September 8, 2011 / 4:06 PM / 7 years ago

Exclusive: EU to delay action on biofuels' indirect impact

BRUSSELS (Reuters) - The European Union’s top climate and energy officials have agreed to delay by up to seven years rules that would penalize individual biofuels for their indirect climate impacts, details of the deal showed.

The political compromise is designed to protect EU farmers’ incomes and existing investments in the bloc’s 17 billion euro-a-year ($24 billion) biofuel sector, while discouraging new investments in biofuels that do nothing to fight climate change.

At a meeting of top EU officials on July 13, the bloc’s energy and climate chiefs, Guenther Oettinger and Connie Hedegaard, agreed to a delay, according to minutes of the meeting, seen by Reuters.

At issue is an emerging concept known as indirect land use change (ILUC), which states that if you divert food crops to biofuel production, someone, somewhere, will go hungry unless those missing metric tons of grain are grown elsewhere.

If the crops to make up the shortfall are grown on new farmland created by cutting down rainforests or draining peat land, this can release enough climate-warming emissions to cancel out any theoretical emission savings from biofuels.

The July agreement would delay crop-specific rules on ILUC in favor of an indirect approach that penalizes all biofuels equally.

This involves raising the carbon-savings threshold that all biofuels must meet compared with conventional fossil fuel to count toward the EU’s target, which aims to raise the share of biofuel in road transport fuels to about 10 percent in 2020.

“The introduction of feedstock-specific factors would seem to be the most effective solution to address ILUC... However, scientific uncertainties still exist with regard to the exact level of such factors,” the minutes of the July meeting said.

“Therefore, as a first step, Commissioners Hedegaard and Oettinger have agreed to mitigate ILUC in the short term by raising the threshold for greenhouse gas emissions savings to a more ambitious level than now.”

The current thresholds require biofuels to achieve carbon savings of at least 35 percent versus fossil fuel by 2013, rising to 50 percent in 2017.

The deal does not specify by how much the thresholds will be increased, and the exact level is subject to further debate within the European Commission, but EU sources said they expect the 2013 target to be increased to 45 or 50 percent.

As a second step, in 2014 the Commission will introduce crop-specific ILUC factors that would take effect in “2016 if possible, or at the latest in 2018.”

By sending a clear message that ILUC factors will be introduced in the future, the Commission said its approach would help to “phase out the worst performing biofuels and to prevent further investments in unsustainable biofuels.”


The deal represents a short term reprieve for Europe’s biodiesel sector, after draft EU studies recently showed that such fuel from EU rapeseed, Asian palm oil and South American soybeans has a bigger overall climate impact than normal diesel.

The chief of Sofiproteol, which owns Europe’s largest biodiesel producer, said the scientific uncertainties surrounding ILUC meant the threat to the sector was still significant.

“We remain concerned about the future of the European biodiesel sector. If the sector is wiped out... the EU will find it impossible to meet its 10-percent renewable energy target in transport,” Sofiproteol Director-General Philippe Tillous-Borde told Reuters.

Green transport campaigners T&E accused the Commission of failing to protect the environment or giving industry the signal it needed to invest in sustainable biofuels.

“This political fudge fails to achieve anything except further delay and confusion. They should seize the opportunity now to point the industry in a sustainable direction,” T&E’s fuels campaigner Nusa Urbancic told Reuters.

Despite calls from some opponents for the EU to scrap its biofuel target, the Commission said it would not propose any reduction in the EU’s goal for 2020, but any increase in the target was also unlikely.

In a further sign that biofuels are no longer seen as the magic solution they once were for reducing road transport emissions, the minutes state that the Commission will no longer support biofuel projects in its overseas development policies.

A spokeswoman for the EU executive declined to comment on the substance of the July meeting detailed in the minutes.

The Commission is expected to present formally its ILUC proposals in the coming months, after which EU governments and the European Parliament will have a limited time in which to raise any objections.

Editing by Rex Merrifield

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