image expired

The reports were  commissioned by the EC from the International Food Policy Research Institute (IFPRI)1 and the Joint Research Centre (JRC)2.  In a letter sent to EU Commissioners Connie Hedegaard, Günther Oettinger and Dacian Cioloş, Copa-Cogeca Secretary-General Pekka Pesonen warned that the IFPRI model used in the study and the JRC method rely on a great deal of uncertainties and on inaccurate data. An analysis of the effects of indirect land use change remains impossible due to a lack of appropriate models and data. These reports are consequently insufficient to allow an impact assessment of political options for an EU legislative proposal in 2012, he stated.

Pesonen insisted that biofuels offer many advantages in terms of reducing greenhouse gas emissions, providing employment in EU rural areas. And they can be produced in the EU in a sustainable way, without being responsible for indirect land-use changes.

Increased biofuel production in the EU also relieves land pressures in non-EU countries and helps to combat deforestation of tropical rainforests.  Copa-Cogeca argues that taking the JRC's proposed values into account in an EC legislative proposal would wipe out the investments and jobs created in rural areas in the EU through the development of the biofuel sector over the last 20 years and would not enable undesirable land use change in non-EU countries to be reduced.

Summary of the  EU Reports in question.

Background

On 23 April 2009, the European Union adopted the Renewable Energy Directive (RED) which included a 10 percent target for the use of renewable energy in road transport fuels by 2020. It also established the environmental sustainability criteria that biofuels consumed in the EU have to comply with. This includes a minimum rate of direct GHG emission savings (35 percent in 2009 and rising to 50 percent in 2017) and restrictions on the types of land that may be converted to production of biofuels feedstock crops. The latter criterion covers direct land use changes only. The revised Fuel Quality Directive (FQD), adopted at the same time as the RED, includes identical sustainability criteria and targets a reduction in lifecycle greenhouse gas emissions from transport fuels consumed in the EU by 6 percent by 2020. Moreover, the Parliament and Council asked the Commission to examine the question of indirect land use change (ILUC), including possible measures to avoid this, and report back on this issue by the end of 2010.


Summary of findings - Updated IFPRI report.

Overall, EU biofuel production will increase from 10.1 Mt oil equivalent in the baseline to 20.9 Mt oil equivalent without trade liberalization and 17.8 Mt oil equivalent with trade liberalization. First, since the way in which Member States intend to implement the EU mandate is expected to result in an increase in the relative consumption of ethanol to biodiesel, the scenario under the trade policy status quo reinforces local production of ethanol.

Under trade liberalization, EU ethanol production declines, with sugar beet and wheat-based ethanol most affected. As a result, local production capacity and feedstock production are dominated by biodiesel production. With trade liberalization, biodiesel represents 92.5 percent of total EU biofuel production.


The report confirms that the extent to which additional demand for biofuels will be met by an increase in supply depends on the feedstock crop. For example, for sugar the additional supply will nearly match the additional demand; for soybean oil and rapeseed oil, this matching is partial, while for wheat, we expect a decrease in the absolute level of supply due to land competition from oilseeds. The latter case is explained by a stronger price increase for oilseeds and therefore for the land rents for this product compared to wheat. The analysis also shows an increase in price for the biofuels crops, especially for oilseed, due to the strong biodiesel component in the mandate. EU biofuels policy causes the relative prices to change and therefore relocates production. It provides a premium to fats and oils at the expense of other production for which relative value declines.

In terms of trade effects of the EU additional mandate, EU import of rapeseed increases strongly (+ 6 million of tons). Imports of palm oil, and soybean (both oil and beans) also increase but to a much lower extent (+4.6 million of tons). Without trade liberalization, imports of wheat (+0.47 million of tons) and corn (+1.6 million of tons) increase due to greater domestic demand in the EU for ethanol. This ceases to be the case when trade liberalization is implemented. This scenario instead leads to higher sugar cane ethanol imports (+ 6.7 Mtoe). In addition, liberalization helps to release part of the feedstock used in the baseline for ethanol production. As a result, there is a decrease in maize imports.

Land use effects are of course at the center of this study. For ethanol, the effects differ depending on the trade policy scenario. Without any trade liberalization, there will be an increase in land used forsugar beet within the EU, while under trade liberalization, the EU can grow more rapeseed, taking land away from sugar beet and cereals.

Globally, the additional biofuels mandate leads to an increase in cropland area by 1.73 million hectares without trade liberalization and by 1.87 million hectares with trade liberalization. The most affected regions are Latin America (primarily Brazil), CIS, and Sub Saharan Africa, while the cropland extension remains under 6 percent in the EU regardless of the trade policy scenario.

Under trade liberalization, Brazil experiences the highest increase in terms of cropland, mainly due to the increase in demand for imported ethanol and thus for sugar cane. If free trade is not implemented, the CIS block benefits the most due to biodiesel demand and the role of sunflower (and also wheat relocation). Pasture and managed forest represent the two major sources of cropland extension, followed by savannah and grasslands and finally primary forest. It is worth noting that 80 percent of the land use change takes place within managed land.

Summary of JRC report.

Based on the outcomes of IFPRI economic modeling the increased biofuels demand will cause ILUC GHG emissions of about 36 gCO2/MJ. This result also includes emissions from peatland drainage due to oil palm plantations mainly in Indonesia and Malaysia, which were not accounted in the original JRC methodology. The estimated peat emissions in unit of energy are 19.8 gCO2/MJ, which represent the main contribution to total GHG emissions from LUC (about 55% of total emissions).

ILUC GHG emissions for 8 feedstocks (4 for ethanol and 4 for biodiesel) were also calculated. The results show that in general ethanol crops have lower ILUC impacts than oilseeds/biodiesel crops: emissions for ethanol feedstocks range from about 4 to 20 gCO2/MJ, and for biodiesel feedstocks they range from about 36 to 60 gCO2/MJ. These JRC results are in line with the emissions calculated by IFPRI.

Links

1 Updated IFPRI report: "Assessing the Land Use Change Consequences of European Biofuel Policies - Final Report" (October 2011)
2 New JRC report: "Estimate of GHG emissions from global land use change scenarios" (October 2011)

Tweet