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Biofuels in the Renewable Energy Directive – the final call

By Géraldine Kutas posted May 16, 2018
On 17 May representatives of the European Parliament, member states and the European Commission will meet to negotiate the provisions on biofuels in REDII. This might be the last chance to find a compromise that ensures the future of a technology that is critical to reduce carbon emissions in transport.

On 17 May representatives of the European Parliament, member states and the European Commission will meet to negotiate the provisions on biofuels in the Renewables Directive (RED II).

This might be the last chance to find a compromise that ensures the future of a technology that is critical to reduce carbon emissions in transport. The European Parliament and member states have improved on the initial proposal by the European Commission, but more needs to be done.

Let’s start with the good news. The Parliament and Council have included a renewables target for transport.  Transport accounts for about 25% of total EU greenhouse gas (GHG) emissions and is one of the few sectors that has increased emissions over the last 25 years. An ambitious target is therefore necessary to seriously tackle emissions in this sector. The respective 12% and 14% targets proposed by Parliament and Council might not be ambitious enough but are steps in the right direction.

The attempt by the European Commission to cut the cap of crop-based biofuels to 3.8% would have provoked the end of a technology in Europe that until now is the only one that has had some real impact on limiting GHG emissions in road transport. By effectively killing the industry, the 3.8% target would also have destroyed any hope of ever scaling up production of next-generation biofuels. That cap needs to be maintained at 7%.

But the Council’s proposal of allowing member states to reduce their renewable targets in transport and individually set lower caps on plant-based biofuels is wrongheaded. It will fragment the market and fundamentally undermine the decarbonisation of transport in Europe. In addition, the proposal for multiple counting for certain alternative fuels is also a very bad idea. This is just an accounting ruse that would drastically reduce the ambitions and effectiveness of REDII. A better way to incentivise alternative fuels that need extra support would be through appropriate targets.

The Bulgarian presidency’s attempt to bridge the gulf between the European Parliament and Council is to be commended, but unfortunately the wording will satisfy no-one, as it is extremely vague and creates massive uncertainty. Suggesting that member states be allowed to set lower limits for biofuels that lead to deforestation or use of land with high carbon stock if they also set lower limits for biofuels that can be considered close substitutes is vague in the extreme. Without a clear definition of what is meant by close substitute, this will create uncertainty for investors and importers.

In the proposed compromise, biofuels with a low ILUC risk would be excluded from the lower limits EU members would be allowed to set. But no clear definition and criteria of what is a low ILUC risk biofuel exit and developing such definition proves extremely difficult. It would require reliable and transparent ILUC assessments that until now have been absent. According to the GLOBIOM study which is based on data that are 8 years old, Brazilian sugarcane, for example, is among the crop-based feedstocks with the lowest ILUC emissions, but there are no clear criteria to understand whether this would be considered a low-ILUC feedstock. Clearly, carbon saving potential is the only reasonable criteria for the sustainability of biofuels.

The idea of basing the lower limits for biofuels on European Commission bioenergy sustainability reports is simply wrong. What is the legitimacy of the EU to assess foreign nation’s fight against deforestation? Such an approach would represent a dangerous infringement upon the governance and sovereignty of independent nations by the EU. Any such an assessment should be based on one of the many existing certification schemes that are respected by industry and third countries alike, and recognized by the European Commission.

Brazilian sugarcane ethanol has proven unambiguously the massive contribution that certain biofuels can make in the fight against climate change. In 13 years Brazil reduced its carbon emissions  in the transport sector by more than 400 million tonnes thanks to bioethanol, that’s almost five times the performance of the EU.

Thursday 17 May will be a tough day for the negotiators who still have a lot of work to do to achieve a workable solution. This is their last chance to get it right.

* Article originally published in the online version of The Parliament Magazine

Free, fair and open trade – only if it suits?

By Géraldine Kutas posted May 03, 2018
The EU has the opportunity to close two major trade deals in 2018: with Mexico and with the Mercosur trading block. But if it fails, the EU’s credibility of promoting free and fair trade would be seriously undermined, as it would be clear that its appetite for free and fair trade goes only so far as its vested interests are not impacted.

