A climate policy that doesn’t reduce but increases emissions
In order to produce crop biofuels, we need to grow plants, and to grow plants we need agricultural land. Arable land is a limited resource, so crop biofuels compete with food for land.
BIOFUELS CREATE INDIRECT LAND-USE CHANGE EMISSIONS (ILUC)
EU biofuel mandates have created extra demand for crops, increasing the overall demand for farmland. When existing agricultural land is used to make biofuels, agricultural production has to expand elsewhere to meet the world’s growing demand for food and animal feed. This pressure for new land leads to deforestation, peatland drainage and conversion of grasslands for farming. The associated change of land use causes a substantial increase in CO2 emissions, a phenomenon known as indirect land-use change (ILUC).It doesn’t matter whether the new crop production is actually diverted to biofuel blending, or whether it just fills the gap created in the food market. From a climate perspective, the most relevant question is the CO2 emissions that are caused by this land use change. Because different biofuels are expected to have different impacts on land use, it is vital to work out which crops have expanded to meet additional biofuels demand in order to quantify the associated ILUC emissions.
The higher the demand for crop biofuels resulting from European climate policy, the more plantation area that will be required, and the more stored carbon that will be lost, as agricultural land overtakes carbon-rich areas such as rainforests.
MOST FOOD-BASED BIOFUELS LEAD TO DEFORESTATION IN ONE WAY OR ANOTHER
Food-based biodiesel is the most consumed biofuel in Europe today. EU biodiesel is mainly made from vegetable oils such as rapeseed, soy and palm oil. In the past decade (2005-2016) when climate policies to promote biofuels were enacted (namely the 2003 EU Biofuel Directive and the 2009 Renewable Energy Directive), consumption of vegetable oils in Europe increased by 31%.
According to European Commission data, this significant growth has been primarily fuelled by the biofuels sector. In 2005, vegetable oils for bioenergy use (mainly biofuels) accounted for 16% of total consumption. By 2016 it had increased 3.5 times, accounting for nearly half of all vegetable oil consumption (44%). This growth has been met with more domestic production (34% increase over 2005-16) as well as a rise in imports (31%). Palm oil imports, especially from Southeast Asia, grew dramatically in the same period.
Prices of rapeseed oil, soy oil and palm oil are closely correlated. In some markets they are substitutes, and hence connected economically. Therefore, vegetable oils from different oilseeds are essentially exchangeable. In other words, palm oil does replace rapeseed oil for some uses, and vice versa.
In a study published in 2013 by the ICCT, the independent research organisation concluded that: “Data from FAOstat show convincingly that since 2000, increasing rapeseed biodiesel demand has been met not only by increased rapeseed production and area but also by increased palm oil imports. Expansion in European vegetable oil production has been inadequate to meet biodiesel demand on its own, and palm oil imports have risen dramatically in the same period that biodiesel mandates have been introduced and ramped up.”
Figures from Europe’s vegetable oils association Fediol corroborated this trend for the period after 2010. It shows that all the growth (34%) in EU biodiesel since 2010 comes from imported palm oil. Palm oil used for non-energy purposes (for instance, food, animal feed, cosmetics and soap) actually declined by one-third between 2010 and 2014. In 2014, 60% of Europe’s total palm oil consumption went into transport, electricity generation and heating.
Europe’s palm oil consumption in 2015
Furthermore, 2015 data from OILWORLD, industry’s reference for vegetable oils market analysis, indicates that EU biodiesel is now the main end product of imported palm oil, reaching an all-time-high share of 46%. This makes drivers the top (albeit unaware) consumers of palm oil in Europe.
In his latest report, Chris Malins, former ICCT top fuels researcher currently at Cerulogy, supports the global link between biodiesel rise and palm oil expansion with conclusive data: “In 2014, global biodiesel consumption was around 30 billion litres. The 28 million tonnes of vegetable oil required to produce this biodiesel is comparable to the 31 million tonne global growth in palm oil production from 2003 to 2014.”
It is now widely acknowledged that palm oil production is one of the key drivers of rainforests destruction and peatland drainage in Southeast Asia and increasingly in South America – soy being the other oil crop directly associated with deforestation.
Rainforests and palm oil: competition for land?
According to FAO data, global palm oil harvested area increased between 1990 and 2008 by 8.7 Mha. Of this expansion, 5.5 Mha were associated with deforestation concentrated in Indonesia (57%) and Malaysia (25%).
Malins estimates the climate impact of deforestation-driven palm oil biodiesel to substitute fossil diesel. “Assuming 40 tonnes carbon storage per hectare in a mature palm plantation, it would take over 70 years of fossil diesel replacement to pay back the carbon debt from deforestation, even for a palm oil plantation with methane capture. Without methane capture, this would rise to over 110 years.”
In the case of peat drainage, the climate impact is even worse because tropical peatland forests are one of the most efficient and important carbon stores and sinks in the world.
