MNP Report 500143001/2008 Local and global consequences of the EU renewable directive for biofuels: testing the sustainability

criteria Bas Eickhout, Gert Jan van den Born, Jos Notenboom, Mark van Oorschot, Jan Ros, Detlef van Vuuren, Henk Westhoek Contact: Bas Eickhout Global sustainability and climate (KMD) Bas.Eickhout@mnp.nl

Netherlands Environmental Assessment Agency (MNP), P.O. Box 303, 3720 AH Bilthoven, the Netherlands; Tel: +31-30-274 274 5; Fax: +31-30-274 4479; www.mnp.nl/en

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MNP 2008 Parts of this publication may be reproduced, on condition of acknowledgement: 'Netherlands Environmental Assessment Agency, the title of the publication and year of publication.'

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Rapport in het kort

Local and global consequences of the EU renewable directive for biofuels: testing the sustainability criteria [pm]

Trefwoorden / Keywords: Biofuels, Greenhouse gases, Biodiversity, Food security, Energy, EU-directive

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Contents
Summary ............................................................................................................................. 6 1 2 3 4 Introduction ............................................................................................................... 9 Discussion on sustainability criteria........................................................................ 12 Proposal by the European Commission .................................................................. 15 Greenhouse gas savings ........................................................................................... 18 4.1 4.2 4.3 5 Methodology in the proposal............................................................................. 18 GHG savings per production chain.................................................................... 19 The impact of fertilizer use ............................................................................... 22

Biodiversity .............................................................................................................. 24 5.1 5.2 5.3 Macro-impact of European proposal ................................................................. 24 Land-use allocation........................................................................................... 26 Conclusions for biodiversity.............................................................................. 26

Food security ............................................................................................................ 27 6.1 6.2 6.3 What is food security?....................................................................................... 27 Results .............................................................................................................. 28 Conclusions on food security ............................................................................ 29

Synthesis ................................................................................................................... 31 7.1 7.2 7.3 Does the criterion of 35% reduction of GHG-emissions guarantee of positive effect on climate change and biodiversity?........................................... 31 Are second generation biofuels really better than first generation? .................... 32 Are biofuels for transport the optimal application for the available biomass? ........................................................................................................... 33

Conclusions .............................................................................................................. 35

References.......................................................................................................................... 36

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Summary
The European Union has set as target an obligatory share of energy from renewable sources in transport in 2020 of at least 10% of final consumption of energy in transport in each Member State. This target for the transport sector is expected to be met by biofuels only, although other routes like connection of the transport sector to the electricity grid are also thinkable. In the proposal for the Directive (released the 23rd of January 2008) the European Commission pays much attention to sustainability criteria for biofuels and bioliquids, as a consequence of the heated debate in the scientific community and society whether biofuels can be called sustainable.

In this report the sustainability criteria as formulated by the European Commission in Article 15 of the proposal are analysed. Since the sustainability criteria need to be met by suppliers of biofuels, the Commission focuses on criteria that can be applied on a batch level. Therefore, only criteria for greenhouse gas savings and concerns of biodiversity are addressed. Other environmental concerns and issues like food security are only addressed in reporting obligations starting in 2011.

We conclude that the current sustainability criteria are not effective in addressing macrodevelopments that occur because of the push for biofuels. For example, the displacement of food and feed production cannot be assessed by the current criteria. The choice to address these issues ex-post is debatable, since some impacts can lead to irreversible loss of biodiversity or a substantial loss in food security.

Moreover, the existing criteria are not addressing the link between greenhouse gas savings and loss of biodiversity. To prevent loss of biodiversity, a push to more intensive crop production is very likely, but this push cannot occur without additional use of fertilizer in the entire agricultural system. Use of fertilizer will lead to additional N2O emissions (a greenhouse gas). Therefore, the optimal greenhouse gas saving of biofuels is not the same as optimal land use for biodiversity concerns. This trade-off between greenhouse gas savings and biodiversity is not addressed in the proposal by the European Commission.

In the proposal by the European Commission there is a clear incentive for second generation biofuels (double counting of 2nd generation is allowed). However, in our analysis it is not obvious that second generation biofuels yield better results than first generation biofuels, since the entire production chain needs to be considered. First generation biofuels also yield by-products that can be used as feed for animals, which is an advantage that is not possible for second generation biofuels. When the end-use of all by-products of first and second generation biofuels is considered, the outstanding results of second generation biofuels

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becomes much more uncertain. This adds another uncertainty in the discussion whether biofuels in transport can be considered a sustainable option.

Therefore, we conclude that the macro-developments that are caused by this 10%-target (additional demand for land of 16 million ha, additional pressure on the food market, leading to higher food prices, displacement risks in different regions outside the EU since the ecosystems, trade-offs between greenhouse gas savings and biodiversity impacts), justify a rethinking of whether a strict target in 2020 for the transport sector is needed. Other routes for the transport sector (for example via electricity) need to be stimulated as well, since the most efficient use of biomass for energy is not through conversion to biofuels (a ton of wood reduces 471 kg CO2 when converted to Fischer-Tropsch diesel and 1121 kg CO2 when used as input for electricity). Strict targets for transport in 2020 will lead to production of biofuels and will cause the development of new markets which are not necessarily needed in the longer term. Another option is to develop a conditional 10% target. Especially, macroimpacts like deforestation, use of water resources and impacts on food prices justify such conditionality. The registration of these impacts needs to be part of a monitoring system that is necessary before obligatory targets are considered.

