Deforestation

Smarter ‘grandfathering’ policy could be the breakthrough on biofuels

A report commissioned by T&E and two other environmental NGOs says the EU can deal successfully with the troublesome issue of indirect land-use change (Iluc) in biofuels production by taking a more enlightened approach to the principle of ‘grandfathering’.

The report, ‘Assessing grandfathering options under an EU Iluc policy’ by the renewable energy consultancy Ecofys, comes at a significant time in the European biofuels debate. Existing EU policy requires 10% of transport fuels to come from renewable sources by 2020 – which effectively means a large share for biofuels – and greenhouse gas emissions from fuel production to decrease by 6% between 2010 and 2020. But the issue of the indirect climate effects of growing crops to make biofuels has made the two EU targets highly controversial.

Up to now, all the focus has been on getting the Commission to recognise the role Iluc plays, despite overwhelming evidence that without taking Iluc into account, some biofuels will emit more greenhouse gases than petrol and diesel. The Commission’s reluctance to recognise Iluc’s importance is believed to lie in the fact that most of the EU’s current biofuel is conventional biodiesel, a very ‘high-Iluc’ fuel. Therefore an EU policy on Iluc has the potential to end large parts of the biofuels industry that has been encouraged by EU energy policies.

This is why the Ecofys report – for T&E, the EEB and BirdLife – could be a breakthrough, as the potential way out of the Commission’s dilemma could lie in more sophisticated ‘grandfathering’.

Grandfathering is a means to exempt existing biofuels installations from future Iluc measures. In the current legislation, grandfathering takes the form of saying any biofuels production in action at the end of 2013 will be allowed to continue unaffected to the end of 2017. The Ecofys report says there are two problems with this. The first is environmental: the capacity for meeting the 10% renewable energy target is largely in place, yet largely through high-Iluc biodiesel. This will cause a large increase in greenhouse gas emissions, the exact opposite of what EU biofuels policy was designed to achieve. The second problem is that the biodiesel industry would be allowed to grow unaffected by Iluc legislation until the end of 2017, but then ruled ineligible by it.

The Ecofys report therefore recommends a grandfathering option based on freezing biofuel production at the volumes in the period 2010-12 until 2020, with all additional production to be subject to an EU Iluc policy. This would effectively cap high-Iluc biofuels at current supply levels, and if they are then gradually phased out by 2020, the three NGOs say this will amount to a measure that will combine environmental effectiveness and a clear framework for new low-carbon investment with fair treatment of past investment and current activity.

T&E policy officer Nusa Urbancic said: ‘We have commissioned this report to look into the options that could create the political compromise to enable science-based Iluc measures to be adopted. The main finding of the report is that most of the sector, notably farmers and ethanol producers, will not be affected by an EU Iluc policy, while producers in the biodiesel sector could deal with the introduction of an Iluc factor if a smarter grandfathering policy was in place. This would lead to a shift from high-Iluc to low-Iluc biofuels, and we would finally steer the EU biofuels market towards fuels that have a better carbon footprint than their fossil fuel equivalents.’

Click here to read the NGOs’ summary of Ecofys report.