House of Commons - Environmental Audit

Select Committee on Environmental Audit First Report

2 What are the possible impacts of biofuels?

22. We received a large amount of information about the potential positive and negative environmental and social impacts of biofuels. We have focused on the major implications of biofuels; not all environmental or social costs and benefits are considered here.

Environmental impacts

23. As outlined earlier some biofuels can lead to substantial GHG emission reductions when compared to fossil fuels, although the level of savings varies widely according to the feedstock and production process. The Low Carbon Vehicle Partnership (LCVP) told us that the level of GHG savings associated with the conversion of wheat to ethanol can vary anywhere between 7 to 77%. Ethanol produced from sugarcane can save as much as 90%.[20] Biofuels can be used to reduce greenhouse gas emissions from road transport.

24. In addition to GHG savings, an interesting environmental benefit that might come from a sustainable biofuels market could be the better regulation of all internationally traded agricultural commodities. Although there are potential benefits in terms of poverty reduction from expanded international trade in agricultural products, as we noted in our Report Outflanked: The World Trade Organisation, International Trade and Sustainable Development, there are also likely to be negative environmental impacts. These include deforestation and increased GHG emissions from the transport of goods. In that report we urged the Government and EU to 'pursue aggressively a more sustainable outcome' to the current Doha Development Round world trade negotiations. During that inquiry we were told that many developing countries were suspicious of demands to consider sustainable development regulations as part of trade negotiations out of fear that they will be used 'as cover for protectionist trade policy'.[21]

25. A potentially significant benefit of a new sustainable biofuels market in the EU, from which developing countries could stand to benefit, could be that it would help to create economic conditions which would assist in securing international sustainability standards for agricultural products more widely.

26. Many of the witnesses to whom we spoke acknowledged that biofuels could have a role to play in reducing GHG emissions from transport, but were concerned that the wider environmental impacts have not been considered adequately. WWF and Friends of the Earth have argued previously that the 'Government's dash for biofuels is ill thought out, lacks appropriate safeguards and could be creating more problems than it solves'.[22]

27. The creation of a biofuels market could substantially increase agricultural commodity prices. There are concerns that this will increase pressure to intensify agriculture and also to expand agriculture into natural habitats. The Joint Nature Conservation Committee (JNCC) told us that they were 'concerned that the rapidly growing biofuel industry and trade will, without appropriate safeguards, add another significant pressure on the environment with negative consequences for biodiversity'. They argued that biofuels could cause damage through:

land use change to accommodate biofuel feedstock plantations resulting in loss, fragmentation and degradation of valuable habitats and consequent negative impacts on the associated biodiversity and ecosystem services;
land use change resulting in the release of carbon from natural carbon stores such as peatland and forests, which might negate any carbon savings associated with the biofuels and increase global greenhouse gas emissions;
intensification of agricultural production, including the increased use of pesticides and fertilisers with implications for water quality, increased use of water leading to shortages, and soil degradation and erosion;
displaced food production encroaching on valuable habitats; and
unregulated use of genetically modified feedstocks that 'may be damaging to wildlife, competitively displace native species, or lead to gene flow with native species'.[23]

28. The Environment Agency agreed with most of the JNCC's concerns, but also argued that higher agricultural commodity values might decrease the relative 'value of agri-environment payments that offset environmental degradation'.[24] This could discourage farmers from working within agri-environment schemes. The Environment Agency also argued that 'an increase in the land used for late harvested crops such as maize and sugar beet for biofuels will inevitably result in more soil compaction, especially in wetter autumns and will increase water run-off and potential flooding in sensitive catchments'.[25] Increasing the land used for arable production will have an impact on our ability to reach environmental targets, and in particular those arising from the Water Framework Directive. The Environment Agency told us that there is evidence to suggest that water companies were 'already having to treat drinking water for oilseed rape herbicides such as carbetamide'.[26] Another example of what might be expected was recently reported in the Financial Times. In response to high agricultural commodity prices, fertiliser prices have increased to their highest level in at least ten years as farmers plan to plant more crops and farm them more intensively. Jan Poulisse from the UN's Food and Agriculture Organisation said that high agricultural commodity prices create an incentive for farmers to use more fertilisers to increase yields.[27]

