Memorandum submitted by the Environmental
Industries Commission (EIC)
EIC was launched in 1995 to give the UK's environmental
technology and services industry a strong and effective voice
with Government.
With over 320 member companies, EIC has grown
to be the largest trade association in Europe for the environmental
technology and services (ETS) industry. It enjoys the support
of leading politicians from all three major parties, as well as
industrialists, trade union leaders, environmentalists and academics.
EIC's Renewable Transport Fuels Working Group represents
over 70 organisations from small biodiesel producers to multinational
commodity companies, and has actively participated in consultation
around the policy and practical implementation of biofuels in
the UK.
INTRODUCTION
In order for the UK to achieve its carbon emission
reduction targets all sectors of the economy, including transport,
must contribute. Transport is a particular challenge as it is
the fastest growing area of carbon emissions. Biofuels are one
of the few commercially available technologies able to produce
significant carbon emissions savings from the transport sector.
Biofuels can also play a role in diversifying
fuel supplies, contributing to fuel security, and in providing
new opportunities for our rural economy.
However some biofuels, like most technologies,
can have adverse consequences if they are developed without due
regard to sustainability and ensuring real carbon savings. It
makes no sense to support those biofuels that lead to deforestation
and habitat destruction.
The Government will introduce next year the
Renewable Transport Fuels Obligation (RTFO), a legal requirement
to include biofuels in the fuel sold at petrol stations across
the country. This gives it the ability to ensure that only the
right biofuels, which meet high standards of sustainability and
deliver significant reductions in carbon emissions, are allowed
to qualify as fulfilling this obligation.
The Government is now consulting on how to achieve
this. Our organisation and its members are working, with Government
and NGOs, to develop clear, robust and sensible standards. We
would encourage Government to apply these standards as soon as
possible and by 2010 at the latest.
QUESTION 1
What are the possible positive and negative social,
environmental and economic consequences of biofuels? How might
trade-offs between climate benefits and environmental and social
impacts be made? Is there a need to develop a new biofuel strategy
for the UK or EU, to balance the environmental, social, economic
and climate impacts of biofuels?
The transport sector is responsible for one
quarter of the UK's carbon emissions and this is growing rapidly,
threatening to derail Government targets to reduce carbon emissions.
The technology to produce biofuels is still
developing and different feedstocks, both from crops and waste
materials/by products, are being developed and used. However,
there is ample evidence from Government and independent studies
to demonstrate that biofuels are a promising technology for tackling
a proportion of carbon emissions from the transport sector. For
example, the report published by DfT in July 2004 "Liquid
Biofuels and Renewable Hydrogen to 2050" concludes that "It
would be possible, by 2050, to reduce total carbon emissions from
road transport to very low levels, through significant use of
renewable hydrogen or biofuels. This could help the UK to achieve
its goal to reduce CO2 emissions by 60% by 2050".
Growing crops for biofuels also has the potential
to generate numerous local environmental, social and economic
impacts. Energy crops, for example have the potential to provide
an incentive to keep land in productive use following the changes
to the Common Agricultural Policy to de-couple subsidy from production.
The UK remains one of the most efficient arable farming nations
in the world, with high standards of environmental stewardship.
Harnessing this productive capacity will enhance both fuel security
and the long term confidence of a sector that has suffered significant
loss of capacity in recent years.
However if biofuels are produced without making
real carbon savings and sustainability a key requirement of Government
support then this is a major risk that they will not deliver real
carbon savings and have other negative environmental impacts.
For example crops which displace rainforests will create far more
carbon emissions than they save and have unacceptable impacts
on biodiversity.
Whilst it is too early, therefore, to come to
a final conclusion on the benefits of biofuels it would be a mistake
to fail to support the development of a promising technology and
to guide this in the "right" direction.
It is, therefore, important that the Government
uses the policy mechanisms at its disposal to ensure that biofuels
have a positive impact. In particular the sustainability criteria
integrated into the RTFO will be central to ensuring transport
energy crops have beneficial impacts.
