The EU's new Renewable Energy Directive obliges member states to ensure that 10% of their transport fuel comes from renewable sources, including biofuels, by 2020.
The goal was aimed at contributing towards the bloc's climate goals, but questions have been raised about the unintended consequences of replacing large forested areas and food production with energy crops.
To address this issue, the directive requires the Commission to present a report by the end of 2010 on how such "indirect land-use changes" impact on greenhouse gases and whether they should be tackled.
But a consultation paper seen by EurActiv reveals that the EU executive is ambitiously planning to come up with a document and potentially a legislative proposal as early as next March. This is to ensure that member states can take them into account when submitting their national renewable energy action plans by the end of June 2010.
The non-paper, drafted by the Commission's transport and energy (TREN) and environment DGs, lists several options to take into account the effects of land-use change. It shows that the Commission is considering addressing the general issue of land-use change instead of limiting its approach to biofuels.
The document suggests that the restrictions on land-use change applied to biofuels could be imposed on other commodities and consuming countries. This could be done by encouraging other administrations to adopt the same restrictions and by encouraging other industries to apply these on a voluntary basis, it states.
Moreover, the EU could require that goods sold on its market are tagged with labels stating compliance with the restrictions, the non-paper reads.
One alternative would be to conclude international agreements to protect "carbon-rich habitats" like rainforests in countries where cultivation patterns are likely to be affected, it states.
However, the Commission believes that such a general approach would require putting in place measures that stretch beyond the scope of the report required by the Renewables Directive, and would take more time to execute.
The rest of the document thus specifically concentrates on biofuels. The minimum required greenhouse gas savings already included in the directive could either be tightened or considered as an adequate "cushion", ensuring that the policy delivers an "acceptably high" greenhouse gas benefit, it says.
Finally, the document floats the idea of promoting differentiated consignments for individual biofuels.
For example, bonuses could be increased for biofuels which do not come from land, or additional sustainability criteria could be set for agro-fuels produced from crops that are likely to cause damaging land-use change. Furthermore, an indirect land-use change factor could be included when calculating greenhouse gas emissions from biofuels, once a methodology has been adopted.
Indeed, the Commission is already consulting researchers about models that could explain the effects of biofuel production on indirect land-use change, according to sources close to the process. These should be presented around September, feeding into a stakeholder consultation in October.
The Commission has already organised separate meetings with member states to chart the field, and has invited comments from stakeholders by the end of this week (31 July).
International trade implications
In addition to comments on the feasibility, uncertainty and administrative burden of the proposed measures, the Commission is seeking feedback on the international trade implications of biofuel sustainability criteria.
During internal negotiations on the directive, Brazil and many developing countries threatened to challenge it before the World Trade Organisation. Major exporting countries fear that the EU will sneak in strict provisions to limit their access to its market, favouring domestic production.
As the directive has now been published, it provides a clearer framework of what both domestic agro-fuel producers and third-country importers can expect from the EU. It sets down clear-cut figures for future greenhouse gas savings which biofuels will have to achieve compared to traditional fossil fuels, and stipulates that biofuels produced from land with "high biodiversity value" cannot be counted towards the target.
"Brazil has raised the issue [of EU sustainability criteria] in some meetings," a WTO spokesperson told EurActiv. But he added that so far no WTO member had requested the organisation to examine the directive's compatibility with its rules.
However, the legislation's potential provisions on land-use change or even the definition of the concept of "land with high biodiversity value" increase the uncertainty. Eventually, these addutions to the directive could expose it to a challenge before the WTO, experts said.
Moreover, it is far from clear whether it is possible to calculate greenhouse gas emissions resulting from land-use changes.
"We question whether it's possible to come up with any macroeconomic model that is able to explain indirect land-use changes because of the production of biofuels. We don't believe this is possible, but we need to wait and see what science is going to deliver," said Rob Vierhout, secretary-general of the European Bioethanol Fuel Association.
He argued that any model would also have to include the positive effects of biofuel production. For example, animal feed is produced as a co-product of biofuels, which reduces the need to expand soy production in third countries in order to export it to Europe, he said, adding that biofuel production is also proven to increase yield per hectare of land.
Hinting that heated debates lie ahead, campaigners against biofuels have described this as "creative accountancy".