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Countdown starts for the biofuels’ verdict in the EU

By Géraldine Kutas posted Dec 10, 2013
Ahead of the adoption of the Political Agreement on the ILUC dossier in the Energy Council on 12 December 2013, a group of NGOs put out a briefing on the biofuels policy review and on the three main issues in the debate: the cap for land-based biofuels, the weakening of the 20% RED target and the inclusion of ILUC factors for accounting purposes. A cap such as the one proposed by the Commission and defended by the NGOs is just a clumsy attempt to find a quick remedy to issues that remained unsolved in 2009, bringing no evident benefit in the long term. In fact, such a black and white approach would not take into account the good performances of well-performing conventional biofuels such as sugarcane ethanol.

Ahead of the adoption of the Political Agreement on the ILUC dossier in the Energy Council on 12 December 2013, a group of NGOs put out a briefing on the biofuels policy review and on the three main issues in the debate: the cap for land-based biofuels, the weakening of the 20% RED target and the inclusion of ILUC factors for accounting purposes.

The briefing claims that ILUC is a real and tangible problem affecting the sustainability of biofuels” and that “most land-based biofuels currently marketed in Europe offer no or limited carbon emissions savings compared to petrol and diesel”.  On this basis, the NGOs criticise the suggestions of the Lithuanian Presidency and proposes 1) to have a cap for first generation biofuels at current consumption levels (or lower) also applied to the Fuel Quality Directive, 2) to make sure that biofuels produced from waste and residues are actually sustainable and 3) to include ILUC factors for accounting purposes in both the RED and FQD.

A cap such as the one proposed by the Commission and defended by the NGOs is just a clumsy attempt to find a quick remedy to issues that remained unsolved in 2009, bringing no evident benefit in the long term. In fact, such a black and white approach would not take into account the good performances of well-performing conventional biofuels such as sugarcane ethanol. It would actually cut them off the European market and – even worse – it would not take into consideration the bad performances of some advanced biofuels. Within another 5 years the EU might risk finding itself in the exact same situation as today.

Granted, not all the biofuels considered as advanced are actually sustainable. However, NGOs should have applied the same logic the other way around to conventional biofuels. Sugarcane ethanol achieves among the highest greenhouse gas (GHG) emission savings (over 70% relative to fossil fuel alternatives, according to the default values in the EU Renewable Energy Directive, and more than 55% when estimated ILUC emissions are accounted for) of all biofuels produced at scale because of its relatively low indirect impacts and the resource efficiency of its production. Let’s not forget that Brazilian sugarcane ethanol is considered an advanced biofuels in the U.S., and especially in California. Nevertheless, there would be no market for it in Europe if the cap ever enters into force.

While the argument for the introduction of ILUC factors in both the RED and FQD could actually be understood and would take into account important differences between biofuels’ environmental performance, having a strict cap wouldn’t match with it and would penalize, in any case, well-performing conventional biofuels.

Is it not perhaps the time to keep calm and work on a more nuanced and consistent approach to biofuels, without putting any extra burdens on the industries? These, after all, have already invested on biofuels and – this needs to be reminded from time to time – might not be able to invest more in advanced biofuels as a result of the implementation of the current proposal and the absence of a regulatory framework for the medium-long term.

A more structured and effective action to resolve the imbalance between diesel and gasoline in Europe would support the EU climate change policy objectives, and incentives to introduce higher blends of bioethanol in vehicles would help moving away from the most polluting biofuels. Sugarcane ethanol is definitely a good candidate for this purpose and could help the EU reach its objective of decarbonizing the transport sector.

Sustainable Biofuels Are Still the One to Help Decarbonizing EU Transport

By Géraldine Kutas posted Nov 29, 2013
A couple of new reports released this month in Brussels carry a similar message: Sustainable biofuels, like sugarcane-based ethanol from Brazil, will need to play a significant role if the decarbonization of European transport is going to happen longer term. There’s also another important message in the two studies, one by E4Tech and the other by CE Delft/TNO: the EU still has an opportunity -- especially with a new Commission and new European Parliament taking over in 2014 -- to cultivate the right policy environment in order to move industry toward producing more advanced biofuels and enabling higher blending rates of sustainably produced biofuels for gasoline and diesel.

A couple of new reports released this month in Brussels carry a similar message: Sustainable biofuels, like sugarcane-based ethanol from Brazil, will need to play a significant role if the decarbonization of European transport is going to happen longer term.