Palm oil deforestation is also linked to wildfires and the associated worst haze episodes experienced in Southeast Asian cities in recent years. Forest fires massively pollute the air. Each year around 110,000 deaths in the region are linked to particulate matter exposure attributed to wildfires.
But palm oil biodiesel is not the only biodiesel that increases emissions compared to fossil diesel. Biodiesel from other oil crops such as soy, rapeseed and sunflower do have a higher climate impact due to ILUC emissions.
As Chris Malins summarises it: “It is important to understand that because the global vegetable oil market is linked, increase in demand for other vegetable oils causes an indirect increase in palm oil demand, and hence deforestation and peat drainage in Southeast Asia also contribute to the calculated land-use change emissions for the other oils. It is equally important though to understand that land-use change emissions occur in many regions, and that tropical deforestation is not the only source. Even if one were to ignore the connection to the palm oil market, the analyses using MIRAGE and GLOBIOM would still attribute relatively high indirect land-use change emissions to soy, rapeseed and sunflower oil.”
CURE WORSE THAN THE DISEASE
Two main modelling exercises have been conducted for the European Commission to quantify the ILUC impacts of EU biofuels policy. The first one has been conducted by the International Food and Policy Research Institute (IFPRI) in 2011 and the most recent one, known as Globiom, has been published in early 2016 by a consortium of consultants. Both studies are based on projections of an increased demand for biofuels. They both conclude that ILUC emissions are significant. The current EU biofuels policy doesn’t take into account land emissions when calculating the total greenhouse gas savings of biofuels.
Transport & Environment’s analysis based on the Globiom study for the European Commission shows that, on average, biodiesel from virgin vegetable oil will lead to around 80% higher emissions than the fossil diesel it replaces by 2020. T&E’s analysis adds the direct emissions of biofuels production (for example, from tractors, fertilisers, and the transportation) and the projected indirect emissions from land-use change – these are then compared to the emissions from fossil fuels.
Soy and palm oil biodiesel are, on average, two and three times worse for the climate than regular diesel, respectively (see light blue bars in the chart below). But even European rapeseed biodiesel, when ILUC emissions are accounted for, produces 20% more emissions than regular diesel. From the image below, we see that no matter which ILUC modelling result is used (Globiom or IFPRI) the emissions for vegetable oil biodiesel are higher than fossil diesel.
Direct emissions plus land emissions
Source: RED II, ILUC directive, Globiom, IFPRI
The failure to differentiate biofuels based on greenhouse gas (GHG) impacts from the beginning has led to the market being dominated by vegetable oil biodiesel and ethanol playing a much smaller role.
The European Commision is supporting advanced biofuels with GHG savings of at least 70% in the Renewable Energy Directive II (RED II) proposal after 2021. Food-based ethanol does not meet this threshold when both average direct and indirect emissions are accounted for. While these biofuels bring some GHG savings, their ILUC emissions are not taken into account in the current policy. One should also consider other impacts and the scalability of this decarbonisation option as it is land intensive. The Commission REDII proposal says member states can still count a 3.8% share of food-based biofuels (both biodiesel and ethanol) towards their renewable energy targets for 2030.
Policy support should shift to more sustainable alternatives such as sustainable advanced biofuels and renewable electricity. This is why policy support for food-based ethanol should be phased out by 2030, and a quicker phase-out of support to food-based biodiesel needs to happen.
To recap, the EU biofuels policy was meant to reduce climate-change emissions from transport. Not only is it failing to do so; it’s actually set to increase Europe’s overall transport emissions by 1.4% in 2020. This analysis includes the 7% cap on food-based biofuels in 2020.
To put it simply, the cure (current biodiesel) is worse than the disease (diesel).
EU SUSTAINABILITY CRITERIA ARE INEFFECTIVE
EU sustainability criteria proscribes crops specifically sourced on drained or deforested land after January 2008 from being used to produce biofuels for the European market (earlier land clearances are therefore implicitly ‘allowed’). Therefore, biofuel producers for the EU market use existing agricultural land to source their crops. By doing so, they force global food producers to find new land elsewhere or plant their crops in recently deforested areas.
These sustainability requirements are ineffective in preventing biofuel-led deforestation. The European Court of Auditors, the independent body in charge of scrutinising EU public spending, has said the EU’s certification system for the sustainability of biofuels is ‘not fully reliable’ because it ignores ILUC emissions, among other flaws. And it isn’t hard to see why: for instance, Indonesian palm producers can cherry pick palm oil from long-established plantations for the EU biodiesel supply and send palm oil from newly deforested land to Europe for use in food or cosmetics. This certification scheme is inherently prone to ‘leakage’.
Besides damaging precious tropical ecosystems, Europe’s demand for biofuels also impacts food prices and causes land grabbing in developing countries.
Interested in the environmental impact of biofuels?
Sign up to receive our articles, publications and reports on the topic.
