In a bid to reduce its dependency on imported oil and tackle global warming, the EU has committed to raising the share of fuels from renewable sources in transport to 10% by 2020. Concerned with warnings that increased agrifuel production could in fact lead to mass deforestation and food shortages, the EU also agreed a set of sustainability criteria for biofuels.

Overview

A wide range of biomass products such as sugar cane, rapeseed, corn, straw, wood, animal and agriculture residues and waste can be transformed into fuels for transport. 

Generally, a distinction is made between first-generation biofuels (mainly produced from crops such as sugar beet and rapeseed) and  second-generation biofuels (from ligno-cellulosic or 'woody' sources and via new technologies to convert biomass to liquid (BTL)).

The two main first-generation biofuels are bio-ethanol and bio-diesel. Brazil and the US are the main producers of bio-ethanol, while the EU has the largest production of bio-diesel, with Germany, France, Sweden and Spain in the lead.

The advantage of biofuels is that they generally emit fewer greenhouse gases than traditional fuels from oil and gas and the EU has set itself the target of slashing its greenhouse gas emissions by 20% by 2020. 

Yet, while total EU-27 emissions fell 7.9% from 1990–2005, transport emissions rose 27% over the same period due to large increases in traffic, so that they now represent roughly one third of the EU’s total CO2 emissions. 

What’s more, a massive 98% of transport fuel consumed in the EU is accounted for by fossil sources, leaving the sector highly exposed to the vagaries of global oil markets. In addition, biofuels can be produced in Europe, unlike oil and gas, which have to be imported. 

EU Policy developments:

  • 2001: the Commission starts to consider the use of more biofuels for transport. In its Communication on alternative fuels for road transport, it identified biofuels, natural gas and hydrogen as possible future energy sources for transport (see LinksDossier on Alternative Transport Fuels). 
  • 2003: the EU adopts Directive 2003/30 EC on the promotion of biofuels. This "biofuels directive" requires member states to set indicative targets for a minimum proportion of biofuels to be placed on the market. These targets were set at 2% in 2005 and 5.75% in 2010
  • As biofuels are more expensive than traditional fuels, the EU also allowed member states to apply a total or partial tax exemption for biofuels (Directive 2003/96 EC).
  • Dec. 2005: the Commission presents a Biomass Action Plan
  • Feb. 2006: Communication "An EU strategy for biofuels" prepares the ground for a review of the biofuels directive, originally planned for the end of 2006.
  • Jan. 2007: Biofuels progress report shows that, in 2005, biofuels reached only 1% of the market and that the EU will miss its 5.75% target for 2010 by a long way. Only two countries (Sweden and Germany) reached the target of 2% by 2005.
  • Jan. 2007: Commission proposes revising EU standards for petrol, diesel and gasoil, set out in the 'Fuel Quality Directive' (FQD), to allow for a greater use of biofuels (see LinksDossier on the FQD).
  • Mar. 2007: EU leaders commit to a binding target ensuring that 10% of transport fuel in each member state is provided by biofuels by 2020 (EurActiv 09/03/08).
  • Jan. 2008: Commission finally presents its review of the 2003 biofuels directive, as part of a broader directive on renewable energies (EurActiv 24/01/08). The directive confirms the 10% target for 2020 and proposes "sustainability criteria" to prevent mass investment in cheaper but environmentally harmful biofuels.
  • Dec. 2008:  EU leaders endorse the energy and climate change package, including a directive on the promotion of renewable energies. The final version softens the 10% biofuels target to include other renewable sources. 
  • By 31 Dec. 2009: Commission to report on requirements for sustainability scheme for energy uses of biomass.

Issues

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:

  • Energy balance

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. 

  • Land Use

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%. 

  • Biofuel costs

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. 

Positions

Despite the critics, the European Commission is sticking to its biofuels target. EU Agriculture Commissioner Mariann Fischer-Boël says the policy is here to stay, arguing that the goals are "attainable" and "necessary if we're serious about energy security and climate change". EU Energy Commissioner Andris Piebalgs agreed that biofuels offer a pathway to more sustainable transport, as well as benefits in terms of reducing dependency on imported oil; providing development opportunities for poor countries and paving the way for second-generation biofuels". 

The EU’s executive further insists that the inclusion of "sustainablility criteria" in legislation will suffice to ensure that only "good" biofuels – which enable significant CO2 savings compared to fossil fuels and do not menace biodiversity – are used. "I know that various objections have been raised, and the Commission takes them seriously. But we believe we can answer them," said Fischer-Boël in March 2008. She further commented that the increases in food prices are "not a bad thing" as they will raise incomes for European and poor country farmers. 

But in November 2007 an OECD  report warned that “governments should cease to create new mandates for biofuels”, while, in June 2008, a World Bank report found that biofuels are already responsible for a 75% rise in food prices. 