There’s also another important message in the two studies, one by E4Tech and the other by CE Delft/TNO:  the EU still has an opportunity -- especially with a new Commission and new European Parliament taking over in 2014 -- to cultivate the right policy environment in order to move industry toward producing more advanced biofuels and enabling higher blending rates of sustainably produced biofuels for gasoline and diesel.

“Currently there is no 2030 policy environment for biofuels. There is also an urgent need for specifications for new biofuel blends for policy to promote high quality advanced biofuels and compatible vehicles, and a framework that addresses biofuel sustainability issues,” says E4Tech, a consultancy, which released its findings on Tuesday. E4Tech’s report was commissioned by a consortium of Daimler, Honda, Neste Oil, OMV, Shell and Volkswagen.

Through the E4Tech study, that group of automakers and fuel producers is pushing an Auto-Fuel Roadmap that recommends a series of achievable steps, based on evidence, that can be put into place in the coming years by policymakers and industry alike.

In particular, the E4Tech study lays out a timeline for a series of key actions, including an EU policy and fuel standards’ aim for the roll-out of maximum 10% ethanol, or E10, into gasoline by 2020; introducing E20 by 2025; and mandating, via policy, that all new gasoline vehicles are E20 compatible from 2018.

Such goals are already feasible with current technologies and with the direction that budding technologies are taking. The targets are also achievable in parallel with meeting critical sustainability requirements and cutting greenhouse emissions. In Brazil, the introduction of flex-fuel vehicles (FFVs) ten years ago has allowed Brazilians to freely decide which fuel they want to use. FFVs can run on either petrol or pure ethanol, or any blends of the two. That freedom of choice in Brazil also comes with the benefit of benefit of reduced carbon emissions, given the high CO2 emission reductions (71% according to EU Renewable Energy and Fuel Quality Directives) that sugarcane ethanol achieves versus fossil fuel. And Europeans should have the same freedom of choice and environmental benefits, particularly in light of recent World Health Organization assessments showing that air quality remains a pressing problem in many European cities and countries.

The E4Tech study’s findings are also echoed in another report unveiled earlier this month from CE Delft/TNO, which produced its study at the request of the European Commission. “It is essential for governments and industry to decide within 1 or 2 years on the way ahead and take necessary actions covering both, the fuels and the vehicles, to ensure their effective and timely implementation,” CE Delft/TNO said in its report.

Like the E4Tech study, CE Delft/TNO says higher blending ratios are technically feasible and would move Europe toward greater decarbonization in transport, which remains one of the main sources of global carbon emissions.

To be sure, to realize the projections and recommendations of both reports -- like biofuels accounting for 15% of transport fuel in 2030 in Europe versus about 5% today, as E4Tech projects -- a lot of things need to happen. Yet it’s an important signal that some key automakers and fuel suppliers are working in parallel to move Europe closer to its climate abatement and energy supply security goals.

But will the EU play its role in providing the proper longer-term policy signals? Let’s hope that the new Commission and Parliament will size this opportunity next year.

European Parliament Committee Upholds Opposition to Quick Bargain Discussion on Biofuel Dossier

By Géraldine Kutas posted Nov 08, 2013
As an indication of how the European Union biofuels dossier remains stuck in a holding pattern, the European Parliament’s Energy Committee has canceled a planned vote on whether to give the EU’s Parliament Rapporteur a mandate to hold negotiations with EU Member States and the European Commission to come up with a grand compromise on the dossier. These inter-institution discussions are an important indication in the EU policymaking phase that signals that a conclusive policy text is likely to be around the corner. But this was not the case for the EU biofuels policy.

As an indication of how the European Union biofuels dossier remains stuck in a holding pattern, the European Parliament’s Energy Committee has canceled a planned vote on whether to give the EU’s Parliament Rapporteur  a mandate to hold negotiations (so-called “Trilogue talks”) with EU Member States and the European Commission to come up with a grand compromise on the dossier.

An Energy committee vote would have been more a formality than anything else because the Parliament’s Environment Committee already voted weeks earlier to reject giving the Rapporteur a mandate to initiate Trilogue discussions. These inter-institution discussions are an important indication in the EU policymaking phase that signals that a conclusive policy text is likely to be around the corner. But this was not the case for the EU biofuels policy.

If there is a good thing though about the protracted biofuels debate in Brussels it is that policymakers can deepen their responsibility to have a more nuanced discussion about biofuels – and move away from the black and white debate that has dominated discussions in this town. This would mean taking more clearly into account ethanol’s environmental benefits, such as high potential greenhouse gas (GHG) emission reduction for example.

