortality due to diarrhea and other water-borne diseases primarily associated with floods will

rise in South Asia

• Climate change will put additional pressures on the environment and natural resources that are

already affected by industrialization, population growth, and rapid urbanization.

• By the mid-21st century, crop yields could decrease up to 30% in South Asia

Overall development requires an integrated approach linking access to credit markets,

infrastructures, education, healthcare, safe water and food etc. Access to energy is a significant

part of this integrated approach, as will be elaborated in the next section.

7

2. Renewable Energy Technologies (RETs) in Nepal

“No country in modern times has substantially reduced poverty in the absence of massive

increases in energy use” - (UN-Energy 2007, 6)

In recent years, as oil prices have been fluctuating, countries all over the world have been

exploiting a wider array of renewable energy sources, particularly micro-hydro, solar, wind, and

biomass. Renewable Energy Technologies (RETs) are often ideal for rural areas for providing

them access to heating, cooking, electrification, transportation, food processing and milling etc.

Nepal’s topography, however, does not make it easy to create access for energy nationwide.

Recognizing the role of various alternative energy sources in development, the Alternative

Energy Promotion Center (AEPC) was established in 1996 under the Ministry of Environment,

Science and Technology (MoEST), Nepal.

2. A. Main Sources of Alternative Energy in Nepal

According to the AEPC (2009), the main sources of alternative energy in Nepal have been:

1. Biogas: Biogas is the mixture of gas produced by the methanogenic bacteria while acting upon

biodegradable materials in an anaerobic (without oxygen) condition. Biogas is an odorless and

colorless gas. It burns with clear blue flame similar to that of LPG, with 60 percent efficiency in

a conventional biogas stove. The GoN, the German Government and the Dutch Government

have been providing subsidy to biogas plants since 1992.

2. Micro-Hydro Power: Micro-hydro projects have been providing electricity to rural

communities that are not served by national electricity services. Micro-hydro power can be used

to power TV, radios, and various household electric appliances. Hydro electricity is also a clean

and renewable form of energy. The GoN with the assistance from the Kingdom of Denmark has

jointly initiated Energy Sector Assistance Programme (ESAP) that provides a comprehensive

subsidy program for micro-hydro power.

8

3. Biomass Energy: Biomass energy includes technologies like biomass briquettes and

improved cooking stoves, which are used for cooking and heating purposes.

4. Solar Energy: Two types of solar energy technologies, namely solar thermal and solar

photovoltaic systems, are available in the country. Solar thermal systems include solar water

heaters, solar dryers, and solar cookers. Solar PV systems include solar communication systems,

solar electrification systems, and solar pumping systems. In order to promote rural electrification

through solar energy and mini-grid electrification throughout Nepal, the GoN has made

arrangement to provide direct and indirect subsidy through ESAP.

5. Wind Energy: Although wind energy is one of the cheapest and cleanest renewable energy

sources available, it is one of the least harnessed energy sources in Nepal. Wind energy could be

an important source of generating electricity. Given Nepal’s topography, with mountain

passages, it seems likely that Nepal has a huge potential for wind energy.

2. B. Alternative Fuels for Vehicles

The alternative energy sources in Nepal focus primarily on rural electrification through micro-

hydro power and solar energy and on cooking and heating through biogas and biomass.

However, there has been very little focus on alternative energy for transportation.

Given the price fluctuations in petroleum and diesel prices and Nepal’s heavy dependence on

Indian oil exports, Nepali farmers are vulnerable to any price shocks in the oil market. In the

agriculture sector, diesel-run tractors and irrigation pumps can contribute to higher agricultural

productivity. Rising oil prices also put pressure on the national budget, as the government of

Nepal subsidizes oil for consumers. Hence, there is a need for alternative sources of energy for

vehicles.

Other than petroleum products (gasoline and diesel), there are different alternative fuels for

vehicles. In general, alternative fuels for vehicles include:

- Compressed natural gas (CNG)

9

- Liquefied petroleum gas (LPG)

- Alcohol fuels such as methanol (methyl alcohol) and denatured ethanol (ethyl alcohol)

- Biodiesel

- Electricity (stored in batteries)

- Hydrogen (fuel-cell)

- Solar

Alternative fuels for vehicles have high costs associated with their initial implementation stage,

making it difficult for developing countries to adopt alternative fuels for vehicles. For each of the

fuel mentioned above, besides biodiesel, the vehicle used has to be specific to that fuel.

However, diesel-run vehicles are cheaper compared to electric or CNG vehicles, and diesel-run

vehicles can run on biodiesel. This makes biodiesel a popular alternative fuel for vehicles.

10

3. Biofuels

Biofuels have been defined as any fuel of biological and renewable origin, including biomass.

Much of the public debate has focused on liquid biofuels for transportation, namely bioethanol

and biodiesel. Biofuel currently come in two forms:

1. Ethanol: Ethanol can be made from sugars (e.g., sugar beets, sugarcane and sweet

sorghum), grains (such as maize and wheat), root crops (such as cassava), cellulose and

waste products

2. Biodiesel: Biodiesel can be manufactured by the transesterification of vegetable oil. It

can be blended with diesel to reduce the consumption of diesel from petroleum

A Quest for Energy Security

It is expected that oil prices will continue to remain unstable and unpredictable, which has

prompted countries to diversify energy sources for reducing the dependency on finite fossil fuel.

In many developing countries, oil imports take up a large and unsustainable share of their foreign

exchange earnings, in some cases offsetting any gains from recent foreign debt elimination

agreements (UN-Energy 2007). Recent oil prices increases had devastating effects on many of

the world’s poor countries, some of which now spend as much as six times as much on fuel as

they do on health, and others twice the money on fuels as on poverty reduction (ibid).

Distinguishing Bioenergy from Biofuel

It is important to distinguish biofuel from bioenergy. Bioenergy is energy produced from organic matter, or biomass. Biofuels are energy carriers derived from biomass. A wide range of biomass sources can be used to produce energy. Some have been used for millennia, such as fuelwood, charcoal and animal dung. Newer sources include ethanol, biodiesel and biogas. These new sources depend on natural vegetation, crops grown specifically for energy, or agricultural or other biological forms of wastes and residues. Biofuel essentially refers to liquid fuels used for transport and energy generation. Bioenergy is a broader terms, incorporating different kinds of energy and sources in rural areas, such as fuelwood or small-scale community energy production, which has always been essential to households and local community needs. Source: (FAO 2008b)

11

Global Trends

Brazil, the member states of the European Union, the United States, and several other countries

are actively supporting the production of liquid biofuels from agriculture—usually maize or

sugarcane for ethanol, and various oil crops for biodiesel. Brazil has been an undisputed leader in

the sugarcanes based bioethanol industry, currently producing 52% of the global bioethanol

production, followed by the US (43%) (Sharma and Banskota 2006). However, the success of the

Brazilian story is based on a 70 years of history and almost two decades of government support;

it took Brazil 25 years before bioethanol could compete with crude oil (ibid).

Among countries that have enacted pro-biofuel policies in recent years are Argentina, Australia,

Canada, China, Colombia, Ecuador, India, Indonesia, Malawi, Malaysia, Mexico, Mozambique,

the Philippines, Senegal, South Africa, Thailand, and Zambia (UN-Energy 2007).

Second-generation Biofuels

Much hope has been pinned on so-called second-generation biofuels, which use cellulose

conversion technologies to turn cellulose-rich biomass into energy. This could provide

developing country farmers, including smallholders, with a use for crop residues like stalks and

leaves, which would be converted into ethanol for electricity, thereby benefiting both poor

farmers with additional income and also poor consumers with cheaper energy. This has positive

food security implications because it has the potential to improve access to food through added

income.

3. A. Biofuels and its Impact on Food Prices

Biofuels has gained a wide growing acceptance the world over. However, any discussion of

biofuels is incomplete without considering its impact on food prices.

