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Down to Earth No.76-77, May 2008

EU energy policy drives agrofuel production

The UK government and the European Union are pressing ahead with policies to increase agrofuel* use for energy - despite evidence of serious harm to the climate and communities - due to concerns about climate change, rising prices of fossil fuels and energy security.1

Only a year ago, financial analysts reckoned that, at US$ 400 per tonne (US$54 per barrel), palm oil would soon be competitive with conventional oil.2 But palm oil has closely tracked crude oil. Now, as oil prices rise to over US$120 per barrel, crude palm oil has hit US$1,150 per tonne (US$155 per barrel) due largely to the high demand for agrofuels.3

Fuelling the policy debate

While the recent focus has been on transport - responsible for about one fifth of Europe's greenhouse gas emissions - it is important to remember that agrofuels are also burnt for power generation in Europe. In addition, fats and vegetable oils are used in the manufacture of food products, soaps, paints, cosmetics and pharmaceuticals.

Heads of government from European Union member states agreed to a package of energy measures in March 2007. The European Energy Action Plan included a commitment to source 20% of the EU's energy from renewables by 2020 (covering electricity, heat and transport) and a 20-30% reduction in greenhouse gas emissions depending on wider international efforts. It also proposed a mandatory 10% biofuel target by 2020, subject to agrofuels being 'sourced sustainably' and to second generation biofuels becoming available. An earlier Biofuel Directive, introduced in 2003, would be revised.

The political stakes are high but the debate has not been easy for the public to understand. At least two pieces of draft legislation about closely related issues are now being promoted by different parts of the European Commission (the executive arm of the EU). Moreover, the policies are not firmly based on sound evidence.

Throughout these policy debates, campaigners in Europe have supported Southern groups' concerns about food security, biodiversity, soil, water and human rights. These include concerns about large-scale palm oil expansion plus plans to revive the sugar industry and scaling up jatropha cultivation in Indonesia (see article on agrofuels in Indonesia). They have also emphasised the need for Northern societies to reduce their energy consumption instead of importing agrofuels from the South to feed their energy-hungry lifestyles.

Agrofuels for UK transport

Officially, Britain shares the EU's position that greenhouse gas emissions must be sharply reduced if there is any chance of limiting world temperature rises to 2°C and avoiding runaway climate disaster. The UK looks likely to meet or even surpass its modest greenhouse gas emission target commitments made under the Kyoto Protocol (22% reductions rather than 12.5% by 2012), but this is not all good news. This achievement is due to substantial purchases of carbon credits from abroad, rather than carbon emission reductions. In fact, Britain is well behind its own carbon reduction targets set in a 2003 government White Paper4. So reducing the fossil carbon of transport fuels is an important priority.

Divide and rule

The UK set up an Office of Climate Change in September 2006 to develop official climate change policies and strategies both domestically and internationally. It also hosts the Stern Review team.9

However, responsibility for policy implementation is divided between six government departments. For example, the Department for Transport is promoting agrofuels through the RTFO. Meanwhile, the Department for Environment, Food & Rural Affairs (DEFRA) which is charged with promoting all aspects of sustainability takes a more cautious approach to biofuels produced from rainforest areas.10 The Department for Business, Enterprise and Regulatory Reform (BERR) promotes support for low carbon technologies and international carbon markets.11

There is also a Climate Change Projects Office, jointly funded by BERR and DEFRA, which helps UK businesses to pursue opportunities arising from the Kyoto Protocol.

From April 15th this year, no-one who drives a car or uses public transport in Britain can avoid agrofuels. All fuel supplied in the UK must contain a minimum of 2.5% of agrofuel - rising to 5% by 2010. The Renewable Transport Fuel Obligation (RTFO) is the British government's way of implementing the EU's revised Biofuel Directive. Organisations including Biofuelwatch and the Campaign Against Climate Change lobbied hard for many months against the target, but the government pushed the policy through parliament.

The RTFO is intended to help the UK meet its targets under climate change agreements and also promote 'energy security' by replacing a proportion of fossil fuels with renewables. It is not a measure to reduce energy consumption overall. So it is rather worrying that the UK sees itself as an international leader in developing carbon and sustainability reporting for agrofuels as part of the RTFO.5 There is no new sustainability standard. Suppliers will rely instead on a list of principles plus existing certification schemes, such as the RSPO, to safeguard against negative impacts (see box, below). It is worth noting that only two of these principles address social issues and only one land rights. No agrofuel will be banned. Companies just have an obligation to report to the government on the 'sustainability' of their agrofuel imports.

Britain currently produces about 55,000 tonnes a year of bioethanol (added to petrol), mostly from sugarbeet, and 75,000 tonnes of biodiesel (added to diesel) from animal fat and rape seed, soy and palm oil. This is far below the two million tonnes a year of agrofuels needed to meet the RTFO 5% target.6 The Environmental Audit select committee warned UK parliamentarians that growing wheat and sugar beet in Britain to make fuel would cause food price rises and make it harder to meet targets on water quality and to protect wildlife.7 Faced with such high costs, biofuel imports from the global south - including palm oil from Indonesia - appear to be the easy option.

