Food price fears push EU lawmakers to put a lid on biofuels growth

MEP Corinne Lepage Sept 2013_0.jpg

The European Parliament has voted to limit the use of fuels made from food crops because of fears that biofuels can push up grain prices or damage the climate, further undermining the once booming industry.

Lawmakers voting in Strasbourg on Wednesday (11 September) set a ceiling on the use of such fuels at 6% of overall transport fuel demand in the European Union in 2020.

Although slightly higher than the 5% cap proposed by the European Commission in October, it deals a blow to EU biofuel producers by effectively preventing them from increasing current output.

In 2009, the bloc set a target for a 10% share of renewable energy in transport, with almost all of it to come from so-called first generation crop-based fuels.

Biofuels, such as ethanol made from sugar or biodiesel from rapeseed, are blended with conventional transport fuels and added to vehicle fuel tanks. They were originally intended to reduce transport carbon emissions and cut Europe's dependence on imported oil.

But faced with claims that Europe's thirst for biofuels was driving up global food prices, and scientific evidence that some biofuels are more harmful to the climate than even conventional fossil fuels, the Commission was forced into a rethink.

"We can't stick with a policy that has such a negative effect on the countries of the south and on food prices. At the end of the day, the parliament has voted in favour of an acceptable limit," French Liberal MEP Corrine Lepage, who led the parliamentary debate, said after the vote.

With first generation biofuel consumption already at around 5% of total EU transport demand, and with almost enough installed production capacity meet the 10% target, a limit of 5 or 6% would call time on the once booming industry and force some existing plants to close.

Lawmakers backed an amendment that would force energy companies from 2020 to take account of the indirect emissions caused by crop-based biofuels, which increase overall demand for land and, as a result, encourage rainforest clearance or draining peatland.

That would effectively ban the use of biodiesel from oil crops such as rapeseed, palm and soy, which according to the EU's scientific models are more damaging than conventional diesel when their overall impact on the environment is taken into account.

The biodiesel industry says the scientific models used in the studies are highly uncertain and based on flawed assumptions.

Algae and waste

In order to try to make up the shortfall created by the cap on first-generation fuels, the parliament said the EU should set a new 2.5% sub-target for the use of advanced, non-crop fuels made from algae or agricultural waste in 2020.

A coalition of industry and environmental groups – including the European Climate Foundation and Danish advanced biofuel producer Dong Energy – have said that full sustainable use of agricultural and forestry waste could supply 13% of EU road transport fuel by 2020.

"This potential will only be realised if EU biofuel and related industries are given investment certainty and a stable policy framework by the European Parliament and Council," the group said in a statement.

One aspect of the vote that offered a glimmer of hope to the biofuel industry was that lawmakers demanded further talks about the rules before opening negotiations with EU countries to finalise them.

With EU governments yet to finalise their common position, talks on the proposals look likely to extend into next year. If they are not concluded by April, European Parliament elections scheduled for the following month could push back the law until 2015.

Several European governments are opposed to capping the use of biofuels as some dispute claims the demand for crop-based oils drives deforestation and food insecurity in other parts of the world.

They fear the collapse of the conventional biofuels industry after a number of countries had already begun investing in the feedstock-based fuels before the EU began advocating a move away from them.

>> Read: Ministers block EU proposal to limit some biofuels

French Liberal MEP Corinne Lepage, who steered the negotiations in Parliament, said MEPs had voted to set “a reasonable cap on first generation biofuels,” at 6% of overall transport fuel consumption.

“This is an important signal that support should be focused on advanced biofuels from 2020,” Lepage said. "I regret however that the Parliament did not give a negotiation mandate that would have allowed the file to be concluded without further delay in order to give industry certainty regarding its investments", she added.

Speaking for the industry, the European Biodiesel Board (EBB) underlined that Parliament had “de facto” refused to give a mandate for negotiations with member states over the proposed biofuels legislation, effectively postponing a decision until after the 2014 European elections.

In particular, the EBB stressed the Parliament’s doubts over proposals to measure land displacement caused by biofuels production – so-called Indirect Land Use Change, or ILUC.

“The rather indecisive results seen today show that doubt persists in using a rather young discipline for policy making,” says Raffaello Garofalo EBB secretary general, adding that including ILUC factors, even for reporting, would convey the wrong signal to citizens.

“European regulators should be proud of the commitment of the EU biodiesel industry to promote a greener economy, foster agriculture and support industrial jobs. European biodiesel should set an example for higher standards, not be punished based on inconclusive science,” said Garofalo, adding: “Europe cannot afford to threaten nearly 220,000 jobs based on simplistic ILUC assumptions.”

Turning to advanced biofuels, the EBB said Parliament had chosen “a schizophrenic proposal maintaining present double-counting support but excluding Used Cooking Oil and Animal Fats from the 2.5% specific target allocated to advanced biofuels.”

“Waste and residues based biodiesel provide up to 95% greenhouse gas reduction compared to fossil fuels and it is not justified not to count it among advanced biofuels. Should the European Union be truly committed to reduce CO2 in transport, reliance on effective solution such as biodiesel from waste and residues should be fostered and biodiesel from waste and residues should be included in the advanced sub-target,” concluded Garofalo.