29. Research was commissioned by the Swiss Government to obtain the full life-cycle environmental impacts of a number of bioenergy technologies compared to fossil fuels. The environmental footprints calculated were an aggregate of indicators for damage to human health and ecosystems and the depletion of natural resources. It found that in many cases the damage caused by the use of fossil fuels is less than the damage caused by agricultural production of biofuels 'in terms of acidification and excessive fertiliser use, biodiversity loss, air pollution… and the toxicity of pesticides'.[28] In Switzerland preferential tax status is only granted for a biofuel where it has a favourable environmental rating relative to conventional fuel. This means that very few biofuels qualify for the preferential tax status, and only those that are produced from waste products such as vegetable oil or those made from woody biomass.[29] Nevertheless it must be considered that the wider environmental impacts of biofuels are as variable as the potential GHG savings and depend very much on location and production methods. A case-by-case assessment might therefore be required.[30]

Figure 1: Total environmental impact of biofuels against greenhouse gas emissions

greenhouse gas emissions

Source: Zah R, Hischier R, Gauch M, Lehmann M, Böni H, Wäger P. Life Cycle Assessment of Energy Products: Environmental Impact Assessment of Biofuels. Bern: Bundesamt für Energie, Bundesamt für Umwelt, Bundesamt für Landwirtschaft; 2007, p. 20

UBP is a Swiss indicator of aggregate environmental impacts. Zah et al obtained the same results using the European Eco-indicator 99 method, which quantifies damage to human health and ecosystems.

HOW MUCH SUSTAINABLE BIOENERGY CAN THE UK PRODUCE?

30. The UK Biomass Strategy 2007 refers to a paper by the European Environment Agency (EEA) that concluded the land available for environmentally-compatible bioenergy production in the UK would be around 0.8m hectares in 2010, 1.1m hectares in 2020 and 1.6m hectares in 2030. It is estimated that 0.8m hectares could supply enough arable crops in the UK to meet half of the 5% by volume target under the RTFO. Although these figures are correct, the Biomass Strategy neglects to highlight that this amount of land is only sustainable when certain conditions are applied, namely that:

at least 30% of all agricultural land is dedicated to 'environmentally-orientated farming' in 2030;

3% of intensively cultivated land is set aside for ecological compensation by 2030;

there is no conversion of existing grassland (and certain other agricultural land types) to arable land;

current forest areas are maintained; and,

ambitious waste minimisation strategies are applied.

31. More significantly for this inquiry, the EEA assumed that only those bioenergy crops with the lowest environmental pressures would be used (mainly perennial bioenergy crops such as miscanthus and short rotation coppice), and that the amount of bioenergy derived from conventional feedstocks, such as sugar beet, would 'decrease rapidly after 2010'.[31]

32. As different biofuels are produced in a number of ways from different feedstocks with varying impacts, it is difficult to generalise the benefits or costs of biofuels. Nevertheless, today most biofuels are produced intensively from feedstocks in ways that could have serious environmental consequences.

33. The sustainability standards applied by the Renewable Transport Fuel Obligation are unlikely to prevent environmental damage from biofuels. In the UK aggregate environmental impacts might make it difficult for us to meet a range of targets, including those relating to halting biodiversity loss or improving water quality.

34. Biofuels standards should be changed to ensure that support is given only to those that deliver environmental improvements over fossil fuels in terms of not only greenhouse gas emission reductions but also wider impacts such as fertilizer and pesticide pollution. We envisage that such standards will be similar to those developed by the Swiss. In the absence of such standards the Government and EU has moved too quickly to stimulate the use of biofuels. Until they are developed the Government should place a moratorium on policies aimed at increasing the use of biofuels.

