The other important target in this Directive is that 20% of the EU’s gross final consumption of energy should come from renewable sources by 2020. Indeed, from a land use and food markets perspective this target could have a potentially greater impact.

While much of this renewable energy in the electricity sector will come from wind, overall by 2020 biomass will remain the most important source of renewable energy in the EU (accounting for 57% of the total, according to an analysis of Member State National Renewable Energy Action Plans undertaken by The Netherland Energy Research Centre and reported in AEBIOM’s 2011 Annual Statistical Report). This is actually somewhat less than the Commission’s original projections in the impact assessment of the Directive that biomass would account for two-thirds of the renewable energy supply in 2020.

Forest and forest based industries are the main contributors to biomass supply, and this should still be the case in 2020 (more than 53% of biomass supply, according to the AEBIOM report). However, the biggest increase is projected to come from EU agriculture (energy crops, biofuel crops and biogas), with smaller amounts from waste. DG Agriculture and Rural development notes on its website that “Agriculture seems thus to be key for a genuine, large expansion of biomass supply.”

The consequences of biomass imports

However, a number of Member States expect to meet their targets by relying on imports of biomass. Analysis of the data in the NREAPs and trade statistics reveals that the quantity of wood required to satisfy the 2020 targets is likely to be too large to be met by increased production within the EU. Thus, Member States will have to rely on importing wood products from elsewhere. A recent study by the Ecologic Institute for the European Parliament Impact of EU bioenergy policy on developing countries considers the implications of increased demand for woody biomass imports from developing countries.

Many of the issues discussed in the report are familiar from the debate on the impact of increased EU biofuel demand on developing countries. They include the impact on access of rural communities to land and water; the extent to which expansion of biomass cultivation could undermine food security in developing countries; impacts on the access to indigenous renewable sources for energy consumption by local populations; and potential environmental impacts including deforestation and spread of monoculture plantations.

Sustainability certification for biomass imports

The Ecologic Institute makes some recommendations to address these concerns. First, it notes that the 2009 Renewable Energy Directive contains sustainability standards for liquid biofuels for transport but there are no binding sustainability requirements for the use of solid and gaseous biomass sources in electricity, heating and cooling. The Commission addressed the need for such sustainability criteria in a 2010 Communication but decided initially to leave it to Member States to introduce criteria based on those in the Directive.

The Commission undertook to report by 31 December 2011 on whether national schemes have sufficiently and appropriately addressed the sustainability related to the use of biomass from inside and outside the EU, whether these schemes have led to barriers to trade and barriers to the development of the bio-energy sector. It would then consider if additional measures such as common sustainability criteria at EU level would be appropriate.

It would also report on how international climate change negotiations and other policy developments including LULUCF accounting and REDD relate to the sustainable production of biomass, whether used for energy, food, feed or fibre. This report is awaited, and will presumably take into account the decisions reached at the Durban UNFCCC conference in December last year.

One might ask why stop at sustainability criteria for biofuels and biomass? Are the social and environmental impacts of sugar cane production to export white sugar to the EU any different to those caused by the export of ethanol? Does the expansion of palm oil plantations to export vegetable oils or soybean production for animal feed have different social and environmental impacts to using these crops to produce biodiesel?

One difference is that it is the mandate built into the Renewable Energy Directive which gives the sustainability criteria for biofuels some teeth. Any type of biofuel can continue to be imported into the EU, but it is only those which comply with the Directive’s sustainability criteria that are eligible to be counted against a Member State’s obligations under the Directive.

As the Ecologic Institute report acknowledges, sustainability criteria have inherent weaknesses. At present they do not account for indirect land use change. Higher prices for wood driving increased logging elsewhere in the world cannot be addressed by the sustainability certification schemes envisaged in the Directive. Nor do sustainability criteria address the social and economic impacts on local communities such as food security, local energy security and land access. The report recommends EU assistance to help developing countries build good governance mechanisms to address these concerns.

Reducing the EU’s ecological footprint

At the heart of these debates about the impact of EU imports from developing countries – whether imports of biofuels or their feedstocks, biomass imports or even imports of food and feed – is a critique of the mainstream view that trade is a mutually beneficial activity. The Ecologic Institute report recommends – as do many development and health NGOs in the case of food policy – that the EU should try to limit its imports (of course, not only from developing countries).