Well-performing first generation biofuels, such as Brazilian Sugarcane Ethanol (BSCE), should be incentivized and not categorized as an under-performing biofuel.

BSCE is an advanced biofuel in places like the U.S., in part because it does not contribute to deforestation, as it is grown mostly on degraded pasture land and produced almost entirely in the south-central part of Brazil, far away from the Amazon rainforest; and it achieves among the highest GHG emission savings (over 70% relative to fossil fuel alternatives, according to the default values in the EU Renewable Energy Directive, and more than 55% when estimated ILUC emissions are accounted for) of all biofuels produced at scale.

What next?

EU Member States could still agree to a “Common Position” as they have been deliberating in coming months. But even if that happens, the Parliament will still need to consider and debate the Member State Common Position, and there simply isn’t enough time to do this when the Parliament’s final full session (plenary) is in April, just ahead of European Parliament elections across all 28 Member States in May 22-25.

Thus, the EU biofuel policy debate is unlikely to be resolved until perhaps 2015, six years after the biofuel/ILUC policy discussion commenced in earnest in Brussels.  

UN food meeting: Let’s not forget the positive role biofuels can play in promoting development

By Géraldine Kutas posted Oct 17, 2013
The United Nations’ Committee on World Food Security (CFS) met last week in Rome and, not surprisingly, biofuels were again at the centre of a hot debate. Governments, industry, civil society and academics all represented at the meeting could agree on an overall mild conclusion which asks for further assessment, given the very controversial topic to which they were confronted.

The United Nations’ Committee on World Food Security (CFS) met last week in Rome and, not surprisingly, biofuels were again at the centre of a hot debate. Governments, industry, civil society and academics all represented at the meeting could agree on an overall mild conclusion which asks for further assessment, given the very controversial topic to which they were confronted.

In the UN’s words, the CFS recognizes that biofuels development “encompasses both opportunities and risks in economic, social and environmental aspects, depending on the context and practices” and encourages all stakeholders to help countries assess the impact of their biofuel policies. This only demonstrates that the overall dimension of biofuel production is yet to be fully captured and this gives stakeholders the opportunity to show that not all biofuels policies have negative impacts, that good examples of a fair balance between food and fuel production exist and that best practices should be incentivized. Let’s hope that this further assessment phase will help to develop a less black and white approach to biofuels.

Brazil is one of these good examples. Brazilian Sugarcane Ethanol (BSCE) is classified in places like the U.S. as an advanced biofuel and the land producing ethanol also produces sugar. In fact, in the last 20 years the volume of sugarcane harvested has tripled to respond to the growing demand for ethanol and sugar, but food production hasn’t dropped at all. Over the same period, grains production has also almost tripled in Brazil. Production of BSCE only uses 0.5% of Brazil’s total area and the agro-ecological zoning regulations limit the land used for sugarcane to 7.5% of the Brazilian territory.

In conclusion, the CFS recognized the complexity of the links between biofuels and food security and the need to distinguish between short-term and long-term impacts, despite the intense reaction of Oxfam at the end of the meeting last Friday, which argued that “Unfortunately, powerful countries refused to act despite the evidence and preferred to put biofuel industry interests ahead of peoples’ right to food”.

Unfortunately, the CFS missed the opportunity to recognize the positive role that bioenergy production has played, particularly in minimizing the downward slope of agricultural investments and commodity prices. After all, investments in agriculture generate more economic growth in developing countries than investments in any other sector.  In addition, access to energy is a condition to produce food: the more sustainable the energy produced and used, the more sustainable the food production will be!

The CFS will meet again next year and according to the action points agreed, FAO will have to come up with proposals on “contingency plans to adjust policies that stimulate biofuels production and consumption when global food markets are under pressure and food supplies are endangered” as well as “provide toolkits to device and assess integrated food security and sustainable biofuels policies”. The newly elected Chair, Gerda Verburg, the Dutch Ambassador to UN agencies in Rome, said she wants to keep negotiating with all the stakeholders represented in the Committee and focusing on the outreach for the implementation of the decisions already taken.

At UNICA, we will continue our efforts to spread the word on how Brazil has emerged as a leader in providing both food and energy from its diversified and efficient agricultural sector.

For more details on the CFS conclusions, see the final report (press release) and the HLPE study (Executive Summary).

