If the European Parliament get its way, higher sustainability standards will be applied to biofuels, which, industry representatives say, will spell the end of the European biodiesel industry. Several EU Member States are preparing to defend their biodiesel sectors. Meanwhile, biofuels are threatening to lose out against electro-mobility in the EU’s post-2020 plans to decarbonise the transport sector, reports Sonja van Renssen from Brussels.

On 24 February Members of the European Parliament’s environment committee will hold a crucial vote on rules to combat indirect land-use change (ILUC). This is the indirect displacement of forest by crops grown for fuel, which has a perverse effect on greenhouse gas emissions. For the biofuels sector, this is a crucial issue: the business case for biofuels in Europe has been built on the need to tackle climate change, but if ILUC factors are taken into account, some biofuels harm rather than help the climate. This is particularly so for biodiesel.

Nils Torvalds, a Finnish Liberal MEP and former journalist, has taken over the lead on this file in the Parliament from French Liberal MEP Corinne Lepage, who lost her seat in the Parliament’s elections in May. He is preparing a proposal for the vote on 24 February. If he gets the committee’s green light, he can begin negotiations with member states. The Latvian EU Presidency hopes for a deal to close the file by June. After that, the European biofuel industry will finally have some more clarity over its prospects – and will be free to focus its lobbying power on getting into the EU’s sustainable transport plans for 2030, which so far are focused mostly on electro-mobility.

MEPs set for clash with member states

Torvalds has structured his approach to ILUC around four goals: a limit to the use of land-based biofuels (i.e. food and energy crops), crop-specific penalties for ILUC, a target for advanced biofuels (which are based on non-food sources, e.g. waste or algae), and a post-2020 biofuels strategy. The point of all this is to “start the transition towards a biofuels policy that delivers substantial greenhouse gas savings also when ILUC is taken into account”.

“Failure to address the ILUC effect would compromise the EU’s climate targets for the transport sector.” –Nils Torvalds, rapporteur MEP on the ILUC file

Torvalds has taken on many of the previous Parliament’s proposals, albeit with some fresh nuances. For example, he puts even more emphasis on creating a market for advanced biofuels: he proposes that after a review of ILUC measures in 2016, the European Commission considers a “legislative proposal for promoting advanced biofuels after 2020”.

In many ways, Torvalds is gearing up for a head-on collision with member states. Like the previous Parliament, he backs a 6% cap for land-based biofuels i.e. only 6 percentage points of the EU’s 10% target for renewables in transport in 2020 could be met by food and energy crops. Most member states want at least 7% – and only applicable to food crops.  A blocking minority including France, Poland and Spain is threatening to veto anything lower.

Torvalds also wants a 2.5% binding target for advanced biofuels in 2020 (which, he says, is achievable if you consider that advanced biofuels count double towards meeting the target, so a 1.25% share is enough). But member states want to be free to set their own targets with 0.5% as a guiding principle.

Most controversial, is undoubtedly Torvalds’s support for “ILUC factors”, which he believes have to be “seriously considered”. ILUC factors would attach a crop-specific ILUC penalty to the carbon footprint of feedstocks (e.g. 55gCO2eq/MJ for oil crops). This would mean that biodiesel is likely to have a greater carbon footprint than fossil-based diesel. It would become unattractive to member states looking to green transport and to fuel suppliers having to comply with greenhouse gas emission reduction targets.

So far, most member states are willing to entertain some limited form of ILUC reporting, but not its mandatory use in evaluating compliance with greenhouse gas emission reduction targets or its inclusion in biofuel sustainability criteria. What the Council of Ministers is proposing, in contrast, is for “low-ILUC risk” biofuels to be identified, certified and permitted to count towards emission reduction and renewables targets over and above any cap for crops. Torvalds says this concept lacks a clear definition.

The ILUC merry-go-round re-starts

What is at stake in the ILUC debate is an entire industry, one created by Brussels. The European biodiesel industry was, after all, born from the EU’s desire to decarbonise its transport sector. This was given legislative force in 2009 when the EU agreed targets for 2020 of 10% renewables in transport and 6% greenhouse gas emission reductions from fuel suppliers (for road transport).

