IISD’s biofuels failures tarnish a once respectable institution

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV.COM Ltd.

Peter Wooders paints the International Institute for Sustainable Development (IISD) as a paragon of integrity in his recent commentary piece published on EURACTIV. But the facts paint a different picture, writes Eric Sievers in a response.

Eric Sievers is the chief executive of Ethanol Europe Renewables (EERL), the holding company of Pannonia Ethanol.

>> Read: Peter Wooders: Biofuels honesty is in the eye of the beholder

In April 2013, the International Institute for Sustainable Development (IISD) published Biofuels at what cost?, quantifying 2011 EU biofuels subsidies at €10 billion, a dramatic and erroneous number.  This 2013 report updates 2007 and 2010 reports with the same name, as well as several eponymous country reports.  As a result, some calculations, statistics and methodologies central to the 2013 report are found only in previous reports.

Two serious errors illustrate the scale of IISD's distortions and require correction.

With respect to "market transfer subsidies", in its 2007 EU, 2010 EU, and 2012 UK Biofuels at what cost? reports, IISD calculations put the transport and administrative costs of sustainable ethanol at 10 cents/liter.  Yet, in its 2013 report, IISD reduces these costs to 4 cents/liter with no effort to explain this contradiction other than a footnote to an "anonymous expert".  The difference increases the final calculation of "market transfer subsidies" for ethanol by a whopping 86%.

We know that IISD's 86% inflated number is wrong; IISD tells us so.  IISD's calculated "market transfer subsidy" subtracted from actual 2011 ethanol prices yields the price of ethanol if there were no subsidies.  Yet, so large is IISD's calculated market transfer subsidy that the resulting subsidy-free price is the same as IISD's estimate on page 23 of the lowest global production cost of ethanol.  In other words, if IISD is correct, then the ethanol industry would sell its product for less than it costs to make that same product- a result that makes clear that IISD's "facts" are in need of repair.

With respect to "excise tax subsidies", IISD states that a subsidy is a transfer of public money to private interests.  There is no arguing that. IISD then theorizes that Member State budgets are dwindling due to biofuels excise tax exemptions, which is where it theoretically locates and measures a subsidy.  However, a fact has eluded IISD in its theorizing, namely that due to its lower energy density, more than one liter of ethanol is needed to replace a liter of petrol, meaning that ethanol blended petrol results in higher total volumes of fuel sold (and taxed).  More than in any other Member State, IISD's billions of theorized excise tax subsidies are rooted in France's economy.  Torpedoing all of IISD's theory is the simple fact that the French government concludes that its ethanol excise tax exemptions increased government revenue by €260 million in 2011.

After an expose by the biodiesel industry of IISD's flawed "facts" on other issues, a recent IISD addendum to the April 2013 report lowers subsidy estimate from €10 billion to less than €6 billion. Yet, we informed IISD about the errors described above many months ago and IISD has corrected nothing.  It is therefore surprising that Peter Wooders claims that IISD "always" corrects its errors.

How IISD has so easily misled Europe about biofuels by orders of magnitude illustrates why EU climate policy is in shambles today—theatrics and unaccountability have pushed aside science and honest debate.  The flawed IISD estimates have been widely published as credible data and used to justify regulatory changes that damage an important European industry.  The result has been the loss of millions of investment funds and thousands of jobs for hard pressed European citizens.

A methodologically consistent and factually correct IISD analysis would show that bioethanol is currently the least expensive way for Europe to decarbonize its economy.  We hope that IISD's leadership still cares about sustainable development and has the strength of character to set the record straight.

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