The EU has the opportunity to close two major trade deals in 2018: with Mexico, on which it just reached political agreement; and with the Mercosur trading block, where an agreement lies tantalizingly within reach. The EU’s recent success in closing major trade agreements, such as with Canada and Japan, has been seen as a clear indication of its commitment to free, fair and open trade.

An agreement with Mexico and Mercosur would certainly be a good outcome for Europe, but whether this makes the EU an advocate of “fair and free” trade is moot. As always, it is in the politically-sensitive issue of Europe’s agriculture sector where the EU often comes undone in its mantra of fair and free trade, faced with the reality of actually opening its agricultural market up to competition. 

Sugar and ethanol are a case in point: with Mexico, the EU has agreed a quota on ethanol of 25,000 tonnes phased in over five years, equaling around 33m litres. This is just 0.5% of the EU’s production of 6.5bn litres in 2016.  The EU has offered Mexico a quota of 30,000 tonnes of unrefined sugar, with a tariff of €49 per tonne phased in over three years. Again, this is only a fraction of the EU’s sugar production, estimated at 20m tonnes in 2017-18, and a tariff of €49/tonne will make it impossible for Mexican sugar to compete with the European sweetener in the EU market. So in reality the deal actually provides no market access at all for Mexican sugar. 

In the EU-Mercosur negotiations a similar picture is emerging. The EU’s offers so far have been far from acceptable for Mercosur. The EU has offered a €98/tonnetariff within a quota of 100,000 tonnes. Only if the tariff were reduced to level the competitive field (another EU mantra) would the offer be fair.  

It was clear from the outset that getting a reasonable deal on sugar and ethanol was among the key issues for Mercosur. As the Brazilian chief negotiator has said, he cannot come home without an offer on these two products on the table. The Mercosur agricultural sector has always supported the deal but this support cannot be taken for granted if the deal does not provide for real market access. 

The deal will provide long-term benefits for Mercosur such as the better integration into global supply chains and improved efficiency and competitiveness. However, in order to sell the deal at home the bloc needs short-term gains in sectors that generate jobs. That is why access to the EU agricultural market would be so important. 

An EU-Mercosur deal will greatly improve market access for European added-value products and services, and will give European businesses a first-mover advantage in a market of some 250m consumers. It will protect geographic indication for hundreds of European agricultural products and ensure high sustainability standards. These are major achievements.

For Mercosur the main economic interest lies in agricultural exports. If the EU is not prepared to allow a level playing field in this, Mercosur could well walk away from a deal. In that case it’s not only European businesses that would lose. The EU’s credibility of promoting free and fair trade would be seriously undermined, as it would be clear that its appetite for free and fair trade goes only so far as its vested interests are not impacted.

Reflections from the FFA: There is no protection in protectionism

By Géraldine Kutas posted Apr 03, 2018
As every year, the 2018 edition of the Forum for the Future of Agriculture (FFA) which was held in Brussels last week was another impressive event. There was a clear message of the need for greater cooperation and trade among the different agricultural regions of the world.

As every year, the 2018 edition of the Forum for the Future of Agriculture (FFA) which was held in Brussels last week was another impressive event. There are very few agriculture-focused events in Brussels of the same calibre that manage to gather such an impressive number of quality speakers, key opinion leaders, and such truly global representation. The debates and conversations that the forum provided for were really inspiring.

What stood out for me this year was the broad global perspective on agriculture that was the major focus of the discussions, shedding light on agricultural challenges in both the developing as well as the developed worlds. There was a clear message of the need for greater cooperation and trade among the different agricultural regions of the world, and I was personally encouraged to hear Commission Vice-President, Frans Timmermans, extoll the virtues of freer agricultural trade and reconfirmed that there is no protection in protectionism.

We strongly support that view, and this is just the kind of thinking we all need to adopt to get the ambitious EU-Mercosur trade deal over the finish line – hopefully before the summer! The great potential of Brazilian sugarcane to provide food, low-carbon energy and bio-plastics to the benefit of the world will not be realised if it stays blocked in Brazil.