ILUC was already bubbling in the background then. Today it threatens to blow the biodiesel industry up. Biodiesel, which accounts for about fourth-fifths of all biofuel use in Europe, uses as its feedstocks oilseed rape, palm oil and soy, and these, according to numerous studies, including from the Commission’s own science department and the International Food Policy Research Institute (IFPRI), have a very high ILUC footprint.

Italy became the first European country to set a target for advanced biofuels in October 2014. Advanced biofuels will have to be blended into petrol and diesel in increasing shares: 1.2% from 2018, 1.6% from 2020 and 2% from 2022 (in each case, these targets have assumed double counting). The decree includes lists of which feedstock types are acceptable (e.g. straw, energy crops) and which are not (e.g. used cooking oil) – these match what member states are currently proposing in Brussels.

However, according to the European Biodiesel Board (EBB), European Oilseeds Alliance (EOA) and EU Vegetable Oil and Protein Meal Industry (FEDIOL), which together represent Europe’s biodiesel production chain, the science on which these ILUC claims are based is “immature”. They point to counter-studies, most recently one by research consultancy Ecofys – commissioned by the industry – which concludes that biofuels’ emission savings are actually 80% better than policymakers suppose because they would replace unconventional, extra carbon-intensive fossil fuels at the edge of the market.

Some experts also question the accuracy of ILUC modelling. At a recent industry event in Brussels, Alexandre Gohin from the National Research Institute for Agriculture in France argued for example, that the models underestimate future yield increases – and therefore overestimate ILUC – again, by some 80%. He added that the figures for ILUC have been “steadily decreasing”.

Another expert at the same workshop, Fred Ghatala from the International Standards Organisation (ISO), announced that after several years worth of research, ISO had decided against including ILUC factors in a new standard on bioenergy sustainability due this year. The science is “nascent and rapidly evolving”. Evidence-based research is “inconclusive or contradictory”. Ghatala said that California’s ILUC values too are going down over time.

Meanwhile, farmers such as Mike Hambly from the UK’s National Farmers Union point out that while EU biofuel policy has nearly doubled oilseed rape production in the last decade, the crop is more protein than oil and locally produced protein feed now represents nearly a third of total EU consumption, up from a fifth ten years ago. That saves on soybean imports – and land use change elsewhere. Rapeseed also works well in crop rotations.

Even within the nascent biofuel industry however, there is already a split. The biodiesel industry wants to protect existing investments, for example by excluding current biofuels from any ILUC demands and a 7% cap. But bioethanol producers, united in trade association ePure, have complained that a 7% cap “could limit the uptake of renewable ethanol as the majority could come from existing biodiesel capacity”. They want a target for renewables in petrol (i.e. bioethanol – blessed with a far lower ILUC footprint) that Torvalds says he backs.

It is also the bioethanol industry that is really pushing the concept of low-ILUC risk biofuels. At another recent event in Brussels, Birka Wicke from the University of Utrecht presented a study arguing that the risk of ILUC can be greatly mitigated – even removed altogether – by increased agricultural productivity and better use of under-used land. Core to this approach is also the argument that really addressing ILUC requires a sustainable approach to all crops, which can in turn help modernise the entire European agricultural sector.

“Indirect land-use change for biofuels is direct land-use change for something else. Bioenergy can be a lever to produce more sustainably.” – Birka Wicke, Assistant Professor at the Copernicus Institute of Sustainable Development at the University of Utrecht 

Environmentalists have long treated these sorts of studies with scepticism. For every optimistic biofuels study, there is a pessimistic twin. Most recently, the World Resources Institute published a new report showing that “any dedicated use of land for growing bioenergy inherently comes at the cost of not using that land for growing food or animal feed, or for storing carbon”. It recommends policy changes to phase out land-based bioenergy. For Nuša Urbancic at Transport and Environment, a Brussels-based NGO, the future of biofuels lies in waste and residues. But tired of the protracted debate over ILUC and with so-called advanced biofuels yet to really get going, organisations like hers are also turning their attention away from liquid fuels altogether: electro-mobility, they say, may be a better alternative.

