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The EU and biofuels

“Europe has seen many storms over the last year or two – whether because of climate change or more familiar factors.  But over this period, I have seen no storm as ferocious as the recent media storm about biofuels”.  Mariann Fischer Boel, 6 May 2008.

Background

Rising food prices and the world food shortage, combined with doubts about the greenhouse gas reduction value of biofuels, have led to the EU’s proposals for greater use of biofuels being sharply criticised.  The draft Renewable Energy Directive proposes raising the target of 5.75 per cent of the market share of road transport fuels to be biofuels by 2010 to ten per cent by 2020.  This particular proposal has proved very controversial, with the European Commission being accused of promoting biofuels without regard to the consequences for food supply or the environment.  This briefing paper explains the EU’s approach to the biofuels question as a whole, including road transport, and puts recent developments into context.

The Technology

Biofuels are renewable liquid fuels produced from biomass (plant or animal material).  Biofuels are based on the fact that plant energy is stored in the form of sugar, starch or oil and these can be converted to biofuels.  There are two main types of biofuels: biodiesel, made from plant oil, and bioethanol, which is derived from sugar or starch.  Biofuels can either be replacements for fossil fuels or blended with them without the need for complex vehicle modification.[1] 

In terms of CO2 production, the important test for biofuels is their CO2 production over the lifetime of the fuel – i.e. in their production, transport, storage and use.  Studies have suggested that some forms of biofuel generate more CO2 than fossil fuels (American corn-derived bioethanol is one example) and it is technically difficult to calculate the emissions from used biofuels because it depends on so many factors.  Nonetheless, the UK Government and others argue that biofuels can produce between 20 and 80 per cent lower CO2 emissions compared to fossil fuels.  The wide variation reflects the fact that some crops contain larger amounts of energy that can be converted than others (tropical sugar cane has a higher energy yield than temperate crops like sugar beet for example). 

Biofuels are a relatively new technology; the first bioethanol plant in the UK only began production in September 2007.  The next generation of biofuel production will use the whole of the plant material and not just the sugar or oil-rich part of it.  Carbon savings from second generation biofuels will be greater than from current biofuels but it may be a decade before the benefits of this new technology are widely available.

Reducing Dependence on Oil

In 2001 the European Commission put forward proposals to reduce dependence on oil for transport through expanding the use of renewable sources of energy, notably biofuels.  The Commission pointed out that the EU had set itself a target of reducing greenhouse gases emissions by eight per cent by 2010 (now 20 per cent by 2020) and the continuing growth in CO2 emissions in Europe was not consistent with this target.  The Commission also noted that transport was particularly dependent on oil and 90 per cent of the EU’s oil was expected to be imported by 2030. 

The Commission proposed a directive to encourage the development and use of biofuels by allowing Member States to reduce the tax on biofuels compared to oil products.  A number of EU Member States, including the United Kingdom, have now adopted favourable tax treatment for biofuels. [2]

The EU’s Biofuels Directive & Future Action

Adopted in May 2003, the EU’s Biofuels Directive set an EU-wide target of 5.75 per cent of the market share of transport fuels to be held by biofuels by 2010.[3]  This was a difficult objective given that the market share was just 1.4 per cent in 2005 and the Commission is saying that, on present trends the actual figure is likely to be 4.2 per cent. [4]  Although some countries have made considerable progress in boosting biofuels output, other countries have not done so well.  In France, production of bioethanol actually fell between 2001 and 2005.[5]

In 2006 the EU adopted an Action Plan on Biofuels to promote their development and use more widely.  This included supporting developing countries that could benefit by producing biofuel crops and sugar producing countries that would lose out from the changes in the CAP.  The Plan noted that it would be necessary to ensure that biofuels were grown in a way that respected environmental sensitivities, including protecting rainforests.  For Member States, the key point, agreed in March 2007, is that there will be a legally binding target on them that at least 10 per cent of all fuels are biofuels by 2020.

The new target of 10 per cent was included in the draft Renewable Energy Directive announced in January 2008.  The 10 per cent figure is highly controversial in some quarters and has been sharply criticised, notably by NGOs such as Birdlife, as likely to do more harm to the environment than good.