Brazilian sugarcane is a low-carbon crop whose sustainability has long been proven and that has many useful applications as we transition towards a more circular, low-carbon economy: it provides the sugar demanded by the thriving European food and drink industry; it provides 1G and 2G ethanol for low-carbon road transportation; it is the source of bio-based products that will help reducing the greenhouse gas emissions of plastics and lubricants; and it also provides for renewable electricity generation.

Sugarcane products

 

That the two major global household brands of Lego and Ikea recently announced that they would be turning to sugarcane as a source material for their bricks and sandwich bags is testament not just to its versatility, but to how it is destined to become a critical component of our daily lives.

At the FFA it was very encouraging to see that there is a genuine interest in the many products derived from sugarcane, and I am very optimistic that this versatile feedstock will contribute much more to global sustainability in the future. The many global challenges discussed at the FFA can only be tackled through global responses, and as Mr Timmermans said, these are not possible without freer trade in agriculture. That would allow the innovative solutions such as those provided by Brazilian sugarcane to be deployed around the world to the benefit of everyone.

An EU-Mercosur trade deal: A balancing act

By Géraldine Kutas posted Feb 21, 2018
The EU-Mercosur deal is a worthwhile prize: the largest bilateral trade deal yet, connecting two markets of almost 800m consumers and at the same time setting a signal against the protectionist tendencies pushed by the Trump administration. Let's go for it!

The negotiators for the EU-Mercosur trade deal are doing an impressive job. This Tuesday started the third week of full time negotiations since the beginning of February, only interrupted by Carnival.

The negotiators clearly see what they are fighting for and the EU-Mercosur deal is a worthwhile prize: the largest bilateral trade deal yet, connecting two markets of almost 800m consumers and at the same time setting a signal against the protectionist tendencies pushed by the Trump administration.

However, now that it is getting down to the prime cuts of the deal (beyond beef), no side wants to give ground easily, and rightly so. While both sides know that the deal is overall beneficial, it is also about very specific economic interests and in the end it is critical that the outcome is balanced.

Europeans can rest assured; the European Commission has so far done a very good job in protecting EU interests:

  • European agricultural products will be protected through tariff-rate quotas and geographic indications;
  • European standards on food safety and many other product groups will be applied and;
  • Import tariffs into Mercosur will be drastically reduced in many EU key sectors such as machinery, automotive, services, and agricultural products.

Altogether the tariff reductions for EU imports amount to €4bn, in contrast the tariff reductions for Mercosur products into the EU only amount to €1bn.

While the benefits of a trade deal go far beyond tariff reductions, these numbers indicate that the EU stands to gain much more than it is giving up, and should therefore push forward.

However, some of the current offers are not satisfactory. The EU proposal for sugar of a 100,000 tonnes tariff quota at a reduced tariff of €98/t only gives market access in theory as the intra-quota tariff is too high, especially after the EU sugar reform, to make Brazilian sugar competitive in the European Market.

Despite the fact that Brazil is the largest exporter of sugar it only provides 4% to the European market. This is also to the disadvantage of the European food and drink industry as well as the bio-based industry that would benefit of a larger variety of sugar supply. In order to be closer to the mark the intra-quota tariff needs to be eliminated. Note than all the EU free trade agreement involving sugar provides for a duty-free quota. Why should it be anything different for Mercosur?

Ethanol is another sector where the EU should offer more. The EU chemical industry is asking for a duty-free access to Brazilian ethanol. Denying this will simply hampered the development of the bio-economy in Europe.

If the EU expects Mercosur to open up its markets for products where the EU has a competitive advantage, Mercosur has a rightful interest in gaining actual market access for its key products. Why should they otherwise open up their economies to the European industrial powerhouses?

All sides have to understand that the deal needs to be sold as a success at home. If Mercosur countries see that the EU is not prepared to make concessions in the sectors that really matter to them, they could move their focus to the other ongoing trade negotiations with the European Free Trade Association (EFTA) and Canada that might seem like lower hanging fruits.