THE EFFECTIVENESS OF INTERNATIONAL SUSTAINABILITY STANDARDS

35. The Government proposes that sustainability standards should apply to biofuels to prevent the potential environmental impacts outlined above. Such standards must be international in nature given that constraints on the production of feedstocks for bioenergy in the EU, and that certain feedstocks can more efficiently be produced in other countries, will mean that biofuel feedstock commodities will be traded internationally. The European Commission estimates that the EU 10% biofuel target might require 10% to 50% of feedstocks to be imported by 2020 depending on technological advances.

36. The Government argues that 'to minimise the adverse impacts of biofuel production… it is necessary to work towards internationally agreed sustainability standards as a matter of urgency', and that it is 'in the forefront in the area… [for example] through work with the Global Energy Partnership (GBEP) to develop an internationally recognised lifecycle carbon methodology for biofuels'.[32]

37. The NFU believes that there is a need to ensure that international standards are not less stringent than those which apply to UK producers. Otherwise domestic production will be disadvantaged in comparison to foreign production. Such a situation can lead to the loss of opportunities for UK business as well as the preferential use of potentially more damaging foreign imports.[33] The Government also believes that international standards have to be effective 'but not so burdensome as to be beyond the capacity of developing countries, who may then export to less demanding importers'.[34]

38. In the development of such standards the Government has to have regard to World Trade Organisation (WTO) rules, under which a country might challenge standards if they consider them to be an unfair barrier to trade. There are provisions for being able to distinguish between traded goods on the basis of environmental criteria (such as sustainability standards) but, the Low Carbon Vehicle Partnership (LCVP) points out that the 'rules are complex, case-law very limited and outcomes highly uncertain'.[35] The LCVP believes that the Government took a conservative approach to lessen the risk of a WTO challenge to the RTFO by not requiring mandatory standards and permitting 'not known' categories in reporting.[36]

39. Although international trade rules make the development of robust international sustainability standards more challenging, they do not necessarily mean that they cannot successfully be created. Indeed, a number of commodity standards are currently being worked on by multi-stakeholder groups, including the Roundtable on Sustainable Palm Oil (RSPO) and the Roundtable on Responsible Soy. The Government believes the development of such standards to be the correct way to improve the sustainability of these commodities.[37]

40. Nevertheless, witnesses to this inquiry queried the effectiveness of international standard schemes. Professor Clift argued that the certification schemes currently in place do not give us much confidence that an international biofuels standard will successfully deal with the impacts of biofuels.[38] The JNCC argues that these schemes provide a good starting point but have limitations. For example, the RSPO is 'not yet operational and no certified oil is on the market today [and] the current membership of the RSPO only covers 40% of the world's palm oil production'.[39] It also points to the Forest Stewardship Council (FSC) as to what might be expected from biofuels standards. It argues that although there have been many positive outcomes of the scheme, illegal logging continues and demand for certified products continues to outstrip supply. In addition 'in the case of the Asia Pacific region, results are rather disappointing… Overall, the market still focuses heavily on unsustainable timber production'.[40] A paper published by the OECD outlined the challenges facing the certification of forest products including:

difficulties in tracking products from forest to end use because documents are easy to falsify; and
the effectiveness of the scheme being undermined by segmentation of the market into one for countries that require certified products and one for those that does not.[41]

41. The authors of the report argued that certification for biofuels could well suffer from similar problems, and also point out that such a scheme will not address the indirect impacts of biofuels.

