For a brief period, biofuels bloomed in the political sun: they would clean up transport, cut dependency on unstable petro-regimes and help out struggling farmers. “Biofuels are just about the only large-scale option available to diversify fuel sources in the transport sector,” Andris Piebalgs, the European commissioner for energy, said two years ago, when electric cars were still an eccentric fancy, rather than the next big thing.
It is no accident that interest in electric cars has grown, as the silver bullet of biofuels has become tarnished. The first set of concerns around biofuels relates to their direct effects: damage to water, soil and biodiversity, along with a rebound effect in the form of higher food prices. This led the EU to develop green standards to guard against promoting biofuels that do more environmental harm than good.
But many academics and environmentalists are also worried about the domino effects of biofuels, the unintended consequences of ‘indirect land-use change’ (ILUC). This effect can be seen when a farmer changes his business by starting to grow crops for fuel. As a result, food production is squeezed and moves elsewhere, potentially eating into valuable forest or grassland.
The EU has drawn up rules to guard against the worst effects of direct land use change, inserted into the EU’s 2008 renewables directive, but the indirect effects have not been taken into account.
At first, the EU decided that measuring the domino effect was too complicated. But the Council of Ministers and the European Parliament have called on the European Commission to study the ILUC equation, and “if appropriate” to draw up a new law by the end of 2010.
While the EU has been hesitating, the United States has begun to act. In May 2009, the Environmental Protection Agency (EPA) proposed that biofuels should be regulated according to their direct and indirect emissions.
Although conceding uncertainty about the science of indirect effects, the EPA concluded that it would be “less scientifically credible to ignore the effects of land-use changes”.
Regulators in California have gone further: they have agreed a ‘low-carbon fuel standard’, where the carbon cost of domino effects is calculated. This would effectively penalise biofuels for increasing emissions, whether directly or indirectly.
Officials at the Commission reject the idea that the EU has been slow off the mark. The Commission plans to publish a report on the problem in March 2010. A draft law is expected at the same time. A group of officials from different departments (transport and energy, environment, agriculture, economic and financial affairs, and trade) are weighing the options for a consultation that will start this autumn.
But this routine consultation reveals the difficulties of legislating against unintended consequences. The Commission is divided over what options should be included in the consultation paper. The first dilemma is assigning value to land: should abandoned farmland be considered worth the same as a rainforest teeming with life? Land value also varies according to the beholder: one person’s empty scrubland could be someone else’s living.
The Commission’s department for transport and energy, which has long championed biofuels, believes there is plenty of land that could be converted at little carbon cost, such as abandoned farmland in the former Soviet Union.
Another conundrum is that any restriction on biofuels must be compatible with international trade rules. One idea being discussed by the Commission is that biofuels should be required to come from highly productive agricultural land. But this idea has caused concern among economic and trade officials. Such a plan could fall foul of the World Trade Organization. It could also be perceived as ‘climate protectionism’ and sour the atmosphere between rich and poor countries as they attempt to reach a new global deal on climate change in Copenhagen.
These knotty questions mean that a routine exercise has become fraught with argument, even before legislation is on the table. Unusually, the final decisions on what options are to appear in the consultation paper will be made not just among Commission departments, but by officials in the private offices of the commissioners concerned.
The consultation may be tied in knots, but arguments are gathering pace. Nusa Urbancic, a policy officer with T&E, a campaign group, wants the EU to follow the Californian example and include the carbon ‘debts’ of both direct and indirect land-use change when it regulates biofuels.
Irrespective of uncertainties over the science, she claims that there is very clear evidence that land displacement is taking place: “Even if the science is not 100% at the moment, at the very least it would send a market signal that some biofuels are better than others.”
The bioethanol industry is also watching the Commission closely. Rob Vierhout, secretary-general of the European Bioethanol Fuel Association, sees the ILUC question as a politically motivated campaign “to kill biofuels”. He believes that the industry is being unfairly targeted as the climate villain: “A dozen human activities cause indirect land use change. To single out biofuels is not doing justice to reality.”
But greens in the US have argued that there is a crucial distinction between biofuels and any other activities that may change how land is used. The point of biofuels is that they are better for the environment than fossil fuels, they argue – which is clearly not the premise behind building a housing estate or a motorway.
After a long debate last year, the Commission seems to agree that the problem exists. The debate over the coming months will be on how to count and control it.
Tricky targetsThe European Union’s experiment with biofuels took off in 2003, with a directive calling for biofuels to have a 2% share of the fuel market by 2005 and a 5.75% share by 2010.
The first target was missed and the Commission has given up on the second. But this did not stop the EU from setting an even more ambitious goal: to get 10% of transport fuel from renewable sources by 2020.
The Commission’s department for transport and energy had originally proposed a 10% biofuels target, but this was broadened to renewable energy during negotiations on the 2008 renewables directive.
One of the most difficult parts of that 2008 directive was agreeing on green safeguards to ensure that the production, transport and use of biofuels added up to a worthwhile saving of carbon emissions when compared to fossil fuels. In the end the EU agreed that all biofuels must have a carbon saving of at least 35% compared to fossil fuels, rising to 50% by 2017 (and 60% in 2017 for new refineries).
The EU also stipulated where biofuels could be grown, ruling out biofuels from clearing old forests, endangered ecosystems or grasslands rich in biodiversity.
Despite the possibility of safeguards, not everyone thinks it was right to stick to the 10% target. The European Environment Agency called for a suspension of the 10% target, concluding that its “unintended effects are difficult to predict and difficult to control”.
American argumentsIncluding the domino effects of indirect land-use changes can have a dramatic effect on the calculation of whether a biofuel can be deemed to be good for the environment.
American corn-based ethanol offers a greenhouse gas saving of 61% compared to fossil fuels, according to the Environmental Protection Agency (EPA).
But when the EPA counted the carbon cost of indirect land change caused by corn-based ethanol, the saving fell to just 16%.
The industry disputes the calculations. Bob Dinneen, chief executive officer of the Renewable Fuels Association (RFA), said that the 16% figure is “still extraordinarily positive, but not where we think we are”. The RFA has argued that indirect land change is “highly speculative”.
Some lawmakers go further. Collin Peterson, a Minnesota Democrat who chairs the agriculture committee in the House of Representatives, complained that the government was “going to kill off the biofuels industry before it even gets started”.
US greens have responded positively to the EPA’s plans. The American branch of Friends of the Earth praised the EPA for taking up the domino effects problem, but criticised the rules for allowing “polluters to cook the books”, because the carbon debt of biofuels will be measured over a long period.
This month’s lobbying war in Washington gives a clue as to how battle lines will be drawn in Brussels.