Information and Links

Join the fray by commenting, tracking what others have to say, or linking to it from your blog.

Follow this Blog

Subscribe via RSS

Or, enter your address to follow via email:

The EU’s Biofuel Mandate

Posted by admin on March 3rd, 2008

In January of this year the European Commission tabled a comprehensive set of proposals to achieve the renewable energy policy goals set last year by the European Council. These proposals include a draft Directive on renewables establishing an overall binding target for the EU as a whole of a 20% share in renewable energy sources in energy consumption in 2020 and a binding 10% minimum target for biofuels in transport to be achieved in 2020 by each Member State.

As far as renewables are concerned the proposals provide for a fair distribution of efforts across Member States establishing national overall targets for each of them (GDP per capita being the main criterion). Three sectors are concerned: electricity, heating and cooling, and transport. Member States retain discretion as to the mix of these sectors except for transport where a minimum binding target of 10% in 2020 has to be achieved.Transport produces nearly one-third of CO2 emissions presenting the most rapid increase of all sectors of the economy. Moreover, the transport sector relies heavily on imported oil. The objectives set in the biofuel directive of 2003 (2% in 2005 and 5.75% in 2010) are far from being met. The biofuel share in 2005 was less than 1%.

Specifically for biofuels and bioliquids the draft Directive establishes stringent environmental sustainability criteria to ensure that biofuels that are to count towards the target are sustainable. They must achieve a minimum level of greenhouse gas emission reductions (35%) and respect a number of requirements related to environmental impact and biodiversity. The draft Directive aims for a complete harmonization of biofuel sustainability criteria in order to ensure that no national criteria may constitute an obstacle to trade. This implies also that no additional sustainability criteria may be set by Member States in relation to third countries. The fuel quality Directive of 1998 will be adapted to allow for a higher incorporation of biofuels blended with fossil fuels.The choice of support instruments to achieve the biofuel mandate is left to Member States under supervision of the Commission. They can take the form of tax exceptions, biofuel obligations, farming subsidies, and subsidies for the development of renewable energy technologies. Member States may encourage the use of second-generation biofuels (such as wastes, crop residues, and lingo-cellulosic material), which offer greater energy potential and more environmental benefits. The contribution made by second-generation biofuels towards the target will be considered to be twice that made by other biofuels.An EU wide policy on biofuels with harmonized sustainability criteria is certainly an important step forward. It maintains however a great variety in support measures and incentives amongst Member States and fails to address the question of border protection.(MFN tariffs on bioethanol are relatively high: between 40 and 60% ad valorem equivalent).

There remain, however, serious question marks on the level of ambition and adequacy of the sustainability criteria.For a foreseeable future the EU will have to rely on first-generation biofuel to achieve the 10% target in 2020: vegetable oils for biodiesel and sugar and starch crops for bioethanol. The target cannot be met by domestic EU production; imports from outside the EU will be needed (notably bioethanol from Brazil). As far as bioethanol is concerned there are question marks on the domestic availability as prices for corn and wheat have gone through the roof. Investments - and even current production - of ethanol have been put on hold in many instances.In the longer term there is concern that ambitious biofuel mandates, combined with trade barriers, will give too much incentive to the production of first-generation biofuels, slowing down the development of the second-generation and risking to affect food security.As far as the sustainability criteria are concerned, many would argue that these criteria are not sufficiently stringent. The impact on water availability, soil fertility, and air quality is not taken into account. The default values for greenhouse gas emission savings can be questioned. The biodiversity criteria will be difficult to enforce due to substitution effects. Nonetheless, harmonized EU sustainability criteria are good for starters. They will certainly need to be strengthened in the future and will require to be complemented by international agreements.  

Reader Comments

Sorry, comments are closed.