The Greens/EFA group in Parliament welcomed the “tentative steps” taken by MEPs to “address flaws” in the EU’s biofuels policy but said problems remained regarding displacement of food production.

Green climate spokesperson Bas Eickhout said: “Ensuring that the emissions resulting from indirect land use change are accounted for under the fuel quality directive from 2020 onwards will help ensure the EU is not promoting the use of biofuels that clearly have a negative climate impact. This would help steer investors and the fuel industry away from bad biofuels in the medium-term.

“However, regrettably, a narrow majority voted against starting negotiations with the Council to conclude this legislation. This will further delay the urgently needed action to tackle climate-damaging biofuels.”

Eickhout also regretted that lawmakers also failed to include emissions resulting from indirect land use change in the calculation of greenhouse gas savings limit for biofuels under the EU's renewables directive.” This contradictory vote ignores the overwhelming evidence that Europe's biofuel consumption is leading to the destruction of tropical rainforests, with major greenhouse gas implications. There will consequently be no guarantee that land-based biofuels perform better than conventional oil-based fuels in the near future.”

"It is also seriously disappointing that Parliament voted to allow a 6% share of land-based biofuels like food crops in the overall fuel mix. Feeding crops into cars has fuelled rising food prices and rainforest destruction and the EU should not be further exacerbating these trends by promoting the use of agricultural land for fuel.  We should be shunning the use of food crops for fuel altogether but this 6% 'cap' is clearly too high. It is highly questionable why the EU should continue promoting biofuels without putting essential climate safeguards in place."

Commenting on the vote, Nuša Urbancic, clean fuels manager for Transport & Environment, said: “Today’s vote calls into question the willingness of the European Parliament to fix the failed EU biofuels policy. Until an agreement is reached, it is uncertain for investors and the environment what the future of biofuels will be. What is certain though is that Europeans will have to keep paying for another seven years for biofuels that pollute more than the fossil fuels they are supposed to replace.”

Commenting on the Parliament’s vote, Imke Lübbeke, renewable energy senior policy officer at WWF European Policy Office said: “While it is positive that MEPs have drawn a line in the sand and introduced a limit for biofuels, EU legislation needs to do more. Parliament wants to delay accounting for indirect land use change from biofuels – a significant problem – until 2020, and even only in one of the two relevant pieces of legislation, leaving a major gap.

“Their action today does not give the market the right incentives to provide cleaner biofuels for the European transport sector. It is now up to the EU Member States to act responsibly, and improve the Parliament’s position, helping Europe on its transition to a more sustainable energy future.”

Rob Vierhout, the secretary general of the European ethanol industry group ePure, said: “It is disappointing to see that the European Parliament has decided to significantly reduce the market for conventional biofuels in Europe. At a time when we need to boost our economy it is difficult to see why MEPs agree to curtail jobs and investment in a sector that helps Europe to grow the production of clean and sustainable fuels."  

Greenpeace was more radical, saying in a statement that MEPs had “supported the increased use of environmentally damaging biofuels, while at the same time calling on the EU to account for the destructive effects of these fuels on food production and greenhouse gas emissions.”

“Today’s incoherent vote was clearly the result of horse-trading. The Parliament wants the EU to drive on both sides of the road: to recognise that biofuels made from food crops are destructive to the environment, but to continue supporting them politically and financially,” Greenpeace EU forests policy director Sebastien Risso.

Greenpeace called on EU countries to “stop and reverse” the expansion of harmful biofuels. “The full carbon footprint of biofuels must be accounted for and public support and subsidies for environmentally and socially damaging biofuels must be phased out. Priority must be given to real solutions for greener transport, including innovative energy efficiency technologies to reduce energy consumption in transport, green mobility in cities, and cars and trains which run on renewable electricity.”

Global anti-poverty group Oxfam congratulated MEPs for having avoided “the worst case scenario”. But it said Parliament was “still guilty of neglecting the needs of both the people and the planet”, saying a 6% cap on biofuels is “far above current levels of consumption”.

“Today’s vote also introduces a new 7.5% binding target for the share of bioethanol in petrol; this would mean that by 2020 Europeans will have to buy 2.5 times more grain based biofuels than they currently do,” said Marc Olivier Herman, Oxfam’s EU biofuels expert.

“In their efforts to appease the biofuels industry and agricultural lobbyists, MEPs have failed in their duty to represent the best interests of their electorate and the one in eight people going to bed hungry each night. As a result, millions will continue to be susceptible to volatile food prices, deforestation and further land-grabbing. EU governments must now pick up their slack.”

Germany, Spain, France and Italy are the EU’s biggest producers of rapeseed oil – and home to the bulk of its auto industry, which actively promotes the use of biodiesel in reducing carbon dioxide emissions.

European biodiesel output (up to 10 million tonnes a year) relies heavily on rapeseed oil but 2012’s crop was an estimated million tonnes less than in 2011, at 18 million tonnes, forcing up prices.

  • 2013/2014: EU member states to agree common position on the proposal
  • 2014/2015: EU Parliament and member states expected to conclude negotiation on the proposed legislation

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