Debate on biofuels picking up speed

The production of biofuels has increased substantially over the past decade, and currently reaches 19 million tonnes per year. Europe has become the world’s leading producer of biodiesel, whereas the US and Brazil lead in bioethanol. This growth has been promoted through European policies: in 2009, the EU Climate and Energy Package for 2020stipulated that 10% of energy used for transport must come from renewable sources by 2020, and will be based primarily on biofuel. Additionally, the CO2 content of fuel has to be lowered by 6 % by 2020.

European consumption of biofuels for transport was 14.4 million tonnes last year. According to the Biofuel Barometer from EUObserver, this was 14 million tonnes in 2011 – denoting an increase of 2.9 %, somewhat less than the growth seen between 2010 and 2011, when the sector could boast a 5.3% growth in production. The total volume of biodiesel and bioethanol currently takes a share of 4.7% of all fuel for European transport – a figure which is supposed to rise to 10% by 2020.

Driving or eating

By and large, biofuels today are ‘first generation’, and are made from crops which are also produced for food: sugarcane, corn, rapeseed,soy, palm oil and wheat. Currently, Europe imports 35% of the raw material needed, but to reach the planned figure of 10%, these imports will have to increase to 50 %.

The two food crises of 2008 and 2010, which caused steep price hikes and civil unrest around the world, have set off the alarm bells. Numerous reports have proven a strong correlation between the rise of biofuels and the shrinking of food stocks. One of these, Rabobank’s Finding the Food-Fuel Balance (October 2012), confirms the relationship between biofuels and food markets, and claims the reserves of plant-based oils cannot keep up with demand. These reserves are the lowest they have been in the last 38 years, but an increase of 23 million in demand is expected by 2016. This has led Rabobank to conclude that a decrease in the production of biodiesel is to be expected, with the report claiming that the discrepancy between demand and supply means that it is likely the 10 % goal will not be met.

The UN Food and Agriculture Organisation also points out that over the last 10 years, the world consumed more food than it produced. This situation of scarcity causes prices to rise, which aggravates hunger and poverty, especially in developing countries. Prices have increased drastically in countries that import food (see insert).

In Latin America and Africa, land speculation and the search for suitable terrain to grow fuel crops is a major driver for land grabbing. From 2009 to 2013, 6 million hectares have been usurped by European companies producing biofuels.

The bio-irony

The great hope for biofuels was that they would reduce CO2 emissions. Connie Hedegaard, the European Commissioner for Climate Action, left no doubts in October last year: “Some biofuels – subsidised with European money – are at least as damaging to the climate as fossil fuels.”

Looking at the entire production chain, it is clear that biofuels based on certain crops cause the same or even more emissions than traditional fuels. This negative result is related to the Indirect Land Use Change (ILUC) of those energy crops. Europe has installed sustainability criteria for biofuels, stating that crops grown for energy cannot be cultivated on land which needs to be deforested, or on existing swampland – both of which are carbon dioxide sinks. The issue is that, when biofuel cultivation takes up existing farmland, agriculture moves to those sensitive areas – so the problem merely moves to another sector.

An example of ILUC: between 2000 and 2006, Europe doubled its imports of palm oil to replace the rapeseed oil that was no longer being used to produce food, and was instead grown for biofuels. “If we want to continue cultivating energy crops and reduce our CO2 emissions we either have to eat less, or eat less nourishing food.” This is Princeton researcher Timothy Searchinger’s conclusion in the paper Understanding the Biofuel Trade-offs between Indirect Land Use Change, Hunger and Poverty. To avoid reducing food production, ever more forests will have to be cut down, leading to increased greenhouse gas emissions.

The same research also shows that the land used to produce crops for energy is not replaced equally by new terrains for food production: for each 100 calories stemming from corn and wheat used in bioethanol, 25 are not replaced by food production. Searchinger concludes that biofuels of the first generation always lead to a lose-lose situation, and advocates phasing out the subsidies to agricultural biofuels.

