Memorandum submitted by the Margarine
& Spreads Association (MSA) (Bio 18)
EXECUTIVE SUMMARY
1. The Margarine & Spreads Association
(MSA) fully supports efforts to tackle climate change, but by
doing so the most sustainable (from an economic, environmental
and social perspective) solution has to be found. A study by RWI[42]
(Rheinisch-Westfaelisches Institut fuer Wirtschaftsforschung)
shows however that the current focus on a limited number of feedstocks,
mainly rapeseed and palmoil, does not constitute the most sustainable
way forward.
2. The margarine and spreads sector uses
a number of the main feedstocks associated with biodiesel production
as a food ingredient. MSA therefore have concerns that by growing
non food crops on land previously used to grow food crops it will
result in insufficient volumes of edible oil for the food industry.
The ingredients of key concern are oils: primarily locally produced
rapeseed oil. The 5% blend obligation will create a demand for
c. 1m tonnes of biodiesel[43],
which exceeds current UK production. The pressure on land space
will cause a shortfall in supply which will both push up prices
and result in an increase in imports.
3. The RWI study estimates that 13.6 million
hectares of land are required for target compliance production
in 2010. Given that total arable land in EU is c. 82 million hectares,
13.6 million hectares represents approximately 16.5% of total
arable land within EU. This estimate of 16.5% of arable land is
substantially higher than compulsory set aside of 10% and therefore
the entire biofuel production can not solely take place on set
aside land.
4. Given the link between our industry and
the use of rapeseed oil for biodiesel we believe that the European
Commission and the UK Government must consider the food industry
when formulating new biofuel policies. Regulatory impact assessments
should be conducted before any new policy is introduced and these
should include sections which examine the potential consequences
for domestic food manufacturers, both in terms of their food production
and the energy they use. In addition, given the global nature
of this issue the impacts need to be assessed in a global context.
5. We would also encourage the Commission
to recommend more study on the impact of biofuels to the food
production chain before setting policy, or creating incentives
or targets.
What is the real scope for biomass and biofuels
to contribute to tackling climate change? What proportion of the
UK's energy and transport fuel needs could they provide?
6. Biomass and biofuel are currently part
of a range of solutions to tackle climate change. We would support
their use where it makes sense environmentally and provides the
most cost-effective option in making a positive contribution to
climate change. We would also ask that when conducting a cost
benefit analysis of bioenergy that it is undertaken in a global
context. There should also be recognition that biofuels are just
one of a range of options available to tackle climate change.
There are many other effective, inexpensive and less impactful
solutions which could be used alone or together to tackle the
problem (for example, enhancement of power plants, improving car
engines, biomass residues etc).
7. With regard to what proportion of UK's
energy and transport fuel needs biomass and biofuels could provide,
consideration needs to be given to other demands on land use such
as food crops.
How cost-effective are biomass and biofuels in
comparison with other sources of renewable energy?
8. Biomass and biofuel can be obtained from
several different feedstocks and should be analysed and compared
individually. In terms of Greenhouse Gas abatement costs, biodiesel
originating from rapeseed oil and bioethanol originating from
sugar beats and wheat are more expensive alternatives (£/tonne)
for power/fuel generation than many other options such as bioethanol
from sugar cane, other biomass (reed, poplar, wood waste) and
wind power. In addition, the cost of producing bioethanol from
sugar-cane is roughly zero whilst the same matter produced from
sugar beat and wheat costs £145/tonne. Thus, these differences
have to be calculated and the best economically viable solution
applied locally.
9. Another feedstock for biofuel is oilseed
bearing trees eg Jatropha and further investigation into their
cost effectiveness should be undertaken, particularly given the
beneficial contribution such a potentially valuable raw material
could contribute to the economies of the developing world where
this crop is prevalent. Supply of jatropha would, unlike other
biofuels not be competing with demands for it from the food industry.
Having reviewed this feedstock and due to its drought resistance
and ability to grow on marginal land, it offers the possibility
of an economically, socially and environmentally sustainable contribution
to energy provision.
10. We would also encourage the European
Commission to recommend that the European Committee for standardisation
amend the current iodine rules to make more oils eligible for
biofuels production—such as sunflower oil. This would also
help reduce the pressure on current domestic biofuels, namely
rapeseed oil, as well as palm oil.
11. The cost effectiveness of biomass and
biofuel needs to be looked at in conjunction with the range of
other measures that can take place to reduce CO2 emissions.
Studies have demonstrated that in some situations it is more cost
effective to enhance (modernise) old conventional power plants
than to use biofuels, with the same or better results in CO2
abatement. The impact of new car engines consuming less fuel/km,
and biofuel/engine improvement are very interesting developments
and their cost effectiveness again needs further investigation.
12. Second generation biofuels under development
are also promising alternatives and may eliminate some of the
disadvantages that biofuel crops produce. In addition, new technologies
such as wave and wind power generation should be investigated
further for their cost/environmental effectiveness.
13. Overall, there should be further research
undertaken to customise solutions which will lead to the most
cost-effective and environmentally beneficial outcome.
How do biofuels compare to other renewables, and
with conventional fossil-fuels, in terms of carbon savings over
their full life-cycle?
14. Biofuels contribute to carbon saving
when compared to fossil fuel, but the extent of this contribution
is directly related to its source and characteristics.
15. Currently, higher abatement results
when using biomass from wood, poplar, reed and bioethanol from
sugar cane. These materials are more efficient in converting carbon.
In addition, they will use fewer fertilisers and pesticides and
demand less land space.
