The study ‘EU Transport GHG [greenhouse gases]: Routes to 2050’ estimates that before indirect effects are counted, the abatement cost of reducing Europe’s emissions with biofuels is between €100-€300 per tonne of carbon.
At current market prices, this would make their CO2 reduction potential up to 49 times more expensive than buying carbon credits on the open market at €6.14 a tonne.
But the EU’s authors conclude that it “it is not possible (and useful) to determine cost effectiveness figures for [conventional] biofuels” because their indirect effect - measured in cleared forests and grasslands (‘ILUC’) - make it a CO2-emitting technology.
The latest report will feed a growing unease about the reasons for the EU's original biofuels policy - justified in environmental terms - and the way it has developed since.
“The truth is that policy makers inside and outside Europe are doing biofuels for other reasons than environmental ones,” said David Laborde, a leading agricultural scientist and author of key biofuels reports for the European Commission.
“It’s a new and easy way to give subsidies to farmers, and it’s also linked to industrial lobbies that produce these biodiesels, and also what they will call energy security,” he told EurActiv.
“They want to diversify the energy supply, and keep their foreign currencies instead of buying oil from the Middle East. They prefer to keep it for something even if it is not efficient or even green,” he added.
The '10% target'
In 2007, the EU first set a 10% target for the use of blended biofuels in transport by 2020.
Although the target was re-sourced from ‘biofuels’ to ‘renewable energy’ in 2009, analysts say that 8.8% of the EU target will still be provided by biofuels, and up to 92% of that will come from conventional biofuels like biodiesel.
Industrial associations disagree, putting the EU’s ratio of sugar-based ethanol, one of the best-performing biofuels, to biodiesel, one of the worst, at 22%-78%.
But both the original announcement and the Renewable Energy Directive two years later conditioned biofuel use on subsequently neglected criteria of cost-efficiency, sustainability and, where available, the use of second generation fuels.
“I don’t think we are there on cost-effectiveness,” said Géraldine Kutas, Brussels representative of the Brazilian Sugarcane Industry Association (UNICA).
“There are no monetary provisions to support this in the directive, and second generation biofuels are still a promise. They are not commercially available yet,” she said.
Even trying to address the issue of indirect sustainability criteria for biofuels had gummed up the EU's policy-making process, she acknowledged.
Research by EurActiv has uncovered evidence that the EU’s original biofuels target was set as much for industrial and political reasons, as environmental concerns.
Claude Turmes, the European Parliament’s rapporteur responsible for steering the Renewable Energy Directive into law, said that business lobbies had influenced his negotiations with the then-French Presidency of the European Council.
“There were two lobbies, the sugar farmers lobby and the German car industry who tried to prevent the EU’s CO2 and cars legislation,” Turmes (Greens/Luxembourg) told EurActiv.
“The origin of the 10% renewables in transport target was the fact that these two lobbies joined forces to impose it on the Commission.”
EU insiders spoken to by EurActiv agreed, saying that biofuels had been a quid-pro-quo demanded for the imposition of ‘greener’ measures in the directive that would encourage wind and solar energy, and cut emissions.
European sugar farmers had suffered in the 2006 Common Agricultural Policy reform which reduced the guaranteed sugar price by 36% and opened up the European sugar market to global competition.
A guaranteed market for agrifuel made from sugar-based ethanol held out some prospect of compensation. And the strength of the French farmers lobby made removing the 10% target “an absolute no go area” for Paris, Turmes said.
“The farm industry was obviously interested in biofuels, biochemicals and the bio-economy more generally,” Kutas added.
But Europe’s sugar farmers profited far less from the EU’s biofuels policy than growers of feedstocks for biodiesel, better suited to the continent’s diesel-based auto fleet.
EU officials say that the car industry was also instrumental in pushing for the biofuels target to be included as a compromise to bridge the gap between the 130g of CO2 per km that the EU wanted as a target for 2012 and the 140g that the car industry was prepared to offer.
“It was no secret,” a source told EurActiv. “It was very clear what they were lobbying for and it went all the way up the Commission”.
As a result, officials in the EU’s energy directorate responsible for biofuels did not treat research which questioned the fuel’s environmental credentials in the same light as that which supported it, multiple sources confirm.
The EU’s biggest error was “that we started to make a policy without knowing the effect it would have,” Laborde said.
“We are now discussing the land use effect after saying for ten years that we need biofuels to reduce emissions,” he went on. “It was a serious mistake.”
Indirect emissions proposal
Brussels is due to publish a proposal measuring the indirect emissions caused by biofuels later this year, distinguishing between low-emitting biofuels such as ethanol and high-emitting ones like biodiesel.
But the EU’s decision-making process has been paralysed by the ongoing dispute between its energy directorate – which does not want ILUC factors considered – and its climate directorate, which does. And there are other problems too.
Both the Renewable Energy and Fuel Quality directives contain ‘grandfathering’ clauses exempting all existing biofuels installations as of 2014 from further legislation until 2017.
As the biofuels industry’s existing capacity is already on the cusp of meeting the 10% target, according to a new report by the environmental consultants Ecofys, this would create massive overcapacity.
The Institute for European Environmental Policy has calculated that on current trends, land conversion of between 4.7 million and 7.9 million hectares would be needed to accommodate the extra biofuels production, an area roughly the size of Ireland.
But the introduction of any ILUC factor would probably rule out high-emitting conventional biodiesels, the majority of Europe’s biofuels production.
That would create a political backlash in EU states such as France and Germany, and potentially tear up the compromise which allowed the Renewable Energy Directive to be passed in the first place.
For now, the proposal remains stuck in the corridors of an EU that appears equally frightened of the political consequences of admitting a policy mistake and the environmental consequences of denying it.