All this forces one to consider whether current policies are at all suitable for the claimed goals: reducing transport-related emissions, stimulate rural development and securing future energy needs. Biofuels, At What Cost?, a research paper by the International Institute for Sustainable Development (IISD) concludes that the European biofuel policy is controversial, does not have clear advantages and lacks decent control. The paper calculated that the sector receives up to 10 billion eurosin subsidies each year (in tax reductions and waivers, fuel mixtureregulationsand research support), even though the sector represents between 13 and 16 billion euros. Ten billion euros is the same amount that was considered for rescuing Cyprus in March, and equals the yearly government spending of a smaller European country like Estonia or Latvia.

These findings are what pushed the European Commission to review its regulations, especially since naval and aerial transport will also have to reduce its emissions and use more biofuel. In October, the Commission drafted a law limiting the share of first generation biofuel to 5 % of food crops, effectively freezing that share at its current level. The remaining renewable energy must come from other sources (biogas, electricity), or from second generation biofuels (waste water, solid waste or wood). The draft also demands clearer reporting on indirect land use, and from 1 July onwards, new biofuel installations have to prove that they reduce CO2 by 60 %. It proposes halting the subsidies for biofuels in 2020, unless producers can show a substantial reduction in CO2. Without the 5 % norm, the share crops for fuel take in agriculture will grow to 8.5 %, signifying more pressure on soil, water and rural communities.

Decisive months ahead

The lobby for biofuels is shocked, and claims the proposal will be the death of the sector. This lobby consists of biodiesel producers (European Biodiesel Board), the European farmers and agricultural cooperatives (Copa-Cogeca), ethanol producers (ePure), the European plant-based oil and protein industry (Fediol), and sugar beet producers (Cibe).

According to these producers, Europe is making a U-turn after being swayed by environmental organisations. They mention the investments over the past years – claiming these add up to 14 billion euros, though the IISD states production capacity is 6.5 billion euros – and claim that this law would threaten hundreds of thousands of jobs. The lobby does not think increasing the share of second generation biofuel is realistic because it will take at least 10 years before these will turn a profit.

The proposition was taken to vote last summer by the parliamentary committees for environment, energy, agriculture, transport and industry, with only the environment committee reaching an agreement, allowing for 5.5 % of first generation biofuel. The other committees propose 6.5 to 8 %. The European Parliament will vote on the law on 11 September, and the Council will decide on the matter in October.

Marc Olivier Herman of the Oxfam EU-Advocacy Office: “The lobby is trying to convince each member state in the Council, and many of these states are very reluctant to change the law. Italy blocks every intervention since it has a very important biofuel industry. The new member states also refuse limitations. Lithuania, currently chairing the Council, proposes a 7 % norm, using a very weak definition of sustainability.”

European environmental NGOs would like to see first generation biofuels phased out completely, through a total reorganisation of the transport sector. To assess the viability of this plan, Greenpeace, BirdLife Europe, the European Environmental Bureau and Transport and Environment commissioned a study from the Dutch research institute CE Delft. This study, Sustainable Alternatives for Land-based Biofuels in the European Union, states that sustainable transport based on energy efficiency, more frugal engines, a restructuring of public transport, electric cars and second generation biofuels, together with a phasing out of the first generation by 2020 would offer many more gains in averting climate change, and would pose less of a threat to our food production.

Corn promoting hunger

40 % of corn grown in the US is used to produce bioethanol. A recent study by ActionAid, Fuelling the Food Crisis: the Cost to Developing Countries of US Corn Expansion, reached the conclusion that the increasing demand for corn and the subsequent rise in prices for those developing countries that import it, created an extra cost of 8.75 billion euros in the period from 2005/2006 to 2010/2011.

In Central America, this meant costs increased by 278 million euros. In Guatemala alone, imports rose from 9 % in the early nineties to a current 40 %, adding up to 69 million euros. The country experiences a strong growth in plantations for African palm and sugarcane. Guatemala has extreme land ownership inequality: 92 % of farmers own only 22 % of the land. Even though the peace treaties of 1996 set out to change this, today the country finds itself with an even larger concentration in plantations for energy crops. Communities that have no property rights are forcefully driven away from their land, and human rights violations are rampant. The situation is exactly the same in neighbouring Honduras. In these countries, food security is threatened and small-scale farmers see no profit from the biofuel gold rush.