To address these impacts in developing countries a meaningful reduction of the EU’s ecological footprint – which is still more than double in size, compared to the productive area available in Europe – needs to be achieved. This deficit is created by importing goods (including but not only energy wood) and services from beyond its borders. In order to alleviate it, substantial efforts towards greater energy and resource efficiency and savings are needed in order to alleviate the pressure on natural resources and ecosystems outside Europe.

The ecological footprint concept is intended to answer the question whether Europeans are using more than their fair share of the world’s resources. It is an indicator that measures the amount of biologically productive land and sea that is needed to provide all resources humanity uses for final consumption. In 2003 the EU ecological footprint was 2.26 billion global hectares (gha), or 4.7 gha per person. In contrast, Europe’s total supply of productive area in the same year was 1.06 billion gha, or 2.2 gha per person. According to the European Environment Agency, the ecological footprint for pan-Europe has been increasing almost constantly since 1961, while Europe’s biocapacity has decreased. This results in an ever larger deficit, with negative consequences for the environment within and outside Europe.

Critiquing the role of trade

Improvements in resource efficiency are both necessary and desirable where global resources are limited (regardless of whether the EU is an importer or exporter of the product concerned). One might add that changes towards more sustainable consumption behaviour are equally important.

Trade is one way in which greater resource efficiency can be encouraged. Historically, it has also been an important facilitator of economic growth which is the main way in which access to global resources is redistributed in favour of poorer countries and poorer people.

However, trade does not always have these positive impacts, particularly for the poor, in situations where property rights are skewed, uncertain or non-existent (for example, with respect to land or the environment). Whether trade should be limited in those circumstances rather than addressing these deficiencies directly is a continuing source of controversy in both food and energy policy.

Photograph of Brazilian eucalyptus forest copyright Chris Lang and used by permission under a Creative Commons Licence.

This post is written by Alan Matthews

Any application of the leaked values would severely hamper the ability of biodiesel manufacturers to enter into the EU’s new biofuels certification plan, announced last August.

Assuming that the EU does not relax its overall target for renewable energy in transport fuel (10% by 2020), if biodiesel fails to make the grade this would raise the demand for bioethanol made either from domestically-produced sugar beet or imported either from Brazil or Southern Africa.

This post was written by Alan Matthews.

One the biggest casualties of the global downturn is the bioethanol industry, which was built on the prospect of oil prices in excess of $60 a barrel. Bioethanol was profitable for a short time when oil prices were spiking at above $90 but with oil down to around $40 a barrel for the forseeable future, the US bioethanol industry is now entirely dependent upon government subsidies and gasoline blending mandates. The political lobby around bioethanol is so powerful that it seems unlikely politicians will remove these subsidies and the effect of a continued production of corn-based ethanol is to set a global floor price for most arable crops. A similar though somewhat less dramatic story can be told about the EU biodiesel sector.

Farmer concludes his analysis with a call for a “Green New Deal”, defined as additional public spending with the twin aims of jumpstarting the economy and investment in new technologies to reduce greenhouse gas emissions and address the depletion of increasingly scarce natural resources like water. I think that the biofuels boom and bust should warn us against such an approach, especially where agriculture is concerned. I am naturally skeptical about governments picking winners in the field of future green technologies and would rather see a more classical approach to the problem of GHG emissions and resource depletion, such as a carbon tax or a market in emissions permits and the pricing of water use. Any revenue raised but these policies could be used to offset taxes elsewhere in the economy. The effect of such a tax shift would be to stimulate an energy efficiency revolution but would not risk the dangers of powerful lobbies scooping the Green New Deal money and offering very little benefit in terms of climate change, as has happened with biofuels. Farming, as a major contributor of GHG emissions, must not be given any exemptions from emissions control policies. It is regrettable that in most countries (with the notable exception of New Zealand) this is exactly what is happening. Agriculture accounts for 10 per cent of EU carbon emissions yet it has been granted a blanket exemption from the EU Emissions Trading Scheme.

