Biofuels failing the economy as well as environment

The total annual public support for biofuels production in Europe is around €10 billion, equivalent to a bailout of Cyprus every year, according to a new report. T&E says the finding confirms that most biofuels on the market today are not only bad for the environment but do not help Europe’s economy either. The report comes as the leading MEP in the environment committee of the European Parliament has proposed to classify different biofuels according to their environmental impacts by including their emissions from so-called indirect land-use change (ILUC).

Biofuels were once thought of as the silver bullet solution for transport fuels, with hopes of benefits for the environment, the economy and agriculture. The EU set the target that encouraged industry to invest in biofuels, but over recent years growing evidence has shown that most biofuels on the market now make a greater contribution to climate change than conventional petrol and diesel. However, the desire to protect initial investments meant that the Commission has been reluctant to accept increasing evidence of the existence of ILUC, the phenomenon whereby expanding agriculture to accommodate new demand of land for biofuels creates massive carbon emissions.

So the revelation by the International Institute for Sustainable Development (IISD) that total support for the biofuels industry – including tax exemptions – came to between €9.3bn and €10.7bn in 2011 is a serious setback for the attractiveness of biofuels. T&E’s biofuels officer Nusa Urbancic said: ‘We already know the EU’s biofuels policy does not help the climate, and this study demonstrates that it doesn’t help our economy either. EU countries fighting to make the best use of decreasing amounts of money have been giving the biofuels industry the equivalent of a Cyprus bailout every year!’

The study Biofuels – At What Cost? was commissioned and co-funded by T&E, the European Environmental Bureau (EEB), BirdLife Europe and the IISD. It has other alarming findings:

  • The amount of public money given to the biofuels industry is well over half the annual turnover of the European biofuels sector (between €13bn and €16bn in 2011)
  • The annual support is substantially higher than the total investment in biofuel production facilities between 2004 and 2011
  • If biofuels’ share of the transport fuels market increases from the current 4.5% to its expected 2020 level of 8.6%, the additional public support would rise to between €28.8bn and €33.1bn.

Current EU biofuels policy sets a target of a 10% share for renewable fuels in European transport by 2020. Of this, 8.6% would come from biofuels, 70% of which would be biodiesel, the biofuel with the worst record for greenhouse gas emissions. Last year the Commission proposed setting a limit of 5% for ‘first generation’ biofuels – effectively a freeze – but this was strongly attacked by the biofuels industry and is still under discussion.