EU Biofuels’ Indirect Carbon Emissions Debate To Move Forward

Source: Wall Street Journal • Posted: Monday, April 30, 2012

BRUSSELS (Dow Jones)–Top European Union policy makers will next week be faced with one of Europe’s most controversial climate policies, as they consider whether biofuels do more harm than good when it comes to greenhouse gas emissions.

The 27 European commissioners will for the first time discuss the issue all together at a regular meeting Wednesday, after diverging views among some members of the college put the EU in a deadlock and delayed action for months.

Brussels has been debating whether biofuels are better for the climate than conventional fuels, with some environmentalists calling for a radical rethink of EU policy that mandates a 10% use of renewable energy –mainly biofuels– in transport by 2020.

A backtrack on its policy could put at risk the biofuels market in Europe, one of the most promising worldwide, as the EU rules have already triggered billions of investments in biofuel production in Europe. It could also have potential consequences on global trade, as Brazil and the U.S. are among the main producers worldwide.

The commissioners will hold an “orientational debate” that’s generally meant to show where the majority stands on a compromise proposal that’s being drafted, people familiar with the discussion said.

The spat has opposed members of the European Commission, the EU executive body. The energy department is still supporting the current EU policy and favors the use of biofuels, not only because it sees them as a good way to reduce CO2 emissions of the transport sector, but also as a way to reduce the bloc’s dependence on fuel imports.

The climate change department instead is more skeptical about their viability as it stresses climate change as the main objective and wants to account also for so-called “indirect” emissions caused by biofuels before continuing to allow their use in the EU.

Even though a unit of fuel made out of a plant still emits the same amount of carbon dioxide as one out of conventional oil when burned, biofuels have been considered carbon neutral because the plants grown to produce them offset the emissions by absorbing CO2.

But the so-called Indirect Land Use Change, or ILUC, that biofuels would trigger, has been the core of a fierce debate.

To grow more biofuel crops, farmers are potentially encouraged to cut down forests and move into peat lands, both of which absorb high levels of carbon dioxide in their natural states. Biofuels crops could also displace food crops that could in turn cause other indirect land use changes. As a consequence, an increased use of biofuels would actually raise CO2 emissions, according to this argument.

The extent to which each type of biofuel determines an indirect land use change can be determined only by running abstract models. Depending on how the models are run and with which input numbers, some types of biofuels could potentially be excluded from the EU market.

That’s why companies and environmentalists have been seeking to influence the commission on which data to use and how to run the models.

To account for these worries, the compromise being drafted for Wednesday’s discussion includes Indirect Land Use Factors, but their enforcement would only have the effect of discouraging the use of certain products rather than banning it, two people familiar with the discussion said. Such a decision might also be softened by being applied only to future production capacity, while present ones would be exempt for a number of years, one person explained, adding that at the same time cleaner biofuels will be encouraged by setting specific targets.

After Wednesday’s debate, the commission aims at making a legislative proposal before the August summer break, and EU official said.