Read The Economic Downturn – The Challenge for Agriculture

The Group comprises representatives from the UK statutory conservation, countryside and environment agencies and aims to advise on policy matters of common concern related to agriculture, woodlands and other rural land uses. It wants to progressively transform the CAP so that it is focused more clearly on rewarding the environmental services arising from land management where the market fails to do so. These rewards should reflect the services provided and the costs incurred. The new policy should in the Group’s view:

• Have a clear role in mitigating and adapting to climate change, addressing water and biodiversity management and ensuring that farming and forestry have the capacity to deliver environmental security and sustainable production in the long term.

• Promote the sustainable use of the natural resources on which all production depends through the use of good practice guidance together with agreed environmental standards, enforced by risk-based regulation which is binding on all land managers.

• Reward the positive management of existing biodiversity, cultural landscapes, carbon and water resources whilst securing improvements in the environmental quality of all rural land.

• Help reduce the environmental footprint of agriculture and forestry, by targeting capital investment on environmentally beneficial technology and infrastructure.

• Integrate sustainable land management with economic and social policy in order to encourage integrated land use that enables rural communities to benefit from the economic potential of their environment.

• Ensure that progress towards environmental, social and economic objectives is monitored, evaluated and regularly reported on.

The group admits that,

‘Transforming the CAP in this way will take time. Any income support retained in the short term should be targeted, with conditions, on those farming systems making the greatest contribution to the management of environmental services for the benefit of society. Research and development should be focused on the challenge of enhancing long-term productivity in ways that reduce environmental impacts and help adapt to climate change.’

The Group states, ‘We see our proposals as providing a sustainable justification for a “new contract” between predominantly urban taxpayers and those who manage rural land.’ It will be interesting to learn more about the proposals when they become available. The principles are good ones, but to an extent the devil is in detail.

There is also the political problem of overcoming the resurgence of support for productionist solutions, the argument being advanced that protecting the environment is a luxury good that can be set aside in a recession. As evidence accumulates about the effects of climate change and their possible acceleration, future agriculture and rural policy must embed measures to mitigate climate change as a key priority.

New loophole in EU renewables legislation could lead to huge emissions

Poznan, December 9, 2008

What – 95% of peatland will be unprotected from biofuels development,
risking huge carbon emissions

Who – Finland and Sweden backed by French Presidency

When – final meeting this afternoon of EU decision makers (Trialogue)

Huge areas of the world’s peatlands will be opened up for biofuel
production if Finland and Sweden succeed in opening up a new loophole in
EU legislation. They propose that only undrained peatlands should
qualify for protection from biofuels development. However, 95% of the
relevant peatland areas have already been drained to some extent.
Increased drainage for biofuel production will result in massive
releases of greenhouse gases. As huge carbon stores, peatlands should be
excluded from any such cultivation.

The Renewable Energy Directive sets targets for renewable transport
fuels use including biofuels yet it is essential that these result in
savings not greater emissions of carbon.

Facts:

* 95% of Indonesian, Malaysia and also Finish and Swedish
peatlands are already drained to some extent and would thus be
unprotected

* Peatlands are the most important areas for biofuel expansion in
these countries.

* Peatlands are huge carbon stores. The drained peatlands cover
less than 0.5% of the global land surface but are responsible for over
11% of global emissions.

* These should be restored instead of more drained for biofuel
production like palm oil or wood.

* Biofuel production will lead to further, deeper drainage,
causing huge additional emissions.

* Palm oil for instance demands drainage of more than 60 cm,
leading to emissions of 60-100 ton CO2/ha/yr

* 50% of all new palm oil plantations are on peatlands (Malaysia,
Indonesia)

* Per hectare around 3-5 ton palm oil is produced, making this
‘biofuel’ up to 9 times more polluting compared to conventional fuels.

More information:

Alex Kaat
Wetlands International
Alex.kaat@wetlands.org
+31 6 50601917

Melanie Edmunds
Birdlife International
+44 7702 237338

Note to editors:

1. Proposed criterion in the EU renewable energy directive:
“15.4a (new). Biofuels and other bioliquids taken into account for the
purposes referred to in paragraph 1 shall not be made from raw material
obtained from land that was peatland in January 2008, unless it is
proven that the cultivation and harvesting of this raw material does not
involve drainage of the soil.”

2. Finland supported by Sweden are now jeopardising this proposed EU law by
inserting the two words “previously undrained” in the text just before
the word “soil”.