The Controversy over Biofuels

The dramatic rise in world food prices over the last two years has coincided with reports of deforestation in the developing world triggered by the demand for biofuels and challenges to the scientific basis for some claims in support of biofuels.  The main concerns about the expansion of biofuels include:

- that the greenhouse gas savings from many types of biofuel are uncertain;

- that the massive expansion of biomass production that would follow any EU targets would put pressure on the supply of land potentially leading to the conversion to biofuel production of inappropriate land (eg wetland or forest) or land hitherto used for food production;

- using biofuels for transport is wrong because it damages both the good name of biomass and diverts attention from its more productive use for heating and electricity. [6]

In response to the concerns, the EU Agriculture Commissioner has argued that biofuels are a necessary as part of the package of measures that will reduce greenhouse gas emissions in the EU but also that they are not harmful to either food production or the environment when produced responsibly.[7]  The EU’s 10 per cent target, the draft Renewables Directive makes clear, “is appropriate subject to production being sustainable, second-generation biofuels becoming commercially available” and fuel of the appropriate quality being available. 

With just one per cent of current EU cereal production being used for bioethanol production and most rapeseed crop used for animal feed and not biodiesel, biofuel production cannot be solely blamed for current world food shortages.  Poor weather hit cereal production in many major countries in recent years, rising demand for meat in India and China has in turn increased demand for the cereals needed to feed the extra cattle and pigs and the world’s population is growing by 70 million a year.  These factors were far bigger than biofuels in driving up world food prices in 2007/08.[8]  The Commission points out that within the EU, the proposals for biofuels are that they should be based not on food crops but on other agricultural products and by-products, such as wood chips and straw, that might otherwise be thrown away

The problems associated with increased biofuel production in developing countries could be addressed by a properly monitored certification system designed to ensure that bioethanol was not derived from forest or as an alternative to food production.  The capacity of countries like Brazil with a well-developed bioethanol industry to help the EU reach its targets is very considerable, particularly if tariff barriers to imports were reduced. 

The New Legislation

The Industry Committee of the European Parliament proposed significant changes to the Renewable Energy Directive in September 2008. Whilst it reaffirmed support for the Commission’s 10 per cent road transport fuels target by 2020 and added that it should be 5 per cent by 2015, they also wanted a share of the 2020 road transport biofuels target to come from what they regarded as more sustainable sources than traditional biofuel, including electricity, hydrogen and the "second generation" of biofuels which are expected to produce greater reductions in greenhouse gases over existing biofuels.

The final directive reflected some of the Parliament’s concerns but it did not include a target of 5 per cent of all road transport fuels being biofuels by 2015. The emphasis on using sustainable biofuels was included however. The Directive includes a mechanism to promote the use of second-generation biofuels in that they will be double-credited towards the 10 per cent target. Biofuels will have to be produced in a sustainable way so that biofuels must save 35 per cent of greenhouse gases compared to fossil fuels, rising to 50 per cent from 2017. The use of former peatland to grow biofuels will be prohibited and the Commission will have to produce a methodology to enable the calculation of the greenhouse gas emission consequences of the change of land use to biofuel production. For example, biofuel production on land formerly used to grow food can lead to forest being cleared to allow space to grow food.

Conclusion

The EU’s willingness to embrace biofuels caused controversy because the details of the proposals appeared not to have been thought through. The final legislation responds to the concerns expressed about the expansion of and sustainability of biofuels and the use of targets and incentives will ensure that developments will be closely monitored in future. Biofuels clearly have a part to play in reducing greenhouse gas emissions and the development of the EU’s initiative will provide much valuable experience in their use.

September 2008; revised January 2009


[1]  The UK Parliamentary Office of Science & Technology has produced a briefing note which explains the technical issues in detail: http://www.parliament.uk/documents/upload/postpn293.pdf

[2]  Figures from Commission press release, 07.11.01.

[3]  COM 2003/30/EC.

[6]  Biofuels Provision in the Renewable Energy Directive – A Summary, Institute for European Environmental Policy, February 2008, p.2.

[8]  Speech referred to above.

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