EU’s thirst for biofuels make food unaffordable for the world’s poorest
Human population growth, richer diets with a higher share of animal products in emerging economies and sustained economic growth around the world will result in a 70% ‘food gap’ between crop calories available in 2006 and those needed in 2050 (FAO 2011). Without improving crop yields significantly, that 70% increase in food production would require over 34 million km2 of new cropland, an area larger than Africa. But the current trends of yield improvements until 2050 will not suffice to meet the global rising demand for food without further expansion of farmland.
Crop-based biofuels compete with food for land, adding extra pressure on such scarce resource and leading to the conversion of carbon and biodiversity-rich ecosystems into farms. Tim Searchinger of the World Resources Institute estimates that “if crop-based biofuels were phased out by 2050, the food gap would shrink to 60 percent. But more ambitious biofuel targets – currently being pursued by large economies – could increase the gap to about 90 percent.”
Crop-based biofuels also impact negatively food prices. Following the 2008 food crisis, several international organizations, including the World Bank, the World Food Programme and the UN FAO have warned against supporting biofuels that put pressure on food prices. A literature review of over one hundred economic modelling studies and over two dozens assessments of the role biofuel demand played in the 2006-2008 ‘food price crisis’ revealed that crop-based biofuel policies do lead to an increase in food-prices. This study, realised by Cerulogy and commissioned by Transport & Environment and BirdLife Europe, concluded that EU biodiesel policies played a significant role in increased vegetable oil prices.
This impact on food prices is worsened by the fact that biofuels mandates are not flexible, meaning that they don’t react to market developments. For example, when food production is lower due to adverse weather conditions such as droughts, floods or hail, biofuels demand remains the same. Food becomes more scarce, and therefore more expensive. By contributing to reducing food stocks, biofuel mandates therefore increase the volatility of food prices. As a result, the use of food-based biofuels has contributed to higher average food prices, and will continue to do so until as long as food-based biofuels are used.
In its Renewable Energy Progress reports (2013 and 2015), the European Commission recognises the direct correlation between biofuels policies and food prices. In its 2013 edition, the Commission analysis estimates that grain use for bioethanol production had a price effect of 1%-2% on the global cereals market. But if the share of bioethanol increases, so will its impact on the price of ethanol feedstocks such as wheat and maize. Regarding EU biodiesel, which is greater in volume than ethanol in the EU, the Commission estimates that the price effect on food oil crops (rapeseed, soybean, palm oil) for 2008 and 2010 was 4%.
According to Cerulogy, if the crop-based biofuel demand for transport were maintained at 7% to 2030, global prices could result 8% higher for vegetable oils and 0.6% higher for cereals, compared to a situation where crop-based biofuels were fully phased-out. Reducing the demand to 3.8%, as proposed by the European Commission for the recast of the Renewable Energy Directive to 2030, would approximately halve the policy-driven price impact.
According to the ICCT: “while the extent to which biofuels may be a driver of price spikes and volatility is controversial, there is wide consensus, (…), that biofuels do increase price volatility and that increased food prices will be a medium-term consequence of biofuel mandates.”
The production of biofuels fuels violent conflicts
With the explosion of the biofuels market, big multinational companies are purchasing large tracts of land in developing countries to grow crops for fuel. These acquisitions often take place at the expense of small farmers and local communities that are forced, sometimes violently, to leave their homes and land. This process, called land grabbing, often happens under very questionable political and legal deals. But since it mainly targets areas of the world where tensions over food prices are high and land conflict already exists, it’s very difficult to stop it.
This is a situation also denounced by a European Commission-funded report. The 2013 report on Assessing the impact of biofuels production on developing countries from the point of view of Policy Coherence for Development concludes:
“Energy markets are a significant driver in the overall trend of large scale land acquisition. A clear link can be established between the EU bioenergy policy and the strong interest of European companies to acquire agricultural land in developing countries, especially in Africa. This also entails that the development of conventional biofuel production has an impact on access to natural resources, such as land and water and often leads to an increase in land concentration to the detriment of smallholder farming practices.”
In 2012, Rahmawati Retno Winarni, the director of Indonesia’s Sawit Watch (Palm Oil watch) estimated 660 land conflicts were raging over biofuels cultivation in Indonesia. “The issue is about land tenure. The biofuels are grown in [what were] forests and forests are never empty. The forest-dependent communities live there and they are forcibly evicted from their homes so that the palm oil plantations can be developed without their consent.”
According to a 2016 Oxfam report, a company at the end of the supply chain of European biofuel producers is barring the access of residents to 1,000 hectares of land in Bengkulu – a province on the south-west coast of Sumatra, Indonesia – which the local government had allocated to them. Similar examples of land-grabbing have been reported in other parts of the world, including in South America.
Frontera Invisible, an award-winning documentary produced by T&E, shows the explosive cocktail of paramilitary violence, palm expansion and biodiesel production in Colombia.