The world faced its worst food crisis in 2008 since the 1970s. Agricultural commodity prices had

been rising since 2006 and they increased sharply in 2008. Overall global food prices increased

by 75 percent in dollar terms since 2000 (FAO 2008b). Of the factors that are widely accepted

as having led to the rise in food prices, biofuels are possibly the most controversial. Biofuel

12

production is charged with diverting land, food, and feed away from food to fuel. According to

Timmer (2008), economic analysts place the share of biofuels’ contribution to the rise in grain

prices at anywhere between 25% and 75%. According to an analysis by the International Food

Policy Research Institute (IFPRI), it accounted for 30 percent of the escalation in global cereal

prices between 2000 and 2007 and for nearly 40 percent of the increase in the real global price of

maize (Rosegrant 2008).

However, biofuels are not the sole cause of the global food crisis 2008. Several long-term

structural factors and short-term cyclical factors have been associated with the rise in food prices

in 2008. The dominant factors are structural and include (i) reduction of production capacity in

developing countries, (ii) the growing demand for grains as a result of population and income

growth in emerging economies and associated dietary changes, (iii) the surge in oil prices, which

drove up prices of fertilizers and fuels, and (iv) increased use of agricultural commodities for

biofuel production; the crisis was intensified by cyclical factors such as (i) the weakening of the

US dollar, (ii) increased speculative investment after the global financial crisis, (iii) declining

food stocks, and (iv) unfavorable weather in key producing countries (ADB 2008; Timmer

2008).

3. B. Biofuels and the Environment

Biofuels are seen as a ‘cleaner’ form of energy. Biofuels being fundamentally carbon neutral1

have significant potential to reduce GHGs in the transport sector (Sharma and Banskota 2006).

These benefits are not undisputed, and they need to be carefully assessed before extending public

support to large-scale biofuel programs.

Cohen et al. (2008) argue that biofuels offer only a very small gain in energy efficiency and their

production minimally reduces GHG emissions. A study by Crutzen et al. (2007) show that some

of the most commonly used biofuels, such as biodiesel from rapeseed and bioethanol from corn,

can contribute as much if not more to climate change as fossil fuels. OECD (2008) estimates that

1 Biofuels are made from plants that during tree growth have taken carbon dioxide out of the atmosphere, so when this is then released during combustion the net effect is zero flux of carbon dioxide to or from the atmosphere.

13

current support measures reduce net greenhouse gas emissions by less than 1% of total emissions

from transport.

Joachim von Braun, Director General of IFPRI, cites a number of studies. With land-use change,

increased world corn-based ethanol production doubles emissions over 30 years and increases

greenhouse gas emissions for 167 years (Searchinger et al. 2008, as cited by Braun 2008). For

palm biodiesel produced in Indonesia or Malaysia, the payback period to the carbon debt from

land conversion is 423 years (Fargione et al. 2008, as cited by Braun 2008). Technologies

expected to have positive environmental impact and decrease the competition for scarce natural

resources, such as the ones producing biofuels from lingo-cellulosic materials and wastes, are

still in the making. Factoring in environmental and economic aspects, embarking on large-scale

biofuel production with grain and oilseeds based technologies does not make sense at this time

(Braun 2008).

The ability of various biofuels types to reduce GHGs varies widely, and in cases where forests

are cleared to grow energy crops, any reduction in GHGs may be offset or even negative. Hence,

biofuel policies must ensure that forests and farmland are protected.

3. C. Jatropha Cultivation in Nepal

More recently, the use of non-edible oil for biodiesel has attracted considerable interest, in

particular jatropha, and others such as pongamia and neem. The seeds of jatropha curcas (a

perennial shrub that can grow in low-rainfall areas and on degraded soils) contain up to 30

percent oil, which once processed into biodiesel and blended with conventional diesel can be

used in standard diesel cars (Bamuller 2008).

Extensive research has shown that jatropha offers the following advantages: it requires low water

and fertilizer for cultivation, is not grazed by cattle or sheep, is pest resistant, is easily

propagated, has a low gestation period, has a high seed yield and oil content, and produces high

protein manure (Gonsalves 2006). Furthermore, because jatropha can grow on nearly any kind of

land, it can be cultivated on land that is now useless, and thus can play a major role in the

14

prevention of erosion and restoration of degraded soils (ibid). Jatropha also provides by-products

that can be used for soap making, making it a useful plant for rural employment generation.

Jatropha is a small tree native of Mexico and Central American region and was later introduced

in many parts of tropics and subtropics most probably by Portuguese during their colonial time

(Kuikel 2009).2 At present it is found all five continents. In Nepal, Jatropha is found widely in

the wild in over 70 of the 75 districts of Nepal. High oil yielding Jatropha is found in all tropical

and subtropical districts up to 1200 m. Oil from Jatropha seeds can be used to produce biodiesel

locally using simple small-scale biodiesel plant. Rural communities can cultivate their own

Jatropha plants in the community wastelands or as hedges in their private land. The biodiesel can

be used to operate irrigation pumps and the oil cake can be used as organic fertilizer replacing

the currently used chemical fertilizer.

3. D. Biofuels in India

Given Nepal’s excessive dependency on India for petroleum products, it is important for Nepal

to understand Indian energy scenario and their direction towards energy security.

India is the world's fourth largest producer of ethanol at 1.6 billion liters in 2005 (Gonsalves

2006).3 With 4.8 per cent annual growth in energy demand and only 25 per cent of consumed

crude oil produced domestically, India is looking increasingly to biofuels to meet its growing

energy needs. The Indian government has set ambitious targets to fulfill its energy requirements.

Beginning in 2003, the national government mandated the use of a 5 per cent ethanol blend in

gasoline in nine of its sugar-rich states, a standard that will eventually extend to the entire

country. In addition, the government is pursuing a National Biodiesel Mission (NBM), which

aims at replacing 20 per cent of the country's diesel requirements with biodiesel by 2012.

Ethanol is produced in India from sugarcane molasses. India is also the world's largest consumer

of sugar and is therefore susceptible to fluctuations in price and availability in the sugarcane 2 This paragraph is based on in-person interview with Kuikel (2009). 3 This section is based on Gonsalves (2006).

15

market. In 2004, a drought during the monsoon season limited the amount of sugarcane

feedstock available for ethanol production, prompting a relief of the 5 per cent blend mandate

and the importation of significant volumes of ethanol, mainly from Brazil.

In recent years, Jatropha has become the preferred source of biodiesel in India, especially

because the plant can grow in wastelands. The Indian government has pursued a large-scale

jatropha research, cultivation and awareness program, including demonstrating vehicle

performance using biodiesel blend and organizing seminars to expand awareness of biodiesel

programs.

Implications of Indian Biofuel Industry in Nepal

Given India’s influence on Nepal, such a huge-scale jatropha cultivation and production will no

doubt have ramifications for Nepali agricuture as well. The growth in domestic demand in India

will increase labour migration to India, and that trend too could hit the Nepali agricultural sector

hard (The Kathmandu Post 2009). If land, labor, water, and food are diverted away from food to

fuel in this process, this will have severe negative implications on the Nepalese food secutiy

situation.

16

4. The Trade-Offs Associated with Biofuels in Nepal

Before discussing the trade-offs associated with biofuel production, it is important to make the

distinction between large-scale biofuel production that diverts water, labor, land, and food crops

like maize and sugarcane away from food to fuel and small to medium-scale local biofuel

production for local energy needs using non-food crops, marginalized land, and labor where

there is minimal employment opportunities. The former relates to the way biofuel production is

pursued in advanced economies and the latter relates to how biofuel production can be pursued

in developing countries, under proper policy guidelines.

4. A. Large-Scale versus Small-Scale Production

There are two approaches for biofuel production: 1) a large-scale centralized program with the

objective of meeting national requirements and 2) small-scale decentralized program for the

energy needs of a given village or neighborhood.

With a large-scale program, the primary benefit may be in the form of efficiency gain.