Decarbonising transport: This is the time to get it right*

By Géraldine Kutas posted Jan 09, 2018
The European Parliament will soon vote on the recast of the renewables directive (RED II). One of the most effective solutions available today to decrease carbon emissions in transport is the use of sustainable biofuels. The European Parliament needs to make sure that we harness solutions that can tackle climate change in the short-term. Sustainable bioenergy, particularly sugarcane ethanol, is one of those options.

The European Parliament will soon vote on the recast of the renewables directive (RED II), one of the key elements of the clean energy package. RED II is critical in ensuring that we harness the potential of renewable energy effectively, and in decarbonising the economy while keeping energy affordable.  

Transport accounts for about 25 per cent of total EU greenhouse gas (GHG) emissions. According to the European Environment Agency (EEA), transport, together with refrigeration and air-conditioning, are the only sectors whose emissions have increased over the last 25 years. Therefore, RED II must set the course for a much faster decarbonisation of transport to have a realistic chance of reaching the EU’s climate targets. 

One of the most effective solutions available today to decrease carbon emissions in transport is the use of sustainable biofuels. In Brazil, the use of bioethanol in flex-fuel vehicles has led to a decrease of 370 million tonnes in carbon emissions in just 13 years - the equivalent of carbon absorption of 2.5 billion trees over 20 years. In fact, Paolo Frankl, the Head of the Renewables Division of the International Energy Agency (IEA), agrees that we need biofuels to decarbonise transport.

IEA Paolo Frankl

 

Therefore, MEPs will soon vote on several important provisions that could determine whether biofuels can make the needed contribution to the decarbonisation of transport. 

First, a renewables target in transport – decarbonising transport is a critical challenge, therefore a mandatory renewables target in this sector is needed. 

Compared with the Commission proposal, the fact that member states and the European Parliament have included such a target demonstrates progress. While a 20 per cent target would be best and in support of the overall decarbonisation objectives, 15 per cent appears to be a realistic compromise (especially since the Council agreed on a 14 per cent target and the European Parliament only on 12 per cent). 

Second, continuing the current cap on crop-based biofuels: To ensure a sustainable future for biofuels, it will be vital to maintain the seven per cent cap on conventional biofuels, of which some have high GHG savings and a low indirect land use change (ILUC) factor. 

The seven per cent cap was agreed two years ago after very lengthy and detailed discussions.  Reducing this cap would not only diminish the sector in Europe but also any prospect of producing advanced biofuels, which are often dependent on the same companies and feedstocks. In addition, for investors, it would be another sure signal that Europe is not a reliable destination for investments. 

Third, maintaining feedstocks for advanced biofuels (annex IX): The feedstocks for advanced biofuels were agreed and based on scientific assessments and after lengthy discussions in 2015. Therefore, this annex should not be reviewed and amended. 

Lastly, inclusion of ILUC into GHG emission calculation: ILUC can only be calculated through economic models (it cannot be observed) and the calculations are extremely sensitive to underlying (and often differing) assumptions. Therefore, results vary considerably. In fact, this has been acknowledged by the authors of the GLOBIOM study as well as by a recent literature review for the European Commission.

Consequently, given that ILUC is an evolving science, if we are going to include ILUC factors, EU legislation must be able to deal with changes, new findings and an inherent uncertainty, in a fully transparent way. 

In order to deal with ILUC, new EU rules must include periodic updates of the underlying numbers, clearly describe the methodology (type of model, hypothesis and data source) and submit it to public consultation. 

It must also be made public who will be in charge of reviewing these numbers. ILUC estimates have far-reaching consequences on the whole sector. Therefore, it should be fully in line with EU regulatory standards and not be an arbitrary and opaque process that adds to the already existing uncertainty.   

At COP23, there was a strong consensus that we need every sustainable solution available if we want to have a realistic chance of reaching our climate targets. The European Parliament needs to make sure that we harness solutions that can tackle climate change in the short-term. Sustainable bioenergy, particularly sugarcane ethanol, is one of those options. 

