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This paper finds that specific characteristics of bioenergy investments – namely long times to build, relatively high variable costs, and the managerial ability of corrective actions during the project – help bioenergy producers to respond to market uncertainties. This effect is shown to compromise the economic effectiveness of bioenergy policies. The paper compares the effectiveness of financial and regulatory incentive programs aiming to stimulate production of crop-based biogas. A stylized stochastic real-options based investment model is developed to analyze the investment behavior of biogas producers under alternative policies. The model is solved by a numerical approach combining stochastic simulations and the genetic algorithm technique. Unless bioenergy schemes account for structural characteristics of the bioenergy industry, they will tend to encourage investments in unused production capacities. This would cause additional welfare costs and benefit mainly crop producers. [ABSTRACT FROM AUTHOR]

In recognition of concerns about the security of energy supply and climate change, the Thai government has developed Alternative Energy Development Plan for the period 2012-2021. Under this plan, the production of bio- ethanol and biodiesel in 2021 is expected to grow significantly. This growth will add more pressures on water and land requirements for growing energy crops. This is likely to contribute to worsening the security of water and food supply. This paper, therefore, provides an overview of the bioenergy development and current policies in Thailand with a view to identify the challenges faced by the development of bioenergy. A review of the bioenergy policies reveals that the existing policies have been exclusively focus on energy perspective and largely ignore the significance of the implications arising from the interdependencies between energy, water and food. There is a lack of understanding of the interrelationships between bioenergy, water and food policy interactions. The lack of such understanding is likely to pose several challenges including food or fuel dilemma, security of water supply and issues surrounding land use for biofuel production. This paper further emphasizes the need to develop an integrated framework for developing an understanding of the relationships between energy, water and land. [ABSTRACT FROM AUTHOR]

In designing policies to promote bioenergy, policy makers face challenges concerning uncertainties about the sustainability of bioenergy pathways (including greenhouse gas balances), technology and resource costs, or future energy market framework conditions. New information becomes available with time, but policy adjustments can involve high levels of adaptation costs. To enable an effective steering of technology choices and innovation, policies have to strike a balance between creating a consistent institutional framework, which establishes planning security for investors, and sufficient flexibility to adapt to new information. This paper examines implications of economic theory for handling cost and benefit uncertainty in bioelectricity policy design, focussing on choices between price and quantity instruments, technology differentiation, and policy adjustment. Findings are applied to two case studies, the UK's Renewables Obligation and the German feed-in tariff/feed-in premium scheme. Case study results show the trade-offs that are involved in instrument choice and design – depending on political priorities and a country's specific context, different options can prove more adequate. Combining market-based remuneration with sustainability criteria results in strong incentives for bioenergy producers to search for low-cost solutions; whereas cost-based price instruments with centrally steered technology and feedstock choices offer higher planning security for investors and more direct control for policy makers over what pathways are implemented. Independent of the choice of instrument type and technology differentiation mechanism, findings emphasise the importance of a careful policy design, which determines the exact balance between performance criteria such as cost control, incentive intensity, planning security and adaptive efficiency. [ABSTRACT FROM AUTHOR]

Abstract: This special issue has presented some of the specific findings of the RE-Impact Project which was commissioned and funded by the EuropeAid Cooperation Office from 2007 until its conclusion in 2010. The project aimed to provide impact assessment frameworks and influence relevant policies through direct involvement in bioenergy projects and policy analysis in South Africa, Uganda, India and China. The papers summarised here have covered issues related to Jatropha curcas and forest-based bioenergy in these countries. Taking an overall look at the project findings we can identify a number of general conclusions relevant for the future of bioenergy and rural development in Africa and Asia. First, only local and context-specific sustainability assessment can identify the risk and responsibilities of the different groups and the exact impact on the environment. Second, many initiatives both in biofuels and forest-based bioenergy are marred by a lack of understanding of the life-cycle financial analysis. Third, careful consideration of local physical and social conditions and the economics of the production chain can identify real opportunities for rural development using bioenergy. The current global impasse in bioenergy policies could actually be advantageous to the development of bioenergy in developing countries. Without the pressure from America and Europe to develop bioenergy systems for climate change mitigation, countries in Africa and Asia may have the breathing room to shape bioenergy systems for their own internal energy supply in an orderly fashion. However, in order to avoid environmental and social impacts it will be necessary to articulate together elements of a number of measures including market-based certification, national policy formulation, national legislation, impact assessments, sustainability planning, land use planning, research, monitoring and evaluation taking into account country and project specific sustainability criteria. Unfortunately, many of the countries in Africa and Asia where bioenergy can play an important role still lack institutional structures able to articulate this sustainable development. [Copyright &y& Elsevier]