Significant economies of scale can be gained from large-scale biofuel production, as is true for

many industrial activities. However, the implications of biofuel production on food security and

environment are still not very clear and depend mainly on biofuel policies. More research is

needed before extending support to large-scale biofuel production.

Small-scale decentralized program, on the other hand, can complement other sources of energy

such as solar and micro-hydro power in meeting the energy needs of a village. Furthermore, their

impacts on food security and environment can also be managed to ensure that neither is being

compromised.

Given the constraints of rural infrastructure and financing, local, small-scale production of

biodiesel may be the best option for Nepal. A number of small-scale programs across the country

would also assure a more even distribution of benefits. Smaller-scale and rural-based production

will open up opportunities for biofuel to be pro-poor. Because small-scale biofuel production can

17

be done by a small group of households even on marginal land, communities can take ownership

of such programs as well. Experience in many countries has shown that biofuel production

facilities that are small and locally owned tend to being about higher local revenues (UN-Energy

2007).

Biofuel production carried out in small-scale in rural areas is financially viable, which is very

important since the Government of Nepal is not in a position to subsidize biofuel production.

Jatropha oil expellers are simple, affordable, and portable, making it suitable to meet the energy

needs of a small rural community. Where national electric lines cannot reach due to the difficult

mountain terrain and lack of proper infrastructures, local biofuel production provides some hope

in reaching these communities.

Below are the specific trade-offs associated with small to medium-scale local biofuel production:

4. B. Biofuels and Food Security

i. Biofuels and Its Implications on the Four Dimensions of Food Security

The expansion of biofuel production could affect food security at the household, national, and

global levels through each of four major dimensions: availability, access, stability, and utilization

The availability of adequate food supplies could be threatened by biofuel production to the

extent that land, water, and other productive resources are diverted away from food production;

food access could be compromised for low-income net food purchasers; food prices being linked

to fuel prices could affect stability; and utilization could be affected if biofuel production leads

to water insecurity (FAO 2008b).

ii. What Does this Mean for the Nepalese Population?

Economic Implications

Rising food prices are generally considered as an opportunity for farmers to benefit from supply

response. However, those in the bottom quintile are net food buyers, making them more

vulnerable to rising food prices (Karkee 2008). According to the recent estimates of the WFP and

NDRI, a total of 19.2 million rural people may lose out from rising food prices while 3.8 million

may stand to gain (WFP and NDRI 2008).

18

Social Implications

The decade-long conflict that started out in the rural areas left the rural people handicapped as

infrastructures were destroyed along with the economy. Many villages in Nepal are still

recovering from the aftermath of the conflict, as infrastructures that were destroyed have not

been replaced. Unemployment has been rising, as jobs are not being created, particularly in the

rural areas. As youths were forced to join the war, children and elderly were left to sustain

themselves. Agricultural production further fell because of the conflict, further contributing to

food insecurity. The increasing pressure on the state to stabilize prices of food has meant that the

other public goods and services such as medical facilities and infrastructure have taken a

backseat. Any upward movement in food prices will put millions of lives at serious risk. The

social and economic implications are closely linked as economic stress leads to social stress as

well.

Political Implications

If food prices rise, the state’s capacity to maintain food subsidies will be limited, further

contributing to food insecurity. Having just emerged from a decade-long armed conflict (1996-

2006), the Nepalese government cannot afford to have civil unrest over high food prices that may

threaten any political stability that the country has come to see in over a decade. In case of any

political unrest, the ones hurt the most are the ones most vulnerable socially and economically

and hence food insecure. A further destruction of rural infrastructures and economy would leave

the country crippled for a very long time.

iii. Ensuring Food Security in Nepal

It is important to focus on increasing agricultural productivity so that the country does not rely

heavily on importing food. The story would have been different if the country had a vibrant

export sector that could support the importing of foodstuffs. Moreover, being a landlocked

country with the Himalayas in the North and India on three sides, Nepal is vulnerable to any

price hikes or unrest in India as well. “Food, fertilisers, pesticides and even seeds – we are so

dependent on India and the other countries that any price fluctuation in the international market

19

is going to have a huge impact on prices here in Nepal," says Jagannath Adhikari, a food security

expert (2008).

Additionally, ensuring food security means providing employment opportunities that would

protect the population from food price shocks. This also means looking for alternative sources of

fuel so that the country is less vulnerable to fuel price hikes, which affects agricultural inputs due

to associated transportation costs.

iv. Increasing Agricultural Productivity for Improving Food Security

Growth of the Nepalese economy is determined mainly by the growth of its agriculture, which

has been slow and minimally productive. Poor irrigation facilities and access is one of the major

reasons for low agricultural productivity in the country. Decentralized irrigation systems like

pumping water from underground sources, rivers, and ponds can be a more cost effective and

sustainable approach. Most farmers in Nepal use diesel or electricity for irrigation pumps, which

poor farmers cannot afford.

Electricity is cheaper at the government subsidized rate but extending lines to farmers’ individual

lands requires high upfront costs (Winrock International Nepal 2008). There is also severe

under-supply of electricity in the country resulting in long power-cuts everyday. Energy services

will enable farmers to access bio-diesel run tractors that may increase agricultural productivity.

As fuel prices have increased, so have prices of agricultural inputs such as seeds and fertilizers

because of the high transportation costs associated with them. Biofuels may help reduce that

cost.

Biofuels can potentially contribute to increasing agricultural productivity through the use of

biodiesel-run tractors as well as engines for processing and refining agricultural products.

v. Can We Protect Food Security While Pursuing Biofuel Production?

The answer is yes, but it is contingent on two factors: 1) farmland is not diverted away from food

to fuel, and 2) food crops are not diverted away for fuel. This can be achieved by:

20

Assigning wasteland for growing energy crops

In India, the fourth largest ethanol producer, wasteland has been identified for large-scale

production of biofuels (Gonsalves 2006). Paulo Sotero, the director of the Brazil Institute at the

Wilson Center, notes that the most impressive display of Brazilian success is that, so far, just

1.5% of arable land has been used to replace 50% of the country’s fossil fuel use (2008). If

biofuel production can be confined to wastelands, then not only will this ensure that farmland is

not diverted away from food, but also replenish wastelands and prevent landslides.

Growing non-edible energy crops

Growing non-edible biofuel crops such as jatropha on degraded and marginal lands that are

unsuitable for food production would not compete directly with current food production and can

play a major role in the prevention of erosion and restoration of degraded soils. There is a

concern that growing crops for biofuels would compete for water and labor. However, locally

produced jatropha oil is expected to be significantly cheaper than diesel fuel for powering

irrigation pumps, providing access to water.

Also, the residue left over after oil has been squeezed out of jatropha seeds can be used to make

jatropha oil cake, which can replace chemical fertilizers that are expensive. Using this fertilizer is

shown to save costs as well as increase agricultural production as compared to chemical

fertilizers. Those members of the households who cannot engage in heavy work can engage in

making jatropha oil cake, making more efficient use of labor available.

4. C. Biofuels and Climate Change

Emissions of greenhouse gas emissions (GHGs) between 2000 and 2006 increased on average by

3.1 percent per annum, compared to 1.1 percent in the previous decade, and are likely to continue

to grow rapidly in view of high economic growth and lack of effective mitigation strategies

(Braun 2008). Although rich countries are responsible for most GHGs, the impact of climate

change is expected to be most severe in developing countries and on the poorest populations.