I am counting on MEPs to make the right choice.

 

* Article originally published on The Parliament Magazine website http://bit.ly/2AJBiu4

The end of a busy year – a time for pause

By Géraldine Kutas posted Dec 20, 2017
As we come to the close of a busy year, it’s worthwhile to take time to pause and reflect on everything that we’ve achieved this year. For UNICA it has indeed been an interesting and eventful year, full of activity on two key dossiers that are of critical importance to the Brazilian sugarcane industry: the proposals for the next edition of the Renewable Energy Directive (REDII), and of course, the EU-Mercosur trade negotiations.

As we come to the close of a busy year, it’s worthwhile to take time to pause and reflect on everything that we’ve achieved this year.

For UNICA it has indeed been an interesting and eventful year, full of activity on two key dossiers that are of critical importance to the Brazilian sugarcane industry: the proposals for the next edition of the Renewable Energy Directive (REDII), and of course, the EU-Mercosur trade negotiations.

While there was a certain amount of disappointment among those who had hoped that an EU-Mercosur trade deal could be concluded by the end of the year, it has been pretty clear for weeks that achieving a deal before Christmas was going to be the exceptional rather than the expected outcome. Negotiators going into the round were aware that further significant concessions were required from both sides: Mercosur offers on dairy products, cars and machinery for the EU, and better offers on beef, ethanol and sugar from the EU for Mercosur.

Rather than focusing on what has not been achieved – a deal by the end of the year – we need to reflect on the massive progress that has been accomplished by all sides during the course of the past year. Let’s not forget that these negotiations began almost two decades ago. And it is far better to wait to arrive at an equitable deal with which both sides are happy than to rush into an agreement that satisfies no-one.

So in that spirit, perhaps the timing could not be better. Both sides should welcome the break that the end-of-year festivities offer to take pause and reflect, and come back to the negotiating refreshed, revived, and ready to secure the deal that will benefit the almost 800m citizens in both blocs.

We have also achieved much regarding the proposed REDII texts. This was something of a rollercoaster ride, from the Commission’s initial proposal to more than halve the cap on conventional biofuels, to the ENVI committee’s proposal to cut them altogether. At each stage of the process we engaged constructively and robustly with all relevant stakeholders to correct false claims, provide accurate information and defend the critical role of first-generation biofuels in contributing to renewable energy targets. A draft general approach on REDII adopted by the Perm Reps proposes keeping the cap of 7% for first generation biofuels, and we are vindicated that the Council has accepted that proposal in its discussions on Monday 18 December.

We want to end the year on an optimistic note, and look forward the finalisation of a great EU-Mercosur deal and a fair REDII directive by the spring. In the meanwhile, it remains for me to wish you all a restful, reflective, and very happy festive period and a peaceful and prosperous 2018. 

Happy New year 2018

ITRE vote on RED II – taking on the Bonn spirit

By Géraldine Kutas posted Nov 24, 2017
Next Tuesday the EU Parliament’s ITRE committee will vote on the Commission’s RED II proposal. It is important to get it right before the text goes to the whole house for approval on 13 December. We can’t wait for the perfect solution. We need all available solutions NOW.

Next Tuesday the EU Parliament’s ITRE committee (Industry, Research and Energy) will vote on the Commission’s RED II proposal. This directive will provide the framework for renewables support in the EU and will be a critical element to ensure that the EU can fulfil its climate target and do its fair share to keep global warming below 2⁰C.

The committee’s vote is a crucial step towards the adoption of the text in the European Parliament. It is therefore important to get it right before the text goes to the whole house for approval on 13 December. This is not an easy task in view of the complexities and sometimes unintended consequences of renewables support schemes.

While attending COP23 in Bonn it became blatantly clear to me that climate change demands urgent action in transportation. Simply waiting for full-scale electrification in transport – still decades upon decades away – is simply not an option. So far the transport sector in Europe has contributed far too little to getting carbon emissions down.