The issue was also covered by The Guardian, Oxfam, Reuters and Ethanol Producer Magazine

New Ecofys study guts "land grabbing" charges against EU biofuel policy

By Géraldine Kutas posted Oct 03, 2013
Ecofys, a well-respected Dutch consultancy, is out with a new study that effectively eviscerates the association of biofuels with “land grabbing,” that favorite charged-phrase NGOs pedal that industry is in the business of pushing locals off their land. The meaty conclusion from Ecofys: “At best, only 0.5% of all deals in the Land Matrix concern land grabs for EU biofuels.”

Ecofys, a well-respected Dutch consultancy, is out with a new study that effectively eviscerates the association of biofuels with “land grabbing,” that favorite charged-phrase NGOs pedal that industry is in the business of pushing locals off their land.

The meaty conclusion from Ecofys: “At best, only 0.5% of all deals in the Land Matrix concern land grabs for EU biofuels.”

Bear in mind, Ecofys is an environmentally minded consultancy, if you will, that does studies for the European Union, industry, and even NGOs. This particular study was commissioned by ePure, the European Ethanol Producers.

The Ecofys study says that biofuels used in the EU market basically do not come from feedstocks produced from “grabbed” lands, undermining among NGO arguments against EU biofuel policy is that biofuels “take land away” from food production and rural communities.

The study cross checked a number of entries in the Land Matrix of the International Land Coalition. Although the best informed global database on land deals, the Land Matrix “is based on reports from the media and NGOs which both often overestimate scale,” says Ecofys.

Nonetheless, the matrix had a total of 617 deals in its system, covering around 38 million hectares, as of March 2013.

This extract lays out the message Ecofys conveys with this study: “Of these 617 deals, we assessed 66 deals, which sum up to 25.8 Mha, or 67% of the total acreage in the database. This includes the 50 largest deals around the world, as well as the 5 largest deals given per sub-region in the Land Matrix. We checked these deals by collecting all possible and available information about these deals on the internet and sometimes from private investigation, by checking information with networks within the respective countries.”

What does Ecofys have to say about NGOs wild claims? “Action Aid claims that ‘it is estimated that biofuels have been involved in at least 50 million hectares being grabbed from rural communities.’ This is 28 times (!) our findings of about 1.8 Mha. The total extent of land deals that can maximally be connected to the EU biofuels policy in past and until 2020 is probably another ten times smaller.” Here is the latest report on social impact of EU biofuel policy by Action Aid.

Finally, the study argues that the voluntary schemes introduced in the framework of the so called RED (EU Renewable Energy Directive) actually helped the development of better regulation in third countries on social and economic aspects of biofuels production. A very successful example is Bonsucro, The Better Sugarcane Initiative, to which UNICA is member and which certifies -- according to EU standards -- 29 Brazilian mills, covering 6.5% of the total Brazilian sugarcane area and more than 2 billion liters of sugarcane ethanol.

The Ecofys study looks at the effect of the EU policy promoting biofuels, hence starting from 2009. It is worth to notice that from 2008, ethanol exports from Brazil to the EU considerably decreased as the graph here below shows (from 1,661.4 million liters in 2008 to 97.21 million liters in 2012); therefore there is clearly no connection between land “grabbing” and increasing demand and exports for biofuels to EU in the case of Brazil.

EU Total Ethanol Imports

For more, find the Ecofys report here. Pangea, which represents pan-African bio-energy interests, produced a short take on the report.

Looking forward to more reactions to this report.

European Parliament Vote on Biofuels: the EU continues Search for a Resolution

By Géraldine Kutas posted Sep 12, 2013

A mixed bag from Wednesday’s full European Parliament vote on biofuels and that issue of indirect land use change, ILUC, after months of debate in the parliament.

The bad news is that the EP, as expected, voted to approve a cap on first generation biofuels, although the cap was approved at 6%, not the 5% that environmentalists were foaming at the mouth for. If approved by EU Member States, the cap would effectively lower the 10% renewables-in-transport target for 2020 that the EU set a few years back; that target is expected to be achieved largely by the use of biofuels.

The better news is that some positive amendments in UNICA’s interests were adopted, such as a 7.5% sub-target for ethanol and a sub-target of 2.5% for advanced biofuels, which includes bagasse and straw. And, proposals were rejected that would have applied protectionist and discriminatory measures and made it difficult, if not impossible, for sustainable, EU-compliant biofuels produced in non-European Union nations to be legally counted toward meeting EU renewable energy and fuel quality requirements.   

Much to the environmentalists’ irritation, this whole issue now goes to the EU’s 28 Member States, who are less enthusiastic about the ILUC issue than Members of the European Parliament. Member States will try to come up with their own position on the biofuel/ILUC topic – which must then, time-consumingly, go back to the Parliament to be reviewed and debated.