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Introduction

On the 23rd of January (2008) the European Commission released its climate and energy policy package, including European targets for greenhouse gas reductions and shares of renewables for all EU member states in 2020 (EC, 2008). This package by the Commission contains proposals for Directives following initiatives by the European leaders in March 2007. In March 2007 the European Council agreed to put an ambitious climate and energy policy package forward, including targets for greenhouse gas emission reduction, energy savings and share of renewables in the total energy consumption (EU, 2007). This policy package is supposed to bring the European Union a leader position in the worlds fight against climate change.

First reactions in 2007 were very enthusiastic from all sides: the European Chemical Industry Council (Cefic) claimed to support an energy policy striving for further emission reductions through energy savings, additional increases in energy efficiency, increased use of renewable energy and better international cooperation, the European Bioethanol Fuel Association (eBio) stated that the EU policies bring great news for the EU bioethanol industry and WWF (formerly known as the World Wildlife Fund) proclaimed European initiatives sets the right path to control climate change at the global level.1 Only Friends of the Earth were less positive in their reaction, since they proclaimed the targets are too little (for greenhouse gas emission reductions) or too vague (for share of renewables): Agreeing such a vague target on the share of renewables instead of sector-specific targets, is leaving in limbo how to generate enough confidence for investors to spur massive commercial uptake of renewable energies in all sectors, including electricity and heating and cooling. The EU must now develop clever strategies to guarantee that this target does not flop.2

However, in the course of 2007 the debate on renewables changed drastically, mainly following raised objections against the use of biofuels3. Most striking in the debate on biofuels was OECDs publication Biofuels: Is the curse worse than the disease?4 The two fundamental questions that were raised in the report were: 1. Do the technical means exist to produce biofuels in ways that enable the world to meet demand for transportation energy in more secure and less harmful ways, on a meaningful scale and without compromising the ability to feed a growing population?

1 2 3

Reactions taken from EurActiv: http://www.euractiv.com/en/energy/eu-energy-summit-new-start-europe/article-162432 http://www.foeeurope.org/press/2007/March9_JK_council_conclusions.htm

The term biofuel is used when bioenergy for the transport sector is meant. Bioenergy to produce electricity and heat is called bioenergy.

OECD claimed this report was not representing an official view of the OECD, but nevertheless the outreach of this report certainly benefited from OECDs trademark.

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2. Do current national and international policies that promote the production of biofuels represent the most cost-effective means of using biomass and the best way forward for the transport sector? (Doornbosch and Steenblik, 2007)

The report concluded that food shortages and damage to biodiversity are a possible consequence of a rush to energy crops, without clear benefits, since the claimed greenhouse gas reduction effects can be very small. Therefore, different Member States came with several reports in which sustainable criteria were introduced. Also the European Parliament joined this discussion during the approval of the new Fuel Quality Directive by amendments in December 2007 (EP, 2007; see Section 2).

This increased attention to biofuels in the course of 2007, was also reflected in more critical positions from NGOs like WWF and Friends of the Earth5. In November 2007, WWF published its position paper on biofuels in which it was stated that WWF will only support bioenergy that is environmentally, socially and economically sustainable and considers that effective measures are needed to address issues like food security, protection of permanent grasslands, natural and semi-natural forests and other high conservation value areas, a fair level playing field for small producers and a positive greenhouse gas balance over fossil fuels (WWF, 2007).

These releases in 2007 resulted in first drafts of the European Commission where several sustainability criteria were introduced for biofuels in the transport sector. However, just before the publication of the European Commissions proposal a group of environmental NGOs (non-governmental organisations) demanded to introduce much tougher standards for biofuel production or give up mandatory transport biofuel targets altogether (De Clerck et al., 2008). This position of NGOs completed a year of turmoil regarding biofuels in the transport sector.

In this report our focus is on the biofuels in the transport sector, where most of the discussions were aimed at. The sustainability criteria as formulated in the proposal for a Directive (Section 3) are put central. In combination with the different aspects of production of biofuels, the following questions are addressed in the Sections to follow: 1. To what extent are the criteria as formulated by the European Commission sufficient to assure the desired outcome of what was the initial reason for proposing the criterion?

http://www.foe.co.uk/resource/press_releases/european_renewable_revolut_07122007.html

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2.

What type of biomass production chain can meet the proposed criteria easier and what are the geographical consequences of the criteria (domestic production versus import from different regions)? What kind of considerations can be added to improve the outcome of using renewables in the transport sector?

3.

Our analysis encompasses a first reaction to the proposed sustainable criteria and addresses a number of sustainability aspects, ranging from greenhouse gas savings and biodiversity concerns to other environmental aspects and food security. These aspects play at a local level in the production chain but also at a national and even global level. Therefore, our conclusions are indicative and are meant to broaden the discussion on renewables in the transport sector. The conclusions on biofuels in the transport sector are not necessarily applicable for other uses of bioenergy in the electricity and heating and cooling sectors.

In Section 2 the general discussion on sustainability criteria is described in short. The details of the proposal of the European Commission is given in Section 3. Thereafter, three sections are addressing the following sustainability concerns: greenhouse gas savings, biodiversity, and food security respectively. The synthesis is given in Section 7 and we conclude with conclusions in Section 8.