An ambitious renewables target for transport is one measure that would help move the decarbonisation of Europe forward. The 12% renewables target for the transport sector proposed by Rapporteur José Blanco López is a step into the right direction, in particular compared with the Commission’s approach that wanted no transport-specific target at all. But I think we should be even more ambitious: 15% should be the minimum target, but 20% represents a level that would provide for a meaningful and adequate reduction of CO2 emissions.  

In Bonn it also dawned on policy makers and climate advocates alike that we need every sustainable solution available if we want to have a realistic chance of reaching our climate targets. There is no single silver bullet that can tackle the issue alone. Electrification is certainly critical to achieve the climate goals in the long term but cannot achieve the necessary emission savings in the short/medium term. One of the options we need to harness now is sustainable bioenergy and biofuels. In Brazil, sugarcane ethanol, a sustainable biofuel with  90% CO2 savings compared to petrol, has directly cut transport CO2–equivalent emissions by 370m tonnes in just 13 years. In contrast in the EU greenhouse gas emissions in transport are still rising.

Next Tuesday the ITRE Committee should make sure that the EU can use all sustainable solutions to fight climate change that are at our disposal. We can’t wait for the perfect solution. We need all available solutions NOW.

COP 23 – We are here!

By Géraldine Kutas posted Nov 12, 2017
• Visit UNICA’s booth at COP23, Bonn zone • Attend our discussion on how biofuels can fight climate change and promote sustainable development at the Brazilian Pavilion on 15 November at 14:00 CET with speakers from ApexBrasil, SE4ALL / Below 50, the World Bank, and UNICA.


  • Visit UNICA’s booth at COP23 in Bonn, Germany
  • Attend our discussion on how biofuels can fight climate change and promote sustainable development at the Brazilian Pavilion on 15 November at 14:00 CET with speakers from ApexBrasil, SE4ALL / Below 50, the World Bank, and UNICA. 

Last year was the warmest year recorded to date, and 2017 is on course to become the second or third warmest year, according to the World Meteorological Organisation. There were many weather-related natural disasters in 2017: the Atlantic hurricane season was one of the most active on record, major monsoon floods caused hundreds of deaths in the Indian subcontinent, and even the Republic of Ireland experienced some of the most extreme weather the island has seen in decades. Fundamentally, climate change threatens crops, wildlife and freshwater supplies. At the opening ceremony of the UN Climate Change Conference (COP23) in Bonn, Germany, the host country Fiji’s Prime Minister Frank Bainimarama said, “The need for urgency is obvious. Our world is in distress from extreme weather events caused by climate change.”

The progress achieved at COP21 in Paris was significant, but agreements alone are not enough. We need action. While most of the United Nations countries have already ratified the agreement, the momentum needs to be sustained, and ambitious policies need to be implemented in order to curb GHG emissions and limit global temperature rise to less than 2 degrees Celsius above pre-industrial levels. It is now time for countries to think about their renewed pledges in time for the COP24 meeting next year where participants will take stock of national progress toward achieving climate goals.

EU’s 2030 target of cutting emissions by 40% is “very robust”, according to the European Commission’s climate negotiator Elina Bardram. However, EU’s progress against that target will depend on implementing the policies that will help achieve different sub-targets, such as those in the transport sector.

Transport accounts for a quarter of all EU GHG emissions in the EU, 70% of which come specifically from road transport. To address this sector, the Commission recently published the second batch of legislative proposals in its Mobility Package “Europe on the Move”, including the post 2020 CO2 standards with the target of 30% fewer CO2 emissions from new passenger cars by 2030.

The 30% CO2 reduction is certainly a much needed step towards decarbonizing the sector, but will this be enough to meet the Commission’s unofficial transport sub-target of a 60% CO2 reduction by 2050? The Renewables Energy Directive (REDII) provides an opportunity to complement the Mobility Package - which decarbonizes the vehicle technology - by decarbonizing transport fuel. This sector must be addressed holistically in order to reach the 2050 scenario and fuels are an inextricable part of the solution.

