EU proposes to reduce use of food-based biofuels


BRUSSELS -- The European Union on Wednesday presented a radical shift in its biofuels policy, proposing to limit the amount of transport fuels from food crops that would count toward a 2020 renewable energy target.

The European Commission is proposing to limit the share of energy from food crop-based biofuels to no more than 5% of the total energy used in the transport sector in 2020. That represents roughly the current amount of food crop-based biofuels used in EU transport fuels.

The use of biofuels has become increasingly controversial in the EU, as questions have emerged about their real contribution in fighting climate change and about the impact they have in lifting global food prices. Biofuels are produced from crops such as rapeseed, palm oil or sugar cane.

The commission originally targeted meeting 10% of the transport sector's needs from renewable energy over that period, and biofuels based on food crops were expected to make up the bulk of it.

But after years of scientific studies, political bargaining and heavy lobbying, the European Commission proposed new rules aimed at discouraging the use of biofuels derived from food crops, while at the same time boosting so-called second-generation biofuels, which don't compete with food needs, even though they are still in development.

"We should not continue to enlarge a problem that is already big enough," said Connie Hedegaard, commissioner for climate action.

If policy makers understand that a policy is going in the wrong direction, "then of course you should think twice," she said. "In Europe biofuels have a role to play in the future, but they truly have to be sustainable."

In its proposal, the commission also said that after 2020 food crop-based biofuels that don't lead to "substantial greenhouse gas savings" shouldn't receive subsidies.

The text is likely to change before it can become law, because the European Parliament and EU governments will now discuss it and will have to agree on a common wording.

"Today's news is still a negative for biofuel producers [because it is] reducing the outlook for agricultural commodity demand in the EU biofuels industry," said Erin Fitzpatrick, grains and oilseeds analyst at Rabobank in London. The rules aren't likely to be implemented until 2015, adding further uncertainty to investments and planning strategies, she said.

While the commission isn't proposing an all-out ban on any type of biofuel, nor an overall cap to their use, the plan marks a U-turn in EU policy on the issue.

In the past, the EU has encouraged the use of biofuels as a way to reduce greenhouse gas emissions in the transport sector. That has prompted hundreds of millions of euros in total investment in biofuel production capacity that the industry says are threatened by Wednesday's proposal.

The plan "would destroy the biofuels industries and related sectors such as crushing and sugar facilities," said a joint statement by the biofuel industry, signed by a group of associations, including the European Biodiesel Board and Copa-Cogeca, the European farmers' lobby.

The proposal "will jeopardize investments, jobs in rural areas and prevent development of advanced biofuels," they said.

The commission also attracted criticism from environmental organizations. The ultimate aim of Wednesday's proposal was to prevent the EU biofuels policy from harming the climate, but some nongovernmental organizations say the new policy isn't solving the climate-change problem.

"While the EC proposal limits today's bad practices, it does not fundamentally steer future bioenergy in a sustainable direction," said Nusa Urbancic, program manager for fuels at Transport and Environment, an organization that promotes environmentally-friendly transport.

Dow Jones Newswires

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