Biofuels in the EU are deeply intertwined with global food and feed markets. As the EU discusses its future biofuels policy, their contribution to the bloc\u2019s animal feed supply and impact on food prices have emerged as major battlegrounds between supporters and critics.<\/p>\n
In its proposal for the recast of the Renewable Energy Directive for 2021-2030 (RED II), the European Commission called for a reduction of the cap on first-generation biofuels, made from food crops, used in the transport sector from 7% in 2020 to 3.8% in 2030. The proposal is currently being debated in the European Parliament\u2019s committees ahead of a final vote in January 2018.<\/p>\n
The proposal is currently being debated in the European Parliament\u2019s committees ahead of a final vote in January 2018.<\/p>\n
Critics of EU biofuels policy have welcomed the move, saying it will reduce pressure on food prices. Farmers and biofuel producers, on the other hand, argue that biofuels have had very little impact on prices, while providing farmers with an income outside the subsidised CAP framework and boosting Europe\u2019s autonomy in animal feed.<\/p>\n
One thing is for sure: a biofuels phase-out will have far-reaching consequences for farmers and global agricultural markets.<\/p>\n
Cutting feed imports<\/p>\n
By-products from biodiesel and bioethanol crops generate some 17 million tonnes of feed for EU livestock every year.<\/p>\n
Biofuel debate a political hot potato as EU renewable energy law nears home straight<\/p>\n
Talks over how to decarbonise the EU\u2019s transport fleet are heating up. As policymakers prepare the bloc\u2019s renewable energy targets for 2030, part of the debate has crystallised around the role of biofuels. And farmers are getting increasingly vocal.<\/p>\n
According to the association of EU farmers and agri-cooperatives Copa-Cogeca, EU support for first-generation biofuels under the 2009 Renewable Energy Directive (RED I) has cut the bloc\u2019s dependence on imports of animal feed proteins by 10%.<\/p>\n
\u201cFirst generation biofuels produced from arable crops grown in the EU replace four to five million hectares of soya that would otherwise be imported from third countries, mainly in South America,\u201d Copa-Cogeca stated in a recent report. Around 4.4 million hectares of arable land in the EU and 3.5 million hectares outside the EU are used to grow the bloc\u2019s biofuel feedstock.<\/p>\n
For Marijana Petir, a Croatian MEP (EPP group) and member of the European Parliament\u2019s agriculture committee, this should be a powerful argument against phasing out first-generation biofuels. Not only would this leave farmers more dependent on imports, she told EURACTIV.com, but \u201cin contrast to the feed produced by the EU biofuel industry those imports will be based on genetically modified (GMO) material\u201d.<\/p>\n
What is more, \u201ccutting feed imports to the EU also helps to reduce the ILUC impact [of animal feed] in third countries\u201d.<\/p>\n
But a recent report by Cerulogy, which compared more than 100 economic modelling studies on the effect of biofuels on food markets, found that while they made a \u201cnot negligible contribution\u201d to meeting the demands of the EU livestock industry, they did not fundamentally alter the EU\u2019s dependence on imports.<\/p>\n
Europe\u2019s farmers still import around 70% of the plant protein they need to feed their livestock. The majority of imports come from South America, costing \u20ac12bn per year.<\/p>\n
And the cut in imports has not necessarily driven down feed prices in Europe. A recent European Commission report also found that biofuel demand had actually increased prices for oilseed-based animal feeds.<\/p>\n
Broad consensus on food price increases<\/p>\n
Biofuels producers and supporters argue that the industry has had a very limited impact on EU food and feed prices.<\/p>\n
\u201cThe increase in food prices is nothing more than a myth,\u201d said Petir. \u201cThis myth has been comprehensively dismissed: the OECD, the World Bank and the UN FAO all accept that the driver of food prices was a spike in oil prices.\u201d<\/p>\n
A sticky matter: Sugar molasses dent EU’s ambitions on advanced biofuels<\/p>\n
Sugar molasses, which the European Commission sees as \u201cadvanced\u201d biofuel, present many of the same problems as conventional biofuels \u2013 including a potential increase in food prices and land competition for food production. But their definition as biofuels keeps the sugar industry happy, EURACTIV.com has learned.<\/p>\n
