The Battle Continues

By Robert Vierhout | April 16, 2013

By the time you are reading this column, European decision makers will have already completed six months of chewing on what could be described as the indirect land use change (ILUC) bill. 

You might remember that its most astonishing part is the limitation of food/feed-based biofuels to 5 percent of the original 2020 10 percent target of renewable energy in transport.  Food concerns were the main reason for this cap, not ILUC. The gap that would occur needs to be filled by advanced biofuels. Aware of the still small volumes of those available biofuels, volumes are artificially increased through a multiplier. 

Both measures are perceived as controversial. Green and social non-governmental organizations (NGOs) think 5 percent is still 5 percent too much, industry fears that many investments were done in vain, and many EU member states also fear that targets can no longer be achieved partly because the multiplier instrument is seen as ill-defined. The European Parliament is still nine months away from expressing its position but views are pretty much scattered like above. 

A majority of member states gave the proposal a frosty welcome. Some countries did not find a single syllable in the proposal they could support. Others found that the proposal was not addressing the ILUC problem at all. The virtual accounting of advanced biofuels puzzled most member states. Only two countries supported the proposal on the 5 percent cap and three states believe that 5 percent is still too much. 

Not much basis for achieving quickly a common ground, one could think. Still, first deliberations between the member states already indicate a sort of direction where this may land.

As the capping element is the most controversial, the Irish Council Presidency recently put two options on the table to solve the 5 percent conundrum. One option implied a limit of 5 percent on biodiesel only and the other option a higher cap for all first-generation biofuel without specifying a ceiling (yet).

As many as 11 states favored the latter and five the first one. 

This first poll is indicating division within the EU powerhouse but is also the most likely way forward. The only big state that has been very silent in this is Italy, but then again it has other fish to fry first.

For the European Commission, this first poll must be a cold shower. Normally, prior to launching a bill, the Commission takes careful account of the informally expressed views of the member states. But it seems that in this case, the Commission "forgot" to do its homework, most likely speculating that the member states would follow the mood of so-called public opinion, aka NGOs.  Member states, however, are faced with the reality of an economic crisis and cannot think of any good reason to kill investments and opportunities for more investments in agriculture.

Maybe the Commission has also given in too quickly to the food concern. In its first, just published, Renewable Energy Progress Report, we can read that "Commission analysis has found that grain use for bioethanol production ... to have minor (1 to 2 percent) price effect on the global cereals market. It also appears that biofuel demand is more price-sensitive than the food market and so demand declines more in response to rising prices." It merely confirms what the ethanol sector has always said, there are only marginal price effects on food prices. The report goes on to state that "it is not yet clear if EU biofuels demand contributes any abuse of land use rights." Also, in this respect, facts do not concur with the NGO fiction. 

It beggars belief that the Commission did not publish this report prior to its bill. It would have taken away much of the unnecessary emotion around the EU biofuel policy. The industry now needs to call upon legislators to keep this evidence clearly on board when amending the bill.

The bill is not terribly long but it is complex and politically very sensitive, which could well make this battle between the pros and cons take much more time than expected. If no agreement is reached between the legislators before April 2014, the bill is very much dead in the water. What happens then depends on how the newly elected Parliament and Commission will decide. But until then, the battle continues, hopefully resulting in favorable outcome for the industry. We seem to be going in the right direction even though we are still far away from the finish.

Author: Robert Vierhout
Secretary-general, ePURE