Biofuels and Global Trade Study Goes Online

"Global trade and environmental impact of the EU biofuels mandate" is the title of a study finalised by the International Food Policy Research Institute this 25 March 2010. The report is one of four studies commissioned by the European Commission in response to the Council and Parliament’s request to examine the indirect land use change effects of biofuels.

The Commission has decided to release this study immediately after its completion in order to ensure full transparency on this important dossier. The other three studies are still underway.

As is common in this new field of enquiry the study's findings are subject to uncertainties because of gaps in available data and the lack of complete empirical validation. Nevertheless, this study makes progress towards a better understanding of the environmental and economic effects of biofuels and contributes to the Commission's decision making process on this topic. READ MORE Download Study

Global demand for biofuels has risen sharply over the last decade, driven initially by oil price hikes and the need for greater energy security. Support measures were established in many countries in recognition of the potential of biofuel development in reducing dependence on fossil fuels, increasing farm revenues, and generating less environmental damage through lower greenhouse gas (GHG) emissions compared to non-renewable fuel sources.

Over the last three years, however, scepticism about the positive impact of biofuels has escalated as the trade-offs between food, feed, and fuels and their impact on global agricultural markets became more evident, eventually leading to the debate over the extent of the role of biofuels in the 2007-08 food price crisis. Furthermore, several studies have raised serious concerns about the negative environmental impact of the unintended consequences of biofuel production, particularly the indirect land use change (ILUC)

impact of releasing more carbon emissions as forests and pristine lands are converted to cropland due to biofuel expansion. This has led to the current debate over whether, and how, the ILUC effects should be accounted for, along with the direct land use change effects, in evaluating the potential impact of biofuel policies.

On 23 April 2009, the European Union adopted the Renewable Energy Directive (RED) which included a 10% 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% in 2009 and rising over time to 50% 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 fuels consumed in the EU by 6% 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. In that context, the Commission launched four studies to examine ILUC issues, including the present study.

The primary objective of this study is to analyse the impact of possible changes in EU biofuels trade policies on global agricultural production and the environmental performance of the EU biofuel policy as concretised in the RED. The study pays particular attention to the ILUC effects, and the associated emissions, of the main feedstocks used for first-generation biofuels production.