Ethanol industry expert: Biofuels tug-of-war is an EU invention

Sievers: "How could one expect a good policy to develop if most of the dialogue is factually incorrect?" [Sarantis Michalopoulos]

This article is part of our special report Rural Renaissance.

The conflict between second and first generation biofuels – depicted as good and bad for the environment – only exists in Brussels. In fact, it’s the brainchild of the European Commission, Eric Sievers told EURACTIV.com.

Eric Sievers is director of investments at Ethanol Europe.

He spoke to EURACTIV’s Sarantis Michalopoulos.

The European Commission has tabled a proposal for biofuels post-2020, which are objected to by industry. Can you list them?

Listing our objections would do this proposal too much honour because it would suggest that the structure of it is correct. But it is entirely wrong for two reasons.

The first is that, over the past decade we’ve had the renewable energy directive (RED) and the fuel quality directive (FQD), which focuses on the greenhouse savings from specific fuel and rewards those which have the highest greenhouse gas savings. The new RED II for the next decades is a proposal to discontinue the FQD approach. It is prolonging the structure that has not worked and has ignored the fabulous successes of the FQD.

The other reason is that the RED II proposal is based on the ideology that there is something called food-based biofuels, which are bad for the environment, and something called advanced biofuels, which are good.

In reality, neither of these categories exists. There are conventional or first-generation biofuels which have 90% greenhouse gas savings, and no impact on food prices. And likewise, there are so-called advanced biofuels, which are worse than oil.

So, it’s a non-starter to pursue an ideology that science absolutely contradicts.

Have you measured the impact of the Commission’s 2030 proposals on rural development?

If you look at the Commission’s own impact assessment, you’ll see that it entirely ignores the jobs that are created and sustained from biofuels.

There is a provision at the very end, which is non-scientific (it’s laughable actually), which is not even from the Commission, it’s from the International Council on Clean Transportation (ICCT). It says that advanced biofuels facilities create lots of jobs but that it’s complicated to calculate how much. And so in order to estimate how many jobs they create, we are going to multiply them by two compared to job estimates for conventional biofuels.

This is fantastic because there is research on how much jobs are supported by conventional biofuels. And likewise, the assumption that jobs from advanced biofuels are more complicated to estimate is actually entirely wrong. It’s just the other way around.

Less than half of the jobs that we support are directly linked to the ethanol we produce. The majority is in fact linked to animal feed, pharmaceutical, and food. The Commission wants to pretend that feedstock goes into an ethanol plant, ethanol comes out and that’s it. Whereas half of what comes out by mass and most of what comes out in terms of high technology and innovation is in the animal feed and non-fuel side of the business.

NGOs like Transport & Environment (T&E) suggest that the Commission’s biofuels proposals won’t have any impact on employment because farmers will still be able to sell their production for other purposes than ethanol production.

T&E has never spoken to a corn farmer in their lives. To suggest that T&E has the backing of the rural population is quite fantastic. In fact, we commissioned research late last year after the most senior Commission official on this file said there are no arguments against first generation biofuels except that the public does not want them. This research showed that, when confronted with the argument against first generation biofuels, 70% of the EU public still supports them.

Do you believe that the EU’s biofuel strategy should somehow be connected with the Common Agricultural Policy?

No, we don’t. We view ourselves as an agricultural company but nothing that we do is directly connected to the CAP. It’s an easy and cheap trick of biofuels opponents to claim that everything is connected to the CAP.

The one thing everyone can agree on is that in 10-25 years, farm subsidies should be reduced. If that’s going to happen then we need to have non-CAP markets for farmers, which is what we’re creating. Any business needs more than one outlet and there is need for diversification. It’s a complete hypocrisy to complain about the CAP to resist the things that diversify EU farmers away from CAP subsidies.

Have you calculated the financial consequences for the ethanol industry in the event that the Commission’s proposal is actually implemented?

We don’t predict losses because we produce lots of different things. Certainly, we would prefer for there to be better markets for high greenhouse gas saving ethanol produced in Europe but we are looking at it in terms of investments.

We will not invest in first or second generation biofuels because the amount of risk that the Commission proposal has created makes it just unpalatable. Maybe there will be people who want this risk in Europe. The actual facts on the ground suggest that there is not anyone who will take this risk other than the European Commission. There isn’t a capital project done today in Europe that is not done with EU funds.

We have biofuels opportunities outside Europe. We have been approached for projects by many parts of the world but we have not done any because our preference is to be in Europe.

It seems you have lost your trust in the EU.

Absolutely, we were the only large biofuels plant to be built because of the RED. So we now have a 500 million litre biorefinery in Hungary thanks to the RED. And the thing that set us apart from most other biofuel investors in Europe at that time is that we had no experience in biofuels in Europe.

Already after the RED, pretty much everyone with experience realised that this is not a field to invest in considering the Commission’ acts. We should have learned our lesson there. But two years later, we broke ground with our second plant in Hungary and then that project had to be cancelled after we spent €10 million when the Commission announced its intention to put a 5% cap on crop-based biofuels.

But we continued and went to Macedonia and we created with Dupont what would have been the world’s largest advanced biofuel project. An incredibly ambitious project to turn abandoned land in Macedonia into a highly productive farmland to produce not only feedstock for advanced biofuels but also more food.

The Commission’s response to that project was to try to amend its ILUC directive proposal to prevent energy crops from being counted as advanced biofuels. This is where we realised there was no winning in this game.

Are member states on your side?   

Most of them are. One of the problems is that not all member states have a biofuels industry. But the ones that have, they are supportive of both first and second generation biofuels.

This war between first and second generation biofuels does not exist on the ground. It only exists in Brussels and it’s the brainchild of the European Commission itself.

Most member states would like to see more biofuels, more investment in rural areas but for that to happen there needs to be a clear conception that the role of biofuels is to replace oil. Not to replace each other.

We are going to forcibly take away x% of the oil market and give it to advanced biofuels and see what happens over ten years. If you take 2-3% it is a huge amount of the market. The same logic should apply to first generation biofuels, lots of which are proven to be good for the environment and have no land grab or conflict between food and fuel.

We should not have a case where market share is given back to oil and that is exactly what the Commission’s proposal is doing. In 2008, they said that by 2020 10% of the oil market should be taken away. Now, it says that maybe 8% should be taken away.

The only real winner in this decade has been the oil sector. It got 2% more market share than it ever expected. And now looking forward to 2021 the Commission’s own proposal says that the oil sector might get back another 5% of the market. This is astonishing. This is the most oil-friendly proposal we could have ever imagined.

What is your last “hope” for this proposal?

The 7% cap on biofuels currently in place won’t be lowered, it seems that people fighting for that will lose. But that’s the defensive part for us. The 2020 policy is aspirational and what we are still hoping for is incentives for more oil being displaced by the bioeconomy. And there is room for lots of different technologies to contribute to that.

But having watched what’s happened in the last decade, there needs to be someone out there who forces some serious dialogue, with real accountability. Because most of what has been said about biofuels in Brussels is simply incorrect. How could one expect a good policy to develop if most of the dialogue is factually incorrect?

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