Study: Biofuels took a €10 billion ‘Cyprus bailout’ in 2011

A report by the international charity has claimed that crop-based fuels could push up the price of some foods by up to 36% by 2020. [Shutterstock]

Public support for biofuels in Europe in 2011 added up to €10 billion, a sum equal to the EU’s bailout of Cyprus, according to new research by the International Institute for Sustainable Development (IISD).

The study is to be launched today (17 April), shortly before French MEP Corinne Lepage, the European Parliament’s rapporteur on EU biofuels legislation,  presents a report, recommending the introduction of sustainability criteria to account for greenhouse gas emissions, caused by indirect land use change (ILUC).

The ISSD paper totes the total support for the EU’s biofuels industry in 2011 at between €9.3 and €10.7 billion, a figure that exceeds the total amount of private capital invested in biofuels installations by some 60%.

The IISD says that its findings come from statistics provided by the European Commission and member states, although they will not be peer-reviewed.

“We already know that the EU’s biofuels policy does not help the climate, and this study demonstrates that it does not help our economy either,” said Nuša Urban?i?, the fuels programme manager for Transport and Environment, a green think tank that co-commissioned the report.

“The annual €10 billion of support Europe gives to biofuels equals a Cyprus bailout every year,” she added. “This amount may double if countries insist on meeting the 10% target.”

Public support for the biofuels industry has been deemed necessary to enable member states to meet the EU’s target of sourcing a 10% share of transport fuel to renewable energy by 2020.

Despite protests from the biodiesel industry, Climate Commissioner Connie Hedegaard has slammed some biofuels for being worse CO2-emitters than the fossil fuels that they replace.

Industry sources contacted by EURACTIV said that they could not comment on whether the figure was accurate without having read the report, and had no alternative estimates of public support.

“We need to ensure that we have a return on investment as the only customers we have are oil industries so we need to ensure that there’s an incentive for an alternative to fossil fuels and public support is a way to do so,” said Isabelle Maurizi, the European Biodiesel Board’s project manager.

Estimates on public support were “always a bit complicated” to work out and much depended on the methodology used, she said. Maurizi declined to comment on how much public support to the industry would be enough, or whether a limit to subsidies could be appropriate at some point.

Proposed 5% limit

Last year, the European Commission proposed setting a 5% upper limit on the share of the transport mix that first-generation biofuels such as biodiesel and ethanol could make up by 2020. The draft legislation was almost unanimously condemned by the first-generation biofuels industry.

If the proposal falls, and the EU reverts to its original non-discriminatory 10% target, the study finds that the additional cost to the public – in the form of research and development subsidies, consumption mandates, and tax exemptions – will reach between €28.8 billion and €33.1 billion by 2020.

This is because the current EU policy is expected to result in biofuels taking an 8.6% share of the transport market by 2020, according to member states’ action plans. 

Of that figure, 70% would be made up by biodiesel, which the EU says has the worst greenhouse gas emissions performance, 23% by ethanol, and only 7% by advanced or second-generation biofuels, which have the most sustainable record.

Second-generation biofuels

But Maurizi contends that the same actors are active in developing both the first- and second-generation of biofuels – so limiting public support for one would hurt the other.

“If you look at straw, such feedstock has the same actors involved should it be the agriculture sector and farmers, but also crushers and biodiesel producers,” she said.

However, sources in the second-generation biofuels industry told EURACTIV that second-generation bioethanol was much closer to commercialisation than second-generation biodiesel. 

“With the biodiesel industry, there has been almost no investment on second-generation fuels, unless you call cooking oil second generation, Urban?i? said. “In general, they use very different processes and materials.”

Arguments that first-generation biofuels help ensure security of supply are also challenged by the IISD report’s finding that the EU imports 40% of its biodiesel feedstock and 20% of its ethanol freedstock. Maurizi described the 40% figure as “exaggerated”

Indirect emissions

Environmentalists say that the elephant in the living room of the biodiesels case is the indirect pollution created by displaced agricultural cultivation from crops grown for fuel.

Maurizi said: “We dispute this assumption because it is based on an immature science which is applying economic modelling to bioenergy. It is a very young science that has been evolving and we don’t believe that it should serve as a basis for policy-making.”

However, the science behind ILUC studies now encompasses past land use change, in which data used is transparent and verifiable, as well as projections into the future.

The EU’s Joint Research Centre is expected to issue two such reports soon, while a recent future-based study by the Institute for the European Environment Policy predicted that biofuels use from the EU’s original 10% plan would result in additional emissions of between 31 million and 65 million tones of CO2 per year, because of ILUC.

Member states’ National Renewable Energy Action Plans would require the conversion of 69,000 squared kilometres of land for biofuels use, risking forests, other natural ecosystems, and poor communities land cultivation practices.

This in turn would lead to the release of massive amounts of CO2 from vegetation and soil, the paper projected.

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.

  • 1 July 2014: New biofuels installations must meet a 60% greenhouse gas saving threshold
  • 1 Dec. 2017: Biofuels installations in operation before 1 July 2014 must meet a greenhouse gas saving threshold of 35%
  • 31 Dec. 2017: The Commission will submit a review of policy and best scientific evidence on ILUC to the European Parliament and Council
  • 1 Jan. 2018: Biofuels installations in operation before 1 July 2014 must meet a greenhouse gas saviong threshold of 50%
  • 1 Jan. 2020: Deadline for 10% of EU's transport fuels to be sourced from renewable energies.
  • 2020: European Commission will not support further subsidies to biofuels unless they can demonstrate "substantial greenhouse gas savings"

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