21

Biofuel production has generally been shown to have a positive effect in mitigating climate

change. The net CO2 emission of burning a biofuel like ethanol is zero since the CO2 emitted on

combustion is equal to that absorbed from the atmosphere by photosynthesis during the growth

of the plant used to manufacture ethanol.

i. Reducing GHG Emissions

The potential of biofuels to reduce GHG emissions depends on a number of factors: land use;

choice of feedstock; biofuel processing methods; and end-use practices. For example, if forests

are cleared to make way for corn and the corn is grown using chemical fertilizers, harvested

using machines driven by fossil fuel, and processed into ethanol using fossil fuel, then the

amount of GHG emitted over the lifecycle of the biofuel may be greater than the amount

reduced. However, if agricultural wasteland is used to grow plants like jatropha that require little

pesticides and fertilizers and processed in a small-scale plant using bioenergy, then biofuels can

significantly reduce GHG emissions compared to fossil fuels.

ii. Climate Change and Food Security

Climate change will affect all four dimensions of food security i.e. availability, stability, access,

and utilization, leading some to call agriculture a victim of climate change. As a result of these

changes, climate change could hamper the achievement of many of the Millennium Development

Goals (MDGs), including those on poverty eradication, child mortality, malaria, and other

diseases, and environmental sustainability. To ensure long-term food security, it is critical to

address the challenges of a warming planet.

iv. Clean Development Mechanism (CDM) for Government Revenue

Under CDM, Nepal can benefit from selling carbon credits to countries with reduction

commitments. Estimates indicate that more than a ton of GHG emission can be avoided for every

ton of biomass used to make biofuels and that one tone of petrodiesel releases 3.2 ton of carbon

dioxide (CO2) with biodiesel reducing net CO2 emission by 2.51 ton (Sharma and Banskota

2006). With average price of certified emission reduction of USD 10 per ton of CO2, the earning

potential would be over USD 25 for every ton of biofuel used – not including the carbon

sequestered by the oil bearing plants (ibid).

22

4. D. Biofuels and Energy Security

Greater access to energy services is closely linked to poverty reduction because it can:

• Improve access to pumped drinking water, which reduces the incidence of diarrhea;

• Provide access to mechanized agricultural inputs, such as irrigation pumps, tractors,

food processors, that may increase agricultural productivity

• Reduce the time spent by women and children on basic survival activities (gathering

firewood, fetching water, cooking, etc.);

• Allow lighting, which increases security; and

• Reduce indoor pollution caused by firewood use and consequently reduce deforestation.

A program that develops energy from raw material grown will go a long way in providing energy

security, which would aid agricultural productivity and consequently food security.

Climate Change and Food Security Climate Change Impacts on Food Availability The impact of changing climate on agriculture, fishery, forestry and other crucial sectors has raised concerns particularly in developing economies depend heavily on these sectors for food production. It has been estimated that crop yields could decrease up to 30 percent in South Asia by mid- 21st century. Climate Change Impacts on Stability of Food Supplies Changes in the patterns of extreme weather events will affect the stability of food supplies. Global and regional weather conditions are expected to become more variable than at present, with increases in the frequency and intensity of cyclones, floods, hailstorms, and droughts. Climate Change Impacts on Access Climate-related animal and plant pests and diseases will reduce food access through reduction of income from animal husbandry, reduction of yields of food and cash crops as well as increased costs of control. Climate Change Impacts on Food Utilization Climate change may affect health outcomes and food utilization with additional malnutrition consequences. Populations in water-scarce regions are likely to face decreased water availability, with implications for the consumption of safe food and drinking water. Flooding and increased precipitation are likely to contribute to increased incidence of infectious and diarrhoeal diseases. Source: FAO 2008a

23

i. Viability of Biofuels as Rural Energy Providers

Biodiesel offer opportunities for power production at relatively small scales at village levels.

Where fossil fuel prices are high due to transport costs and reliable supply of feedstock for

biofuels exist, biofuels may prove to be the most economical option. For rural energy needs, a

small-scale community-based biofuel plant would be sufficient. These plants, such as jatropha oil

expeller, are affordable, portable, and simple to use. Winrock International Nepal’s project

shows that one expelling center, costing around EUR 3000, which includes the expeller house,

can support the needs of 100 households (2008).

4. E. Biofuels and Employment Generation

With almost half of the country’s labor force unemployed and with population growing by 2.2%

annually, providing employment opportunities for social and economic development of the

country is critical. Biofuels could provide the much needed stimulation in rural development and

create employment opportunities.

Improving Food Security Through Increased Job Creation

Biofuels could benefit poor people through raising agricultural incomes, creating additional rural

jobs in crop harvesting and processing, and utilizing marginal lands and crop residues (Braun

2008). Because biofuel production is labor-intensive, it could be a boon to rural areas with

abundant labor. Smaller-scale and rural-based production will open up opportunities for biofuel

to be pro-poor. This has positive food security implications because it has the potential to

improve access to food.

How to Encourage Job Creation in Nepal

While ethanol production requires fairly large economies of scale, small-scale production of

biodiesel could meet local energy demand in developing countries (World Bank 2008).

Organizing groups of smallholders through contract farming schemes to grow and market

biomass to processing plants may be most effective for this (Hazell and Pachauri 2006). Given

the constraints of rural infrastructure, local, small-scale production of biodiesel could meet

energy needs of a village while providing employment opportunities.

24

In Nepal, because job creation is a high priority, the focus may include the encouragement of

labor-intensive biofuel feedstock, production of biodiesel, and local use of energy services. The

UN-Energy (2007) notes that of all biofuel feedstock, oilseed crops in developing countries tend

to be stimulate job creation particularly when harvested manually. Because the process of

converting plant oils into biodiesel is relatively straightforward, biodiesel conversion can often

occur at a smaller scale.

Examples of Increased Employment Opportunities

There are examples of small-scale, labor-intensive biofuel production systems aimed at

providing employment and income for smallholders. For example, a local NGO in Mali called

the Mali-Folkecenter Nyetaa (MFC Nyetaa) that has been working on the promotion of jatropha

production and use, including plantation, use as a living hedge, soap making, use as a diesel

substitute for transportation, and power generation for rural electrification (Mali-Folkecenter

2008). In fact, the MFC has been using a Nepalese jatropha oil press, a South-South technology

transfer that has removed a significant barrier to wide scale adoption of jatropha oil technology

in Mali (ibid).

Preliminary results from an IFPRI macroeconomic analysis suggest that expansion via either

plantation production of sugarcane for ethanol or jatropha for biodiesel will lead to increased

welfare and reduced poverty, due to income-earning opportunities, with positive implications for

food security (Cohen, et al. 2008).

4. F. Biofuels and Health

Reduction in Indoor Pollution

Many rural families around the world depend more on basic energy services such as heat for

cooking and power for processing food than on energy for transportation. The direct burning of

firewood and other biomass for energy services affects the health of the rural population,

particularly women who are a majority of the primary caretakers of the home. This has serious

implications for gender issues as well where women’s health are more severely affected than

25

men’s. Access to modern energy services can reduce indoor-pollution and improve women’s

health. It may also reduce the time spent on basic survival activities such as gathering firewood,

fetching water, cooking, etc that will enable women to live more productive lives.

In the Philippines, a new cooking stove that can run on kerosene as well as a number of plant

oils, including jatropha oil, is being developed and disseminated by an innovative public-private

partnership (UN-Energy 2007). This also sets an example of how public-private partnership can

benefit the production of biofuels in a country where the state has limited capacity.

Toxicity of Jatropha

Jatropha fruit has been found to be toxic, however, in small quantities it only induces vomiting

(Kuikel 2009). 4 Where Jatropha is native, villagers are aware of this property of jatropha. In

areas where jatropha plantation is new, the production process needs to have an awareness

component to make people aware of the side effects of jatropha consumption. In Nepal, many

villagers use jatropha stem to brush their teeth and are well aware that the fruit is toxic. This

property of jatropha in fact makes it suitable as hedges and fencing around farmland to keep

animals like cows and monkeys off from the field.

4 This section is based on in-person interview with Kuikel (2009).

26

Summary of Trade-Offs Associated with Biofuels

There are costs and benefits associated with biofuel production, and a careful analysis is needed

to devise biofuel policies. If we ensure that land, water, and food crops are not diverted away

from food, then the negative impact of biofuels on food security could be mitigated.