What is more, ePure, the European renewable ethanol association, argues that EU-grown biofuels even have the power to iron out these fluctuations by cutting the bloc\u2019s dependence on fossil fuel imports.<\/p>\n
\u201cOver 60% of food price increases are caused by crude oil prices, not the production of biofuels. By displacing fossil fuels, biofuels can mitigate the effect of crude oil on food prices,\u201d ePure stated in a 2017 factsheet.<\/p>\n
But the Cerulogy report found a wide consensus that increasing biofuel demand had indeed resulted in increased food prices.<\/p>\n
\u201cClaims by biofuel advocates that this is a \u2018myth\u2019 stand in wilful contradiction of this evidence base, and are often supported by a variety of disingenuous claims and half-truths,\u201d the report stated.<\/p>\n
And crucially, \u201creturning [protein-rich by-products] to livestock feed markets is not enough to eliminate any negative impacts on food prices\u201d.<\/p>\n
Copa-Cogeca estimates that biodiesel has had a 4% price effect on global food oil crops and bioethanol, a less marked effect of 1-2%.<\/p>\n
Cerulogy predicts a 0.6% higher global cereal prices and 8% higher global vegetable oil prices if the 7% crop-biofuel is kept, compared to phasing them out. This, the report\u2019s authors say, means that a decision to keep the 7% cap on biofuels in transport for 2021-2030 would cost consumers and other users of oils and biofuel feedstocks $19bn by 2030.<\/p>\n
Broader market disturbances<\/p>\n
But the industry argues that the economic impact of the biofuels phase-out will reach far beyond food and feed prices and could create broader market disturbances.<\/p>\n
\u201cStable agricultural markets lead to increased investments and increased productivity, which is beneficial for food as well as biofuels,\u201d the Copa-Cogeca study stated. \u201cConventional biofuels are not automatically synonymous with market conflicts.\u201d<\/p>\n
And simply finding new markets for the newly generated surplus is not a viable option, according to the industry.<\/p>\n
\u201cThere is no alternative outlet in the EU to absorb 6.4 million tonnes of rapeseed oil. Neither is it realistic to consider that this volume will replace imported tropical oils,\u201d Nathalie Lecocq, the director-general of Fediol, the organisation representing the EU vegetable oil and protein meal industry, told EURACTIV.<\/p>\n
Visegrad and Balkans hit out at Commission over biofuels phase-out proposal<\/p>\n
The Visegrad and three Balkan countries signed a joint declaration urging the European Commission to reconsider its proposal to gradually phase-out the first generation biofuels after 2020 and think about the consequences.<\/p>\n
\u201cExporting such volume to the world market would not be possible either, without a considerable cut on prices,\u201d she added. This view was supported by Copa-Cogeca Secretary-General Pekka Pesonen, who warned that a phase-out of biodiesel in the EU would cost farmers \u20ac300 per hectare.<\/p>\n
\u201cNo alternative\u201d<\/p>\n
What is more, the Fediol secretary-general said that if oilseed producers, who provide the raw materials for biodiesel, were to switch to other crops, such as wheat, it would \u201cdrive crop prices down across the board, reducing farmers profitability\u201d.<\/p>\n
Cereal prices have already fallen 40% in three years due to record global production. Converting the EU\u2019s rapeseed fields to wheat would increase EU production by 15% and further undermine prices.<\/p>\n
\u201cIn short, there are no economically viable alternatives to rapeseed production,\u201d Lecocq said.<\/p>\n
For ePure, the European renewable ethanol association, this is an argument in favour of increasing the cap for bioethanol in EU transport. The association says the fuel ethanol industry currently uses only 2% of EU grain production, so does not compete for resources with food or feed markets.<\/p>\n
The Copa-Cogeca report supports this view, saying that these cereals would otherwise have been put in storage as supply far outstripped demand.<\/p>\n
A European Commission spokesperson defended the EU executive\u2019s decision to cut the cap on biofuels in transport from 7% to 3.8%, saying \u201ctheir contribution towards reducing GHG emissions is considered to be limited\u201d.<\/p>\n
What is more, \u201cthis will further reduce the pressure markets for food and feed,\u201d the spokesperson said.<<\/p>\n","protected":false},"excerpt":{"rendered":"
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