Biofuels Backlash in the EU - MPOC
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Biofuels Backlash in the EU - MPOC

Bio-fuelsEU bio-fuels policy is at a crossroads. Inthe past 12 months, bio-fuels have gone frombeing seen as an all-encompassing panacea for theworld’s ills to a knee-jerk reaction in favour of strong domestic lobbies.In January 2007, EU heads of state and government had backed a drive to increasethe volume of bio-fuels used in the transport fuel mix to an ambitious 10% by 2020. Butthe tide has turned, driven by concern over the impact of bio-fuel production on theenvironment and food prices.As a result, the timetable for agreeing the crucial sustainability criteria for bio-fuels has beendramatically accelerated, with a decision now expected by June.Anti-bio-fuels campaigners have focused their fire on food security, negative greenhouse gas(GHG) impact and biodiversity loss. Many scientists have waded in alongside NGOs, providingammunition and cover for politicians with cold feet to oppose the targets they hadenthusiastically endorsed and demand a rethink of the whole approach.The need to ensure sustainable production of bio-fuels has risen up the agenda tobecome a political issue. Initially limited to a January 2008 EuropeanCommission proposal on the 10% target, bio-fuels sustainability is nowbeing debated more broadly at EU level.There is pressure for keycriteria to be made more stringent, with the EuropeanParliament calling for minimum GHG savingsto be set at 50%.20GLOBAL OILS & FATS BUSINESS MAGAZINE • VOL.5 ISSUE 2, 2008

In this fast moving context, the keypolitical drivers are now not only theEuropean Parliament, a barometer of civilsociety’s concerns, but also the very EUmember-states that only recently sawbio-fuels as a cure-all.Throw into the mix the protectionistdomestic farm lobby and the vestedinterests of other affected industries, allweighing in on the politicians, and theoutcome for the EU bio-fuels policy hasnever looked less certain.Legislative landscapeNational governments – primarily inthe UK, the Netherlands and Germany– have led efforts in Europe to definesustainability standards for bio-fuels.They have developed domesticproposals for certification schemesdesigned to ensure that bio-fuelproduction that causes deforestation,biodiversity loss, increased GHGemissions or harm to local populationsis excluded from bio-fuels targets anddoes not benefit from supportschemes such as subsidies or taxincentives.EU politicians in Brussels now have thetask of designing an overall bio-fuelspolicy which will also include sustainabilitycriteria. Ideas from member-states willfeed into the new legislation, but theEuropean Commission (EC) andMembers of European Parliament(MEPs) also have their own ideas and willplay a crucial role in shaping it.At the centre of the debate are two keypieces of legislation (Box 1) that arecurrently being hammered out and, onceadopted, will determine Europe’sapproach to bio-fuels. These are theRenewable Energies Directive (RED) andthe Fuel Quality Directive (FQD).In February 2008, EU member-statesmade a political decision to back theEuropean Parliament’s introduction ofsustainability criteria into the FQD, amove that pleased opponents of thebinding 10% volume target approach setout in the RED. The member-statesagreed to set up a dedicated workinggroup to thrash out core sustainabilityprinciples that could then guide bothpieces of legislation.GLOBAL OILS & FATS BUSINESS MAGAZINE • VOL.5 ISSUE 2, 200821

Bio-fuelsWhile this promises to lead to a moreunified EU bio-fuels policy, it is likely todelay the adoption of the FQD to mid-2008. It also seems set to meet withresistance from the EC, which wouldprefer to see the criteria developed fullyin the RED and merely referred to in theFQD.Part of the EC’s concern is surely that aFQD amended to include sustainabilitycriteria would achieve one of the keyobjectives of the RED – lifecycle GHGsavings from bio-fuels – making it easierto justify the removal of the increasinglyunpopular 10% target. The workinggroup is expected to makerecommendations on the substance andscope of the criteria by the end of March,paving the way for adoption of theDirective by June (Box 2).Serious bargaining aheadThe EC stands by its proposed 10% biofuelstarget. In a speech to the EuropeanBusiness Summit on the EU’s energysecurity policy on Feb 21, EnergyCommissioner Andris Piebalgs reiteratedthat the EU needs sustainable bio-fuels toreduce its reliance on – mainly imported– oil.However, the bio-fuels dossierincreasingly appears to be viewed as apoisoned chalice, compromised on all thekey advantages that it was supposed toconfer. Its few champions risk being seenas captive to favoured audiences(especially farmers, and to a lesser degreethe European industry).Piebalg’s bio-fuels proposal, heraldedas a groundbreaking leap forward inthe EU’s efforts to tackle climatechange when it was floated in early2007, now risks being derailed byMEPs and member-states wary ofscoring a huge own goal in thesustainability stakes.Like EU governments, MEPs last yeargave the green light to plans to set abinding 10% bio-fuels target, as long asthe new legislation also includedsustainability criteria. However, thebarrage of negative reports on thepotential and sustainability of bio-fuelshas since hit hard.It is a more sceptical group of MEPs thatmust now amend and eventually givethe green light to the two key legislativeproposals. Key MEPs take a harder linethan the EC, opposing the 10% targetand advocating more stringentsustainability criteria.Acting as a weathervane for public opinion, they willcontinue to reflect civil society’sconcerns.And while most recognise that there aregood and bad bio-fuels, it will be up tothe industry to make its case to aninstitution which can afford to set thebar high since it will not have toimplement the new rules. TheParliament will be a major battlegroundfor bio-fuels this year.The backlash is keenly felt by somemember-state governments.The stage isset for some serious bargainingbetween producing and non-producingcountries, with national governmentsunder scrutiny from often hostile mediaand NGOs and increasingly scepticalpublic opinion.22GLOBAL OILS & FATS BUSINESS MAGAZINE • VOL.5 ISSUE 2, 2008

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