Table 2: Summary Table of Trade-Offs Associated with Biofuels The Nepalese Scenario Implications

Costs Diversion of food and land to biofuels may cause food prices to rise

- High poverty and low nutritional indicators - Net importer of food - Stagnant productivity in agriculture and lowest crop yields in South Asia

- To improve food security, there has to be growth in agricultural productivity, employment opportunities, and access to energy services

Benefits Energy access

- NOC running at a monthly loss of more than USD 2.2 million

- Only 48% population has access to electricity

- Agriculture characterized by slow and variable growth and low productivity

- If local energy needs can be met through biofuels, it would lower the monthly losses of NOC

-Energy services may improve agricultural productivity by making mechanized agricultural inputs available, thus contributing to food security

Employment generation

- Unemployment is at 42% - Population is growing at a rate of 2.2% annually

- Job creation in rural areas is even more important in the face of rising food prices - Small-scale production of biodiesel could meet energy needs of a village while providing employment opportunities

Reducing GHG emissions

- With climate change impacts, crop yields could decrease up to 30 percent in South Asia by mid- 21st century - Nepal can take advantage of the CDM and sell carbon credits to countries with reduction commitments

- Biofuel production has generally been shown to have a positive effect in mitigating climate change, so this may have positive implications on food security in the long run - Under CDM, the Nepalese government can earn revenue

Reducing indoor-pollution and improving health

- The vast majority of the population rely on biomass energy - Biomass makes up for 92% of the basic energy services such as cooking and heating

- Biofuels can reduce indoor-pollution and improve women’s health -Women’s health have significant impact on food security of the entire household

27

The trade-offs are depicted in Figure 2 as well. It shows how food security is affected by climate

change and biofuel production as well as how climate change and biofuel production are related.

Climate change will negatively affect food security. Biofuel production can either contribute to

climate change or mitigate it, depending on how the production takes place. The production also

determines whether biofuels can improve or worsen food security. If we can emphasize the

positive signs and reduce the negative signs, biofuel production can improve food security.

Figure 2: Trade-Offs among Biofuels, Food Security, Climate Change, and Energy Security

(-) FOOD SECURITY CLIMATE CHANGE

(-) (-)

(+) (+)

BIOFUELS

(+)

Energy Security5

(+)

5 The dotted line represents the indirect effect of energy security on food security.

Increased GHS emissions from increased corn-based ethanol production; land-use change such as cutting forests to produce feedstock; and byproducts of increased corn production

Reduced agricultural production; increased risks of flooding and droughts; and decreased water availability and increased water contamination

Diversion of land, food, and feed to fuel

Employment generation in farming and processing biofuels could lead to higher incomes that subsistence farming

Ethanol from agricultural wastes and non-food crop may reduce GHG emissions by consuming less energy; utilizing wasteland would reduce pressure on agricultural land

Reducing indoor pollution caused by firewood use and reducing deforestation; allowing lighting; improved access to pumped drinking water, reducing incidence of diarrhea; agricultural productivity through access to mechanized agricultural inputs

28

5. Viability of Biofuel Production in Nepal

5. A. Potential of Jatropha Cultivation in Nepal

Nepal has 14.7 million hectares of land of which 4.41 million ha (30%) has favorable climatic

conditions for cultivation of jatropha (Sharma and Banskota 2006).6 Even if only 10% of this

potential land is used for jatropha cultivation, with the yield assumption of 10 tons per hectare,

4.41 million tons of jatropha seed can be produced annually, which is equivalent to 1.1 million

tons of jatropha oil or biodiesel assuming oil yield is 25% of weight of the seeds. This is almost

twice the amount of total petroleum products (i.e. 0.67 million kiloliters) imported into the

country in 2004/05.

Jatropha also has a huge potential for meeting the rural energy requirement at the village level.

With 250 jatropha tree planted around the perimeter as living fence, enough oil (68 liter

assuming the yield rate of 1 kilogram per tree and 27% oil content) would be produced annually

to meet processing cost and to fuel at least one clean burning lamp continuously day and night

for the whole year for negligible cost of plantation and harvesting. Additionally, 188 kg of oil

cake would be available as by product, which could either be retained by household for use as

manure or sold, where market is available, at NRS 4 (approximately USD .05) per kg of oilcake.

If oil is used as a kerosene substitute, there will be about NRS 130 million (USD 1.6 million)

saved and about 40 kilotons of CO2 mitigated annually in the country besides the revenue

generated from credit on carbon storage in roots and woody biomass of tree. Further assuming

that 10 percent of the potential households (25000 in the Terai and the hills) are involved in

planting 250 plant each then annual energy produced will be equivalent to 4.5% of the kerosene

or diesel import or 10% electricity consumption.

5. B. Financial Viability of Jatropha Plantation

In order to assess whether jatropha plantation are financially viable in Nepal or not, Sharma and

Banskota (2006) have carried out a simple analysis of jatropha plantation based on the available

6 This section is based on Sharma and Banskota (2006).

29

cost and benefit parameters and certain assumptions about yields and oil content.7 Their result

indicates the breakeven price of NRS 5 (USD 0.06) per kg of fruit seed beyond which jatropha

cultivation become profitable yielding acceptable rate of return. They conclude that financial

viability of jatropha plantation is robust even under assumptions of high cost and low benefits,

and state further that their findings compare well with similar studies conducted in India on

economics of jatropha.

Although biodiesel has not been produced from jatropha seeds in a commercial manner in Nepal,

it is economical to cultivate jatropha seeds for biodiesel production, as shown by studies done by

Research Center for Applied Science and Technology (RECAST) through pilot cultivation of

jatropha seeds. Planting jatropha seeds on 10 hectares of land shows a profit of USD 0.12 per kg

of seed and USD 1,231 per hectare (Sharma and Banskota 2006).

Furthermore, the price of jatropha oil to be used as biodiesel is much less than the market price

of petrodiesel (USD 0.64 per liter) making it a commercially viable product (Tiwari 2006).

Especially given the difficult mountain terrain of Nepal that make transportation costs

particularly high, with some places not even accessible by vehicles, the cost of biofuels may be

even lower.

Other Energy Crops

Some feedstock is better suited for large-scale production while others more for small-scale

production, depending on the availability of land, labor, water, markets, and technology. The

choice of feedstock also depends on factors such as yield per hectare, oil content of the

feedstock, crop versatility, market price, byproduct usage, drought and pest resistance potential,

water requirements, fertilizer needs etc.

The paper focuses on jatropha crops because of the nature of the crop – it requires low water and

fertilizer for cultivation, is pest resistant, has a high seed yield and oil content, produces high

protein manure, can be cultivated on wasteland, and can assist in the prevention of erosion and

restoration of degraded soils (Bamuller 2008; Gonsalves 2006; UN-Energy 2007). Because 7 For details on the analysis, refer to Sharma and Banskota (2006, p6)

30

jatropha harvesting is labor intensive, it is suitable for areas with high unemployment problems

(UN-Energy 2007).

5. C. Financing Biofuels Projects

Given the potential and financial viability of jatropha cultivation in Nepal, it is recommended

that the Nepalese government take initiatives on pursuing biofuel production. To date, financing

of domestically produced biofuels for consumption has always depended on government support.

However, given the state of the country’s economy, government financing may be limited.

Furthermore, in Nepal, small-scale biofuels projects could face challenges obtaining finance

from traditional financing institutions because of high risks associated with it such as crop

failure. This is where microcredit could come useful. The growth of microcredit in recent years

has largely benefited rural communities in Nepal as well (Winrock International Nepal 2004).

Already programs like USAID’s Nepal Biogas Microfinance Capacity Building Program,

UNDP’s Small Grant Program, and Biogas Sector Partnership Nepal, to name a few, have used

microcredit to finance biogas and solar energy projects in Nepal (ibid).

There are also significant opportunities created through public-private partnerships. Given the

commercial viability of biofuel projects, private investors could be drawn into investing.