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Discussion on sustainability criteria

The discussion on biofuels for the transport sector, summarised in Section 1, also lead to different proposals on which sustainability criteria should be considered before biofuels can be seen as good alternatives for fossil fuels. Especially, United Kingdom (UK) and the Netherlands were the first two countries with clear sustainable criteria, covering areas of the greenhouse gas balance, biodiversity, land-use change, welfare, well-being and competition for food and other materials. In the UK, the Low Carbon Vehicle Partnership (LowCVP) came with the following criteria of importance for the production of biofuel crops (LowCVP, 2006):

o Conservation of carbon stocks Protection of above-ground carbon Protection of soil carbon o Conservation of biodiversity Conservation of important ecosystems & species Basic good biodiversity practices o Sustainable use of water resources Efficient water use in water critical areas Avoidance of diffuse water pollution o Maintenance of soil fertility Protection of soil structure and avoidance of erosion Maintain nutrient status Good fertiliser practice o Good agricultural practice Use of inputs complies with relevant legislation Use of inputs justified by documented problem Safe handling of materials o Waste management Waste management complies with relevant legislation Safe storage and segregation of waste

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In 2007, in the Netherlands, the Cramer Committee6 came with a comparable list of sustainability indicators (Cramer et al., 2007): o Greenhouse gas balance: measured over the complete production chain a greenhouse reduction of 30% compared to use of fossil fuels must be met in the transport sector; o Competition with food and other local applications: production of biomass may not endanger the food production and other applications (for medicines etc.) o Biodiversity: biomass production may not affect protected or vulnerable biodiversity; o Environment: quality of soil, air and water must be sustained; o Welfare: production of biomass must contribute to local welfare; o Well-being: production of biomass must contribute to the well-being of employees and local population.

In its judgement of the Fuel Quality Directive (EC, 2007) the European Parliament also implemented sustainability criteria for biofuels to ensure no perverse incentives are introduced by the Fuel Quality Directive. Most important is the demand by the European Parliament that biofuels should show a greenhouse gas reduction of at least 50% compared to fossil fuels in order to offset the negative effects of growing fuel crops, such as negative environmental effects, increased competition for land, water and food, and increased pressure on natural forests and local communities (EP, 2007).

Clearly, the amount of greenhouse gas (GHG) savings that is required is one of the most important discussion issues on the table. However, the methodology applied is heavily determining the amount of reduction that can be achieved by using biofuels instead of fossil fuels. Therefore, a clear methodology on the counting of greenhouse gas savings is essential before production chains can be assessed. This issue will be discussed in Section 4.

In its amendments to the Fuel Qualitative Directive the European Parliament also introduced further criteria that need to be met before subsidies may be given to specific production chains. These criteria demand that international conventions and regulations are complied with, in particular relevant ILO standards and UN conventions for the protection of indigenous people, no significant effect on water resources occur due to biofuels production, air, water and soil quality is not adversely affected by extraction of fuel feedstock production and no deforestation or net loss of other carbon stocks above or below ground occurs due to fuel feedstock production (EP, 2007).

The Committee was led by Jacqueline Cramer who became Minister of Environment in February 2007.

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The areas that are covered by these criteria are very much related. The discussion seems to focus on how the greenhouse gas saving should be accounted and how criteria on the other fields can be implemented at a production level. For specific biodiversity concerns, clear criteria at a production level can be set, but displacement effects at a national or global level are difficult to steer by criteria. In Section 6, this issue will be addressed.

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Proposal by the European Commission

The official title of the proposal concerned is Proposal for a Directive of the European Parliament and of the Council on the promotion of the use of energy from renewable sources (EC, 2008). The broader intention of the Directive is to set a binding target to increase the level of renewable energy in the EU energy mix to 20% by 2020. The European Commission acknowledges that an integrated approach to climate and energy policy is needed given that energy production and use are primary sources for greenhouse gas emissions. However, not only climate change is a reason to stimulate renewables in the EU. As the European Commission states the European Union' increasing dependence on energy imports threatens s its security of supply and implies higher prices. In contrast, boosting investment in energy efficiency, renewable energy and new technologies has wide-reaching benefits and contributes to the EU' strategy for growth and jobs. In this broader setting the targets for s renewables within the EU27 should be considered.

In this report we only focus on renewables in the transport sector, since environmental sustainability criteria are only applicable to the renewables in this sector (and bioliquids in the other sectors). For renewables in the electricity sector and for heating and cooling no sustainability criteria are set (with the exception of bioliquids). In Article 5(9) it is stated: Electricity produced from renewable energy sources in third countries shall only be taken into account for the purposes of measuring compliance with the requirements of this Directive concerning national targets if: (a) it is consumed in the Community; (b) the electricity is produced by an installation that became operational after the date of entry into force of this Directive; and (c) the electricity is issued with a guarantee of origin that forms part of a system of guarantee of origin equivalent to that laid down by this Directive.

The target for renewables in the transport sector is set in Article 3(3): Each Member State shall ensure that its share of energy from renewable sources in transport in 2020 is at least 10% of final consumption of energy in transport in that Member State. In Article 5(1) it is mentioned that: Biofuels and other bioliquids that do not fulfil the environmental sustainability criteria in Article 15 shall not be taken into account. Interesting enough, it is also stated that Gas, electricity and hydrogen from renewable energy sources shall only be considered once in either the electricity sector, use for heating and cooling or the transport sector for calculating the share of final consumption of energy from renewable sources. In other words, other routes than liquid biofuels are possible for the transport sector, but are not stimulated in any way in the rest of the proposal.

