Biofuels in the balance as EU fails to conclude carbon impacts

Officials cannot agree on impact of indirect land use change rules, which could wipe out biodiesel in Europe

Biofuel producers have been “left in limbo” by EU policymakers’ failure to agree on how to measure the industry’s environmental impact at a meeting in Brussels yesterday.

Officials were attempting to thrash out a method of accounting for indirect land use change (ILUC), which occurs when areas are cleared to grow crops for energy. Green groups claim this has the potential to raise emissions and push up food prices, negating the emissions savings that should result from switching from fossil fuels to biofuels.

The European Commission was expected to produce guidelines this summer delineating those biofuels that are thought to be more emission heavy, such as biodiesel, from fuels like ethanol.

But the negotiations have reportedly become bogged down with outbreaks of in-fighting between the Climate Commission, which wants ILUC to be considered in the new rules, and the Energy Department, which does not.

A decision is now expected by the end of the year, but the wait leaves producers uncertain as to the future of their industry. Europe’s €13bn biofuel industry is heavily dependent on biodiesel made from palm, soy, and rapeseed feedstocks, which ILUC factors could almost totally rule out in the long term.

However, restricting the use of biodesel would make it very hard for the EU to hit its target of achieving a 10 per cent share of green energy in road transport by 2020, most of which is expected to come from biofuels. A related fuel directive also requires oil companies to cut the carbon content of their fuels by six per cent by the end of the decade, which is also likely to mean an increase in blending biofuel with standard fuel.

The Commission is debating three options: the first would see all biofuels forced to save 60 per cent of emissions compared with standard fuel from 2016, a rise on the current 35 per cent requirement. While this is likely to rule out some biofuels made from palm and soy, rapeseed could still make the cut, despite some estimates that rate it as causing greater net emissions than crude oil.

The second option is backed by environmentalists and would introduce ILUC factors for individual crops, along with incentives for second generation biofuels, which are made from agricultural residues, waste, or algae and are considered significantly less carbon intensive.

However, the most likely solution remains a compromise proposal combining elements of the two rival approaches.

Clare Wenner, head of renewable transport at the Renewable Energy Association (REA), told BusinessGreen the Commission had to finalise its decision urgently so the industry could get on with the business of decarbonising the transport sector.

“We need some kind of a decision,” she said. “Every option has merits and demerits but we need to make a decision and help industry move on.
“The bigger picture here is decarbonising transport. If you make the best the enemy of the good, people won’t do anything.”

However, Kenneth Richter, biofuels campaigner at Friends of the Earth, argued that if the renewable transport targets could not be achieved sustainably, they must be revoked.

“We’re disappointed there’s no progress,” he told BusinessGreen. “Every year there is no decision biofuels continue to be incentivised when the majority, particularly biodiesel, don’t save emissions but potentially increase them more than fossil fuels.

“It’s encouraging there seems to be an understanding that addressing ILUC is essential – the fight seems to be over how to do it. We’ve argued the transport targets [as they stand] cannot be met sustainably [and] need to be urgently reviewed.”




European Commission
Renewable Energy Association