Unfortunately, not only has the 10% transport target in the first RED been removed, but REDII specifically proposes to reduce conventional biofuels from the current 7% cap to 3.8%. Instead of cutting conventional biofuels the EU should allow for cleaner more sustainable fuels that are readily available and can make a different in the short and mid-term decarbonization efforts. Brazilian sugarcane ethanol can and should play a bigger role in the EU as it reduces GHG emissions by 70% compared to fossil fuels, and has a low ILUC impact as assessed by the Commission itself.

This is already happening on a global scale. In Brazil, the use of bioethanol in flex-fuel vehicles has led to a decrease of 370m tonnes in carbon emissions in just 13 years – the equivalent of carbon absorption of 2.5 billion trees over 20 years. 

It is important to look at the transportation sector in a comprehensive manner and deploy all available solutions now, while in parallel investing in future fuels and technologies if we are to meet the overall Paris Agreement targets. Fuels are a critical to the solution, and conventional biofuels in particular have the potential to significantly decarbonize the sector today.

Come visit the UNICA booth in Bonn to learn more about how this is working in practice in Brazil and around the world.

COP23

UNICA Booth is located in the Bonn zone, exhibition area, 1st floor in front of the coffee bar.

On 15 November at 14:00 CET the Brazilian Pavilion will host a panel discussion entitled “Biofuels: fighting climate change and beyond”.

  • Ambassador Roberto Jaguaribe, the president of the Brazilian Trade and Investment Promotion Agency (Apex-Brasil), will tell us more about how Brazil can cooperate with other countries to help them in their transition sustainable biofuels.
  • Gerard Ostheimer, Global Lead for the SE4ALL Sustainable Bioenergy High Impact Opportunity / Below 50, will address the deployment of biofuels as a cleaner and affordable fuel, especially in developing countries.
  • Celine Ramstein, Climate Change Specialist at the World Bank will explain how carbon-price mechanisms can stimulate the use of biofuels, creating a higher income for renewable energy producers.
  • Géraldine Kutas from UNICA will provide concrete examples of the contribution of Brazilian sugarcane ethanol to climate change mitigation and of social inclusion, revealing data on IDH, income and education rate in municipalities where sugarcane is produced.

Mercosur: sweeten the deal

By Géraldine Kutas posted Nov 07, 2017
The EU-Mercosur trade deal is a once in a generation opportunity, don’t let it slip away. Sweeten the deal!

The EU-Mercosur trade deal is close to the finishing line and the final breakthrough might still come by the end of the year. This trade agreement between the EU and the four Mercosur Members  - Argentina, Brazil, Paraguay and Uruguay - would be the largest bilateral trade deal the EU has ever brokered. The deal would indeed be unprecedented in many respects: It would be the first time that the economies of Mercosur open up to a major trading block and also by far the largest deal between the EU and emerging economies.  

Now is a unique window of opportunity and there is strong political will on the side of the Mercosur countries to get the deal finalised. This would not only open up a huge market for EU products and services, but also send another strong signal, after the successful trade negotiations with Japan earlier this year, that the EU is seizing its role as the world’s foremost trading power.

However, there still remain some stumbling blocks that could put the deal at risk. Not surprisingly, the agriculture sector is the main point of contention as the Mercosur countries are very competitive in products such as sugar and ethanol, in which the EU has major defensive interests.

Sugarcane field

But trade is not a zero sum game and its benefits cannot be measured by the increase of exports alone. Increased access to Brazilian sugarcane products through the Mercosur deal is an example where the benefits for EU industry go far beyond what the trade balance indicates. Indeed, as René Van Sloten, Executive Director Industrial Policy at Cefic, the European Chemical Industry Council, said: “including sugar and ethanol into the Mercosur trade deal would offer the possibility for a win-win outcome for both sides.”

EU-Mercosur benefits of including SC products

So how could EU industry benefit from increased access to raw sugarcane products?