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In Article 15, the environmental sustainability criteria are given. Article 15(2) indicates the greenhouse gas saving from the use of biofuels and other biolquids taken into account for the purposes referred to shall be at least 35%. This saving is applied to the mix of renewables, not for each raw material.

In contrary, the biodiversity criteria are applicable for the raw materials produced. In Article 15(3) it is stated that biofuels and other bioliquids taken into account for the purposes referred to shall not be made from raw material obtained from with recognised high biodiversity value, that is to say land that had one of the following statuses in or after January 2008, whether or not the land still has this status: (a) forest undisturbed by significant human activity, that is to say, forest where there has been no known significant human intervention or where the last significant human intervention was sufficiently long ago to have allowed the natural species composition and processes to have become re-established; (b) areas designated for nature protection purposes, unless evidence is provided that the production of that raw material did not interfere with those purposes. (c) highly biodiverse grassland, that is to say grassland that is species-rich, not fertilised and not degraded.

And Artcile 15(4) adds that Biofuels and other bioliquids taken into account for the purposes referred to shall not be made from raw material obtained from land with high carbon stock, that is to say land that had one of the following statuses in January 2008 and no longer has this status: (a) wetlands, that is to say land that is covered with or saturated by water permanently or for a significant part of the year, including pristine peatland; (b) continuously forested areas, that is to say land spanning more than 1 hectare with trees higher than 5 metres and a canopy cover of more than 30%, or trees able to reach these thresholds in situ.

Other criteria, such as mentioned in the Cramer criteria are not set in this stage. Even more important, Member States shall not refuse to take into account biofuel and other bioliquids obtained in compliance with this Article, on other grounds of sustainability.

Other impacts of biofuels in the transport sector should be considered in reporting obligations (Article 19): Member States shall submit a report to the Commission on progress in the promotion and use of energy from renewable sources by 30 June 2011 at the latest, and every 2 years thereafter. In the report Member States should report commodity price and land use

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changes within the Member State associated with its increased use of biomass and other forms of energy from renewable sources, the development and share of biofuels made from wastes, residues, grasses, straw and ligno-cellulosic material and the estimated impact of biofuel production on biodiversity, water resources, water quality and soil quality.

To stimulate innovation, the Commission states in Article 18(4) that tor the purposes of demonstrating compliance with national renewable energy obligations placed on operators, the contribution made by biofuels produced from wastes, residues, non-food cellulosic material, and ligno-cellulosic material shall be considered to be twice that made by other biofuels. This intention plus the high greenhouse gas reduction percentages that are assumed in Annex VII B and E give a clear incentive for second generation biofuels. The question remains whether these new biofuels are available before 2020 and whether there supposed environmental gains can really be met.

These intentions are the basis for our further analysis. In Section 4, the greenhouse saving counting procedure as proposed by the Commission is followed. Since the greenhouse saving percentage needs to be met by a blending of biofuels, fuel suppliers can mix different biofuel production chains. However, here we assumed that all biofuel blendings come from one source of raw material. With this assumption we can show which production chains have a higher probability of not meeting the greenhouse gas saving target. In each chain we show the importance of the largest uncertainties that still exist in the counting procedure. And at a macro-level we indicate to what extent there is a probability that greenhouse gas emission increase can be seen although the sustainability criterion is met.

In the other Sections we work with the total amount of biofuels that is needed to meet the 10% transport target in 2020 to visualize the level of ambition that is put forward by the European Commission. Next, the biodiversity criteria from the European proposal are followed and the European and global land-use consequences are indicated. Main question will be to what extent the current criteria are suitable to prevent further loss of biodiversity, which is supposed to be reduced significantly, as agreed upon by the EU in the context of the Convention on Biological Diversity (CBD, 2002).

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Greenhouse gas savings

One of the most important advantages of biofuels over fossil fuels is their assumed lower emissions of GHG-emissions in the production chain. In the proposal the European Commission states that the greenhouse gas saving from the use of biofuels shall be at least 35%. To calculate the greenhouse gas saving by biofuels, several aspects of the production process needs to be considered. The following elements might have a significant impact on the results: o Productivity of the crop cultivation and the related input of nutrients leading to N2Oemissions. o Emission factors of processes in the production chain, especially N2O-emissions in the chemical industry for fertilizer production o The use of biomass for process energy in the production chain; examples are biodiesel for agricultural activities, bio-electricity and bioheat for biomass industrial processing o Allocation of the emissions based on energy values of the different products resulting from the same processes in the production chain; of course the market position of the different products will not remain the same in time o Extension of the system studied to include all products resulting from the production chain and their potential to substitute other products (like animal feed, straw for electricity and fossil glycerine) o Soil emissions because of the change of land-use In this Section the proposal by the European Commission is compared to these aspects using data by Hamelinck (2007).

4.1

Methodology in the proposal

Article 17 encompasses the methodology that the European Commission is proposing to calculate the GHG saving by biofuels compared to fossil fuel. In the proposal, different options are possible: or default values as given by the Commission will be taken or a detailed calculation methodology is followed. Clearly, a preferred option for many Member States will be to use default values, to minimize work load. However, these default values are only allowed to be used when the raw materials are cultivated outside the Community or within the Community in regions that are assigned beforehand by the Member States (this needs to be done before 31 March 2010). Obviously, this is an incentive for Member States to assign as many areas as possible, although these areas need to have lower emissions for cultivation than assigned by the Commission in Appendix VII-D.

