Biofuel mandates cause increased demand for agricultural land as food crops are displaced to grow fuel feedstocks. Where rainforests are cut down or peatlands drained for agriculture, the emissions can be huge. An accurate measure of the sustainability of biofuels must account for ILUC.
In December 2008 the EU adopted a new biofuels policy as part of the Renewable Energy Directive (RED) and the revised Fuel Quality Directive (FQD). Both directives contain targets that will drive the development of biofuels and a set of sustainability criteria that biofuels must adhere to in order to be counted as contributing towards the targets. However, there is an important loophole: emissions resulting from indirect land use change (ILUC) remain unaccounted for in the emissions calculations.
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