Gaping hole: transport in 2030

So far, there is no climate and energy policy for transport in 2030. At the Energy Union conference in Riga last week however, EU energy and climate commissioner Miguel Arias Cañete mentioned “continuing leadership on efficient vehicles” and “promoting electro-mobility”. He referred to electro-mobility too in a speech to IG Metall, the main German metalworkers’ union, in Brussels on 27 January. A leaked draft Energy Union paper says: “Europe indeed needs to speed up the electrification of its car fleet and become a leader in electro-mobility.” Neither of Cañete’s speeches, nor the Energy Union draft paper call for Europe to be a leader in biofuels, advanced or otherwise.

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This new focus on electro-mobility has not escaped the attention of biofuels stakeholders such as Novozymes, which makes enzymes for bioethanol production. “It is positive that the Commission focuses on decarbonising transport and the role of electric vehicles but the lack of ambition on alternative fuels such as advanced biofuels, where we have a technological leadership in Europe, is short-sighted”, says Thomas Nagy, Executive Vice President at Novozymes. “This is burying our heads in the sand: biofuels are politically sensitive at the moment yet available to help decarbonise the transport sector here and now. But the Commission prefers to promote the less controversial – for now – i.e. electric vehicles. These may reach scale in the transport mix by 2030 but the vast majority of cars on the road by then will still be using liquid fuels.”

Others stakeholders, such as T&E, cities and electricity companies, are explicitly calling for an electrification strategy for European transport.

The Commission’s starting point for transport in 2030 is the conclusions adopted by European heads of state and government last October. There they agreed to cut EU greenhouse gas emissions by 40% by 2030 and invited the Commission to look into a “comprehensive and technology neutral approach” to reduce emissions from and improve the efficiency of transport after 2020. Member states can include transport in the EU Emission Trading Scheme (ETS), they recalled. The latter idea is still alive in some circles, sources in Brussels close to the issue say, though it was rebuffed at the time by a study suggesting that a carbon price of over €200 would be needed.

Europe’s long-term goal is to reduce transport emissions by 60% by 2050. It is a long way from achieving this – for now, transport remains the fastest-growing source of greenhouse gas emissions. On aviation and shipping, the EU has been forced to put its faith in international processes (the International Civil Aviation Authority and International Maritime Organisation, respectively) after the terrible backlash over its attempted inclusion of international flights in the EU ETS. On road transport, the Commission has tried and struggled to impose the energy transition.

There is little on the table for 2030. One, there will not be a renewables in transport target. At best, MEPs may impose a target for advanced biofuels and/or bioethanol through the ILUC file. Two, there is no plan at present to continue with the fuel quality directive provision that requires fuel suppliers to cut greenhouse gas emissions from road transport by 6% from 2010-20. Three, a so-called EU alternative fuel strategy, which sought to impose a pan-European roll-out of electric charging stations and natural gas and hydrogen refuelling points, was eviscerated of specific targets when it was agreed last year.

“The Commission does not think it appropriate to establish new targets for renewable energy or the greenhouse gas intensity of fuels used in the transport sector or any other sub-sector after 2020.” – European Commission, 22 January 2014, 2030 climate and energy package 

Instead, the new Commission’s first priority appears to be vehicle efficiency. “The most important and cost-effective way to reduce [road transport] emissions is to increase the efficiency of vehicles on our roads,” said Cañete on 27 January. He pointed to the CO2 emission standards for cars and vans as examples of policies that are working – and which the Commission intends to pursue in future. He then singled out electro-mobility for a special mention. Apart from that, the commissioner was clear: “Other possible measures like emission targets or ETS inclusion are not on our agenda at this stage.”

The Commission plans a big stakeholder conference in the summer to talk about decarbonising the transport sector. But the comments above indicate that vehicle efficiency standards and perhaps an electro-mobility promotion plan is the direction the Commission is going. Will this work to decarbonise the transport sector? And what happens to biofuels? Torvalds’s report can make a difference on both points. Not only does he want an advanced biofuels target, he also wants the Commission to review the fuel quality directive targets as part of its 2030 framework. The 24 February vote, will not only be a decision on ILUC, it will help shape the EU’s climate and energy policy for transport in 2030.