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In the detailed methodology that is given in Appendix VII-C the Commission is proposing a fairly detailed methodology where most of the aspects of a well-to-wheel analysis are considered. The following emissions need to be included in the calculations: emissions from the extraction or cultivation of raw materials, annualised emissions from carbon stock changes caused by land use change, emissions from processing, emissions from transport and distribution and emissions from the fuel in use. In the case of by-products from first generation biofuels, the accounting will have to be done on the basis of the energy content. This allocation method of by-products is relatively simple to calculate.

In summary, the proposed methodology by the European Commission is very extensive and, theoretically, accounts for most of the steps that need to be considered in a well-to-wheel analysis. An important aspect of the proposed methodology is the consideration of soil emissions because of land-use change. Also here the Commission proposes default values that are very high. For example, if permanent grass (not highly biodiverse, since this category is excluded in Article 15(3) (see Section 3) is converted to arable land for biofuels, the emissions become: (181-82)*(44/12)*(1/20) = 18 tons CO2/ha. This value is difficult to overcome by advantages of biofuels. Therefore, the methodology is a clear incentive to use existing arable land and not permanent grassland or lightly forested areas.

The only disadvantage of the proposed methodology is that displacement of food and feed crops is not considered. However, this issue is difficult to address anyhow (see Sections 5 and 6).

4.2

GHG savings per production chain

The default values as chosen in the proposal are documented in Annex 7 of the Commision staff working document, which is an annex to the Impact Assessment of the European Commission. In this Annex 7 the reasoning for the methodology is given and the choice to come to default values is explained. From this explanation it becomes clear that the typical values in Appendix VII-A and B are based on energy allocation of by-products (as proposed in the methodology). To build in a safety valve, most of the default values are set to lower GHG savings than the calculated value, including accounting of by-products by energy allocation. Again, this shows the European Commission cautiousness with respect to use of biofuels.

In our own analysis of several production chains, we get to saving rates as given in Figure 1. The chains considered are summed in Table 1. Different values are given per production chain. bb refers to the use of bioenergy in the production chain. In the production chain energy is needed for transport and processing. In most cases the input is fossil energy, but

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also biomass can be used as a resource. With respect to allocation the following three steps are considered: no allocation of by-products, allocation of by-products based on the energy value of the products (conform proposal) and by substitution (by-products can substitute fossil products, for example straw can be used for the production of electricity instead of coal and animal feed can be a substitute for soy meal, with corrections for the soy oil).

Table 1: Production chains considered in this analysis Crop Rapeseed Palm oil Wheat Sugar beet Sugarcane Wood Wood Biofuel Biodiesel Biodiesel Bioethanol Bioethanol Bioethanol Fischer-Tropsch diesel Bioethanol

GHG-emission reduction of biofuels

E wood FTD wood E sugar cane E sugar beet E wheat BD palm oil BD rapeseed 0% 20% 40% 60% 80% 100% bb allocation bb no allocation substitution allocation no allocation

Reduction related to fossil fuel

Figure 1: GHG savings according to own calculations for different aspects (on the basis of Hamelinck, 2007)

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From Figure 1 it is clear that how allocation of by-products is calculated is a crucial step for savings that can be achieved. Moreover, it shows that the proposed default savings by the European Commission are on the low side for first generation biofuels(for example, sugar beet ethanol according EC is 35% GHG savings, sugar cane ethanol 74%, rape seed biodiesel 36% and palm oil biodiesel 51%). In contrast, the values for the second generation biofuels are on the high end (93% for farmed wood Fischer-Tropsch diesel and 70% for farmed wood ethanol). Again, this result shows the push for second generation biofuels by the European Commission. The same conclusions are valid when the values in Appendix VII-D/E are compared to own calculations (Figure 2-4). Please note that it is assumed for second generation biofuels that processing emissions are zero since only biomass is used.
GHG-e m i ssi on rape se e d biofu e l
80

60 Trans p o rt 40 Pro ces s ing C ult ivat io n 20

0 No allo cat io n Energ y b as ed allo cat io n EU-p ro p o s al t yp ical Eu-p ro p o s al d efault

Figure 2: Greenhouse gas emissions for rape seed biodiesel as reported by the European Commission (EC, 2008) and as determined by own calculations on the basis of Hamelinck (2007).
GHG-e m ission palm oil biofu e l 80 60 40 20 0 No allocat ion Energy based EU-proposal Eu-proposal allocation typical default

g CO2 eq/MJ

T ransport P rocessing Cult ivat ion

Figure 3: Greenhouse gas emissions for palm oil biodiesel as reported by the European Commission (EC, 2008) and as determined by own calculations on the basis of Hamelinck (2007).

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GHG-e m ission farm e d wood FT-die se l 80 60 40 20 0 No allocat ion Energy based EU-proposal Eu-proposal allocation typical default

g CO2 eq/MJ

T ransport P rocessing Cult ivat ion

Figure 4: Greenhouse gas emissions for farmed wood Fischer-Tropsch diesel as reported by the European Commission (EC, 2008) and as determined by own calculations on the basis of Hamelinck (2007).

