European Union Seeks to Cap Food-Based Biofuel Production

The European Union wants to limit the contribution of crop-based biofuels toward the bloc’s renewable energy target to avoid competition with food and spur the development of clean fuels made from non-edible crops.

The European Commission, the bloc’s regulatory arm in Brussels, proposed today that first-generation biofuels made from crops such as sugar, starch or vegetable oils provide 5 percent of the EU target for transport fuel. The current EU requirement that at least 10 percent of energy for road and rail transport in 2020 come from renewable sources in all member nations risks causing side-effects that undermine the battle against global warming, environmental groups have said.

“We must invest in biofuels that achieve real emission cuts and do not compete with food,” EU Climate Commissioner Connie Hedegaard said in a statement. “We are of course not closing down first-generation biofuels, but we are sending a clear signal that future increases in biofuels must come from advanced biofuels. Everything else will be unsustainable.”

The draft legislation needs approval by EU national governments and the European Parliament to enter into force. Biofuels including ethanol and biodiesel are the main renewable energy for transport and offer the prospect of reducing the use of fossil fuels blamed for climate change.

Food Crops

Biofuels, mainly first-generation, accounted for about 4.7 percent of EU transport fuel consumption in 2010, according to the commission.

The commission’s proposal would also require reporting of estimated emissions linked to indirect land-use change. Greater use of crops for biofuels would displace food production and that would threaten to spur the conversion of forest and peatland, which store carbon dioxide, into land for food crops.

While capping the production of crop-based biofuels is a step in the right direction, the failure to hold biofuel suppliers accountable for the emissions from indirect land-use change is the “most serious flaw” in the commission proposal, according to Greenpeace.

“Fuel suppliers can still use harmful biofuels like palm oil from Indonesia and claim credit for cutting emissions,” John Sauven, executive director of Greenpeace, said by e-mail.

‘Substantial’ Savings

The proposed obligation to monitor emissions stops short of solving “the key environmental issue of halting production of unsustainable biofuels that are, in some cases, more harmful to the climate than fossil fuels,” environmental lobby Transport & Environment said in an e-mailed statement today.

Today’s proposal doesn’t affect the ability of the EU’s 27 member states to provide financial incentives for biofuels. After 2020, biofuels should only qualify for aid if they lead to “substantial” savings of greenhouse gases that scientists blame for global warming and are not produced from crops used for food and feed, according to the EU.

“This proposal will give new incentives for best- performing biofuels,” EU Energy Commissioner Guenther Oettinger said today. “In the future, biofuels will be saving more substantial greenhouse gas emissions and reduce our fuel import bill.”

Novozymes A/S (NZYMB), the world’s biggest maker of enzymes for biofuels, said that while it strongly supports the commission’s intention to accelerate the deployment of advanced biofuels, the effectiveness of the proposed instruments is questionable. It urged the commission to push for more ethanol in the fuel pool to start a transition towards most sustainable transport fuels.

Sustainable Biofuels

“Capping all conventional biofuels without distinction and failing to promote the best performing ones will not help address indirect land-use change,” Lars Christian Hansen, president of Novozymes for Europe, said by e-mail. “Today’s proposal is not providing the necessary signals that sustainable biofuels will be part of the EU energy mix.”

The commission’s proposal would lead to a “rapid kill” of the biofuels industry, Nathalie Lecocq, director general of Fediol, which represents the European Vegetable and Proteinmeal industry, said by phone. Investors in first-generation fuels are often the same as those in second-generation fuels, she said.

“If you discourage fully the first generation biofuels then there is doubt around second generation biofuels which means investors aren’t going to feel confident to continue their investment,” said Lecocq.

To contact the reporters on this story: Louise Downing in London at Ldowning4@bloomberg.net; Ewa Krukowska in Brussels at ekrukowska@bloomberg.net

To contact the editors responsible for this story: Reed Landberg in London at landberg@bloomberg.net; Lars Paulsson at lpaulsson@bloomberg.net

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