Private sector biofuels investment has been killed off by the Renewable Energy Directive, and only a clear, stable policy offering certainty up until 2030 will revive it, argues Eric Sievers.
Eric Sievers is the CEO of Ethanol Europe Renewables Ltd.
2012 teemed with absurd, and effective, allegations against ethanol. 2013 saw proof those claims were exaggerated by orders of magnitude. Perhaps 2014 can promote intelligent dialogue, resulting in a biofuel policy that creates a million jobs, achieves massive GHG savings, enhances food security, empowers rural communities, plies few subsidies, and precludes land grabbing.
A recent EURACTIV article revisits historic stakeholder ILUC battle lines. Let's leave that history and its platitudes behind. In their place, we need a zero ILUC biofuel policy incentivizing the best of all biofuels and promoting action that leaps ahead of the dead-end notion of ILUC factors.
That policy is self-evident if stakeholders would start talking in plain un-politicized language. Stakeholders on all sides want the same things: investment in good biofuels, high GHG savings, rural jobs, poverty alleviation, and global food security. Instead, the current debate is obsessed with "caps", "ILUC factors", "food vs. fuel", and "multiple counting" rather than substantive outcomes. These loaded phrases, without exception, preclude sensible policy. Debates migrate to fantasy scenarios; "multiple counting" waves its wand to transform shale oil into a renewable.
"ILUC" and "ILUC models" do not point in the same direction. ILUC factors are the biofuel equivalent of taxing every European in 2014 on the income that the 1% might earn in 2020. Such an approach could yield sufficient income for the treasury, but would be fundamentally unacceptable on every other level, even if the underlying projections weren't wrong.
Yet, with ILUC factors, the underlying model projections are wrong. The 2011 IFPRI model yields the ILUC factors contained in the Commission's 2012 RED amendments. This 2011 model predicts average 2013 UK GHG biofuel savings of 35% and near zero with ILUC. The UK official results? 70% and near 40% with ILUC.
Does anyone want policy based on models that so quickly and spectacularly contradict reality?
The answer is not to search for a better model.
Fortunately, the science of ILUC acknowledges that biofuels made from crops that would not otherwise be grown have zero ILUC. Such non-ILUC crops can come from above-trend yield increases, multicropping, or degraded/abandoned lands. These crops answer the EU's need to halt agriculture's decline and save rural communities. Between 1993-2023, the EU will abandon 25,000,000 hectares of arable land. Likewise, over 30 years Hungarian maize yields remained static, while in Austria, Brazil and the U.S., yields doubled or tripled, a result due only to the lack of Eastern European agricultural investment.
Not only would non-ILUC biofuels ensure both RED and FQD success; they would increase global food security. Only half non-ILUC feedstock can be processed into fuel; the other half becomes high-protein antibiotic-free GMO-free animal feed. This feed replaces protein meals from the Americas that are high-ILUC, GMO, laced with antibiotics, and widely used in West European meat production.
A cap on crop-based biofuels, then, is an absurd way to address ILUC when non-ILUC feedstock is the only practicable way to ensure full carbon accounting and promote global food security.
Not only do food security, ILUC and conventional biofuels have synergies that expose current policy proposals as medieval and misguided, but those synergies are reinforced by a calm review of other exaggerated claims about biofuels.
For instance, 2008-13 saw claims that 6,000,000 African hectares were land grabbed for EU biofuel. That area equates to 5 billion liters of biofuel (30% of the whole EU market) not the statistical 0% market share that is reality. Indeed, new Commission and independent reports show large-scale African biofuels land grabbing to be less than 1% of the scale alleged. Nevertheless, land grabbing risks merit serious attention and can be solved within a non-ILUC biofuels policy. Sustainability requirements should be supplemented to require that "biofuel feedstock shall not be produced on land that was the primary source of sustenance for a local population in 2008."
Without belaboring the evidence, subsidy attacks have also been off by at least an order of magnitude. Water attacks were off by five orders of magnitude.
But one particular error on the scale of two orders of magnitude is critical to policy success. Many stakeholders have uncritically assumed that tens of billions are annually invested in EU biofuels thanks to the RED. Yet, private biofuels investment in the EU is dead, and the RED killed it.
Biofuels investments are capital intensive; they require long-term stability. Even before 2012, Commission zeal to change rules and formulas several times a year reduced biofuels investment activity from tens of billions to around €100 million annually.
Indeed, a total of two large biofuel investments were entirely launched and completed post-RED. All others were launched prior to RED passage. Those two projects, one cellulosic and one conventional ethanol, produce 0.02% of EU transport sector energy. At this pace, the RED will inspire 0.05% of EU transport sector investments by 2020, not the 5% planned.
Accordingly, the largest irony of EU biofuel battles is their real-world irrelevance. Today's RED debates are an exercise only in addressing certain egos; they will result in no investment, no matter which caps or feedstock lists prevail. Only a policy that will have stability and clarity from 2014/5 all the way through to 2030 will result in investments.
And truly advanced biofuels must be included. They need, and the only thing that will work is, a gradually increasing separate no-nonsense EU-wide mandate.