European Voice | 12 July 2007

Can biofuels become sustainable?

By Emily Smith

The biofuels target set by the Commission might not be an environmental winner after all, writes Emily Smith.

Aiming to get one-tenth of EU transport fuel from plant sources by 2020 might have looked like the least challenging target agreed at this year’s spring summit.
Perhaps even some non-expert EU leaders thought that switching 10% of the fuel driving vehicles around European roads would require a less fundamental overhaul of policies than the other commitments made in March: to cut greenhouse gas emissions by 20% and increase the use of renewable energy to 20% of the total mix by 2020.

If anybody did see the biofuels target as an environmental vote-winner, they were soon set straight.

Far from rushing to thank leaders for plans to phase out polluting fossil power, environmental groups demanded a cautious approach to sugarcane or grain-based fuels. Without strict environmental standards, they said, biofuel production could lead to deforestation, water shortages and an increase in carbon dioxide emissions.

While sighting a chance to turn their tracts of arable land into a valuable commodity, poor countries began to flag up the effect on food prices if traditional crops space is turned over to biofuel production. Mexico has already seen the price of tortillas — the country’s main source of food — soar, as corn is increasingly used for biofuel production.

Public attention in Europe has also turned to impact assessments showing that the EU would need to use 72% of its farmland for biofuel crops to meet the spring summit target and that it costs 2.5 times more to produce a litre of biofuel than to produce the same amount of petrol.

The European Commission says that it will formally propose the 10% biofuels and 20% renewables targets in a single directive this November. But before it does, the Commission has to find a way of answering all the biofuels questions that have come to the fore since March.

“This is one of the biggest headaches the Commission has today,” according to one Commission official.

Last week (5-6 July) the Commission hosted an ‘international biofuels conference’, bringing together EU and international experts and politicians, including Brazil’s President, Luiz Inácio Lula da Silva. Brazil today is the world’s largest ethanol producer, but is often accused of ignoring environmental and work standards to grow the sugar-cane needed.

The Commission President José Manuel Barroso and five commissioners - responsible for energy, the environment, trade, development and external relations - were among the speakers, indicating both the importance of the conference and the breadth of issues to be tackled by any new biofuel policy.

Energy Commissioner Andris Piebalgs said that the November directive would contain “a sustainability scheme” for biofuels, whose details were still being worked out.
He said that the scheme would have to include minimum sustainability standards for biofuels and that only biofuels meeting these criteria would count towards the 10% target. Governments would also only be able to offer tax exemptions for these ‘sustainable’ biofuels.

Environment Commissioner Stavros Dimas pointed out that the 10% binding target was not as absolute as many now believe. “We seem to risk forgetting what the Council told us,” said Dimas. “Namely, that this is only a 10% target if two criteria are met.”

The spring summit conclusions state that “the binding character of this target is appropriate subject to production being sustainable [and] second-generation biofuels becoming commercially available”.

The Commission and biofuel producers say that they are confident that sustainable and/or second-generation biofuels, produced more efficiently and with far less impact on food crops, can be developed in time for the 2020 deadline.

But if they do not, the spring summit criteria give governments a clear get-out clause.

Alongside the biofuels directive and sustainability scheme, the EU has to agree the best way to develop a working biofuels market.

Swedish Trade Minister Sten Tolgfors said that import tariffs on biofuels should be scrapped to encourage the use of these fuels. Some 3% of Swedish cars run on biofuels, mostly ethanol imported from Brazil.

But eBio, the European bioethanol fuel association, said that import tariffs were needed to encourage investment in European biofuels potential. Ramón de Miguel, eBio president, said that investment was particularly important if Europe was serious about getting second-generation biofuels on the market soon.

Even faced with import tariffs, developing countries are keen to see the 10% target adopted. Countries led by Brazil, but also including Indonesia and Mozambique, could see their export markets swell as EU and US demand for plant-based fuels grows.

Trade Commissioner Peter Mandelson enraged EU farmers by saying that Europe would have to import a large part of its biofuel resources. “Mandelson must understand that biofuels policy is also about promoting EU energy independence,” said Pekka Pesonen, secretary-general of Copa-Cogeca, the European farmers’ association.

Mandelson was accused by one agriculture specialist of promising Brazil a welcoming EU biofuels market in the hope of finding a way to restart stalled World Trade Organization talks.

Mandelson and Louis Michel, the European development commissioner, said that they were working to develop an EU scheme to encourage sustainable biofuel standards without creating trade barriers.

Michel said that this could be paid for in part by the European Development Fund (EDF), whose next five-year funding period starts on 1 January next year.

A spokesman for Michel said that sustainability and trade barriers could also be addressed through new economic partnership agreements (EPAs), which are currently being negotiated with countries from the African, Caribbean and Pacific bloc.

“New EPAs and the EDF will provide a framework for action on trade in biofuels,” he said. “From 2008 onwards this issue will become much more visible.”

EU biodiesel production 2006, in tonnes
Austria: 134,000
Belgium: 85,000
Cyprus: 2,000
Czech Rep.: 203,000
Denmark: 81,000
Estonia: 20,000
France: 775,000
Germany: 2,681,000
Greece: 75 000
Hungary: 12,000
Italy: 857,000
UK: 445,000
Latvia: 8,000
Lithuania: 10,000
Malta: 3,000
Poland: 150,000
Portugal: 146,000
Slovakia: 89,000
Slovenia: 17,000
Spain: 224,000
Sweden: 52,000
TOTAL: 6,069,000
Source: European Biodiesel Board

EU Bio-ethanol production in 2006, in tonnes
Spain: 317,000
Germany: 315,760
France: 234,306
Poland: 104,000
Italy: 102,400
Sweden: 57,600
Lithuania: 14,000
Czech Rep.: 13,200
Netherlands: 11,680
Latvia: 9,600
Hungary: 4,818
Ireland: 760
TOTAL: 1,185,524
Source: European Union of Ethanol Producers