16. In a study carried out by RWI comparisons
of many alternatives to biofuel were made. Please find attached
a copy of this research for your reference.
Not all biomass is equal—potential carbon
savings depend on, for instance, farming practice. What can be
done to ensure energy crops are sustainably produced?
17. In order to assess whether a crop is
sustainably produced, the whole life cycle needs to be looked
at in a global context.
18. Only research and application of the
correct measure for each case and adoption of best practice will
guarantee sustainable biomass.
What impact will UK Government and EU actions
have in increasing demand for, and production of, biomass and
biofuels?
19. The immediate impact is expected to
be on land use. Due to the incentives and higher prices on offer
to farmers, it is expected that land use will change from food
to non food crops. Raw material availability for food purposes
is likely to decrease and prices of major agricultural commodities
would increase to the point of drastically affecting prices to
consumers.
20. The graph below illustrates that based
on the target of 5.75% biofuel by 2010, a 2.25 million MT/Year
growth in EU-25 biodiesel production for the next five years would
be required. Therefore basing this demand on rapeseed oil would
have a profound impact on the rapeseed market.
21. The graph below illustrates that Rapeseed
and Canola oil consumption is increasing both at EU and world
level. Therefore, an increase in demand at UK/EU level cannot
necessarily be achieved by supply at a global level.
22. In the graph below the impact of the
increase in demand for biodiesel has already started to take hold.
The price of rapeseed (red) has started to increase dramatically
over the last few years and when compared to sunflower in blue
and soybean in green rapeseed has continued to rise where they
have fallen.
23. The graph below further illustrates
the price increases that have already taken hold. The price of
rapeseed is outlined in orange (top line), mineral oil as red
(bottom line) and Sunflower as yellow and palm oil as green.
Weekly Palmoil Crude P2 [Line], Rapeoil-Dutch P2 [Line], S. Oil-Dgummed P2 [Line], BFO 2M Europe [Line]
24. Disruption of the food chain would be
serious, as world food production has to date only been able to
keep up with demand.
What impact might an increase in energy crops
in the UK and the rest of the EU have on biodiversity, production
of food crops and land use and the environment more generally?
25. Large scale promotion of biofuels require
huge amounts of arable land. Studies have demonstrated that biofuel
production cannot solely take place on set aside land (SAL). In
fact, to reach the EC target (5.75% biofuel by 2010), almost double
the current amount of "SAL" would be required. This
would result in competition for land use between food and non-food
purposes and as a consequence, an increase in prices.
26. In addition, intensive land usage would
require planting on poorer land ("SAL") and therefore
demand higher use of fertilisers and pesticides.
Does bioenergy production constitute the best
use of UK land for non-food crops? Should UK and EU policy focus
on increasing domestic production of energy crops and biomass,
or are there merits in importing biomass for energy production,
or raw feedstock or refined biofuel, from outside the EU?
27. In a study carried out by RWI, they
estimate that 13.6 million hectares of EU land are required for
target compliance production in 2010. Given that total arable
land in EU is c. 82 million hectares, 13.6 million hectares represents
approximately 16.5% of total arable land within EU. This estimate
of 16.5% of arable land is substantially higher than compulsory
set aside of 10% and therefore the entire biofuel production cannot
solely take place on set aside land. Therefore, other solutions
will need to be found.
28. If land is to be used for biofuel production,
it is expected that its outcome is the most cost-effective alternative.
Studies have demonstrated that European crops (rape seed, beats
etc) result in a more expensive and cost-competitive biofuel when
compared to other sources (soya, sugar cane, palm oil etc).
29. Research should be carried out to analyse
the potential for biomass to be produced locally. Importing cheaper
and more cost-effective biomass would be one route, but also raises
the question of why not incentivise the use of this matter where
it is produced (and thus, save the transportation fossil fuel).
Trading systems could be used to stimulate use of biomass where
it calculates and we all have to remember that climate change
is a global issue to be tackled at a global level, wherever makes
most sense.
30. For instance, contributions could be
made by enhancing old power generating facilities, improving car
engine yield, investing in research for second generation biofuels
(where Europe might be more competitive), campaign against waste,
invest in new technology (wave and wind generation). In addition,
the use of oils from oil bearing trees such as Jatropha should
also be investigated to meet the EU requirements.
What more can be done to make more efficient use,
as an energy source, of the by-products of agriculture and forestry
(eg wood waste and other organic waste)?
31. We would suggest that a map outlining
UK's biomass potential is developed and a plan formulated on the
best use of this capacity locally, minimising transport and handling.
It is also important to set policies to stimulate the development
of sustainable and cost-efficient biomass alternatives.
32. Further research would identify key
actions that could be taken at a local level. An example of this,
is the use of industry and community waste for power generation.
What lessons can be learned from other countries'
experience in the production and use of bioenergy?
33. Bioethanol in Brazil is produced at
full cost-effective scale: Sugar-cane syrup is extracted for production
of sugar or bioethanol (for blending with gasoline as biofuel).
The residual liquid sewage can be used as fertiliser for the next
crop and the solid remains from crushing is burned to generate
power to run the entire facility with excess energy exported.
34. The same kind of approach can be found
in ligno-cellulosic facilities. They are able to retro-feed their
residues and offset the energy intake.
Margarine & Spreads Association (MSA)
February 2006
42 The RWI study is a meta analysis of research data
conducted by Manuel Frondel and Jorg Peters RWI-Essen and
funded by the International Margarine Association of the Countries
of Europe (IMACE). The study reviews the environmental, economic
and land use aspects of rapeseed-based biodiesel. Back
43
D1 Oils. Back
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