You are here: Home Blog E.U. Posts

E.U. Posts

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

What’s your first-generation biofuels literacy?

On April 22, we celebrate International Mother Earth Day. Many people want to take action on that occasion by planting a tree or informing themselves on climate change solutions and environmental conservation. However, in today’s era of post-truth politics and information overload, we often struggle to make sound judgements about what is best for the environment and what is agenda-driven rhetoric. Same goes for lawmakers who are in charge of setting the policies that will lead us to a more environmentally friendly economy and lifestyle.

Read on

OLDER POSTS

 
Site Map
About Us Privacy Policy
News