Structure of the Presentation

1. Current situation and development of the Slovak agriculture and debate on future perspectives of agriculture as a basisfor biofuel production Miroslava Rajčániová – Artan Qineti Slovak University of Agriculture in Nitra, Faculty of Economics and Management, Department of Economics

2. Current state of Slovak agriculture - position of agriculture in the national economy of Slovak Republic, entrepreneurial structure and use of land Current state of biofuel production – possible biofuel products, biofuel producer Enviral Future perspectives – debateon advantages and disadvantages of biofuels Structure of the Presentation

4. Share of agriculture in GDP and total employment (in %)

5. Size Structure of agricultural enterprises According to share on total number

6. Size Structure of agricultural enterprises According to share on total area

7. Share of products in agricultural production (%)

8. Current state of biofuel production • high expectations that biofuels can be a solution to a host of problems, ranging from oil dependency, energy shortages, the environment, farm incomes and rural development. • Slovakia imports most of its primary energy supply • clear market for bioenergy is still lacking,

9. Biomass and biodiesel • abundant biomass resources available (industrial wood residues and forestry wood residues, straw and other agricultural residues, rapeseed, and wet biomass like animal manure and sewage sludge) • at present biomass only provides 0.2% of energy in Slovakia • In the period 2001-2003 biodiesel production capacity of 62,000 tonnes per year. • In 2001, 30,290 tonnes of biodiesel were produced and used • In 2002, 6,267 tonnes, of which a quarter was exported. • In 2003, even less biodiesel was produced, only 3,573 tonnes.

10. Bioethanol production • Enviral - won the tender to be a biocomponent supplier for the whole group of MOL, to which Slovnaft belongs • Maize serves as the basic raw material, consumption cca 300 thou. tons p.a. (one third of the entire amount of maize cultivated in Slovakia) • annual production capacity totalling 120 thou. m³ of bioethanol, • Production process consists of fluidization, saccharidization, fermentation and distillation. Bioethanol is the main product, the present distilling burnout (the so-called DDGS) is the side product which shall be further used.

11. Bioethanol production

12. History of bioethanol use • first fuel used in motor vehicles • widely used during the Second World War in Germany, Brazil, the Philippines and the United States • Currently the most widely used in Brasil and USA. • Presently it is possible to speak about bioethanol as an alternative fuel.

13. Advantages of bioethanol • it is a renewable source of energy • it has a positive impact on the decreasing of environmental pollution – decrease of GHG • energy reliable – decrease in dependency on crude oil reserves • expansion of the agricultural market • a high octane rating at relatively low cost • pure bioethanol may completely replace conventional fuels in adjusted motors; as an ingredient (not exceeding 13% concentration) it may be added to ordinary, not adjusted motors

14. How much raw material is necessary for the manufacturing of 1000 litres of alcohol? • Maize ca 2,300 kg • Wheat ca 2,800 kg • Sugar beet ca 10,000 kg • Sugar cane ca 13,000 kg • 30 000 hectares of polluted soil • Fast growing trees

15. Role of the Slovak government • Slovak norms based on the norms of the European Union. • the minimal content of biological fuels or other renewable fuels shall, from 1 January 2007 to 31 December 2009, total a reference value of 2% calculated from the energy content of the total amount of diesel fuel oil and gasoline offered on sale. • From 1 January 2010 to 31 December 2010, the above value shall increase to a reference value totalling 5.75%

16. Debate on the negative spillover effects of biofuel production Energy Commissioner Andris Piebalgs said “Today biofuels are the only substitute for fossil fuels in transport. They will contribute to our security of energy supply, will reduce greenhouse gas emissions and create jobs in rural areas. I regret that Member States are still late in implementing biofuel rules.”

17. Debate on the negative spillover effects of biofuel production • Biofuels may mean filling the fuel tank at the cost of emptying the stomach of the poor, aggressive growth in ethanol and bio-diesel supply should induce drastic rise in food prices (Runge 2007, Msangi 2006). • the impact they will have on the natural environment may be negative, GHG emissions have to be quantified “WTW” – Well to Wheels (Runge 2007, van Dam 2006, Fearnside 2002, Giampietro 1997).

18. Debate on the negative spillover effects of biofuel production • Biofuel technology is land intensive. Biofuel demand will put pressure on existing use of land including food production and natural habitats - Meeting 10% of EU energy requirements for transport in 2010 could take up 43% of current land use for cereals, oilseeds, set aside and sugar beet. • It will increase the demand for agricultural inputs like fertilizers, pesticides, etc., which have negative environmental externalities.

19. Future research • comprehensive analysis (both theoretical and empirical) of the effect of the biofuel policies on economic efficiency, income distribution and social welfare. • So what is the policy objective? To reduce pollution, reduce dependence on imported oil, diversify energy sources or help farmers (while reducing tax costs of farm subsidy programs) are all part of the rhetoric in the media and politics.

20. Thank you for your attention !