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Europe Backtracks on Biofuels

New EU proposals to tackle rising concern over the environmental impacts of biofuels are not as harsh as the sector had feared – but neither the industry nor its critics have welcomed the compromise.

In September 2012, a leaked proposal from the European Commission (EC) left Europe’s biofuel producers braced for a double blow: new indirect use of land (ILUC) measures along with a cut in the 10% target for biofuels in European transport by 2020.

But in October the EC pulled back from this hardline position. A new cap will indeed be set for biofuel from food crops. But ILUC factors will be introduced only for reporting purposes – and not, as the industry feared, as part of sustainability accounting.

A Shift in Biofuel’s Image

Scientific consensus has shifted since 2008, when the 10% target was set for biofuels. Two key areas have put the sector’s environmental image under question. For anti-poverty campaigners, the use of crops for fuel has contributed to an upward spiral in food prices, threatening vulnerable populations. But the sector is equally under threat from reports by some scientists that biofuels can release more carbon emissions than crude oil.

These new calculations of biofuels’ environmental impact feature estimates of carbon emissions through changes in land use. Until now, Europe has measured emissions purely from the fuels themselves. But it now faces demands to take into account the carbon that would have been captured by the biomass the fuel crops displace. By factoring in this effect, European Commission (EC) figures suggest fuels from palm oil, soya bean and rapeseed emit more carbon than crude oil. And the October proposal reflected both food and emission concerns by setting a 5% cap for biofuel from food crops by 2020.

In theory, the remaining 5% of consumption would now be met by second- and third-generation biofuels from feedstocks such as algae, straw and various types of waste. Yet even the Commissioners seemed sceptical that these nascent technologies can plug the gap.

‘Our analysis is that it’s still possible to achieve the 10% target, but if you were to ask me whether this proposal will make it easier, I would answer “no”,’ Climate Commissioner, Connie Hedegaard, told Reuters.

The Industry Responds

Reactions to the proposal from European biofuel organisations have also been withering. Liza Priester, communications manager at bioethanol industry body ePURE, told REW that the Commission’s policy shift would undermine investment across the industry.

‘Only three or four years ago, we got a green light for billion-euro investments,’ she said. ‘The whole industry flourished as a result of the EC’s policy. To have a complete U-turn is unacceptable.’

In Priester’s view, second- and third-generation fuels would become the unintended victims of the new policy, as investors in the new technologies are the same firms that are now to be stung by the Commission’s new 5% cap.

‘France, Germany and Sweden have already exceeded the 5% limit. Other countries are very close but are not yet at full capacity,’ she said. She forecast that distilleries already constructed to meet the original 10% target, but not yet operating at full capacity, would now be scaled back.

Biodiesel vs Bioethanol

The prospective legislative changes have been seen as favourable for biodiesel. If the biofuel market had remained unchanged, bioethanol had been poised to expand its current 20% share of the market.

‘If you know the fuels market, we in Europe are hugely short on diesel, and oil companies want to fill the gap with biodiesel as much as possible,’ Rob Vierhout, secretary general of ePURE, told Reuters. ‘So there is a real chance that this 5% will be filled with biodiesel only, which is good for my colleagues in the biodiesel sector, but bad for us.’

Yet Isabelle Maurizi, a project manager at biodiesel trade association the European Biodiesel Board (EBB), echoed Priester’s attack on the proposals, which she described as ‘dramatically counter-productive’ and ‘a slap in the face for the entire industry’.

In her view, the policy is not only disastrous for European biofuels but also based on ‘false science’. ‘The IFPRI [International Food Policy Institute] study on which ILUC calculations are based didn’t take into account the co-products, which are used for animal feed. Results from the US show that biofuel is performing far better than other fuels,’ she said.

Maurizi shares Priester’s view that the ‘complete U-turn from what was said in 2009’ would fail in its apparent intention of promoting advanced biofuels. ‘If you kill the first generation, then there will be no money to invest in the next generation,’ she said.

The Route to Law

Both ePURE and EBB are eager to contribute to amending the proposed new policy to protect their sector. ‘The document is still being reviewed. We have a lot of the facts working for us,’ said Priester.

Yet the EC, by watering down original proposals to introduce ILUC measures, is already receiving flak from poverty campaigners and environmental activists.

Tracy Carty, a policy advisor for Oxfam, told reporters that the EC has ‘clearly caved in to the biofuels industry’. And campaign group Transport & Environment told Reuters that the proposals were a missed opportunity. ‘While the EC proposal limits today’s bad practices, it does not fundamentally steer future bioenergy in a sustainable direction, because it still does not account for ILUC emissions from biofuels,’ said programme manager Nusa Urbancic.

The EU’s legislative process opens opportunities for both the industry and campaigners to push for changes. The new cap for biofuel from food crops may take two years to become law. In the meantime, though, investment in European biofuels is unlikely to remain unscathed.

‘I don’t know what the Commission is thinking,’ said ePURE’s Vierhout. ‘What will happen is that people will walk away from Europe and invest their money somewhere else, because there is no future for the biofuel industry in Europe any more.’

 

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