May 21, 2008
An unsustainable biofuels policy
Read a European Commission document closely enough, and there’s usually a nugget in it somewhere. In the case of Tuesday’s communication on rising global food prices, it was to be found in the final paragraph, which asked the question: Should the EU drop its biofuels target due to rising food prices?
European Union leaders committed themselves last year to producing 10 per cent of their road transport fuel by 2020 from biofuels. Among scientists, car manufacturers and green campaigners, not to mention several EU governments, it was always a contentious target. But the Commission reaffirmed the goal in January, describing biofuels as one of the few measures “realistically capable of making a significant impact on greenhouse gas emissions from transport”.
The tone of Tuesday’s message from the Commission was subtly different. It stated: “The target has never been to reach 10 per cent biofuels at any price. It is 10 per cent biofuels under strict conditions. Those conditions include a workable and robust sustainability scheme, and commercial viability for second generation biofuels…”
In a word, the Commission is putting more emphasis now on the question of “sustainability” - that is, whether biofuels can be produced in a way that does not degrade the environment - and less on the 10 per cent target itself.
To some extent, the switch of emphasis reflects the pressure that the EU feels under from those who argue volubly that biofuels production is driving up world food prices and damaging the environment at the same time. But some EU governments would no doubt heave a private sigh of relief if the 10 per cent biofuels target were to be put to one side.
Significantly, the target is also coming under criticism from influential political circles in the European Parliament, which would have to approve the 10 per cent goal for it to become law.
All of which raises the question of whether the first big hole is being blown in the EU’s campaign against climate change. Adjusting the biofuels target should, of course, be a matter of simple common sense. It ought not to involve a massive loss of face.
But climate change is a war in which the EU likes to lead the world from the front - partly because it is neither willing nor able to handle real wars. Any climbdown from the biofuels target is bound to be seen as an embarrassment for the EU. That’s a pity, but if truth be told the risk of red faces has been growing for more than a year.
At least the EU is prepared to reconsider its biofuels policy on the basis of food price hikes while others are not doing this. From the China perspective, everything the EU is doing on climate change is very constructive indeed, as can be seen in the recent special EU-China Summit on Climate Change (25 April 2008) and in the itemisation of it at regular summits. If we do not help China, we will fail ourselves and the world. CO2 emissions are rising almost vertically here as China industrialises and we must help China to find a plateau soon and to start seriously decarbonising its economy.
Posted by: Dave Feickert | May 21st, 2008 at 6:24 pm | Report this commentBetter to drop something once unintended consequences become clear, namely the ramp-up in food prices. The EU would be better dealing with climate change in the following way:
1. Reduce the ‘carbon intensity’ of the power industry, the biggest polluter of them all.
2. Electrification of transport.
While it deals with 1, the market will reduce emissions in the transport sector for us as prices increase in response to the tight supply of oil. The market will not reduce carbon emissions from electricity suppliers as the dirtiest fuel, coal, will become more attractive as oil, and hence gas, become more expensive.
Posted by: Richard | May 22nd, 2008 at 9:02 am | Report this commentThe EU should be red faced if backs down from the 10% target for biofuels as it would be like throwing the baby out with the bathwater. In essence, it’s 1 percent a year over 10 years – a reasonable and achievable objective.
There are a variety of sustainable biofuels available, which have been proven to deliver meaningful greenhouse gas reductions. The EU’s mandatory target coupled with sustainability criteria will ensure that the market gets the certainty it needs to develop, while Europe is assured of biofuels with an environmental net gain to contribute to climate change goals. A win-win if ever there was one. Paradoxically, the elimination of the 10% will not mean an end to biofuels on the market in the EU or elsewhere, there just will be fewer incentives to ensure that those that are on the market are the most environmentally performing.