However, before large-scale biofuel projects are initiated, the government should set biofuel

policies in place that take into account the various trade-offs discussed earlier.

5. D. Case Study of Biofuel Projects in Nepal Winrock International Nepal’s Jatropha Project8

Winrock International Nepal, an international Non-Governmental Organization (NGO), is

currently undertaking a project that encourages villagers to use community-grown jatropha oil

for irrigation pumps to support increased agricultural production and rural economic growth. The

project aims to promote rural economic growth by making irrigation affordable for poor farmers

in the Siraha district of Nepal.

8 This section is based on in-person interview with Kuikel (2009).

31

Before initiating the project, Winrock undertook a study covering all major populations of

Jatropha in Eastern Nepal. This includes Chitwan, Dhading Makwanpur, Bara, Parsa, Dhanusa,

Mahottari, Siraha, Saptari, Udayapur, Morang, and Jhapa Districts. The results showed that

estimated seed production per tree varies from 3.23 kg to 20.53 kg. Among the sampled tree

from different population the mean seed production per was 10.46 kg.

Because jatropha is a shrub that can be used as hedges around the house, farm or forests,

households may want to participate in projects if the benefits are explained to them.

Communities can also decide to make use of public wastelands in the vicinity, with necessary

approval from local authorities, for new Jatropha plantations and develop modalities for tending,

collection, distribution etc. For the landless, usually the most food insecure segment of the

population, this is not feasible but they can be employed in the plantation and processing if

pursued in a community-based manner.

Crystal Bioenergy: A Public Enterprise9

Crytal Bioenergy is the largest public enterprise involved in biofuel production in Nepal. They

believe that it is possible for Nepal to be fully independent from diesel in the next 10 years with

jatropha cultivation on 0.15 million hectare of land, assuming that 1 hectare yields 2500 trees.

Like Winrock International, they estimate 4 -20 kg of fruit can be bore from one tree.

At present, community forest user group have 1.2 million hectare all across mountains, hills, and

terai region of Nepal. This includes areas under high-tension electric wires where trees or other

food crops cannot be grown, highway sides, riversides, and periphery of forests. Crystal

Bioenergy hopes to utilize these lands where nothing is presently being grown.

The enterprise only works with community forest groups, women’s groups, and farmers group.

They make agreements with the groups to buy jatropha seeds for 50 years, as this is the life of a

jatropha plant to produce maximum yield. Investment on the land is from both groups – the

9 This section is based on in-person interview with Rai (2009).

32

enterprise makes financial investment on building nurseries, providing seeds and technology, and

assisting in technical capacity building and the groups contribute labor. Presently, seedling is

exported from India. The profit from jatropha seeds is shared, with 75% going to the community

and 25% to the enterprise. Overhead costs for the enterprise takes up about 80% of the 25% and

the remaining is profit for the enterprise. Because they have several such projects across 33

districts in Nepal, the profit adds up for them. At the same time, the community with 75% share

in the project also benefits.

Crystal Bioenergy currently has 10,000 hectare farmed so far, and their investment has been

NRS 50 million (USD 0.64 million). By the end of this year, they would have farmed 50,000

hectares, and next year, they plan to have an additional 50,000 hectares. Ramesh Kumar Rai, the

Managing Director, cited the success of the State of Chhatisgarh in India in producing jatropha-

based biofuel. The soil profile of Chhatisgarh is sandy. Chhatisgarh initiated its jatropha

plantation in 2005, and within 2 years, they had managed to plant jatropha on about 84,000

hectares of fallow land (Chhatisgarh Biofuel Development Authority 2007). They are projecting

to grow jatropha on 1 million hectare by 2012.

33

6. The Way Forward: Recommendations and Challenges

Small to medium-scale local biofuel production in Nepal has many benefits to offer in the form

of employment generation, mitigating climate change, providing access to energy, and improving

health; all these benefits in turn have the positive effect of improving food security. However,

steps should also be taken to ensure that rural farmers receive some of the benefits and that

farmland, food crops, and water are not diverted away from food to fuel.

6. A. Nepal’s Biofuel Policy at Present

Nepal has no national biofuel policy so far, and any activity in this area is limited to academics

or R&D levels with no support from the government. In January 2004, the cabinet had decided to

blend 10 percent ethanol in petrol being used in the country, however, this decision has not yet

materialized because of unsettled dispute over ethanol prices between NOC and “Shree Ram

Sugar Mill” that was willing to supply necessary ethanol to NOC (Tiwari 2006).

The annual sales of petrol, diesel and kerosene according to NOC (see Table 3) were 101,912,

306,687 and 197,850 kiloliters respectively in the fiscal year 2006/07 (Ale 2008).10 These

quantities were 80,989, 294,329 and 226,637 kiloliters respectively in the fiscal year 2005/06.

The figures indicate the increase in sales by 25.8% and 4.2% in petrol and diesel respectively and

decrease in sale in kerosene by 12.7%. The growing trends of transportation fossil fuel will be

difficult to meet due to budgetary imbalances. It is crucial to develop and promote biofuels to

substitute fossil fuel to some extent gradually. Even the 10% blending of ethanol to petrol

requires about 28 kiloliters of ethanol per day. Similarly the 3% blending of bio-diesel to petrol

diesel requires 25 kiloliters of bio-diesel.

Although AEPC is the main government entity responsible for making biofuel policies, there is a

lack of coordination among the different ministries such as the Ministry of Forestry, Ministry of

Environment, Science and Technology (MoEST), Ministry of Agriculture (MoA), and Ministry

of Energy (Adhikari 2009). 11 When the then Finance Minister of Nepal, Babu Ram Bhattarai,

10 This section is based on Ale (2008). 11 This section is based on in-person interview with Adhikari (2009).

34

allocated NRS 50 million (USD 0.64 million) for developing a biofuel program for Nepal in

September 2008, there was confusion as to which ministry the fund should go to. Food security

and land use fall under the jurisdiction of the Ministry of Agriculture but AEPC is formally

under MoEST.

Table 3: The Sales Report of Petrol, Diesel, and Kerosene and Requirement of Biofuels in Kiloliters

Fiscal year Petrol Diesel Kerosene Ethanol

(E10) Biodiesel

(B5) Ethanol

(E10)/day Biodiesel (B5)/day

Biodiesel (B3)/day

1993-1994 31,061 195,689 162,157 3,106 9,784 8.5 26.8 16.1

1994-1995 34,983 226,622 180,900 3,498 11,331 9.6 31.0 18.6

1995-1996 41,193 250,500 208,715 4,119 12,525 11.3 34.3 20.6

1996-1997 44,709 257,910 243,810 4,471 12,896 12.2 35.3 21.2

1997-1998 46,939 300,604 282,026 4,694 15,030 12.9 41.2 24.7

1998-1999 49,994 315,780 294,982 4,999 15,789 13.7 43.3 26.0

1999-2000 55,589 310,561 331,120 5,559 15,528 15.2 42.5 25.5

2000-2001 59,245 326,060 316,381 5,925 16,303 16.2 44.7 26.8

2001-2002 63,271 286,233 386,592 6,327 14,312 17.3 39.2 23.5

2002-2003 67,457 299,973 348,620 6,746 14,999 18.5 41.1 24.7

2003-2004 67,586 299,730 310,826 6,759 14,986 18.5 41.1 24.6

2004-2005 75,989 315,368 239,328 7,599 15,768 20.8 43.2 25.9

2005-2006 80,989 294,329 226,637 8,099 14,716 22.2 40.3 24.2

2006-2007 101,912 306,687 197,850 10,191 15,334 27.9 42.0 25.2

Source: Ale, 2008

35

6. B. Recommendations

The recommendations are targeted towards AEPC:

A Biodiesel Board

With India pursuing such an ambitious biofuel production strategy, it would no doubt have direct

or indirect effects on Nepali agriculture. Before major investments are made in biofuel

production in Nepal, it is crucial that the government take immediate steps to formulate clear

guidelines on where and how biofuel production can take place.

