One-Sided Report on Biofuels Cost is Wrong

By Rob Vierhout | September 23, 2013

Back in April the International Institute for Sustainable Development published—with much pomp and circumstance—a study that revealed that the European taxpayer has to cover a €10 billion check every year to finance biofuels.

The study was requested and funded by nongovernmental organizations (NGOs). The day before it was officially released, the results were already quoted in the press. NGOs were screaming that biofuels were costing as much as the bailout for Cyprus and the member of the European Parliament preparing the position on ILUC was crying foul over all this waste of government money.

The study was peer-reviewed by NGOs and a number of other biofuel critics. The biofuels industry asked to be involved in the peer review process but it was refused because, according to IISD, we could not be trusted. Still, we sent them comments, criticizing their methodology and numbers. 

The “accountancy-model” IISD used was one-sided, looking only at government expenditure but leaving out of the picture the revenues the industry is generating for government and society. A well-respected company, Ecofys Consultancy, analyzed the report and spotted similar errors we spotted and indicated. As a consequence of that analysis IISD had to correct its numbers. The expenditure is now lowered to €6 billion per year, but according to the biofuel industry and Ecofys it’s still much too high. 

Several studies that were carried out for the European Union ethanol industry delivered the evidence that the benefits of biofuel support are net positive for society. For every liter of ethanol we produce, we contribute €1 to the gross domestic product. Last year, we produced 6 billion liters, which is equal to what the entire biofuel sector is costing society. And ethanol is only 25 percent of the market. Hopefully, IISD has learned from ignoring industry comments and will think twice before it again issues a biofuels at-what-cost report.

Besides the preposterous accusation on the government subsidies, we have the forever on-going accusations by NGOs on food prices and land grabbing in areas outside Europe. On these two issues, two recent reports have proven that the claims do not match the facts.

The Land Matrix Global Observatory stated that the global levels of land grabs have been massively exaggerated and known land grabs have not been driven by biofuels. And, not long ago the United Kingdom Overseas Development Institute came up with similar findings and exposed the NGO campaign as irresponsible and unconstructive.

The whole land-grab story is created by NGOs to create a false emotion of guilt in the public opinion, whereas most people have no clue. Sad stories about Africa always run well in EU public opinion and certain groups of politicians.

That too applies to food. You can present 10 reports or 100 reports all saying that the relationship between biofuel policy and increase of commodity prices is not there but still the NGO community will not accept it. They keep shouting that it is a crime and a sin at the same time to use crops for fuel. And why? Because emotion and negativity are news and a guarantee for (financial) support.

Europe will lose its way on biofuels when these emotional forces and arguments keep dominating the debate. In the EU, we are forgetting that biofuels are about oil, pure and simple.  Renewable ethanol is the only large-scale competitor to petrol, and in that competition, ethanol bests petrol on every single social, security and environmental metric. In return, ethanol is usually a tiny bit more expensive than petrol.  If the only goal of the world was to have the cheapest possible fuel, then there is no reason to support biofuels.  

There is no credible suggestion that ethanol is worse for the climate than petrol.  Wars are not fought over biofuel supplies. And while about 90 percent of global ethanol subsidies have been phased out over the past five years, fossil fuel subsidies, running into the hundreds of billions of euros, have been left largely untouched.  These are the facts that should be at the center of Europe's biofuels debate.

Author: Robert Vierhout
Secretary-general, ePURE