Powering cars with plants once seemed like an unstoppable idea. Biofuel was sold as a way to reduce Europe’s oil dependency on autocratic regimes, meet climate-change targets and help Europe’s struggling farmers. But since the European Union agreed laws to promote biofuel, doubts have sprouted like weeds. Now it looks increasingly likely that the EU will have to rewrite bioenergy laws to guard against their unintended consequences. 

The problem that early biofuel enthusiasts did not anticipate was that every change in the natural world has a ripple effect somewhere else. A farmer may decide to sell 100 hectares of corn to a biorefinery instead of to a miller. With no change in land use, the greenhouse-gas emissions caused by the farming activity appear to be the same. The problem arises because the demand for that 100 hectares of food corn has not gone away.

One consequence is that maize prices rise. Another is that a different farmer may expand his farm by 100 hectares by ripping up rainforest or ploughing over biodiverse grasslands. This hidden ripple effect on the environment is known as indirect land-use change, a concept that now has its own acronym – ILUC – as well as a burgeoning scientific literature and numerous political interests.

The European Commission has until July to decide whether to amend EU legislation to take account of ILUC. According to the independent economist charged by the Commission with studying the issue, the need for action is clear. “It is obvious that they cannot neglect the fact that there is a land-use change effect [and] that it can be very strong,” says David Laborde, a research fellow at the International Food Policy Research Institute (IFPRI), a research organisation dedicated to ensuring adequate food supplies based in Washington, DC.

Questionable targets

Laborde says that his findings call into question the EU target of deriving 10% of transport fuel from renewable energy by 2020. “Maybe we will need to reduce the ambition of the mandate because no one can supply all the biofuel,” he says.

Laborde prefers to talk about land-use change, seeing the distinction between direct and indirect as an “artificial” one. His work shows that all types of biofuel have land-use effects, but some are more dramatic than others. Biodiesel – fuels from rapeseed, maize or soya – causes more greenhouse-gas emissions than bioethanol, fuels produced from starchy or sugary crops such as sugar cane. Laborde cannot disclose the numbers in his current study, but a?previous study that he co-wrote last year, also for the Commission, shows the scale of the problem. This study showed that emissions from land-use change biodiesel causes greenhouse-gas emissions of 59 grams of carbon dioxide (CO2) per megajoule (MJ) – compared to 87g CO2/MJ for conventional diesel. Bioethanol would cause land-use change emissions of an average of 17g CO2/MJ.

“Biodiesel is a worse option than ethanol in Europe,” says Laborde, noting that over a 20-year period biodiesel will make no savings in greenhouse-gas emissions compared to the fossil fuels that they are replacing.

Fact File

Biodiesel production in the EU (‘000 tonnes)
2009 :     9,046

EU’s largest biodiesel producers (‘000 tonnes)
Germany:   4,933
Spain:   4,100
France:   2,505
Italy:   2,375
The Netherlands:  1,036

Source: European Biodiesel Board

The problem is that Europe’s transport system and political incentives are stacked in favour of biodiesel. By 2020 around four-fifths of the demand for biofuel is likely to be met by biodiesel rather than more environmentally friendly bioethanol. European farmers have rushed to plant rapeseed to meet the surge in demand for biodiesel, and that policy has been embraced by Copa-Cogeca, a European farmers’ union, and the car industry. In contrast, bioethanol, produced in large quantities in Brazil, is subject to steep tariffs at the EU border.

Three options

In May, a draft of Laborde’s study will be sent to the Commission’s impact assessment board. According to people familiar with the issue, the Commission now faces three options. The first – as in all EU lawmaking – is to do nothing. Laborde’s comments seem to rule this out. Furthermore, Connie Hedegaard, the European commissioner for climate change, who shares responsibility for this portfolio with Günther Oettinger, the European commissioner for energy, said last year that she favoured a precautionary approach, which also seems to militate against ‘doing nothing’.

This leaves two serious options. One is to add ‘penalty points’ to biofuels to counter the risks of indirect land-use change – an approach known as adding an ‘ILUC factor’. The other is to upgrade existing sustainability standards. In 2008 bioenergy legislation, the Commission set green safeguards on biofuel, requiring them to save a certain percentage of greenhouse-gas emissions when compared to fossil fuel (see box). The idea is that these percentage thresholds could be jacked up, thus making it harder for less-green biofuel to qualify – although crucially some so-called sustainable fuels could be exempted from more exacting standards.