What’s all this mean?? Delay, Delay, Delay. That is not ideal, but at least this situation raises the prospect of a better deal coming from Member States—or maybe no deal at all, should Member States fail to agree on a common position.

So stay tuned. A lot more to come on this from Brussels.

Some of the coverage from yesterday’s vote via Reuters, BusinessGreen, The Guardian, BBC News,  Wall Street Journal, and Euractiv.

Another Study Puts “Food vs Fuel” into Much-Needed Perspective

By Géraldine Kutas posted Sep 09, 2013
Another interesting report out last week on biofuels. This one is entitled, “Biofuels play minor role in local food prices,” and was produced by Ecofys, a Dutch consulting firm that does work regularly for the European Commission and sometimes for NGOs and the biofuels industry.

Another interesting report out last week on biofuels. This one is entitled, “Biofuels play minor role in local food prices,” and was produced by Ecofys, a Dutch consulting firm that does work regularly for the European Commission and sometimes for NGOs and the biofuels industry.

The key takeaway from the Ecofys report (found here: http://www.ecofys.com/en/news/report-biofuels-play-minor-role-in-local-food-prices/)

“The historic impact of EU biofuels demand until 2010 increased world grain prices by about 1-2% and, without any cap on  crop-based biofuel production may lead to another 1% increase through 2020.”  

Additionally: “Systemic factors, like reduced reserves, food waste, speculation, transportation issues, storage costs and problems, and hoarding play a much larger role in local food prices” than biofuels, Ecofys concluded.

Does these conclusions sound familiar? They should. Here’s a list of other studies from other reputable institutions -- including the European Commission, the European Union’s executive -- that have reached similar conclusions like what Ecofys has just churned out:

·  World Bank (Baffes and Dennis), 2013, "Long-term drivers of food prices"http://econ.worldbank.org/external/default/main?pagePK=64165259&piPK=64165421&theSitePK=469382&menuPK=64166093&entityID=000158349_20130521131725

·  The European Commission report on the implementation of the EU Renewable Energy Directive (see p.12) http://ec.europa.eu/energy/renewables/reports/doc/com_2013_0175_res_en.pdf

·  The Institute for International Trade Negotiations (ICONE) in Brazil http://www.iconebrasil.com.br/publication/study/details/568 

UNICA @Rio+20, be ready to commit!

By Géraldine Kutas posted Jun 19, 2012
The day we have all been waiting for has come. Over the last few months, governments have been working on a document that needs signatures of more than 130 international leaders coming to Rio from all over the world. Keeping in line with the level of ambition associated with the summit the paper is called “The Future We Want”. It is meant to commit its signatories to do their best to put the world on a more sustainable development path and ultimately a green economy.

The day we have all been waiting for has come.  

Over the last few months, governments have been working on a document that needs signatures of more than 130 international leaders coming to Rio from all over the world.

Keeping in line with the level of ambition associated with the summit the paper is called “The Future We Want”. It is meant to commit its signatories to do their best to put the world on a more sustainable development path and ultimately a green economy.

But just how much agreement governments reach should not be the only measure of success for Rio+20. At Rio, private sector and NGOs will be working in partnership across platforms to chart a path towards a more sustainable use of resources. Our commitment to each other is just as real and as binding. I’m excited that UNICA will be part of this historic moment, and we hope that what’ve learnt is a good blueprint for others.

I have previously talked on this blog about the future that UNICA wants and the urgency to take action and act responsibly.

In a world of rising energy demand, decreasing traditional energy supplies and a rapidly growing population, renewable energies are essential. And because the Brazilian experience shows that they can be an engine for economic growth there is even more good reason to hear us out. Times are tough for everyone, but if you can open up market opportunities, grow GDP and satisfy consumer demand for clean fuels, there is a solid business case. 

We’ve been preparing for Rio+20 for some time now because we see an opportunity, economic as much as environmental. We have also been actively telling our story,  and with great authority, through the "Dialogues for Sustainable Development", a UN platform for civil society participation in official discussions that has given an outstanding support to all our energy proposals. And for those of you here in Rio or those who’ll be following us from far, we plan to continue showing our commitment to a green economy and engaging with our stakeholders at a number of events this week:

On June 18th, UNICA talked about the potential of sustainable bio-energy at an event organised by the Global Bioenergy Partnership (GBEP).

On June 19th, UNICA will give a speech at the ICTSD Trade and Sustainable Development Symposium called “Enabling Climate Mitigation, Fostering Low-Carbon Growth”.

