Blog posts in January 2008 by amorel

So for those following, or even if you haven't been, it has been hard to ignore thebarrage of biofuels news reports of late. Perhaps the most notable was the EU finally(!) reconsidering its Biofuels Policy, which would require 10 percent of transport fuel to be renewable by 2020.  By far the most problematic aspect of this policy was the question of where this biofuel was to be sourced from.  While the EU did provide blanket incentives for growing domestic biofuel crops, namely rapeseed, these were often the cheapest or most readily available feedstocks; not necessarily the most environmentally benign.  Also, without an attempt to actually reduce the amount of transport fuel being used, keeping up with a percentage of fuel by 2020 would assuredly require signficant biofuel imports (most likely from Brazil and Southeast Asia).

Now the EU looks set to reduce these incentives and allowing targets to be missed after statements from both the DG Environment Minister Dimas and EU Science and Research Commissioner Janez Potocnik.  The latter at least recognizing that not all biofuels are created equally by saying, "the environmental performance of biofuels depends very much on different production pathways. If produced and used sensibly biomass used for fuel can reduce erosion, stabilise slopes and improve water retention and water quality." While I am not convinced which technology he is referring to here, it is evident that he recognises there are some that do not meet these criteria (e.g. US corn-ethanol.)

 Over the last few months a variety of proposals have been surfacing as to how to differentiate between these types of biofuels.  The Netherlands released their Cramer Report requiring assessment of biofuel productions impact on greenhouse gas emissions, biodiversity and run-off,  while Germany will be passing a mandate that biofuels meet a set of similar sustainability criteria in order to satisfy national biofuel targets.  Dutch Minister Cramer insists that their requirements will be voluntary to begin with so as to avoid any trouble under the WTO, which is certainly a valid concern considering the Malaysian Palm Oil Council (MPOC) is already scrutinizing statements coming out of the EU.  

In my opinion, this is shaping up to be quite an unprecedented debate, with tempers flairing on all sides.  For one, when has the public ever asked where their transport fuel was sourced from? Sure everyone complains that by driving our cars we are by extension funding Al Qaeda's activities, but no one has yet to demand that oil companies label where they are sourcing their fuel  (unlike our ability to choose between Italain tomatoes or Kenyan mange tout).  Yet these proposals would demand exactly that, which would require some reorganization of our existing fuel distribution infrastructure to ensure differentiation.  Unless that is, the EU was able to require that all biofuels produced and imported were sustainably certified, which could be viewed as an unfair trade barrier by its tropical trading partners.  In fact, Malaysia and Indonesia are currently on the defensive, complaining that palm oil is being unfairly picked on (see Netherlands statement to halt all subsidies on imported palm oil for bioenergy).  So there seems little doubt they would lodge a complaint should meaningful barriers be put in place.  Secondly, you are seeing oil companies (under the guise of the OECD and others) actually highlighting the environmental impact of fuel production, in this case biofuel production, to maintain the status quo where their product continues dominate.  Yet, I wonder if this strategy may eventually backfire, as one would imagine the public wouldn't stop at denouncing the environmental impact of biofuels and finally have a serious think about cutting our fossil fuel use (one can always dream).  I've heard that oil companies are particularly loath to mandated biofuel blending targets as these only cut into their currently astronomical profits.

Vegetabel oil commodity prices are also shooting up, considered a direct result of US ethanol policies and poor soybean harvests.  The New York Times recently published an interesting article about the ramifications of these price rises on slum dwellers in India. (http://www.nytimes.com/2008/01/19/business/worldbusiness/19palmoil.html?ex=1201410000&en=11d076a2c5b5841e&ei=5070&emc=eta1).   Although the argument has been made that record food prices may actually be benefitting agriculturally dependent, developing countries by allowing farmers to actually receive more meaningful sums for their produce (obviously the question of access to markets and distribution of wealth is crucial here).

So I recommend you follow this debate as it seems to be really heating up!  There is still quite a bit to be understood about current and future biofuels production methods as well as the dynamics of world food trade.  But at least now the powers that be in the EU are finally realizing that to meet their significant reductions in emissions they can not rely so easily on biofuels to be a big player and may actually start looking at how to reduce their own domestic energy use (though that remains to be seen).

Blog post by amorel on Jan. 25, 2008 at 5:30 p.m.

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