The biodiesel industry is fiercely opposed to both these options. Such rules could have “a very detrimental impact on the overall sector”, says Amandine Lacourt, the deputy secretary-general of the European Biodiesel Board. Production of biodiesel in Europe more than doubled between 2009 and 2010, according to EBB figures. “A penalty would be totally arbitrary and would compromise the investments that have been made relying on the renewables directive,” Lacourt says.

In contrast, Brazil’s bioethanol industry sounds bullish. “There are a lot of opportunities,” says Géraldine Kutas, the acting head of the Brazilian Sugarcane Industry Association’s (UNICA) office to the EU. “We welcome this debate in Europe. This is a chance for the Brazilian bioethanol industry to demonstrate to the world that we are a global benchmark.” But the bioethanol industry is nervous about what the Commission might propose on ILUC. “Our fear is that this might turn into a non-tariff barrier,” says Kutas.

UNICA is opposed to raising the threshold on sustainability safeguards, dismissed by Kutas as “a magic number”. “If we are able to calculate the magnitude of ILUC, then we should have an ILUC factor,” she says. But Kutas thinks that the science is “not mature enough” to produce a credible figure. She notes that recent scientific studies in the US and the EU have given Brazilian ethanol emissions values as varied as 3.8g CO2 oil equivalent per MJ, 17g CO2/MJ and 46g CO2/MJ. “This is the same crop, this is the same country. How can you get such different results?” she asks. “It is difficult to base the legislation on such immature science. It would be easily challengeable at the WTO.”

Evolving with science

The prospect of a case at the World Trade Organization gives Commission officials sleepless nights. But green campaigners are urging the Commission to add an ILUC factor, courtesy of rapidly advancing science. A report by the independent Institute for European Environmental Policy commissioned by green groups showed that ILUC effects could mean that the world loses an area twice the size of Belgium to growing biofuel crops by 2020. Nus?a Urbanc?ic? of Transport and Environment, a campaign group, is convinced that scientific knowledge has advanced far enough to put an ILUC factor on biofuel, although she says the factor should not be “set in stone” but evolve with science.

The concern for Urbanc?ic? and her colleagues is that the Commission will reject the factor, instead choosing to raise the threshold, while handing out exemptions for European biofuel – an approach she describes as “masking the do-nothing option”.

For Laborde, the problem highlights that biofuel policy was never really designed to help the environment but was an afterthought to security-of-supply concerns. Asked whether biofuels was driven by interest groups, Laborde says: “Yes”. “There is a group of stakeholders who want biodiesel,” he says, citing carmakers, who can meet EU fuel-efficiency laws with biodiesel, and farmers who gain from growing the crops.

If the Commission follows the logic of Laborde’s report and ends the favourable treatment for European biodiesel, the political fallout of retreating on this ‘favoured’ policy could be high. But the best evidence available suggests that bending to political interests risks greater harm to Europe’s climate policy and credibility.

A short history of EU policy on biofuel

Europe is “held hostage by oil” was the portentous conclusion of a green paper from the European Commission in 2000 that urged the EU to turn to biofuel. Biofuel is “very attractive”, said the paper, also lauding its low greenhouse-gas emissions and potential to create jobs in depressed rural areas.

The paper called for a target of 20% of European transport fuel from alternative fuels (including hydrogen) by 2020. This was not taken up when the first biofuel directive was agreed in 2003, but the 2020 dateline remained in the EU’s mind. When EU leaders met in March 2007 for the summit that set EU greenhouse-gas policies, they agreed that 10% of transport fuel should come from biofuel by 2020 if it could be sustainably sourced.

But by the time the EU agreed legislation in late 2008, doubts had set in. The target was subtly altered, becoming a goal to get 10% of transport fuel from renewable sources by 2020, not just biofuel. Also written into the legislation were green safeguards: biofuel must save at least 35% of greenhouse-gas emissions when compared to conventional fossil fuels, and this figure will rise to 50% from 2017. But these safeguards only count direct emissions. Now it seems that 2011 will be the turning point when the EU acts to constrain indirect emissions.