Misguided EC Proposal Phases Out Conventional Biofuels

The European Commission's latest proposal is another U-turn in biofuels policy and is based on a questionable rationale. The Global Scene column appears in the January 2017 print edition of Ethanol Producer Magazine.
By Emmanuel Desplechin | December 23, 2016

The European Commission has just made another frustrating U-turn on biofuel policy. In November, as part of its proposed revision of the Renewable Energy Directive for 2020-’30, the Commission called for phasing out the use of conventional biofuels in Europe from a 7 percent maximum share of road transport energy in 2021 to 3.8 percent in 2030. The proposal isn’t just misguided policy—conventional and advanced biofuels are essential tools for decarbonizing transport in Europe and for meeting EU energy and environmental goals—but it’s also misguided policymaking. The EC has now proposed four fundamental changes to the targets guiding biofuels since the first in 2003—a policy change every three years, creating regulatory instability and an impossible investment environment.

The Commission’s proposal jeopardizes the €16 billion ($16.7 billion) investments in biofuel production facilities that were made in good faith and which have helped stabilized price volatility in commodity markets, facilitated millions of tons of EU-grown feedstock purchases each year, and provided valuable income for Europe’s struggling farmers. The proposal threatens to unravel €6.6 billion in annual feedstock revenue for European farmers.

The rationale for the Commission’s proposal is questionable. The unscientific, one-size-fits-all approach ignores the fact that feedstock sustainability varies considerably, with conventional ethanol feedstocks on top. The proposal considers ethanol produced from sustainable, low indirect land use change (ILUC) feedstock grown in Europe, such as cereals and beets, on par with imported palm oil biofuel, which has high ILUC risk and is linked to deforestation. Any phase out should be applied only to biofuels with a high ILUC risk.

The Commission also ignores the widespread support in Europe for the use of biofuels, attributing its new phase-out proposal to “public concerns.” However, the only EU-wide opinion poll, conducted by Eurobarometer, showed that EU citizens overwhelmingly support the use of biofuels in Europe by more than 70 percent.

The food-versus-fuel argument is also misguided. In a 2015 report, the EC confirmed EU biofuels policy has not led to negative impacts on food prices. The UN FAO World Food Price Index shows that global food commodity prices have actually dropped by 15 percent between 2008 and now—a period that witnessed a significant ramp up in global biofuels production. Cereals, which make up the by-far largest share of feedstock used to produce European ethanol, have seen global prices fall by a massive 40 percent since 2008. The World Bank has suggested that through biofuel’s displacement of oil, they even may help alleviate food price increases.

It’s now up to EU member states and the Parliament to consider the proposal. In climate and energy discussions, European members clearly stated they want flexibility in determining their own future energy mixes. The EC proposal undermines this objective. In 2015, when the EC and parliament adopted the compromise ILUC directive agreement, it introduced a 7 percent cap on conventional biofuels and called for a policy framework that “would promote sustainable biofuels after 2020” and “create a long-term perspective for investment in sustainable biofuels with a low risk of causing indirect land use change.” The EC proposal ignores this call, because many conventional biofuels, particularly European ethanol, achieve high greenhouse gas (GHG) savings and low ILUC risk. Phasing them out will rob member states of a useful tool for meeting EU climate and energy targets.

The Commission has confirmed that conventional biofuels have been, and will be by 2030, the main tool for delivering GHG emission reduction in transport. Given the need to achieve 18 to 20 percent reductions in transport to reach Europe’s overall 40 percent decarbonization goal by 2030, the use of conventional biofuels should not be lowered.

It is unrealistic for the Commission to expect biofuel investors to now fully invest in advanced biofuels, considering how they’ve been stung so many times by the Commission’s U-turns. The EU can restore biofuel investor confidence and protect existing investments by not lowering the contribution of conventional biofuels from the levels in existing legislation. Policy continuity is vitally important and so is the contribution of conventional biofuels post-2020. The EU targets for emission reduction in transport fundamentally rely upon the GHG savings from these biofuels.

Author: Emmanuel Desplechin
Director Government Affairs
ePure, the European Renewable Ethanol Association