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EU Tension Over Biofuels Cap Intensifies

EU biofuels debateEnvironment ministers met in Brussels last week unable to agree on the European Commission’s proposal to limit production of biofuels made from food crops.

The Commission declared in October that it would revise legislation to limit production of these “first generation” biofuels to half of Europe’s 10% quota for renewable fuel.

The environmental concerns about biofuels derived from food sources are well documented. Associated rises in worldwide food prices, deforestation and large-scale changes in land use have made them an unpopular alternative to fossil fuels.

By capping the production of these fuels, the European Union is hoping to create a larger production capacity for “second generation” biofuels, which are hoped to provide a more environmental friendly long-term solution.

At last week’s debate, only a handful of member states, including the United Kingdom, supported the European Commission’s recent proposal. Many other states argue they have already developed productive capacity in biofuel technology based on the legislation’s original targets; a cap would therefore dent the competitiveness of an industry already well established.

Much of Europe’s wavering, according to Oxfam’s Marc-Olivier Herman, is politically motivated, with little concern about the fuel’s true environmental effects:

“Almost all EU member states have put the interests of an unsustainable biofuels industry before those of people and the planet.

“European consumers are unknowingly financing hunger and environmental destruction in poor countries through the billions of euros they pay as a result of mandates, tax incentives and subsidies to biofuels,” he said.

Our fuel industry is now set up with storage tanks and fuel dispensing pumps to supply a range of different fuels including petroleum, diesel and biologically synthesised ethanol. Europe is the world’s largest biodiesel producer, accounting for 53% of global production in 2010; significant investment has therefore been placed in an industry which had been hoped to provide a solution to the globe’s depletion of fossil fuels.

Many biofuels have been proven to produce fewer carbon emissions than petroleum fuels, and their advantage of being renewable makes them a viable and cost effective alternative. Critics, however, may be correct when they say that we are merely depleting our reserves of fossil fuels with one hand and destroying the globe’s natural habitats with the other. The overall environmental impact of first generation biofuels renders their usage a short term solution at best.

The sustainability of biofuels is largely dependent on the proliferation of second generation varieties, which form the second half of the EU’s renewable fuel quota. These fuels are derived from non-food sources such as crop waste or fast-growing grasses, and will not have a negative impact on world food prices. The current difficulty with these fuels is that their synthesis relies on highly complex and expensive processes; the average cost of cellulosic biofuels is typically 40 per cent greater than the cost of corn-based ethanol.

Bloomberg’s recent New Energy Finance (BNEF) report, however, has found that second generation biofuels are now on track to provide cost-competitive fuel solutions sooner rather than later. Falling costs of enzymes and processes associated with their production could create cost parity with ethanol by 2016:

“It may be dangerous to assume that it (cellulosic biofuel) will not become competitive this decade. If our survey proves accurate, cellulosic ethanol will make meaningful inroads into the vehicle fuel market in the last years of this decade,” said Harry Boyle, lead biofuel analyst at BNEF.

Cost improvements are already emerging, with the cost enzymes needed to create a litre of cellulosic ethanol falling by 72 per cent in the last four years. Although the sector faces relatively high capital costs, this is typical of an industry in the earlier stages of its lifecycle; if capital can be attracted to the industry, new refineries and infrastructure can be built and further cost improvements will follow.

With only a handful of fully functioning plants in operation, investment in second generation biofuels is needed quickly. Many hope that an EU’s cap on first generation fuels will help to stimulate investment into this sector and encourage this development. This looks hopeful with the EC intent on pushing their proposal through: Connie Hedegaard, European commissioner for climate action, said the Commission is “committed to the proposal” and that “allowing a higher cap would significantly diminish the efficacy (of the proposal) to reduce greenhouse gases from biofuels.”

With President Obama recently calling on Washington to pursue bipartisan solutions to reduce the threat of climate change, the biofuels industry is likely to remain at the heart of our global long term fuel strategy. The extent to which first generation fuels will continue to form the basis of this strategy is not yet known; much will depend on aligning regional policy and stimulating further technological development in new areas.

Robert Potts's picture

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Rick Engebretson's picture
Rick Engebretson on Apr 11, 2013 1:36 pm GMT

A very constructive discussion. Thanks.

To see such understanding and effort is comforting. The food, energy, water, climate, biodiversity, resource depletion, population challenges we face are unprecedented. It seems the advanced world cultures are choosing science and dialog in an era of peace and prosperity. Something I am very proud of and thankful for. A great legacy from a generation that did learn.

James Thurer's picture
James Thurer on Apr 11, 2013 8:18 pm GMT

The real problem with biofuels is not food crops vs nonfood crops.  Nothing is gained by cutting down food crops and replacing them with nonfood crops to produce energy.  One might argue that something is gained by using agricultural waste from foodcrops as a biofuel feedstock (assuming that the technology to do so will be developed), but the reality is that the volume of material per unit of land that can dedicated to this without causing soil degradation is very limited.  In other words, what is often called agricultural waste isn’t really waste – it’s fertilizer.

The real problem with biofuels is the net energy yield per unit of land, which is a function of both gross energy yield per hectare and eroei.  At present, the only biofuel with a viable net energy yield per hectare is sugarcane ethanol, which cannot be produced in Europe in significant quantities because of climate.  Sugarcane ethanol can be produced commercially in the southeastern U.S., but agricultural policies preclude this.

If Europe truly wants to encourage viable biofuel production, it will abandon its quotas, and instead invest in producing and consuming sugarcane ethanol in areas with appropriate climates. 

This won’t happen, of course, as the real objective of biofuel quotas in both Europe and North America is not to produce significant quantities of renewable energy in an environmentally and economically responsible manner.  Rather, the goal is to transfer wealth to the agricultural sectors of their economies for political reasons.  In that, the biofuel quotas have been enormously effective.



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