The reviews come from a variety of respected organisations ranging from the World Bank to the United Nations to the European Commission’s Joint Research Centre. Overall, the results do not make happy reading for the dwindling band of biofuels boosters. Findings include:

- Biofuels generated on croplands or natural habitat have great potential to increase greenhouse gas emissions when acccounting for the impacts on land use.

- Biofuels made from waste carbon, such as forest or crop residues and municipal waste, or grown on abandoned and degraded lands hold the most promise for greenhouse gas benefits.

- Biofuels have contributed significantly to the worldwide increases in crop prices over the last few years although prices will come down as markets adjust if demand does not continue to increase rapidly.

- Available biomass should be preferentially used for heat and electricity because doing so generates larger greenhouse gas reductions at lower economic cost.

- Economic costs of biofuel subsidies have been high per liter of biofuel.

Download (PDF format)

“The more specific you make the policy, the more room you give to bureaucrats who make the decisions. Non-targeted payments give more power to farmers.”

In case it’s not clear, Mr Gandalovic was making the case against targeted payments. In doing so, perhaps inadvertently, he touched on a question that goes to the very heart of the debate about the future of the CAP: the extent to which the CAP’s 54 billion euros of annual public expenditure should be targeted on clearly defined objectives and measurable outcomes. It is a debate raging right now within DG Agriculture, a power struggle that is pitting CAP ‘modernisers’ who seek a greater role for the current rural development pillar against CAP ‘consolidators’ who defend the “Fischler settlement” and the current Commission Health Check agenda. What it boils down to is a debate over the fundamental role of public policy in agriculture.

The modernisers favour a ‘programming approach’ that ties public money to definable public benefits and introduces quasi-contractual relationships between the state as purchaser and the farmer as service provider. In most cases the services to be provided are ‘environmental services’: preservation of biodiversity and wildlife habitats, action on water pollution, soil erosion and so on. This is the underlying ethos of EU rural development policy, although there are significant elements of the RDP that don’t quite meet the standard, the most obvious being Less Favoured Area payments. The modernisers see the old market intervention measures and direct payments (the single farm payment) as poorly targeted, both in terms of need (big, competitive farms get the most subsidy) and value for money (the link between subsidy payments and public goods provisions is, at best, weak).

The consolidators see things rather differently. They perceive that across the board, EU farmers lack competitiveness on world markets, in part because of the burden of meeting higher regulatory standards and having higher costs for land, labour and farm inputs. For this reason, the EU must step in and provide a blanket form of support to almost all farmers, approximately on the basis of their output. This ‘market correction’ will allow farmers in the EU to compete on a ‘level playing field’ internationally. For the support to be WTO-compliant it must be decoupled from production. This change was the most important part of the Fischler reforms agreed in 2003 and implemented with to varying degrees by member states. The fear expressed by consolidators, which is articulated in great length in the Scenar 2020 report, is that without a big cash injection, most European farmers would go out of business.

The limited ambition of the CAP Health Check proposals represent a victory for the consolidators, although the contours of the debate are visible in discussion of key health check elements such as the level of modulation, the introduction of payment limits and the potential of Article 68 measures which, depending on how they are drafted, could follow a programming-approach or resemble an old-style production subsidy.

It is unclear how long-lasting the consolidators’ victory will be. Those around Agriculture Commissioner Mariann Fischer Boel echo her line of ‘one vision, two steps’ with varying degrees of radicalism, inferring quite different notions of the shape of the CAP beyond 2013. For some senior members of her Cabinet, the single farm payment is just a transitory arrangement, as it had originally been intended when direct payments were first introduced in the 1990s. Broadly speaking there are a two alternative visions of the future: (1) a flat-rate per hectare payment for all European farmers or (2) a massive expansion of the rural development budget under the programming approach. Both involve major redistributions which present significant political challenges.

Some fear that without the current SFP (or its flat-rate successor) as a one-size-fits-all entitlement policy run from Brussels, DG Agri would likely face budget cuts, loss of prestige within the Commission and a diminished power to shape land management practices across the continent. They also fear that a programming approach implies greater flexibility for member state discretion, a CAP à la carte, partial renationalisation and the undermining of the single market. Some federalists of the old school are consolidators simply because the CAP is the policy area that has seen the highest level of European integration. For them, criticism of the CAP is critism of European project.