4.3

The impact of fertilizer use

So far, the conclusion is that the EC proposes a detailed methodology, but that most of the Member States will work with the default values, since these values are easy to use and these values are chosen with care and the methodology can easily lead to lower GHG savings when soil emissions are considered. However, the issue of fertilizer use is hardly mentioned so far. In the proposed methodology (Appedix VII-C) fertilizer use should be considered. However, this methodology is hardly addressing the issue that fuel production per hectare and farmers income increase with higher fertilizer dose. Therefore, a target for biofuels will automatically introduce an incentive for more fertilizer use. However, fertilizer use will lead to additional N2O emissions, decreasing the GHG savings. Figure 5 shows this trade-off for rape seed biodiesel: the GHG savings are declining when high N application rates are applied. When only default values are used from the proposal and farmers will use a lot of fertilizer to optimize their income, the actual GHG savings become very uncertain. This aspect is not considered sufficiently in the current proposal and shows the complexity of the problem that is introduced by the target of 10%.

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GHG-balances rapeseed biodiesel

160% 140% reduction GHG-emissions 120% 100% 80% 60% 40% 20% 0% 0 25 50 75 100 125 150 175 200 225 250 N-dose in cu ltivati on (ton n e s/h a) bb soy substitution (no soil emission) soy substitution (no soil emission) bb energy based allocat ion without allocation energy based allocat ion

Figure 5: GHG savings for different N application rates, for different allocation rules of bioproducts.

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5
5.1

Biodiversity
Macro-impact of European proposal

As described in Section 3, the European proposal excludes several ecosystems from possible cultivation for the use of biofuels. However, again, displacement of production of food and feed cannot be excluded. Therefore, a substantial demand for additional land for biofuels will lead to an incentive to use productive land for biofuels and to shift other cultivations to other areas. This impact can be crucial given the high target of biofuels. Moreover, the EU is not the only region with high bioenergy targets. In this analysis the US-target is also considered.

The latest EU proposal on biofuels (10% in 2020) en U.S. plans on biofuels (35 billion gallons of bioethanol in 2017) require substantial amounts of land for the cultivation of energy crops. In the EU the main energy crops cultivated are oil crops (rapeseed, sunflower), wheat, maize and sugar beet. In the US the main crop used for energy is corn (maize) and is used for the production of bioethanol.

For the estimation of future crop production and future land demand the OECD-FAO outlook 2006-2016 is used as basic source on future developments in agriculture. For the most relevant food/feed and fuel crops the required data on production and land demand were taken form this outlook and extrapolated up to 2020. The data also reflect presumed yearly yield increase, which is assumed to occur as result of improved management and better crop varieties. The growth in production demands are based on the development in 2016 and the yearly yield increase are based on the development in the last 5 years.

In the OECD-FAO report only the most important biofuel producing regions are addressed separately. These are the EU27, U.S., Canada, Brazil and China. In our calculations we used the OECD-FAO biofuel figures for all these regions. In the OECD-FAO outlook the development of biofuels is modest compared to the ambitions of EU policy and US policy. The ambition in the U.S. is a production of 35 billion gallons of bio-ethanol in 2017. The target for 2020 is assumed to be equal to the target in 2017.

Four scenarios are considered: The first scenario (A) is based on the data presented by OECD-FAO. The only modification is the extrapolation up to 2020.

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The second scenario (B) is based on the first one. The only modification is a doubling of the growth in yield per hectare. This has substantial impact on the required area (but has a trade off to N2O emissions (see Section 4.3). The third scenario (C) is based on the data presented by OECD-FAO. The period is extended to 2020 by extrapolation and the policy targets of the EU (10% biofuels) and of U.S. (35 billion gallons bioethanol). The consequences of policies are an additional increase in demand for biofuels and subsequent impact on the area for the production. The fourth scenario (D) is based on the third one. The only modification is a doubling of the growth in yield per hectare. This has substantial impact on the required area.

Area results are shown for EU and US in Table 2. Since less feed crops are needed (byproducts of biofuels can be given to livestock) the total additional area needed for the European target is around 16 million ha. This is comparable to 10% of the current European agricultural area.

Table 2: Areas needed in Europe and the USA for meeting the biofuel targets in the region itself.
EUROPE27- area (wheat, oilseeds, maize) Scen A OECD-FAO Scen C target 2020 Scen D target 2020+yield improvement 3.635 kha 3.635 kha 3.635 kha 7.396 kha 7.396 kha 7.264 kha 11.867 kha 18.888 kha 15.853 kha

US7- area ( maize) Scen A OECD-FAO Scen C target 2020 Scen D target 2020+yield improvement 5.749 5.749 5.749 10.222 10.222 10.090 10.353 29.990 26.361

This area is very large and not likely to become available in Europe before 2020. Therefore, the EU-directive can be seen as an incentive to produce biofuels outside Europe, which is difficult to manage. Moreover, alternatives for bioethanol and biodiesel can be produced more efficiently in other regions. For example, when 50% of the required bioethanol is produced by in Brazil with sugar cane, the area needed is only 2 million ha. This shows that

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for reasons of productivity, production outside Europe is recommendable. This trade-off of productivity and location of production is not addressed in the proposal.

5.2

Land-use allocation

Pm; what areas are available globally for producing biofuels given the criteria in the proposal? Allocation of different maps is used to show global availability of ecosystems according EU proposal. Example of maps:

Figure 6: Maps of potential for woody bio-energy production in 2050, land degradation (map from the GLASOD database), protected areas (Sustainability First scenario GEOIV) and the water stress index (WaterGap results for 2050) as used in the analysis.