On the link between biofuels and food prices, this UK government report makes interesting reading for both its assessment of long term effects on food prices and the relative challenges of using existing models to assess the impact of biofuels in this context.
http://www.defra.gov.uk/environment/climatechange/uk/energy/renewablefuel/pdf/biofuels-080414-4.pdf
Posted by: Geraldine Kutas | May 22nd, 2008 at 4:24 pm | Report this commentThis can come as no surprise to anybody and has been on the cards ever since the policy was announced. One of my farmer customers used to grow cereals then set aside weeds but now he grows oil seed rape which powers a nearby power station. Pressure on cereal prices is set to increase dramatically due to; the use of cereals as bio-fuels, loss of cereal production due to bio-fuel production (oil seed rape and others) and finally but possibly the most influential is a sudden rise in the amount of meat eaten in emerging countries and the amount of cereals necessary to produce that meat. Fifteen years ago I stopped eating meat because I felt it placed an unnecessary burden on world resources. At the time people thought my argument was weird and assumed I just didn’t want to eat meat but now it’s starting to make a little more sense although I hadn’t realised at the time quite how quickly things would change.
The only positive way to reduce greenhouse production is to reduce our dependency on fuel. Like it or not we will all end up driving less, flying less, heating our houses less and air conditioning will become a thing of the past.
Growing fuel instead of food is immoral. Impracticable and unsustainable.
Posted by: Edward Grimshaw | May 22nd, 2008 at 5:30 pm | Report this commentTo Geraldine Kutas: I can’t see what you can gripe about. You say “There are a variety of sustainable biofuels available”. If so, then growing those plants should be supportable, by the EU’s new proposal?
The latest hikes in oil prices will not be the last: there are suggestions of $200 a barrel by the end of the year. So, again, another of the EU criteria would be attainable.
But it is not only oil-based/bio-based fuels that are “in play” here. There are already bio-substitutes for other oil-based products, as yet too expensive to be competitive. And we can be sure that as oil prices continue their upward trend, even more time, money and effort will be poured into finding even more alternatives.
Posted by: derek tunnicliffe | May 22nd, 2008 at 5:53 pm | Report this comment1) Europe and the Americas ( and Africa) have thousands upon thousands of acres empty and growing nothing , and millions of workers ready to go .
2) Diesel prices for farm machinery, transportation , packaging,farm power ,electricity and gas, etc.,as well as fertilizer are what’s lifting food prices ( as well as 30 % of speculation in prices of oil , gas and diesel ) and not the 20 % of a few crops diverted to bio-fuels, this is just an Oil Lobby very well orchestrated campaign of fear .
3) at 135 doll./barrel how can the EU talk retreat? because the Oil lobby has corrupted the place, that’s why !
4) as FT reports today, even the big solid airlines are hurting with oil prices, so synthetic jet fuel, coal to liquid and ethanol/bio-fuels are a must RIGHT NOW !
5) and by the way, Hapag-Lloyd , a key provider of crops and commodities transport, i hope it stays in Europe and does not get sold out to outside the EU, this is another sample ,with the biofuels paranoia, where we can see the criminal results of 2.400 lobby’s in Brussels doing the BACKSTABBING and most of them greased with Oil/Gas Money, shame !
6) as in the USA,elected officials must support Tax credits , Renewable Energy Tax Credits, and as in Washington D.C., we see in Brussels some patriotic politicians saying that Solar , Wind , Geothermal,Fusion, Bio-Fuels, Biomass from Municipal Waste and Hydrogen/Methanol Fuel-cells don’t need any more help,what a criminal shame ! take that for Oil Power and servitude to OPEC !
7) if Brussels is unable to create a smart bio-fuels/ethanol alternative and Energy Independence for Europe ( and the Americas ) then we need a new crop of elected officials, we need the new generations to get involved before we become a colony of the Oil Lobby and their Neocon masters.
Posted by: blogger | May 22nd, 2008 at 9:53 pm | Report this commentDerek, no gripe at all with the current Commission proposal. It has both objective and reasonable sustainability criteria and a mandatory target. It is what is needed to promote sustainable biofuels.