1. Given the lack of coordination among the different government bodies regarding biofuel

policies, the first step for AEPC to consider is recommending the formation of a

Biodiesel Board with experts in the areas of food security, environment, land reform,

alternative energy, forestry, finance, and rural development.

2. There must be a healthy debate from all sides regarding formulating biofuel policies.

Instead of closed-door policy formulation, AEPC should promote transparency and

debate in its recommendations.

3. Each biofuel production proposal should meet certain criteria, including

maintaining/improving land, air, and water quality. Biofuel production should be

categorized into small, medium, and large-scale production; large-scale production

proposals should be evaluated and approved by the Biodiesel Board.

Protecting Food Security

As discussed earlier, food security does not have to be compromised while pursuing biofuel

production. For this, the paper makes the following recommendations:

Assigning Wasteland for Growing Energy Crops

1. Currently the Ministry of Agriculture (MoA) is responsible for formulating policies

relating to land use. AEPC should work with the MoA to define wasteland and should

ban the use of growing energy crops on land other than wasteland and as fence for farms.

2. AEPC should work with the MoA in identifying highway sides, riversides, periphery of

community forests, and wasteland for biofuel production.

3. AEPC should seek support from district- and village level government entities in

collecting information regarding land use.

36

4. Also, army and police barracks can be involved in the program, as they have manpower,

technical expertise, and land needed for biofuel programs.

A Community-based Biofuel Production

1. District and village-level government entities should be involved in the monitoring

process to ensure communities are abiding by biofuel policies.

2. Biofuel program should be designed to provide poor farmers as well as those unemployed

with employment opportunities.

Growing Non-edible Energy Crops

1. AEPC should propose banning the use of food crops for biofuel production until more

research has been done in food versus fuel debate.

2. AEPC should connect with national and international research institutes to continue

researching other non-edible crops.

Private Investments

1. The scope of land use and crop use policy should be limited to waste land and non-edible

crops.

2. As noted earlier, large-scale production proposals should go through the Biodiesel Board.

3. If the Board cannot act in such a capacity immediately, the government can place a

restriction on private investments in biofuel production until such a mechanism of project

approval can be created. Because the effects of large-scale biofuel production are not

clear yet, such projects should be halted if they cannot be properly monitored.

Investing in Research and Development

Some biofuel production experiments had been conducted by scientists at RECAST in the early

1980s but very little has happened at the commercial level.

1. AEPC should consider partnering with universities at home and abroad and building

public-private partnerships that would allow investments to be shared.

Awareness Programs and Trainings

Many people from public to policy level are still not aware of the potential benefits of biofuels

and the associated technologies available for extracting oils and their wider applications (Tiwari,

37

2006). At the same time, many even in the biofuel sector are unaware of successes and failures

of biofuel programs in Nepal and in other parts of the world.

1. AEPC should continue with its training programs in biofuel production.

2. By compiling project updates from across the country and creating either newsletter or

website, knowledge can be shared so different projects can learn from one another.

The recommendations provided will have the affect of mitigating the negative impacts as well as

enhancing the positive impacts, as seen in the table below.

Table 4: Mitigating the Negative Impacts and Enhancing the Positive Impacts of Biofuels Potential Negative Impacts of Biofuel Production Mitigating the Negative Impacts Diversion of agricultural land for biofuel production diminishes the availability of land for food, thereby adding to food price increases

Assign wasteland in place of agricultural land for biofuel production

Diversion of food and feed to fuel leads to food price increases

Negative effects on health and sanitation due to water shortages and water contamination as crops like sugarcane are water-intensive

Grow plants like jatropha and pongamia that are 1) non-edible, 2) less water-intensive, and 3) can be grown on wasteland

Potential Positive Impacts of Biofuel Production Enhancing the Positive Impacts Create additional rural jobs in crop harvesting and processing

Reducing GHG emissions

Assign wasteland for biofuel production so that new jobs are not simply replacing farming on agricultural land

Access to energy services

Reducing indoor pollution and improving health

Focus on community-based biofuel production for local energy needs that would enable the communities to utilize some of the energy produced

38

6. C. Looking Forward

While a national biofuel policy that of using biodiesel as a substitute for petrodiesel may not be

foreseeable in the near future because of the country’s political economy, what can be done in

the present is formulating guidelines for community-based small-scale biofuel projects.

Identifying Wasteland

In order to avoid the problem of converting agriculture lands into bioenergy that threatens food

security, Lobell et al. (2008) use Geographic Information System (GIS) data and remote sensing

to show the global potential for bioenergy on abandoned agriculture lands. Similar technique can

be used in Nepal to overcome the challenge of identifying wasteland.

The last land use survey in Nepal was done in 1979. Lack of current data makes it challenging to

identify wasteland through GIS mapping. Presently wasteland can be identified through

consulting with district and village level government entities.

Availability of Technology for Biofuel Production

Nepal may benefit from focusing on community-based small-scale biofuel production for local

energy needs. Technology transfer is still a big part of even a small-scale project. This can be

met through agricultural extension workers who can disseminate best practices and respond to

farmers’ needs and requests for technical advice.

International capacity building activities could help to build the know-how that is a prerequisite

for extension services, thus fostering more sustainable small-scale bioenergy production (UN-

Energy 2007). Especially at this early stage of liquid biofuels production, international capacity

building may bring lessons learned from other countries that may help channel biofuel

production in Nepal in a more cost-effective and environment friendly manner.

Land Tenure

Many of the rural families in Nepal do not have official title to their land. Biofuel production

could drive away small farmers from their land in the absence of clear land ownership, further

marginalizing the poor. Strong legal structures need to be in place in order to prevent such a

39

situation. Land tenure is a very sensitive issue in Nepal, but it needs to be tackled with at some

point if the country is to move ahead without another civil war breaking out again.

This paper has considered the different trade-offs associated with biofuel production and

assessed the potential benefits of biofuel production in Nepal. Given proper guidelines, biofuel

production in Nepal may bring the much-needed stimulation in the rural economy. However, in

the case of failure of implementing and enforcing the banning of use of food crops and fertile

land, biofuel production could jeopardize the already vulnerable food security and accelerate

environment degradation. The importance of strict and clear policies and monitoring processes

cannot be overemphasized.

40

Works Cited

ADB. ADB’s Response to the Food Crisis. Manila: Asian Development Bank (ADB), 2008. ADB-UNCTAD. Quantification of Benefits from Economic Cooperation in South Asia. Macmillan India, 2008. Adhikari, J, interview by M Aryal. Nepal: Poor Planning Behind Rising Food Prices Inter Press Service News Agency, (May 8, 2008). Adhikari, K D. "NEA Half-Year Bulletin." Vidyut 10, no. 1 (August 2008). Adhikari, Narayan Prasad, Engineer, Alternative Energy Promotion Center (AEPC), interview by Shailee Pradhan. Lalitpur, (July 30, 2009). AEPC. Alternative Energy Promotion Center (AEPC). 2009. http://aepc.gov.np/index.php?option=com_content&task=blogcategory&id=16&Itemid=27 (accessed March 10, 2009). Ale, B B. A Final Report on National Policy Recommendation for Promotion of Biofuel Energy in Nepal. Lalitpur: Alternative Energy Promotion Center (AEPC), 2008. Babu, S. "Food Security in South Asia." 2005. www.southasianmedia.net/magazine/journal/9-food_security_southasia.htm (accessed November 26, 2008). Bamuller, H. "Biofuels and Trade: Need for a Balanced Energy Policy." Trade Insight, 2008. Barnett, T P, J C Adam, and D P Lettenmaier. "Potential Impacts of a Warming Climate on Water Availability in a Snow-dominated Region." Nature 438, no. 17 (2005): 303-309. Braun, J V. "Impact of Climate Change on Food Security in times of High Food and Energy Prices." Land Management 2, no. 3 (October 2008). CBS. Nepal Living Standard Survey 2003/04. Kathmandu: Central Bureau of Statistics (CBS), 2004. Chhatisgarh Biofuel Development Authority. Chhatisgarh Biofuel Development Authority. 2007. http://www.cbdacg.com/ (accessed September 10, 2009). CIA. The World Factbook. September 29, 2009. https://www.cia.gov/library/publications/the-world-factbook/geos/np.html (accessed October 10, 2009). Cohen, M J, C Tirado, N Aberman, and B Thompson. Impact of Climate Change and Bioenergy on Nutrition. Washington DC: International Food Policy and Research Institute (IFPRI), 2008.