On June 20th, UNICA will take part in the World Green Summit.

On the 21st, we will venture into the Bioeconomy debate alongside Novozymes and Electrobras.

And we will round off our busy Rio schedule on June 22nd with a presentation on the opportunities and challenges for bioenergy in Brazil at a conference organised by the CNA.

Sound busy? It’s not all.

A few days ago, we unveiled our latest contribution to understanding the potential of Brazilian sugarcane. We have launched an interactive digital tool that tells the story of our industry, provides timely information about market developments, and gives an overview of prospects and future uses of sugarcane ethanol. And it’s good fun to use it.  You can also download the app on your mobile devices and connect to our facebook page.

As you all see, much of the action in Rio+20 will not just take place at the negotiating table. We invite you to follow the debate and take part in the conversation.

We hope that this conference will mark the beginning of the future we all want.  

What’s possible when people have choice?

By Géraldine Kutas posted Jan 26, 2012
A lot. And the Americans will be the first to tell us. After more than three decades, the U.S. government lifted its tariff on ethanol giving the American public greater access to and an increase in environmental benefits starting in 2012. This is clearly a significant step forward, but I can’t help but think that we are missing out here in Europe?

A lot. And the Americans will be the first to tell us.

After more than three decades, the U.S. government lifted its tariff on ethanol giving the American public greater access to and an increase in environmental benefits starting in 2012. This is clearly a significant step forward, but I can’t help but think that we are missing out here in Europe?

Europe has set an ambitious environmental target in its 2020 energy legislation yet it simultaneously discriminates against a commercially viable renewable fuel that enables us to reach those same targets. Does anyone else see this paradox?

I know – and EU decision makers know too - that sugarcane ethanol reduces greenhouse gas emissions by 90 percent on average compared to ordinary fossil fuels, making it the best carbon performing biofuel produced today on a commercial scale. Since free trade is, in fact, a two way street, I should highlight that in 2010, Brazil eliminated its ethanol import tariff, undeniably increasing Brazil’s energy security. Today, Brazil hopes to encourage other countries around the world to do the same and develop free markets for clean, renewable fuels such as ethanol. I commend the United States for finally letting their import tariff expire – now I urge European citizens to make note of what European legislators owe them. To be fair, Europe isn’t alone. Big economies like China and Japan also impose an import tariff on ethanol.

Trade barriers can deprive Europeans of access to the many benefits of sugarcane ethanol. We wholeheartedly support and guarantee sustainability in the Brazilian ethanol production. Since the approval of the Bonsucro sustainability standards by the EU in July 2011, 12 mills were successfully certified within 6 months under that scheme. That’s commitment. But EU’s sustainability criteria, can act as non-tariff barriers, and their potential to limit trade in biofuels is significant.

So, what I think European consumers are missing here is choice. The choice to:

…increase relative independence on fossil fuels

…choose to power cars with a clean and renewable fuel

…cope better with high fuel prices

And ultimately to play an important role in meeting ambitious environmental targets decision makers have promised them.

It is urgent to act.

I know this won’t happen overnight, import tariffs create distortions and distortions take time to correct. But my hope for this year is that we start questioning their true merit!

We have a busy year ahead, let’s get to work and you’ll hear from me again in the coming months.

Are EU sustainability criteria for biofuels compatible with WTO rules?

By Géraldine Kutas posted Dec 12, 2011
That’s the question many of us are grappling with today. With the aim of meeting environmental goals, the European Commission is now due to finalize the very last provisions of the sustainability criteria it established two years ago in both the Renewable Energy Directive (RED) and Fuel Quality Directive. The criteria were created as a mechanism to ensure that biofuels marketed in the European Union (EU) truly help in mitigating climate change and preserving biodiversity.

That’s the question many of us are grappling with today.

With the aim of meeting environmental goals, the European Commission is now due to finalize the very last provisions of the sustainability criteria it established two years ago in both the Renewable Energy Directive (RED) and Fuel Quality Directive. The criteria were created as a mechanism to ensure that biofuels marketed in the European Union (EU) truly help in mitigating climate change and preserving biodiversity.

But recent decisions taken by the dispute settlement body of the World Trade Organization (WTO) – US — Clove Cigarettes, US — Tuna II (Mexico) and US –– COOL – could jeopardize the viability of the criteria, resulting in significant consequences for trading biofuels.

Are sustainability criteria for biofuels “discriminatory” or “unrelated to product characteristics”? This issue has been widely discussed among stakeholders, including policymakers, scientists, NGOs and academics, all with competing views.