Sugar and ethanol are important sustainable feedstocks for the European chemical industry. Products such as plastics, paint and coatings all require feedstock which today is mainly sourced from fossil fuels, but that could be replaced by ethanol. Also sugar is a key ingredient for the bio-industry, being indispensable for biotechnological processes. Further, sugarcane ethanol has tremendous potential to decarbonise the transportation sector, which currently account for almost a quarter of EU GHG emissions. Including sugar and ethanol into the deal would help EU industry getting the right quality at a fair price. According to René van Sloten, EU industry has to endure 40-60% extra costs for ethanol because of import tariffs, in contrast fossil fuel ethanol can enter the EU without any tariff. 

Consequently the EU chemical industry could produce at lower costs which would make it more competitive. This would also have a domino effect down the supply chain, making products cheaper for business and consumers.

EU-Mercosur tariff

Brazilian sugarcane is also among the most sustainable renewable feedstocks with the highest greenhouse gas (GHG) saving potential. Gaining access to this feedstock would not only help European industry to lower its GHG emissions but also to boost the bio-based industry. This industry has an enormous potential to contribute to the circular economy with new products and solutions.  Gaining better access to renewable feedstock would help industry to increase its investments in bio-based production plants in Europe, which in turn would increase demand for bioethanol also to the benefit of European producers.

Europe should take these benefits into account that the inclusion of sugarcane products into the trade deal can bring and not only look at the defensive interests of the EU agriculture sector.

The EU-Mercosur trade deal is a once in a generation opportunity, don’t let it slip away. Sweeten the deal!

Don’t derail the decarbonisation of transport

By Géraldine Kutas posted Oct 20, 2017
Climate change does not wait for the roll out of new technologies - we need to use every tool that is at our disposal today.

If Europe wants to get anywhere close to hitting its target of a 40% Greenhouse Gas (GHG) reduction by 2030, it will need to tackle transport emissions, which account for about 25% of total EU GHG emissions. To further complicate the issue, road transport is set to grow 30% by 2030. We need available solutions that are deployable now if we are to mitigate global warming. Sustainable biofuels are one of the few available solutions that can help today to reduce carbon emissions in transport. In Brazil for example, the use of bioethanol led to a decrease of 370m tonnes in carbon emissions in just 13 years, which is more than Spain emitted in 2015. The average life span of a car is 10 years and the existing fleet runs primarily on fossil fuel. In fact, only 2.8% of the existing EU fleet is comprised of alternative energy vehicles. This means that in the short and possibly mid-term, introducing a higher ethanol blend is one of the only realistic options to lower GHG emissions in transport. Sustainable sugarcane ethanol results in at least 70% fewer GHG emissions than petrol, and is available now!

Despite these facts, the Environment Committee in the European Parliament risks torpedoing this solution by confirming the phase out of crop-based biofuels. This would not only kill this sector in Europe but also any prospect of producing advanced biofuels, which often depends on the same companies and feedstocks for production. Not to mention, of course, any real shot at decarbonizing the transport sector in the short-term. This extreme policy change, only two years after a framework for biofuels was agreed upon and before the effect of the policy can be properly assessed, will discourage  investment in the EU. The key arguments for this policy change, namely Indirect Land-Use Change (ILUC) and concerns that biofuels lead to higher food prices are based on non-verifiable assumptions that should not form the basis for the phase out of a whole industry. Not all first generation biofuels are created equal and sugarcane ethanol is one of the most sustainable biofuels available.

In order to ensure that the EU can make a real contribution to the decarbonisation of transport, the Environment Committee should:

  •  Set a renewables target in transport to at least 20%;
  • Keep the current cap of 7% for highly sustainable biofuels, which is essential to the decarbonisation of European transportation;
  • Evaluate first-generation biofuels based on their GHG savings and sustainability criteria;
  • Not include ILUC estimates when calculating the GHG emission savings of crop-based biofuels, as long as a predictable methodology based on verified data and sound review process is in place.

Climate change does not wait for the roll out of new technologies - we need to use every tool that is at our disposal today.

Our Authors

 

Géraldine Kutas, Head of International Affairs & Senior International Adviser to the President of UNICA Géraldine Kutas
Head of International Affairs & Senior International Adviser to the President

 

Leticia Phillips, Representative-North AmericaLeticia Phillips
Representative, North America

 

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