Early indications show the European Parliament joining the chorus of international criticism. Green MEP Claude Turmes, who is leading discussions on the Renewables Directive in Parliament, wanted the target to be scrapped completely due to "the many unknowns" surrounding the technology. Nevertheless, in a compromise with his shadow rapporteur Swedish MEP Anders Wijkman, he agreed to push rather for a lower target. Turmes also wants the EU to conclude a biofuel trade deal with Brazil, saying this is the only way Europe will be able to access the substantial quantities of agro-fuels it needs in a sustainable manner. 

European farmers ( COPA-COGECA ): 

  • Insist "the binding minimum objective of 10% for biofuels in transport must be maintained" to encourage investment in biofuel technology, including second generation.
  • Favour tax incentives to promote the development of alternative fuels. • Supports import quotas and tariff protection to guarantee the development of production in Europe. “Agricultural and forest biomass produced in the EU provides the greatest guarantee of sustainability,” it argues.
  • Support the “urgent” introduction of sustainability criteria to prevent changes to soil allocation (deforestation, turning over of savannah) and biodiversity loss, as well as to ensure adequate working conditions in third countries. 

Car manufacturers ( ACEA ):

  • Believe biofuels are an indispensable part of the strategy to cut CO2 emissions from cars.
  • Supports measures to get fuel-makers to raise the share of biofuels in petrol and diesel to at least 5% and promises that, by 2010, all new car models will be capable of running on petrol containing up to 10% ethanol and diesel containing up to 7% FAME (Fatty Acid Methyl Ester).
  • Think second generation will be more compatible with car engines and save more greenhouse gases, but that first-generation biofuels, with sustainability criteria, still have a role to play in reducing CO2 emissions. 

Biofuel producers (European Bioethanol Fuel Association (eBIO)  and  European Biodiesel Board ( EBB ) )

  • Are angry with the apparent U-turn on biofuels in Europe, saying it adds to the uncertainty when long-term investments are badly needed in the sector. 
  • Caution against dropping the 10% target, saying this would simply disadvantage the EU producers on biofuel markets, while countries with lower sustainability standards, like the US and Brazil, continue their production.
  • Say biofuel production only uses 2-3% of EU agricultural land and that the 10% target would not put unsustainable pressure being put on soil, water and biodiversity, even if it is entirely based on domestic production. "Stopping biofuels would only have a very marginal impact on food prices." 
  • Highlight need to reduce dependence on insecure sources of imports of oil for transport fuels. 
  • Underline the important GHG savings linked to biofuel use. 
  • Believe biofuel development has an "important potential" for rural development and employment. 

 Green NGOs ( WWF Greenpeace Friends of the Earth T&E EEB BirdLife Biofuelwatch )

  • Are against the 10% target. 
  • Insist on mandatory and legally-binding environmental certification for imported and domestic production, with strong sustainability criteria. 
  • Believe mass biofuel production will lead to biodiversity loss, deforestation, forced evictions and population displacement, food shortages and price increases, and water scarcity, especially in developing nations seeking to enter the market.
  • Believe biofuels represent an inefficient use of biomass, which would be much better used in the electricity and heating sectors. 
  • Favour second generation biofuels that do not compete with food crops. 
  • Believe biofuels should not count towards voluntary agreements by carmakers to reduce fuel consumption. 

Timeline

  • Mar. 2007: EU summit sets target of 10% of transport fuel in each member state to be provided by biofuels by 2020.
  • 23 Jan. 2008: Commission presents a mid-term review of its Biofuels Directive, as part of a package on promoting renewable energies.
  • Feb. 2008:  Ad-hoc working group set up to define "core criteria" for sustainable biofuels.
  • Dec. 2008: Departing from their previous commitment, EU leaders approve new directive on renewable energy, agreeing a 10% target for 'green fuels' by 2020 that includes biofuels along other renewable energies (EurActiv 5/12/08).
  • 5 Dec. 2010: Deadline for all EU countries to comply with new Renewables Directive. Greenhouse gas savings from biofuels to reach minimum 35%. 
  • Summer 2011: Commission strategy to tackle unwanted side-effects of biofuels production.
  • 2012: EU countries to submit first report on national measures taken to respect the sustainability criteria for biofuels. 
  • By Dec. 2014: Commission to review greenhouse gas emission saving thresholds for biofuels, taking available technologies into account. 
  • 2017: Greenhouse gas savings from biofuels to reach minimum 50%.
  • 2018: Greenhouse gas savings from biofuels to reach minimum 60%. 
  • 2018: Commission to present renewable energy roadmap for post-2020 period. 
  • 2020: Transport sector mandated to source 10% of its energy needs from renewable energy, including sustainable biofuels and others.