Given the importance of sustainability criteria for the EU biofuels market, we recently co-organized a workshop with the International Centre for Trade and Sustainable Development (ICTSD) to provide a platform for experts in Brussels to discuss the legal and technical arguments around the (in)compatibility of EU sustainability criteria. That way, we could gather opinions from all sides for a constructive dialogue in light of the recent WTO jurisprudence dealing with the Agreement on Technical Barriers to Trade (TBT).

The two remaining provisions I mentioned earlier that are under consideration by the European Commission are highly contentious. Indirect Land Use Change (ILUC) is one of the most prominent examples of where incompatibility could occur since science is currently too flawed to attribute a specific ILUC impact to specific biofuels feedstock. Another example is “highly biodiverse grassland”, which clearly targets specific regions of the world. Andrew Shoyer, chairman of Sidley Austin LLP’s international trade and dispute resolution practice, advises that land-use criteria on biodiversity and any ILUC factor would be “particularly vulnerable”. And furthermore, specifically regarding ILUC, a recent EU-commissioned study by the International Food Policy Research Institute (IFPRI) concluded that many uncertainties remain surrounding the calculation of ILUC. It especially emphasized that such model cannot differentiate between direct and indirect land use emissions due to a lack of empirical evidence.

Another reason that EU sustainability standards might not be compatible with WTO rules is if they effectively discriminate between domestic and imported products based on individual production methods. Even though EU directives don’t contain a legal restriction on the imports of biofuels, in practice they can affect its marketability resulting in de facto discrimination. That means Brazilian biofuels – despite their proven outstanding environmental benefits – potentially could be limited in accessing the European market – a market which developed these rules explicitly to benefit from GHG-reducing fuels. There is a hint of paradox here.

What I know for sure is that we have more questions than answers on the table. In fact, this was also the outcome of our event. Let’s not rush into this. With all the uncertainty still to be clarified, I hope EU policymakers will take the time to carefully analyze cases affected by the TBT and the GATT agreements. The consequences could be detrimental for biofuels and many other renewable energy sources if they get this wrong. At UNICA we welcome all efforts to address climate change, and are convinced that a thoughtful decision that meets environmental objectives and is compatible with the WTO can be reached.

EU-Brazil Week: Only Baby Steps on Renewable Energy & Trade

By Géraldine Kutas posted Oct 10, 2011
Last week, at the annual EU-Brazil Summit, the EU and Brazil have been discussing how to jointly tackle our global challenges – chief among them trade, climate change and economic growth. For the last four summits, leaders have pledged their unwavering commitment to work together. But were there actual results?

Last week, at the annual EU-Brazil Summit, the EU and Brazil have been discussing how to jointly tackle our global challenges – chief among them trade, climate change and economic growth. For the last four summits, leaders have pledged their unwavering commitment to work together. But were there actual results? 

Yes, we are happy to see some progress was made, but surely we can and must do much more. It’s time to be bold and make decisions that will make a significant difference. I was encouraged to hear the European Council President Herman Van Rompuy say “we are able and willing to do more.”

Now these words need to be followed by actions.

For instance, what was accomplished in terms of pressing issues that were on the agenda, especially trade and renewable energy?

Let me start with renewable energy. The EU and Brazil noted the importance of stable and transparent energy markets and the need for continuous efforts to improve energy access and sustainability, which are crucial elements for global economic growth. The Letter of Intent signed last week between the European Commission and the Federative Republic of Brazil is a first step in that direction. It aims at strengthening the scientific cooperation between both parties in climate change, energy and sustainable management of natural resources, among other issues. I think this is a promising start but now we need to take these talks to the next level.

By 2050, global energy demand is expected to double. The business community gathered at the 2011 EU-Brazil Business Summit fully agreed that biofuels are the only powerful resource available at a commercial scale to efficiently and economically decrease greenhouse gas levels in the transport sector. However, we need a clear policy framework that will enable increased, yet sustainable production. Brazilian sugarcane ethanol, which is produced in a sustainable way with no subsidies, is the best performing biofuel thanks to its environmental benefits. Yet its access to the European market is heavily restricted. This brings me to my next point: trade.

Brazil is the sixth largest investor in the EU but existing trade restrictions and unjustifiably high tariffs still limit the access of Brazilian products into the European market. Brazil already eliminated its tariff on ethanol. Now it’s time for Europe to do the same and offer its people a chance to choose a clean and sustainable fuel, at a competitive price.

If biofuels are indeed a powerful and sustainable alternative that can help Europe decrease transport emissions, we need to open up markets so we can share our expertise and goods, while at the same time helping Europe reach its targets.