41

Crutzen, P J, A R Mosier, K A Smith, and W Winiwarter. "N2O Release From Agro-Biofuel Production Negates Global Warming Reduction by Replacing Fossil Fuels." Atmospheric Chemistry and Physics 7, no. 4 (2007): 11191-11205. FAO. Climate Change and Food Security: A Framework Document. Rome: Food and Agriculture Organisation (FAO), 2008a. —. High Level Conference on World Food Security: The Challenges of Climate Change and Bioenergy. Rome: Food and Agriculture Organisation (FAO), 2008b. —. Nepal: Agricultural Policies and Strategies for Poverty Alleviation and Food Security. Rome: Food and Agriculture Organisation (FAO), 2003. —. "World Food Summit Plan of Action." Food and Agriculture Organisation (FAO). 1996. http://www.fao.orf/WFS/INDEX_EN.HTM (accessed December 8, 2008). Ghimire, S R. "Environmental Concern in Nepalese Agriculture." The Journal of Agriculture and Environment 9 (June 2008). Gonsalves, J B. An Assessment of the Biofuels Industry in India. Geneva: United Nations Conference on Trade and Development (UNCTAD), 2006. Hazell, P, and R K Pachauri. Bioenergy and Agriculture: Promises and Challenges. Washington DC: International Food Policy Research Institute (IFPRI), 2006. ICIMOD. The Melting Himalayas: Regional Challenges and Local Impacts of Climate Change on Mountain Ecosystems and Livelihoods. Lalitpur: International Centre for Integrated Mountain Development (ICIMOD), 2007. IPCC. Climate Change 2007. Geneva: Intergovernmental Panel on Climate Change (IPCC), 2007. IRIN. Nepal: Fuel shortage threat to food security. July 28, 2008. http://www.irinnews.org/Report.aspx?ReportId=79476 (accessed August 30, 2008). Karkee, M. Nepal Economic Growth Assessment in Agriculture. Kathmandu: United States Agency for International Development (USAID) Nepal, 2008. Koirala, G P, and G B Thapa. Food Security Challenges: Where Does Nepal stand? Research Report No. 36, Kathmandu: Winrock International Nepal, 1997. Kuikel, Jagadish Chandra, Senior Research Associate, Winrock International Nepal, interview by Shailee Pradhan. (August 15, 2009). Lobell, D M, M Burke, C Tebaldi, M Mastrandrea, W Falcon, and R Naylor. "Prioritizing Climate Change Adaptation Needs for Food Security in 2030." Science 319 (2008): 607-610.

42

Mali-Folkecenter. Mali-Folkecenter. 2008. http://www.malifolkecenter.org/ (accessed June 30, 2008). Ministry of Finance. Economic Survey of Nepal. Kathmandu: Government of Nepal, 2006. OECD. Biofuel Support Policies: An Economic Assessment . Paris: Organisation for Economic Co-operation and Development (OECD) Publishing, 2008. —. Development and Climate Change in Nepal: Focus on Water Resources and Hydropower. Paris: Organisation for Economic Co-operation and Development (OECD), 2003. PAF. Nepal Facts. 2007. Poverty Alleviation Fund (PAF) Nepal. http://www.pafnepal.org.np/facts.php# (accessed November 25, 2009). Rai, Ramesh Kumar, Managing Director, Crystal Bioenergy, interview by Shailee Pradhan. (August 22, 2009). Republica. NOC brings down diesel imports. September 13, 2009. http://www.myrepublica.com/portal/index.php?action=news_details&news_id=9755 (accessed October 10, 2009). Rosegrant, M W. Biofuels and Grain Prices: Impacts and Policy Responses. Washington DC: International Food Policy Research Institute (IFPRI), 2008. Shakya, N M. "Hydrological Changes Assessment and Its Impact on Hydro Power Projects of Nepal." Consultative Workshop on Climate Change Impacts and Adaptation Options in Nepal’s Hydropower Sector with a Focus on Hydrological Regime Changes Including GLOF. Kathmandu: Department of Hydrology and Meterology and Asian Disaster Preparedness Center, 2003. Sharma, B, and K Banskota. The Economics of Biofuels: Opportunities and Challenges. Kathmandu: Renewable Energy Technology for Rural Development, 2006. Sharma, S K. "Food Security in Nepal." In Economic Reforms and Food Security: The Impact of Trade and Technology in South Asia, by Suresh C Babu and Ashok Gulati. Washington DC: International Food Policy Research Institute (IFPRI), 2002. Shrestha, A B, C P Wake, P A Mayewski, and J E Dibb. "Maximum Temperature Trends in the Himalaya and its Vicinity: An Analysis Based on Temperature Records from Nepal for the Period 1971 – 94." Journal of Climate 12 (1999): 2775-2789. Sotero, P. "Sugarcane Ethanol Producton in Brazil." Betting on Biofuels: Opportunities and Implications. Washington, DC: Brazil Institute at the Woodrow Wilson International Center for Scholars, 2008.

43

The Kathmandu Post. Indian budget may affect Nepal’s farm sector. August 7, 2009. http://www.asianewsnet.net/news.php?id=6724&sec=2 (accessed October 10, 2009). Timmer, P. "Causes of High Food Prices." Asian Development Outlook 2008 Update, 2008. Tiwari, M. "Status of Biofuels in Nepal." 3rd International Conferences on Biofuels . New Delhi: Winrock International India, 2006. UN-Energy. Sustainable Bioenergy: A Framework for Decision Makers. New York: United Nations-Energy, 2007, 6. WFP and NDRI. Market and Price Impact Assessment of Nepal Final Report. Kathmandu: World Food Programme (WFP) and Nepal Development Research Institute (NDRI), 2008. Wiles, David. The road to Sweden's oil-free future. March 31, 2006. http://www.sweden.se/eng/Home/Work-live/Sustainability/Reading/The-road-to-Swedens-oil-free-future/ (accessed October 10, 2009). Winrock International Nepal. Financing RETs: A Guidebook for MFIs in Nepal. Kathmandu: Winrock International Nepal, 2004. —. Nepal Innovation Biodiesel Project . Kathmandu: Winrock International Nepal, 2008. World Bank. "Biofuels: The Promise and the Risks." In World Development Report 2008: Agriculture for Development. World Bank, 2008. —. Nepal Renewable Energy Project to Reduce Greenhouse Gas Emissions. July 2, 2007. http://beta.worldbank.org/climatechange/news/nepal-renewable-energy-project-reduce-greenhouse-gas-emissions (accessed January 10, 2009). —. World Development Report 2003: Sustainable Development in a Dynamic World. New York: Oxford University Press, 2003.

PROJECT BUDGET (From May 15 – September 10) Supplies Description Cost

Cell phone, batteries for tape recorder, notebooks, and folders $150

Computer repair $200 Internet access $300 Supplies Total $650.00 Stipend Description Cost

Stipend to compile and analyze data and write report $1200

Stipend Total $1200.00 Travel Description Cost Flight to Nepal $1800

Local transportation (flights and buses) for site visits $450

Travel Total $2250.00 Room and Board Description Cost Lodging and meals $1200 Room and Board Total $1200.00 Project Total $5,300.00 Funds from TIE $5,300.00