The processes to develop a biofuels strategy
are in place in the EU and UK. The review of the Biofuels Directive
will be key to setting a framework whilst the RTFO provides a
delivery mechanism. It is a question of developing these correctly
rather than developing a new strategy.
QUESTION 2
Should biofuels be regulated to minimise the negative
environmental and social impacts, and in what way? How might regulation
fit in with international trade agreements and rules? Should there
be regulation of the entire carbon cycle of biofuels?
There are a range of feedstocks and process
for biofuels which have different carbon saving and overall sustainability
benefits. EIC believes that Government should give greater support
to those biofuels that have the greatest benefits. In assessing
these benefits it is important that the Government gives due weight
to wider sustainability considerations as well as carbon savings.
Otherwise the Government may promote fuels that are produced in
such a way as to run contrary to its environmental policy objectives
in areas such as biodiversity (for example through encouraging
deforestation).
EIC, therefore, supports a sustainability certification
system being introduced as part of the Renewable Transport Fuels
Obligation (RTFO). This system should:
— Be simple, so that the costs are
not disproportionate, and where possible build on existing schemes
such as the Assured Combinable Crops Scheme (ACCS)
— Recognise the whole supply chain,
and not, therefore, disadvantage UK production where more stringent
standards may be applied than in the case of some imports.
— Initially be in the form of compulsory
reporting, but quickly lead to an evidence based banded system,
directly tied to obligation compliance.
Providing the system is simple to administer
we believe credits could feasibly be linked to the carbon saving
of the fuel and to minimum environmental and social standards
by 2010.
Certification should be based upon simple, robust
and measurable performance with independent certification. Early
movers should be protected from subsequent changes, to encourage
early activity and a solid evidence base from which to achieve
improvements.
The Government should be brave in applying these
standards, before others overtake the UK's initiatives in this
field, and should not wait for international standards to be agreed.
Incremental improvements based upon a real industry are far preferable
to perfect theories. However, they must be seen as taking a lead
in creating EU and international processes. This is a global sector
and requires international agreement on standards.
QUESTION 3
How successful are existing international structures,
such as the Roundtable on Sustainable Palm Oil, at ensuring that
imports of biofuels can be obtained from sustainable sources?
To what extent is it currently possible to identify the provenance
and production standards of imported biofuels?
Existing international structures, such as the
Roundtable on Sustainable Palm Oil, are valuable in encouraging
sustainable commodity production. However they are not sufficient
to ensure that imports of biofuels are obtained from sustainable
sources. It is not currently possible to identify the provenance
and production standards of the majority of imported biofuels
and these standards do not seek to reduce greenhouse gas emissions
These schemes are limited in scope and development
and cannot be relied upon to ensure carbon savings and sustainability
criteria for biofuels. Standards agreed through international
bodies- such as exists in carbon emission reduction through the
Clean Development Mechanism—are required to ensure genuine
carbon savings and sustainability.
The Government should use the expertise developed
under the RTFO to support and influence the development of EU
carbon and sustainability standards. This work demonstrates leadership
over other European standards, and those applied to food or fossil
fuels. The carbon and sustainability standards should be used
to encourage such approaches in other areas (including secondary
land use change, which is beyond the scope of any single industry).
QUESTION 4
At what stage is biofuels technology? Is there
enough support for the development of biofuel technology? A UN
report found that the climate change benefits of solid biomass
outweigh those of liquid biofuels. Are current policies promoting
the development and deployment of a range of biofuel technologies?
How successful have EU strategies and Directives been in stimulating
biofuel usage?
Progress on the development of the biofuels
industry has been slow, most notably in the UK, as a consequence
of inadequate value and period of fiscal support and lack of transparency
in government policy and regulation.
There are now, however, signs of this changing
and recent progress has been welcome. The UK Government has exercised
valuable EU leadership with its RTFO initiative, under which an
obligation to provide road transport biofuels to the market is
integrated with essential elements of sustainable development
and carbon accreditation.
Following passage of legislation, the RTFO is
due for introduction in April 2008, and will follow similar schemes
planned for Germany and The Netherlands. Nonetheless, we are concerned
that UK investor confidence is subdued, and are alarmed that market
uptake—currently less than 0.5% by volume in the UK—remains
so far below that required to contribute to the above mentioned
strategic objectives.