5.3
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Conclusions for biodiversity

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6.1

Food security
What is food security?

There are four dimensions to food security: availability, access, stability and utilization. Further development of bioenergy sectors will affect food security in numerous ways. The effects of bioenergy on food security will be context-specific, depending on the particular technology and country characteristics involved. For instance, liquid biofuels derived from food crops will have different food security implications than modern bioenergy systems based on lignocellulosic or waste materials. FAO has initiated working groups for assessing food security implications of bioenergy. The questions that need to be addressed by those working groups are: 1. 2. What are the expected impacts on food prices at all levels on food insecure households? What are the implications for food availability in terms of competition for natural resources, such as land or water, or human resources, such as labour? What about inputs to agriculture, particularly for households dependent on own food production? What are the implications on incomes, employment and land rents given current inequities in access to productive resources? Is there anything different about bioenergy that could mitigate or overcome factors of exclusion that contribute in part to food insecurity and rural poverty? What are the implications of bioenergy on environmental sustainability and climate change as they affect food security? Who (public sector, private sector, civil society) is best placed to monitor and address possible conflicts arising from the competition between food, feed or fuel use of biomass? How can low-income food deficit countries ensure that food security concerns are addressed, given the possibility of unintended consequences due to rapid development of bioenergy and the complex linkages between agriculture, energy, environment and trade?

3.

4. 5.

6.

Here identification of the most vulnerable countries:

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Source: Schmidhuber, 2006

6.2

Results

Results from Eururalis study (WUR/MNP, 2008) in which 10% target is implemented in a liberalised scenario.
10 5 0 -5 -10 -15 Cereals Oilseeds Sugar Reference BFD Crude oil

Figure 7: Percent changes in real world prices, 2020 relative to 2001 (Banse et al., 2008)7

Numbers in % indicate the share of imported biofuel crops in total use of biofuel crops in petrol sector

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16000 12000 8000 4000 0

30%

42%

53%

44%

52%

Initial, 2001

Reference, 2020

BFD, 2020

Reference, high oil price, 2020

BFD, high oil price, 2020

domestic

imported

Figure 8: Origin of biofuel crops used in the EU-27 (in Mill US$, 2001; Banse et al., 2008).

6.3

Conclusions on food security

Food security exists when all people, at all times, have physical, social and economic access to sufficient amounts of sage and nutritious food that meets their dietary needs and food preferences for an active and healthy live (Nyberg and Raney, 2007). At present about 800 million people suffer from malnutrition. The aim of Millennium Development Goal is to reduce this number by 50% by 2015.

The central question is whether a criterion to prevent deterioration of food security can be implemented on micro-scale (individual consignments), or whether this question can only be addressed at regional, national or global level.

Only in more extreme cases this criterion can be implemented on the level of individual consignments, for instance when the biofuel-feedstock is coming from a region with high incidence of malnutrition. However, the fact that an individual consignment is produced in a food abundant region, does not mean that there is no impact on food security for people in other regions. Several studies (Banse et al., 2008; Elobeid & Hart, 2008) have shown the effects of biofuel policies on world market prices (see also Section 6.2). In low income, food deficit regions higher world market prices lead to a significant impact on purchase power. Elobeid and Hart demonstrate that the impact of the US policy on bio-fuels lead to cost increases of food baskets up to 15% in certain SSA countries.

If the criterion can only be implemented on a macro-level, several questions arise, like:

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1. 2. 3. 4.

How can the criterion actually be implemented? Who is responsible for monitoring? How is the feedback on the results of the indicator organised? Should the criterion be used ex-ante or ex-post?

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7.1

Synthesis
Does the criterion of 35% reduction of GHG-emissions guarantee of positive effect on climate change and biodiversity?

A clear reduction is positive for climate change and excludes cases, for which it is doubtful if there would be a reduction. A reduction of GHG-emissions is beneficial for biodiversity as well.

The list of default data in Annex VII of the proposal makes clear that none of the biofuels, which are on the market nowadays or can be expected in future, will have problems with the criterion mentioned. The most critical situations for fuel producers or suppliers can be solved by either presenting more data on the actual situation, mixing biofuels (or biomass as the resource) with different characteristics or using more bio-energy in the process chain. Producers will only provide extra data, if they are better than the default value of one of the three distinguished parts of the process chain. So, even if the actual overall values would not be above 35%, a specific biofuel would comply. In many process chains the extra use of biomass for process energy might improve the results. Examples are biodiesel for tractors and transport and production of heat and electricity by burning biomass. A potential reduction increase of about 20% for crops like rapeseed and wheat is assessed based on exploring calculations. Although this seems a bit of a trick, it should be realized the high reductions for biofuels based on wood or for sugar cane ethanol can be explained by the use of biomass for process energy. Because the 35% criterion is applied for mixtures adding some more waste as a resource or mixing worse biofuels with better ones could be attractive. Small amounts of bad biofuel are not prohibited to enter the market this way. The conclusion must be that almost no biofuel is prevented from entering the market by the criterion of 25%. Even a higher reduction criterion (i.e. 60%) would probably have a small impact on the crops used for biofuels, but would lead to smart solutions in practice. The results depend on the allocation method. The EC-proposal prescribes the energy based allocation method for good reasons. The substitution method is more likely to simulate practice, but will be quite complicated. For rapeseed and wheat the difference between energy based allocation and the substitution method (with animal feed substituting soymeal) is about 0-15%.

