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Keeping EU biofuels policy alive costs society €10bn a year, study shows

Europe is reforming its biofuels policy due to concerns raised about its impact on global land use change patterns and global food markets. The negative environmental impacts of the biofuels policy have been well demonstrated, but what is less clear are the economic implications.

This report (which represents an update on an earlier 2011 study) finds that the cost of biofuel subsidies were between €9.3bn and €10.7bn in 2011, yet estimates of environmental, social and economic impacts show only marginal benefits at best. Therefore the report casts doubt on the wisdom of supporting biofuels in the future. The report was funded by four NGOs - T&E, the EEB, BirdLife Europe and IISD.

Citation and summary as follows: IIEP (2013). Anticipated Indirect Land Use Change Associated with Expanded Use of Biofuels and Bioliquids in the EU – An Analysis of the National Renewable Energy Action Plans, Catherine Bowyer (2011) Institute for European Environmental Policy, UK.

This study represents an extension of an earlier November 2010 analysis and estimate of the effects of Indirect Land Use Change (ILUC) associated with the increased use of conventional biofuels that EU Member States have planned for within their National Renewable Energy Action Plans (NREAPs). These documents specify how European governments plan to deliver their transport targets under the Renewable Energy Directive (RED). Twenty-seven NREAPs, covering all EU Member States, have been analysed in this study. ILUC effects have been calculated using recently released studies by the European Commission.

  • The RED target, for 10% of transport fuel to be from renewable sources by 2020, is anticipated to stimulate a major increase in the use of conventional biofuels up to 2020, contributing up to 92% of total predicted biofuel use or 27.3 Mtoe in 2020. This would represent 8.8% of the total energy in transport by 2020; 72% of this demand is anticipated to be met through the use of biodiesel and 28% from bioethanol.
  • Member States are anticipating importing significant proportions of these fuels and their associated feedstocks. Figures reported equate to 44% of bioethanol and 36% of biodiesel in 2020. However, actual imported levels of feedstock are anticipated to be higher as it is unclear whether the imports anticipated by Member States refer to feedstock for ‘domestic’ processing into biofuels as well as imports of processed biofuels.
  • Bioliquids are also an important element of future bioenergy profiles for some Member States. However, the state of information concerning the feedstock basis for these is often incomplete and bioliquids are, therefore, not included in this analysis.
  • It is predicted that, compared to 2008, in 2020 an additional 17,196 Ktoe of biofuels would be used and sourced from conventional sources, ie primarily food crop based feedstocks; this can be considered to be additional demand stimulated by the RED.
  • Using currently available data, this additional demand for these fuels is anticipated to lead to between 4.7 and 7.9 million ha of ILUC, ie an area equivalent to just larger than the Netherlands to just under that of the Republic of Ireland.
  • This additional ILUC was calculated to result in emissions of between 50 and 83 million tonnes of CO2 equivalent (MtCO2e) on an annualised basis, ie between 1003 and 1668 MtCO2e in total.
  • Under the RED biofuels must deliver a required level of GHG savings relative to fossil fuels to count towards the targets. Even when this saving is taken into account, total additional GHG emissions from increased biofuel use, taking account of ILUC, are between 313 and 646 MtCO2e (for the period 2011 to 2020) or between 31 and 65 MtCO2e annually. The latter equates to up to 14% of emissions from EU agriculture in 2007 or 7% of total transport emissions. Put another way this would be equivalent to between 14 and 29 million additional cars on the road across Europe in 2020.
  • Based on this assessment, and the assumptions adopted, use of additional conventional biofuels up to 2020 on the scale anticipated in the 27 NREAPs would lead to between 81% and 167% more GHG emissions than meeting the same need through fossil fuel use.
  • This analysis was based on what were considered the most appropriate assumptions using the evidence and models available at the time of drafting. However, sensitivity analysis shows that even with far lower estimates of ILUC arising per unit of additional biofuel consumption and of GHG emissions per unit area of ILUC the use of conventional biofuels envisaged in the NREAPs fails to deliver the reduction in GHG emissions required under the RED, and leads to an increase in GHG emissions overall.
  • This analysis underlines the need to address the question of ILUC as a priority for biofuels policy and to include ILUC in the criteria for assessing whether biofuels should count towards the delivery of targets under the RED for 2020 and, more generally, for EU European climate change mitigation goals. Moreover, it also raises urgent questions about the appropriateness of projected levels of conventional biofuel use by Member States in 2020. Many have focused little effort in their NREAPs on promoting advanced biofuels or pursuing a greater efficiency in their transport sector so as to reduce the overall climate burden.

The full report and briefing can be found here.

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