EU trade deals must be coherent with clean biofuels policy – report

The EU’s current trade policy could undermine Europe’s goal of decarbonising transport by encouraging the consumption of unsustainable biofuels, a new report has found. With free trade talks between the EU and the Mercosur countries ongoing, there are serious concerns that the removal of trade barriers in energy and raw materials could lead to an increase in imports of unsustainable biodiesel from Argentina – if sustainability safeguards are not put in place. The report says there is a need for coherence in EU trade and climate policies.

Argentina produces cheap biodiesel from soybeans, which is twice as bad for the climate as regular diesel. The EU may come under pressure from the Mercosur countries to loosen internal policies that affect crop-based biodiesel – similar to what occurred in talks over a previous trade deal. Heavy lobbying by Canada – while the Comprehensive Economic and Trade Agreement (CETA) negotiations were ongoing – succeeded in watering down the EU’s Fuel Quality Directive (FQD) legislation so that Canada’s dirty tar sands could enter the EU without restrictions.

T&E’s better trade and regulation legal analyst, Kristina Wittkopp, said: ‘It makes no sense for the Commission to propose stronger environmental and climate policies at home, and then turn a blind eye to them once it’s discussing trade deals. Environmental criteria such as greenhouse gas emissions, land use, air and water quality should be taken into account when imposing anti-dumping duties.’

Argentina has already complained to the World Trade Organisation (WTO) about the EU’s biofuels sustainability criteria. Also, Argentinian biodiesel currently faces import tariffs and significant anti-dumping duties when entering the EU, though the duties were successfully challenged at the WTO. T&E said environmental criteria should be considered when deciding whether to impose anti-dumping duties.

Meanwhile, Indonesia, which is also in trade talks with Europe, has signalled that it wants palm oil to be considered a source of renewable energy. Palm oil is on average around three times more polluting than fossil diesel. Shortly after the European Parliament adopted a report calling for a phase out of vegetable oils causing deforestation as a component for biofuels, Indonesia and Malaysia announced that they would send a delegation to “kill” the initiative.

Wittkopp concluded: ‘Instead of phasing out biodiesel, we risk opening the floodgates for the worst types of biodiesel such as soy and palm oil. Trade policy cannot be conducted in isolation and must be coherent with the overarching goals of the EU.’