Environmentalists challenge this view. "Tackling climate emissions from the transport sector needs to start with strict mandatory fuel efficiency measures. Biofuels could theoretically play a small role, if (and it's a big if) there are strict sustainability criteria in place. But draining, clearing and burning of vast tracts of rainforest and peatlands to make way for crops for biofuels is madness," Andy Tait of Greenpeace UK pointed out in a letter to the press.8

RTFO Environmental and social principles

1. Biomass production will not destroy or damage large above or below ground carbon stocks.
2. Biomass production will not lead to the destruction of or damage to high biodiversity areas.
3. Biomass production does not lead to soil degradation.
4. Biomass production does not lead to the contamination or depletion of water sources.
5. Biomass production does not lead to air pollution.
6. Biomass production does adversely affect workers' rights and working relationships.
7. Biomass production does not adversely affect existing land rights and community relations.

The UK government considers that the following schemes satisfy these principles:

Standard Environmental Standard OK? Social Standard OK?
Linking Environment and Farming Marque Yes No
Roundtable on Sustainable Palm Oil Yes Yes
Sustainable Agriculture Network/ Rainforest Alliance Yes Yes
Basel Criteria Yes Yes
Forest Stewardship Council Yes No
Social Accountability 8000 No Yes

European targets

Ironically, while the UK was pushing legislation on agrofuels and transport through parliament in line with EU policy, some members of the European Commission were having serious doubts.

The target that agrofuels must have a 10% share of the transport market by 2020 was agreed in principle by EU leaders over a year ago and appears in draft legislation on renewable energy launched by the European Commission in January this year.12 The 10% figure was controversial, not least because the 2005 target was not met.

To meet the targets, the EU biodiesel industry says it would have to raise output by 15 per cent each year and rely mostly on EU-grown rapeseed and sunflower oils. Only 20% of the raw materials would come from imports. EU Agriculture Commissioner Mariann Fischer Boel suggested food manufacturers could meet their demand for vegetable oils by switching from rapeseed oil to soy or sunflower.13

EU Development Commissioner Louis Michel publicly expressed concern that "the use of arable land to produce the resources necessary for biofuels could be detrimental to agricultural production".14 And Environment Commissioner Stavros Dimas admitted earlier that he had largely underestimated the potentially damaging environmental and social consequences of agrofuel production. Dimas said the EU would introduce a certification scheme and promised a clampdown on biodiesel from palm oil.15

On the other hand, Energy Commissioner Andris Piebalgs staunchly defended the EU policy saying that "The key contribution of biofuels to the sustainability of the transport sector should not make us forget its other benefits which are as important as the environmental ones, namely: reducing our dependency on imported oil; providing a development opportunity for poor countries and paving the way for second-generation biofuels".16

This confusion arises from the fact that there is not just one but two new proposals on the table. The package on Renewable Energy launched on January 23rd this year comes from the energy department of the Commission and will be dealt with by energy ministers in the European Parliament. It includes a revision of Directive 2003/30/EC on the promotion of the use of biofuels and other renewable fuels for transport, commonly called the 'Biofuels Directive'. There is also a draft Fuel Quality Directive, introduced last year, to be dealt with by environment ministers and experts. It says fuel suppliers should reduce the carbon footprint of transport fuels by 10% by 2020, but it does not affect total fuel use.

Without suitable safeguards, agrofuels could do more harm than good to people and the planet. An agreed, reliable system of sustainability criteria is essential, but this has been a contentious issue. Industry has, on the whole, been resistant. Questions have been raised too about whether these criteria breach WTO guidelines. The Commission wanted the criteria to be part of the revised Biofuel Directive, but environment officials did not want the decisions to be left to energy officials. The current compromise is that both directives should contain different sustainability criteria with a common core. Whatever the solution, mandatory minimum sustainability standards are unlikely to be in place until 2011, making it difficult for consumers to choose between 'good' and 'bad' agrofuels.

Moreover, neither the UK's RTFO nor the current draft of the EU Biofuels Directive includes greenhouse gas reduction targets. So the policy does not necessarily encourage the use of types of agrofuels with the best greenhouse gas savings. As a result, the Directive will do more for economic development and energy security than combating climate change. The prestigious UK scientific body, the Royal Society, has warned that - without support for research and development - there is a risk of becoming 'locked in' to using inefficient agrofuels.17

International criticism

The past months have seen a stream of evidence from independent scientists challenging biofuel policies. A leaked internal European Commission report gave a damning verdict on the EU's mandatory 10% agrofuels for transport target. It revealed that the policy could cost as much as 65 billion euros and use huge amounts of land outside of Europe while failing to deliver any significant greenhouse gas savings.18

