Starting on the wrong foot
The debate on biofuels took off in 2003 when the EU, via its Biofuels Directive, adopted a non binding target for Member States to use 5.75% of renewable energy in transport by 2010. The rush for biofuels started on the assumption that they would cut CO2 emissions from cars, trucks and planes, create new markets for farmers, and reduce our dependence on foreign oil imports.
Some environmentalists and scientists tried to raise awareness and expressed their concerns about the climate and environmental impacts of biofuels but the policy push for biofuels was already underway.
In 2009, the EU adopted the Renewable Energy Directive (RED) which requires each Member State to fuel their transport sector with 10% of renewable energy by 2020. At the same time, the EU Fuel Quality Directive (FQD) requires the carbon intensity of fuels to be reduced by 6% by 2020 – compared to 2010. These two laws actually turned out to be the main drivers for food-based biofuels in Europe. But neither of these laws, the RED and the FQD, took into account CO2 emissions coming from changes in the use of land, a major loophole in the policy.
In an analysis published in 2009, Transport & Environment, Birdlife and other environmental NGOs warned “When agricultural land is converted for biofuels, more land for food is needed elsewhere. This can lead to deforestation and consequently a huge release of carbon. (…) When all the impacts are accounted for, biofuels (…) can be as bad, or even more harmful than conventional oil.” NGOs called for a full carbon accounting of biofuels’ carbon footprint and a more efficient use of scarce resources such as agricultural land.
In 2011 more than 200 scientists from around the world echoed the concerns of civil society organizations and co-signed a letter urging the EU to take into account the emissions caused by the production of biofuels: “Without addressing land use change, the European Union’s target for renewable energy in transport may fail to deliver genuine carbon savings… It could end up as merely an exercise on paper that promotes widespread deforestation and higher food prices.”
But their warnings were not heard.
WHEN PUBLIC MONEY COMES INTO PLAY
To reach these targets, the European Union allowed the use of subsidies, tax incentives and mandates for biofuels and, by doing so, created a new big market for these fuels. Investors jumped at the opportunity. A multi-billion dollar industry was born. In Europe alone, Reuters estimated the biofuels market to be worth €17 billion in 2011.
The different fiscal and policy mechanisms to create this market costed EU citizens €6 billion in the year 2011. There were no environmental benefits in return for their investment, as the current policy for 2020 is expected to increase emissions, due to indirect effects. Since then, the EU has limited the use of tax exemptions and direct subsidies to food-based biofuels but they are still supported through mandates, i.e. obligations to fuel suppliers to add biofuels to the fuel mix.
THE NUMBER GAME PLAYED BY THE BIOFUELS INDUSTRY
To protect and develop its profitable market, the biofuel industry doesn’t mind distorting the truth. For example, the lobby group European Biodiesel Board (EBB) recently stated: “Our [biodiesel] industry was born from a political ambition that is still ready to serve: develop an EU-made green fuel to improve EU energy security, progress towards a low carbon economy and strengthen the independence and revenue of European farmers.”. Food-based biodiesel – which makes up 80% of the biofuels market – will be, on average, 80% worse for the climate in 2020 than the fossil diesel it replaces. Its use actually takes us away from a low-carbon economy.
European biodiesel consumed in the EU is quite heavily sourced from imported feedstocks (around 40% in 2014) and more and more reliant on palm oil. The share of palm oil used in biodiesel in the EU has seen a six-fold increase in the past years. In 2010, 8% of all palm oil imports in the EU was used for biodiesel. The share was 45% in 2014. In 2015, 46% of all the palm oil imported ended up in Europe’s cars and trucks, making drivers the top (albeit unaware) consumers of palm oil in Europe. Currently, almost one third of biodiesel is made out of palm oil (32% of biodiesel in 2015). This doesn’t improve the EU energy security or bring jobs to the EU farming sector.
Finally, the biofuels industry claims that there would be 220,000 jobs at risk if the biofuels targets are revised downwards. But a more honest evaluation of the number of jobs created in biofuels plants placed the number at around 4,000 in 2011. A recent JRC briefing on the EU bioeconomy estimates the number of jobs in the biofuels industry at around 12,000 in 2015.
When it comes to farmers, there might be some loss of revenues for the sector, as the biofuels policy has pushed some of the feedstocks’ prices upwards. But several studies have shown that farmers will be able to adapt to a decreased demand for crop biofuels. This is because biofuel crops are food crops and “it is possible for farmers to revert to food crops or other cash crops should demand for biofuels be reduced”. More recently, the EU agricultural outlook looked at the impact of different phase-out scenarios for crop biofuels after 2021. It concludes, for example, that a decreased consumption of rapeseed for biofuels would be partly compensated by an increased use for food and by increased exports.
A move to cleaner fuels, such as a transition to sustainable advanced biofuels and a sustainable electrification of the transport sector, would lead to the creation of new jobs. Research conducted by the International Council on Clean Transportation suggests that tens of thousands of permanent jobs and construction jobs could potentially be supported via a shift toward biofuels from waste and residues in the EU.
A VICIOUS CIRCLE DIFFICULT TO STOP
In October 2012, the European Commission released a proposal to reform the EU biofuels policy and tackle the issue of indirect land-use change. It proposed to cap at 5% the amount of food-based biofuels that can be counted towards the 10% target in 2020.
In September 2013 the European Parliament voted to strengthen this Commission proposal by including numerous safeguards, including the introduction of mandatory accounting of ILUC emissions into the FQD from 2020. The Parliament was extremely polarised on the issue. In the end, Corinne Lepage, the MEP responsible for the file at the time, did not get the mandate needed to open negotiations with the European Council. Following the vote, she tweeted: “The European People’s Party and the far right have defended the first generation biofuels lobby well… Seven billion euros per year subsidy!” The Council, for its part, significantly weakened the Commission proposal by increasing the 5% cap on biofuels produced from food crops to 7%,
After long political negotiations, the discussions between the Council and the Parliament led to the adoption of a final Directive in September 2015. The adopted text limits at 7% the amount of food-based biofuels that can be counted towards the 10% target for renewables in transport and requires the reporting – but not accounting – of ILUC factors.
In April 2017, the European Parliament urged the European Commission to phase out the use of vegetable oils that drive deforestation for biofuels, preferably by 2020. Groups across the political spectrum supported the resolution calling for an end to incentives for biofuels that cause deforestation and peatland drainage, such as palm oil, soy and rapeseed. The resolution was adopted by a large majority and sends a clear signal that the parliament wants a quick phase-out of crop-based biodiesel in the proposed new Renewable Energy Directive (RED).
The EU now needs to follow this resolution and stop all incentives that artificially create demand for vegetable oils in the transport sector. Any solution that involves only banning palm oil ignores the fact that it will simply be replaced by rapeseed or soy, which also have high ILUC emissions associated. This is because vegetable oils can be substitutes, for most uses, meaning that a ban of palm oil in biodiesel can lead to rapeseed plugging the gap in the biodiesel market and palm oil replacing rapeseed previous uses.