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A reduction of more than 35% suggests a positive effect on climate change in all cases. However global land conversion partly driven by the demand for biofuels is not included. To analyze the potential impact, a more relevant indicator is the GHG-emission reduction per hectare. In this way an assessment can be made of the compensation for indirect soil emissions. Using the values presented in the EC-proposal for the conversion of lightly forested area or permanent grasslands into arable land an emission would lead to an emission of almost 5000 kg CO2/ha.y. Furthermore the impact on biodiversity is dominated by two effects: positive because of less climate change and negative because of conversion of natural area (also indirect and elsewhere, but related to the extra land-use for biofuels). Although scientific knowledge doesnt lead to strict guidelines because of many uncertainties, it is likely biodiversity losses in present ecosystems occur when GHG-reductions are lower than 20000 10000 kg CO2eq/ha.y. Using the energy based allocation method (for emissions and land-use) for the most important biofuels (including some future options) reductions (all > 35%) are in the order of 5000-15000 kg CO2-eq/ha.y. Extra soil emissions are compensated, but the positive effect is reduced significantly. For biodiversity negative effects on present ecosystems cannot be excluded for all biofuels. The EC-proposal wants to stimulate the use of wastes, residues, non-food cellulosic material and ligno-cellulosic material. Optimal use of waste streams will have positive effects. No extra land is used. In some cases in practice these streams have other applications. There is no clear definition of whats waste. Therefore negative effects of using them for biofuels cannot be excluded.

7.2

Are second generation biofuels really better than first generation?

In cultivation de energy production per hectare of woody materials is higher. New technologies enable the conversion of more waste materials into biofuels. Woody materials can be cultivated on land, which is not suitable for food crops. Woody material is no food crop and no rival for food production, biomass for the first generation is.

To start with the last argument, it makes no sense. The real sustainability dilemma is not if food crops are used for bio-energy or not. The real dilemma is if land is used for the cultivation of food, feed or energy crops. In case land is not suitable for food production the cultivation of woody biomass (or other like jatropha) for energy will reduce the pressure on the food market.

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However, even the cultivation of these types of biomass requires at least reasonable conditions to realize economically interesting productivities. Problems of availability of water cannot be neglected. The biodiversity value of these types of land cannot be ignored either. In general, it can be assumed that the lower the biodiversity of the land the lower the potential productivity and the higher the extra needed inputs (water and fertilizer). There is not enough knowledge and experience to conclude whats the strongest impact. In agricultural practice in many cases it is no question of food or feed or energy. There can be several products or co-products leaving the production chain with different purposes. This will be optimized with the biorefinery concept. Two situations of widely used energy crops in Europe, wheat and rapeseed, both producing biofuel and animal feed have been compared with the production of the same amounts of biofuel (in MJ) and animal feed (based on nutritional value and quality) from soybeans (cultivation in Latin-America with relatively low productivity) and biofuel from European wood. The emissions per MJ for the soybean/wood combination are lower but more land is needed. In case biomass is introduced in the process chains for rapeseed and wheat and the N-dose is slightly adjusted to get to the same GHGemissions per MJ for rapeseed the total land-use is 10-20% higher and for wheat about 30% lower than for soy/wood.

Based on these results there is no clear answer to the question whats best.

7.3

Are biofuels for transport the optimal application for the available biomass?

There are no alternatives for transport, at least not on the short term. Energy security is dominated by oil.

The discussion is determined by two facts: 1. the availability of biomass is limited and 2. the GHG emission reduction of biomass used for the generation of electricity is higher. Because of this last point, the way the excess electricity is allocated in the EC-proposal deserves support. The advantage of electricity generation is especially true for woody materials and thus for second generation biofuels. For example, a ton of wood reduces 471 kg CO2 when it is transferred to Fischer-Tropsch biodiesel, but it reduces 1121 kg of CO2 when it is applied directly in the electricity sector. Of course, the advantage of biofuels is they can easily be introduced in the present system, just blending fossil fuels with a certain percentage of biofuel. The costs for first generation biofuels are no big problem, especially with the present high oil price. However its potential to reduce GHG-emissions in 2020 is quite low. A reduction of less than 5% per kilometer can be expected, far less than the increase of transport.

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Are there really no alternatives for transport? Yes, there are. Fuel cell cars on hydrogen, hybrid and plug-in hybrid and even all electric cars are alternatives, although there costs are still relatively high. In a transition process towards a new system their potential is high, although it depends on the sustainability of the hydrogen production and the generation of electricity. The EC-proposal includes these alternatives for transport as renewable if the production is based on renewable energy. Electricity for transport will be taken from the grid, which delivers mainly fossil based electricity. So, this application is not really stimulated this way. It might be better to take the amount of renewable electricity as part of the extra electricity produced compared to a reference year. Are the hydrogen and electricity alternatives really more promising? This question can be related to the question of an optimal use of biomass by comparing four situations all starting with same amount of wood as the source of energy and ending with kilometres driven with an average car. Electricity wins, hydrogen follows and FT-diesel and bio-ethanol stay behind. The excess electricity produced is about as valuable for transport as the liquid biofuels. The electricity pathway is not included in the 10% biofuel. Understandable because wood for electricity entering the grid cannot be assigned to transport, but a pity because it still is a very promising option for the long term, although dependent on technological improvement of batteries. The electricity and hydrogen pathways can be supported by bio-energy, but they are not depending on it.

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Conclusions

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References
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