The next decade will require dramatic development
in the scale and efficiency of biofuels manufacture and logistics,
and an inevitable transition from the cottage industry of today
to a highly efficient, commodity industry serving a vibrant, free
flowing international market. To be successful, this will need
to set clear target outcomes and support mechanisms so that the
best endeavours of the agricultural sector, and developers of
existing and new technologies can be harmonised.
The market is not well served by Government
picking "superior technologies". Each will develop based
upon commercial and technical risk, and should be judged on their
results in delivering carbon savings at least cost and with high
environmental standards.
Existing assets and technologies have much to
contribute. Plant scale-up and improved efficiency can be applied
to both process and logistics. We believe that substantial advances
can (and should) be achieved without compromise to biodiversity
and land-use, and are capable of meeting or exceeding the EU biofuels
substitution target of 5.75% by 2010. There are three significant
areas of potential within the existing biofuels industry, namely:
— Agronomy—As crops are developed
for specific biofuels use, they will rapidly develop higher yields
with lower fertilizer inputs.
— Process—As Europe engages with
process engineering, we will see higher yields at lower energy
cost.
— Synergies—The industry will
rapidly establish new ways of utilizing its co-products in much
the same way as the oil industry. The National Non Food Crop Centre
has much experience in this area, but needs a processing base.
At present the most mature biofuels technologies
are based on wheat and oilseed rape feedstocks. In the future
new feedstocks may play an increasing role. These include Miscanthus
and perennial ryegrass. The attractiveness of these so called
second generation feedstocks lies in their ability to utilise
more marginal non food producing land, with little input and produce
significant biomass yields.
In addition to chemical engineering and fermentation
technologies, it will be necessary through plant breeding research
(much of it already underway) to produce higher biomass yielding
crops, reducing the land, water and fertiliser take, yet with
enhanced conversion potential.
The urgency of renewable energy deployment is
often overlooked, as clearly identified by last year's Stern Report.
It is important that existing technologies are deployed to build
market infrastructure and achieve short term carbon impacts in
abeyance of new technologies, rather than waiting for a technological
silver bullet.
It is clear that the current slowdown in UK
development plans, and the current low production base, make secure
achievement of the 2010 targets highly unlikely.
The potential gap in certainty between the current
duty incentive for biofuels, and a robust transparent carbon and
sustainability linked obligation scheme is a major threat to the
whole range of biofuel benefits.
QUESTION 5
The EU Strategy for Biofuels claims that biofuels
"are a direct substitute for fossil fuels in transport and
can readily be integrated into fuel supply systems". What
proportion of UK domestic transport and energy generation could
be fuelled by UK produced biofuels? Is it possible for biofuels
to entirely replace oil for transport purposes? Is there a role
for public procurement or public transport? Will biofuels improve
fuel security? How secure are biofuel crops from unexpected events
such as drought or disease?
In a global market it is not possible for the
UK or EU to ban imports of biofuels or the feedstock for their
production. However, in a rapidly developing area with potential
for supply shortages, significant domestic production is going
to be essential to ensure security of supply. UK and EU policy
should, therefore, focus both on encouraging demand for all biofuels
that are demonstrated to contribute to sustainability and on encouraging
domestic capacity as part of the supply of those biofuels.
The UK currently exports 2-3 million tonnes
of wheat annually which could be diverted to biofuel production
and is sufficient to supply the 5% inclusion rate by 2010 using
current biofuels technologies (NFU Briefing Paper, June 2007,
Biofuels—Some Myths and Misconceptions). Furthermore, the
5 million hectares of set-aside land in the EU has the potential
to grow 40 million tonnes of cereals (Biofuels International,
July 2007, Making sense of biofuels, p. 42). There is significant
scope within the UK, and across the EU, to develop a vibrant biofuels
market which can exceed the current EU substitution target of
5.75% (energy basis) as stated by the 2003 EU Biofuels directive.