These then are the battle lines of the coming debate over the future the CAP in the EU budget review. What we see now is the phony war, the real action will wait until after the next European Parliament elections and the appointment of a new Commission with – it is widely assumed – a new Agriculture Commissioner.

The final result of the poll was 5,892 votes in favour of sticking to the EU’s biofuels target for 2020 and 47,653 voting that the target should be abandoned. The day-by-day voting up to 6 June, when the poll was removed, is shown in the graph below:

Ms Ahrenkilde Hansen also gave the following statement:

“E-polls are generally proposed on the Europa website, including on the President’s website, for a short duration and removed when the interest is fading out. They are not designed for formal consultation (other mechanisms in the political process provide for that), but for giving the visitors, in this case the visitors of the website of the President, an opportunity to convey to the President their personal opinions in an informal manner. Generally, the results can be consulted for the full duration of the poll. In the concrete case of the biofuels e-poll, campaigning and organised voting unfortunately defeated the purpose of the poll and resulted in technical problems, preventing individual citizens to express their personal opinion on this issue to the President (the effect of the campaigning is immediately visible on the tables attached). The poll was subsequently removed from the President’s website.”

Campaigning and organised voting defeating the purpose of the poll? Quel horreur! Now I would never suggest that the Commission has form in turning against polls that produce unwelcome results but I do think that the Commission should to dignify the people who took the time to cast a vote by publishing the results. I’d also suggest that the President take a look at the excellent e-petitions website at 10 Downing Street, built by the good people at mySociety.org.

The EP’s Environment Committee adopted a report which advocates a revised 4 per cent target for 2015. The EU’s current target is for ten per cent of transport fuels to made up by biofuels and other renewable sources by 2020. MEPs on the committee voted in favour of the recommendation by 36 to zero, with eight abstentions. Meanwhile, the rapporteur for the Industry Committee, Claude Turmes, suggests abolishing binding biofuels targets altogether. This is the view expressed in a new policy briefing from Breugel, the Brussels-based economics think tank. Its authors say that biofuels targets are ‘an obstacle’ to greenhouse gas emissions reductions:

“setting ambitious biofuels targets has no purpose and can even be counterproductive for tackling climate change.”

The report favours an emissions trading scheme as the best way of achieving emissions reductions at least economic cost.

Finally, this week saw the publication of the much-awaited report of the Gallagher review, set up by British Prime Minister Gordon Brown to advise on whether biofuels are contributing to the recent steep rises in the prices of agricultural commodities. The review concludes that,

“[biofuel] feedstock production must avoid agricultural land that would otherwise be used for food production. This is because the displacement of existing agricultural production, due to biofuel demand, is accelerating land-use change and, if left unchecked, will reduce biodiversity and may even cause greenhouse gas emissions rather than savings. The introduction of biofuels should be significantly slowed until adequate controls to address displacement effects are implemented and are demonstrated to be effective. A slowdown will also reduce the impact of biofuels on food commodity prices, notably oil seeds, which have a detrimental effect upon the poorest people.”

The report also calls on the EU to drop its target of 10 per cent by 2020:

Current evidence suggests that the proposed EU biofuels target for 2020 of 10% by energy is unlikely to be met sustainably and the introduction of biofuels should therefore be slowed while we improve our understanding of indirect land-use change and effective systems are implemented to manage risks.

It now seems highly unlikely that the EU will stick to its current biofuels target. The only question is when this will be announced and what the new policy will be.

Focusing on the period 2003/05 to 2013/15, the study foresees that the EU will switch from being a net exporter of grains to a net importer, while its import deficit in oilseeds will increase. The principal reason for the changes in the net trade position is the significant growth in domestic demand for bio-energy production.

An aside in the study is what it projects for organic food production in Europe. Noting that organic food production requires more acreage than conventional farming, it observes that the growth in the area devoted to organic production has been slowing down and that sustained high prices for food in general will contribute to a further slow-down in this market segment.

A video presentation by Professor Harald von Witzke summarising the report can be found at the following two YouTube links
Humboldt report on global market trends Part 1

Humboldt report on global market trends Part 2