Target in trouble amid flood of criticism
In January 2008, the Commission presented its proposal for a Renewables Directive, which aimed to raise the share of biofuels in transport from current levels of 2% to 10% by 2020 in order to reduce Europe's dependency on imported oil and contribute to the fight against climate change.
However, there was increasing concern that a surge in the production of such fuels based on current technologies – which mainly involve transforming food and feed crops into fuels – could have more negative implications for the environment than positive ones.
International organisations as well as scientists, academic observers and NGOs point to the risks of biodiversity loss and food and water shortages that the target could provoke as land is taken over for biofuels production. Recent shortages on global food markets and the follow-on price raises have further catalysed opposition to the EU’s target.
In July, the European Parliament's Environment Committee voted to scale down the proposed EU-wide biofuels target to just 4% by 2015. EU environment and energy ministers also appeared to be seeking to manoeuvre themselves out of their biofuels commitment, stating that the mandate could be reviewed and that the Commission’s legislative proposal was in fact not limited to biofuels alone but to renewables in general. This would mean hydrogen or electricity power sources could also be counted towards the target (EurActiv 07/07/08).
In September, Parliament's Industry and Energy Committee, which had the lead on the dossier, went in a similar direction, approving a report drafted by Luxembourg Green MEP Claude Turmes. While confirming the 10% target by 2020 and setting an interim 5% target for 2015, Turmes' report nevertheless specified that at least 20% of the 2015 target and 40% of the 2020 goal must be met from "non-food and feed-competing" second-generation biofuels or from cars running on green electricity and hydrogen (EurActiv 12/09/08).
Crucially, MEPs also lent their support to a clause providing for a "major review" of the whole EU biofuel promotion policy and of its social and environmental impacts before 2015 - a move the biofuels industry says will deter investments in the sector.
The compromise struck on the directive in December retains the 10% renewable transport fuel target, but states that this should be reached from renewable sources as a whole, not just from biofuels (EurActiv 05/12/08).
Pros and cons of biofuels
The production of biofuels for transport faces several challenges:
There is controversy over the energy balance of biofuels production. The energy balance is the amount of energy needed over the life-cycle to produce biofuels (input) versus the amount of energy produced (output). According to studies by Pimentel and Patzek, it takes more energy to make ethanol than is contained in the ethanol itself. Other studies (eg. by the US Department of Agriculture) indicate that the energy balance is positive. The balance also varies largely according to the crops used and the transformation process. For a good overview of the debate on the energy balance of biofuels, see "The energetics of ethanol: an introduction and link to studies".
Climate change reduction potential
In principle, biofuels are "carbon neutral": when they are used, no more carbon dioxide is released than has been absorbed during the growth of the plants used to make these biofuels. Therefore replacing fossil fuels with biofuels for transport could help in the fight against climate change.
But other studies, including a May 2007 report by the United Nations Energy division, contest this conclusion, saying that the use of biofuels could actually increase greenhouse gas emissions as land would be converted from forests, wetland and reserves for conservation to grow more corn or soya beans. The report notes that with respect to reducing greenhouse-gas emissions, biofuels would be more appropriately used for combined heat and power production (CHP - EurActiv 10/05/2007)rather than for transport.
Using agricultural land to grow bio-energy crops would compete with the use of land for food and animal feed production, driving up the prices of commodities like cereals. According to the EEA, reaching the initial 5.75% target of the biofuels directive would already require biofuel crops to take over between 4% and 13% of the total agriculture area of the EU-25.
Nevertheless a July 2007 study by the Commission's DG Agriculture foresees that reaching the new 10% target for biofuels in transport by 2020 would not "overly stretch the [EU's] land availability", requiring a "relatively modest" 15% of arable land, which it claims could be largely covered by "set aside" land, currently reserved under the Common Agricultural Policy in order to limit excessive production by farmers (EurActiv 27/07/07).
Environment and sustainability
Energy crops generally require more fertilisers and pesticides to grow. They also require more water, draining the earth’s already scarce resources. What’s more, biodiversity loss - especially in developing countries seeking to enter this growing market - is an important risk as forests and grasslands are cleared to plant the vast quantities of crops needed to make a significant dent in the use of oil in transport.
Calls for binding "sustainability criteria" to be introduced in laws promoting increased biofuel use therefore emerged from all sides. In its proposed Renewables Directive of 23 January 2008, the Commission proposed to introduce certain standards, including an obligation for biofuels counting towards the 10% target to deliver life-cycle CO2 savings of at least 35% compared to fossil fuels and a ban on biofuels planted in protected areas, forests, wetlands and "highly biodiverse" grasslands.
But MEPs insisted on tougher conditions. In September 2008, the Industry and Energy Committee backed a report demanding that biofuels offer at least 45% carbon emission savings compared to fossil fuels – a figure that would rise to 60% in 2015. They also insisted that additional social and environmental criteria be included to protect natural resources from both direct and indirect land use changes and to guarantee respect for human rights and adequate working conditions in biofuel plants, especially in developing nations.
In an attempt to reach a compromise between the 27 member states on the issue, a special ad-hoc working group was set up at the end of February 2008, with the aim of drafting "core criteria" for biofuels (EurActiv 01/04/08). After months of in-fighting, EU ambassadors appeared to have reached a consensus in September.
The EU's Renewables Directive, adopted on 26 March 2009, initially requires a 35% CO2 saving, which will then be scaled up to "at least 50% in 2017 and 60% in new installations thereafter. It stipulates that biofuels and bioliquids taken into account in the 10% target must not be produced from raw materials from land with "high biodiversity value", land that has a high carbon stock, or peatlands.
The final life-cycle CO2 reduction requirement will be crucial for the biofuel industry. Indeed, typically, biodiesel made from European-grown rapeseed results in a greenhouse gas saving of 44% while the typical figure for ethanol made from EU sugar beet is 48%.
Biofuels are more expensive than traditional fossil fuels. Therefore tax exemptions are needed to make them competitive. Second generation biofuels promise to be cheaper but are still under development (see LinksDossier on 2nd generation biofuels). In some countries like Brazil, biofuels can be produced at cheaper prices.