The EIC believes that this can be achieved without compromise
to biodiversity and optimum land use.
EIC believes that the Government should signal
steadily rising targets towards the agreed EU position of 10%
by energy content. The timetable for implementation will depend
upon fuel quality work to ensure that the vehicle fleet is able
to accept higher levels of biofuels—although the potential
role of high blends should also be acknowledged in this timetable.
Inclusion rates above 5% could be met by UK
production in the future as cereal production becomes increasingly
efficient and biofuel production technologies improve. There are
promising technologies for using by products/waste from agriculture,
forestry and general biodegradable wastes for producing biofuels.
Indeed, the principal feedstocks for biodiesel currently produced
in the UK are used cooking oil and tallow.
Waste and by product feedstocks will score highly
on carbon savings and sustainability considerations and the key
to encouraging them will be providing greater levels of incentive
through the RTFO for fuels that score highly in these areas.
Government will also need to address the regulatory
hurdles that can result in by products being considered waste
and therefore subject to the rigours of a waste management licensing
system principally designed for those running landfills. EIC is
pressing at both EU and UK level for action to tackle the problems
caused by the wide application of the definition of waste—whilst
ensuring that the potential environmental impacts are properly
controlled.
It is clear that biofuels alone are unlikely
to provide the solution to carbon emissions from transport. They
are one promising technology which should be developed alongside
other technologies and behavioural change.
QUESTION 6
What impact would an expansion of UK production
of biofuels have on the ability of the UK to produce its own food?
How might this impact on greenhouse gas emissions from international
trade patterns? What impact might the expansion of biofuels have
on international food security and prices?
At the 5% inclusion level required by the RTFO
the UK's ability to produce its own food would be unaffected;
however, at higher inclusion levels the UK would face a choice
between importing either biofuels, or food or both, with consequent
increased greenhouse gas emissions.
Global food stocks are at their lowest level
for decades and agricultural commodity prices have been rising
rapidly in recent years. However, there is a complex interaction
between food prices, agricultural commodity availability and fuel
prices, since the cost of fuel forms a major part of production
costs and farm gate prices have become decoupled from food retail
prices. Therefore, at the present low levels of biofuel production
it is unlikely that rising food prices can be attributed to diversion
of raw materials to biofuels.
The long term certainty and carbon and sustainability
accreditation, championed by biofuels, has the ability to enhance
the security and sustainability of food production, if adopted
in a sensible and holistic fashion. However prior to biofuels
rising beyond the current level of 10% proposed in the EU the
impact on food security and prices will need to be kept under
review.
QUESTION 7
How might farm viability in both developed and
developing countries change with an expansion of biofuels? What
implications are there for poverty in developing countries? Should
we be concerned about large monopolies forming on the biofuel
sector?
Farm gate prices in the UK have been falling
for over a century and have fallen by 18% in the last ten years
alone—despite recent commodity price increases. Biofuels
will provide an alternative market for agricultural products which
will boost the incomes of farmers in both the developed and developing
world.
Of the world's 47 poorest countries, 38 are
net oil importers, and 25 of these import all of their oil. Many
of these countries have substantial agricultural bases and are
well positioned to grow highly productive energy crops, which
would save these impoverished countries from spending scarce resources
on importing expensive oil, hence biofuels have the potential
to improve farm viability and alleviate poverty in developing
countries. The impact in practice will need to be kept under review
as biofuels develop to ensure these benefits are realised.
CONCLUSIONS
Biofuels are a promising technology to contribute
towards tackling carbon emissions from the transport sector. They
are, however, only part of the solution and they carry risks of
negative impacts if the market is not given the right signals
by Government support strategies.
Government should, therefore, support the development
of biofuels, particularly domestic production where high standards
can be ensured, through a policy framework which is consistent
and long term to provide investors with the opportunity to make
a return on their investment.
That policy framework should also provide clear
signals to the market as to the standards biofuels will be expected
to meet. We must, therefore move rapidly to a scheme which links
Government support to the level of carbon savings delivered and
to meeting minimum standards of sustainability and which is also
practical to achieve.
25 September 2007
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