So, we truly hope the new Joint Action Plan for the period 2012-2014 will provide us with a genuine level playing field and reduce suspicion on both sides. This will have an impact across many sectors and it will ultimately benefit us all. Not only do we hope it will boost innovation, enhance employment, stimulate economic growth, but a successful agreement can also create economic synergies and reduce costs of raw material for both parties, besides achieving an environmentally friendlier planet.

We’re on the right track, but baby steps won’t get us there fast enough. Let’s move beyond constructive talks and leapfrog into a sustainable and prosperous future for both Europe and Brazil.

“Brazil Week” Spotlights EU-Brazil Relations

By Géraldine Kutas posted Oct 02, 2011
For five years now, European and Brazilian policy makers and officials convene to exchange views on big ticket issues for Brazil and the EU. This week they will meet in Brussels – what better place if you want to advance some critical issues between major trading blocs. The Brazilian President Dilma Rousseff, European Commission President José Manuel Barroso, European Council President Herman Van Rompuy and business leaders plan to discuss ways to tackle common global challenges and work on strengthening ties between the EU and Brazil. Renewable energy is important to Brazil so we can safely assume it will feature on the agenda. As most involved parties, we too recognize that there is a lot to gain from a dynamic strategic partnership. Climate change, competitiveness, innovation and trade are global challenges, and they require global solutions. But most of all they require a genuine level playing field.

For five years now, European and Brazilian policymakers and officials convene to exchange views on big ticket issues for Brazil and the EU. This week they will meet in Brussels – what better place if you want to advance some critical issues between major trading blocs. The Brazilian President Dilma Rousseff, European Commission President José Manuel Barroso, European Council President Herman Van Rompuy and business leaders plan to discuss ways to tackle common global challenges and work on strengthening ties between the EU and Brazil. Renewable energy is important to Brazil so we can safely assume it will feature on the agenda. As most involved parties, we too recognize that there is a lot to gain from a dynamic strategic partnership. Climate change, competitiveness, innovation and trade are global challenges, and they require global solutions. But most of all they require a genuine level playing field.

As you would expect, that brings me to the EU-Mercosur negotiations. Needless to say, they will drive a good deal of conversation this week. And for a number of good reasons. For one, the EU is Brazil’s leading trading partner. And the EU has repeatedly noted that Brazil is the most important market in Latin America. But existing trade restrictions and unjustifiably high tariffs limit the access of Brazilian products into the European market. Brazil has already eliminated its tariff on ethanol, but at this moment in time, Europe heavily taxes clean and renewable Brazilian sugarcane ethanol. How will this policy help Europe achieve a sustainable future? It most likely won’t. It doesn’t make much sense either because access to these goods will save Europeans money, advance competitiveness, drive innovation and protect the environment – the very challenges those leaders plan to resolve. I also believe that free trade stands to benefit us all. Brazil and the EU get to create one of the world’s largest bilateral free-trade zones. This is a hugely promising prospect. It’s also a lofty claim, so allow me to explain.

It really means that man on the street gets more choices! For us at UNICA, this means clean and renewable energy in the hands of European consumers and a competitive market that brings down the price of fuels that protect the environment. I’d argue that it will get us all closer to some tangible results as far as policy commitments are concerned.

I’m both proud and excited that UNICA can have a share of voice in this important debate. Our industry has been a critical component of what’s made Brazil a truly unique renewable energy pioneer over the past three decades. And we want to share our experiences with everyone who has an interest in smart, sustainable energy policy. Our goal is to partner with other countries to promote renewable energy on a global level. On October 3rd, we’re organizing a reception “Biofuels done well – Sugarcane leading the way to clean energy”, which will highlight what we believe can help Europe achieve a sustainable future. It’s hosted by MEP Britta Thomsen at the European Parliament in Brussels and will be attended by a number of Brazilian government officials. And that's not all we've got planned for “Brazil Week”. Our Chief Representative in the EU Lola Uña Cárdenas will participate in a panel at the European Commission on October 5th, to speak about EU-Brazil cooperation efforts as they relate to agribusiness.

Brazil has an increasingly important role on the global stage – be it for energy, food or developing a strong and functioning bioeconomy. We hope policy leaders and businesses alike will take advantage of “Brazil Week” and put forward workable solutions to our mutual challenges. After all, a fruitful relationship between the EU and Brazil is good for everyone. Stay tuned for our take on this week’s discussions.

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

 

Sugarcane Solutions Blog

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