Up to 7% of carbon emissions in the ETS escape through loophole

Between 90 and 150 million tonnes of CO₂ resulting from burning biomass with no climate safeguards are ‘labelled’ carbon neutral in Europe and thus do not require carbon permits under the EU emissions trading system (ETS), according to a new study published today. This represents up to 7% of all emissions in the ETS on an annual basis or three times the CO₂ emissions released in Portugal in 2012 ^[1].

Biomass’ zero emissions rating in EU legislation is based on the assumption that its CO₂ emissions have been saved in the growth phase. But science has shown that these emission reductions are not always achieved and the time delay (so-called carbon debt) from the release of CO₂ by burning to its recapturing by plant growth can be from zero to 500 years.

Land-based biomass can also bring about the same ‘indirect land-use change’ (ILUC) that the EU is struggling to address under the reform of the biofuels policy. There are currently no sustainability criteria for biomass in the EU renewable energy legislation.

There is also little information on where the biomass comes from. 98% of pellets from the growing US wood-pellet industry go to Europe, despite the National Resources Defence Council (NRDC)^[2] warning that large-scale clear cutting, old-growth logging and wetland logging is widespread and unregulated in the US. Biomass consumption is projected to increase by 40% by 2020, according to the Commission, and at least 15% will have to be imported, weakening Europe’s energy independence.

Carlos Calvo Ambel, energy policy analyst at T&E, said: “Giving biomass a zero-rating in the ETS is like signing a blank cheque – you never know what you are going to get. The absence of sustainability criteria and full carbon accounting for biomass frequently leads to more carbon emissions. In the case of American wood pellets exported to the EU, it is clear there is a problem in the US and Europe is responsible for it.”

The study by Transport and Environment (T&E), European Environmental Bureau (EEB) and BirdLife Europe also shows that the cost to EU governments is €630m-€1bn a year in foregone revenue from the ETS, because the industry does not have to surrender allowances for burning biomass.

Reassessing the zero-rating would allow the EU ETS to better reflect the net effect of the production and use of biomass, with only real emissions savings being allowed to count for zero in the ETS. It would also help to both get rid of perverse incentives that could lead to increases in greenhouse gas emissions and solve the existing surplus of allowances in the system.

Organisations T&E, BirdLife and EEB also call for sustainability safeguards for all bioenergy use. In its Energy Union communication, the Commission announced that it would propose a bioenergy sustainability policy, as part of the renewable energy package for 2030.

Sini Eräjää, EU bioenergy policy officer from BirdLife Europe and EEB added: “By closing this loophole, the EU can remove perverse incentives for biomass which emit more carbon than they save and actually help mop up the emissions glut in the EU ETS.”

^[1] European Environmental Agency GHG viewer. http://www.eea.europa.eu/data-and-maps/data/data-viewers/greenhouse-gases-viewer
^[2] NRDC, 2014. The Truth About the Biomass Industry: How Wood Pellet Exports Pollute Our Climate and Damage Our Forests. NRDC fact sheet. http://www.nrdc.org/energy/files/wood-pellet-biomass-pollution-FS.pdf