Agriculture, Energy & International Policy
At the recent G20 summit in China, climate change and green economies were central topics of discussion. Both Beijing and Washington took advantage of the historic summit to sign the Climate Agreement negotiated at the end of last year at the Conference of Parties in Paris (COP21). The dynamics developing within the energy sector represent an opportunity for individuals and companies interested in investing in the infrastructure and agriculture industries to contribute to the achievement of important policy goals.
Agriculture, Energy & International Policy
Two global priorities when it comes to energy issues are worldwide access and transition to renewable sources. Firstly, regarding access to electricity, Africa and Asia are the main emerging regions where substantial sectors of the population still lack reliable energy infrastructures. For example, in Asia Pacific alone, an estimated 500 million people still use biomass as the main source of their (minimal) energy consumption. Similarly, most of these populations only use heat to cook and, to this end, employ traditionally developed natural oils, made from agricultural goods such as peanut or palm.
One of the main concerns with populations dependent on wood and self-made natural oil as energy resources is the health hazard that these heat sources expose them to. For example, a wood powered kitchen in sub-Saharan Africa exposes mainly women and children to large amounts of dark smoke, which causes long term respiratory problems. Furthermore, the use of oil as well as live fires for cooking and for heat poses a great danger to households in these regions. Therefore, it is natural that G20 nations establish as one of their priorities expanding electric infrastructures to reach underserved communities. However, this also means that the demand for electric power is expected to continue growing for decades to come.
The second related topic prioritized by the G20 nations is renewable energy sources and energy produced from waste or discarded material. In this regard, the leading nations during the last couple of years have been Brazil with an average 77% and Canada with an average 62% of all energy produced coming from non-fossil fuel sources. Nations producing more than ten (10) percent of their energy from renewable sources include Turkey, China, the United States, Japan, India, Australia, the ensemble of the European Union. Furthermore, the G20 and other international organizations have target goals to increase these percentages over the coming decades.
When discussing transitions into renewable energy, the image that automatically comes to mind is that of windmills and solar panels. However, the fact is that the nations whose renewable energy percentages are the highest rely heavily on agriculture to produce energy. In the case of Brazil, their largest source of renewable energy is ethanol, mainly produced with sugarcane and, to a lesser extent, corn. Gasoline sold in Brazil for use in vehicles and machinery must be blended, by law, with fungible ethanol in proportions upwards of 20%. Similarly, Canada also has ethanol and biodiesel blend mandates for gasoline, even though their requirements are significantly lower than Brazil’s. For example, Canada has a nationwide federal blend mandate of 5.0% ethanol. However, provinces such as Saskatchewan and Manitoba have higher ethanol blend mandates of 7.5% and 8.5% respectively.