A study commissioned by the Swiss government concluded that agrofuels made from palm oil, corn and soy may be more damaging to the climate than fossil fuels. The report, cited in the journal Science, calculated the relative merits of 26 biofuels based on reduction of greenhouse gas emissions, damage to human health and ecosystems and natural resource depletion.19

Prof Robert Watson, the UK's Chief Scientific Adviser to DEFRA, also stated that current policies on using food for energy are flawed. "In many parts of the world the reduction of greenhouse gases is not as great as people claim, and it also comes... often with loss of biodiversity, soil degradation and water pollution.We clearly need to make sure that if we use biomass for fuel it must be sustainable economically, environmentally and socially," he argued in a radio interview.20

Dr Hartmut Michel, who won a Nobel Prize for his work on the chemistry of photosynthesis, explained "When you calculate how much of the sun's energy is stored in the plants, it's below one percent...When you convert into biofuel, you add fertilizer, and then harvest the plants. There's not real energy gained in biofuel," he told a forum in the Philippines.21

The latest criticism of the 10% target has come from the European Environment Agency. The EEA's scientific committee last month called for the 10% quota to be suspended, saying it is an "overambitious experiment whose unintended effects are difficult to predict and difficult to control".22

Food vs Fuel European Commission president, José Manuel Barroso, has ordered a study into possible links between agrofuels and the recent rapid rises in the prices of food.23 However, he is unlikely to revoke the 10% target for transport.24

UN Secretary-General Ban Ki-moon has pushed climate change to the top of the UN's agenda. UN food agencies are also facing a crisis over rising prices (see article on poverty and rice). Ban is likely to repeat his call for a review of land-use conversion by biofuel producers at the High-Level Conference on World Food Security: the Challenges of Climate Change and Bioenergy, to be held at the FAO headquarters in Rome, Italy in June.25 He has already expressed concern that there are only seven years left to meet the Millennium Development Goal of halving global hunger by 2015.26

Civil society organisations from around the world will use the 9th Conference of the Parties of the UN Convention on Biological Diversity (CDB) to be held in Bonn in May to debate the agrofuel issue. "The subsidies and runaway development of the agrofuels industry is fuelling speculation in commodity futures markets and land, so driving food prices, hunger and the destruction of ecosystems and communities. The CBD must act to halt the damage and call for the control of markets in agricultural commodities for food, feed and agrofuels," a spokesperson for the CBD Alliance explained.27

Although some EU officials are belatedly starting to question whether large-scale monocultures of palm oil to supply agrofuels for Europe's power supply and the transport sector is the answer to climate change, their considerations are far too late. Industry in the North and South has jumped on the agrofuels bandwagon. In the UK, many biofuel plants have been announced over the last two years. Now they are struggling to survive against subsidised imports from the USA.28

Meanwhile Indonesian and Malaysian palm oil producers are concerned that moves by Europe to restrict biodiesel imports will adversely affect their investments (see article on Indonesia's agrofuels).

DTE has joined with other NGOs in the UK and the rest of Europe calling for the RTFO targets to be scrapped and a stop to agrofuel expansion, targets and imports at EU level.29 We support declarations by Sawitwatch that palm oil for agrofuels increases social conflict and undermines land reform in Indonesia and its calls for a reduction in palm oil consumption in Europe.30 Copies of DTE's letters to MPs and MEPs are available on request.

*Note: Many campaigners refer to the use of products from large-scale monocultures, such as biodiesel from palm oil and bioethanol from sugar, as 'agrofuels' to reflect this is part of agribusiness, not a natural process. The European Commission uses the term biofuels.

1 This article draws on an unpublished briefing document kindly provided by Helena Paul of Exonexus.
3 Jakarta Post 28/Apr/08
4 Hansard, 4/Dec/07
5 Royal Society press release, 14/Jan/08,
6 Observer 20/Jan/08
7 Telegraph 20/Jan/08
10 Office of Climate Change,
12 New Scientist 23/Jan/08
13 Reuters 7/May/07
14 Interview 11/Jan/08 on
15 BBC Radio 4 Today programme interview, 14/Jan/08
16 21/Jan/08
17 Royal Society press release, 14/Jan/08,
18 Friends of the Earth Europe, Birdlife International Press Release, 18/Jan/08
19 Scharlemann & Laurance, Science, 4/Jan/08
20 BBC Radio 4 Today programme interview, 14/Jan/08
21 Philippine Daily Inquirer 14/Jan/08
22 European Environment Agency website, 10/May/08,
23 European Federation of Transport & Environment 14/May/08
26 Guardian 5/Apr/08
27 CBD Alliance press statement 13/May/08,
28 Guardian 1/Apr/08
29 See for example, Friends of the Earth Europe's 14/Jan/08 press statement calling for a moratorium on EU plans to expand agrofuel use on
30 See Sawit Watch's open letter to the European Parliament, the European Commission, the governments and citizens of the European Union, 29/Jan/07 on

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