My concern is the kind of pressure that we are seeing from some quarters in the Parliament and Council to get rid of the mandatory target, mentioned in Tony’s post, which would in effect throw the good biofuels out with the not so good
Posted by: Geraldine Kutas | May 23rd, 2008 at 12:39 pm | Report this commentThanks for that, Geraldine: understood!
As Blogger notes, it’s the oil industry that is putting the pressure on - and, as we know, their head in-the-
sand approach to global oil-stock depletion is that they hope it’s oil-sand their heads are in!
One way of by-passing the oil giants could be by putting the pressure onto the motor manufacturers. Another is, of course, to change the CAP to support production of sustainable biofuels.
Posted by: derek tunnicliffe | May 23rd, 2008 at 5:14 pm | Report this commentInteresting news from the USA today. The LA Times carries an article asking whether oil at $130 a barrel is the “tipping point” for the US economy. And Ford Motors used the same words to describe the oil price effect on its vehicle sales (gas-guzzlers down, lighter vehicles up). Hybrid vehicles are an “easy sale” a car-dealer says, whilst his back lot is full of unsold pickups.
OK, this isn’t an obvious move in the direction of bio-fuels but it is certainly a move against oil-based.
Price rises are known to have at least a short-term effect on patent applications. We’ll have to wait and see - and hope, meantime, that the EU can hold out against “Big Oil” interests.
Posted by: derek tunnicliffe | May 24th, 2008 at 3:28 pm | Report this commentSIR
FORGIVE ME TO DIFFER WITH THE OTHER PUNDITS
THE HORRIFIC MOSTER OF CAP
WOULD ACTUALLY SERVE A PURPOSE HERE
AS THE HEDGE AGAINST FOOD COSTS
FINALLY YEILDS A RETURN TO THE EU
BRAVO FOR A 30 INVESTMENT NOW IN THE MONEY
BUT DO LIMIT THE EXTRAVAGANCE
INTO DESIGNER GM CROPS
EDWARD PONZI
Posted by: edward ponzi | May 24th, 2008 at 8:12 pm | Report this commentMIT ECONOMIST
sir
\you are quite right the CAP now has protected the EU citizens from food cost disruption
30 years of investment now provides stability against a dangerous volatile time of price fluctuations
Europe is wise to invest ahead, as Germany has often done
Russia and France do not have the same vision
and constantly are called to margin as a result
oftentimes in voilent ways
thank you
Posted by: DIMA TRYFONOFF | May 24th, 2008 at 8:15 pm | Report this commentVW and Sanyo Electric are developing Lithium-Ionen- Batteries and VW plans to be selling hybrid autos by 2010. These batteries will make longer trips possible, using only the electric power.
(On ZDF TV today).
Posted by: J.J. | May 28th, 2008 at 12:17 pm | Report this commentThe rush into biofuels was not dictated by politics, but rather by rising fuel prices. It requires only basic economics to foresee 1. even higher fuel prices, 2. more biofuels (at the expense of food prices and biodiversity), 3. more coal usage (at the expense of climate change targets). Hypocrisy is rampant in this field of politics - see the recent solemn declarations on saving biodiversity, or the “innocent” gap between Kyoto targets and IEA forecasts. While the consequences for nature are dramatic, environmentalists tend to overlook the geopolitical risks. Somebody has calculated that an increase of 10 US$/barrel means a yearly 500 Billion US$ transfer into the pockets of Putin, Chavez and Ahmadinejad. At 130 US$/barrel, and costs of less than 30, that means at least 5 Trillion US$ per year. While that is good news for our weapon manufacturers, it is bad news for the Western civilisation. The only solution to keep that risk under control would be taxation of energy in OECD states and China (i.e. pushing the World market price down), and using part of the revenue for an aggressive technological revolution. That solution is feasible, but it requires a different sort of politicians, and intelligent voters.
Posted by: Jochen Jesinghaus | May 30th, 2008 at 8:48 am | Report this comment