LAND USE CHANGE

42. During the course of our inquiry land use change was raised as being of particular concern, especially when it occurs in tropical regions. A report published by OECD argued that the environmental services provided by natural ecosystems in the tropics are not properly valued, and that therefore such habitats are vulnerable to conversion to other uses, including the production of biofuels. Such changes in land use damage the environmental credentials of biofuels.[42]

43. The public probably recognise the problem of rainforests being cleared for plantations such as palm oil. Currently only a small percentage of palm oil is used for biofuels, with most being used in food and cosmetics. The market for palm oil in these sectors is enormous — one in ten supermarket products contain it.[43] This demand means that clearance of forest for palm oil plantations is now the primary cause of permanent rainforest loss in Indonesia and Malaysia. A UN report, The Last Stand of the Orangutan, concluded that given the huge demand for palm oil it is 'very difficult to curb the spread of plantations'.[44] It also concluded that the 'rapid increase in plantation acreage is one of the greatest threats to orangutans and the forests on which they depend'. It found that between 1967 and 2000 the area under palm oil plantations grew from under 2,000 km² to over 30,000 km², with demand expected to double this area by 2020.[45]

44. This large-scale deforestation has largely occurred in the historic absence of a demand created by a large biofuel industry. The Environment Agency told us that demand for biofuels is already leading to more deforestation in Indonesia and Malaysia, and that 20% of the EU's biofuels market is expected to be supplied from these two countries. A biofuels market in the EU also has an indirect impact on demand for palm oil. The Environment Agency told us that EU palm oil imports doubled 2000-2006, 'mostly to substitute for rapeseed oil diverted from food to fuel users'.[46] The UN estimate that combined with logging and fire pressures, palm oil production could result in the destruction of 98% of Indonesia's rainforest within 12 years. The lowland forests that are the most valuable in terms of their biodiversity might be lost by 2012, making orangutans close to extinction in the wild within four years.[47]

45. Some of our witnesses have argued that the availability of currently unutilised or degraded land might productively be used to produce biofuels without increasing pressure to change land use. The NFU says that 5% of transport fuel could be met through UK produced biofuels with current technology, and argues that much of the UK's cropland is 'under used and could be growing renewable fuel', such as by growing on the 513,000 hectares of set-aside land or 150,000 hectares of bare fallow (uncropped but crop-prepared land) that was available in 2006.[48]

46. There is also degraded, waste or uncropped land in developing countries. For example, a report by Global Forest Watch in 2004 estimated that there is around 7 million hectares of cleared forest lying idle in Indonesia.[49] In 2007 the Indonesian Environment Minister said that although they plan to expand palm oil plantations by 7 million hectares by 2011, these will 'not be allowed to sacrifice natural forests… they will be planted in lots that are already empty. There are plenty of these, 18 million hectares of them'.[50] However, Indonesia's ability to enforce environmental protection standards locally is severely hampered by poor governance and corruption. The current primary cause of deforestation, palm oil plantations, are often grown preferentially on cleared rainforest as the palms do not provide a harvest for five years. Timber from the cleared forest provides a subsidy for the first few unproductive years.[51]

47. Hannah Griffiths from Friends of the Earth said that growing biofuels solely on true wasteland would be a good thing.[52] However, she pointed out that there is controversy surrounding the term wasteland. It is sometimes applied to land on which people are living or relying for their livelihoods. She also pointed out that much of the wasteland in Indonesia is actually former peatland which 'could be reflooded and provide benefits in terms of becoming carbon sinks again'.[53] It would also be difficult to ensure that a national policy to focus development onto wasteland would actually translate into action at the local level.[54]

48. One of the most effective methods of monitoring land use change is the deployment of earth observation technology. The Government should give as much support as possible to the appropriate technologies as well as to international co-operation on the shared use of earth observation data.

MANAGING LAND TO STORE CARBON

49. Land use change is not only important in terms of its impacts on biodiversity or other more localised environmental impacts. It could also have implications for climate change given the large stores of carbon held in rainforests and other habitats such as peatland. Converting forest into a biofuel plantation could release some 100 to 200 tonnes of carbon per hectare.[55] The UN has said:

Ironically, in the desire to cut CO₂ emissions, western markets are driving ecosystem destruction and producing vast and significant CO₂ emissions through forest burning and peat swamp drainage. The most effective measure to achieve this is conservation of remaining peatland forests, alongside rehabilitation of degraded peatlands and improved management of plantations and agricultural areas.[56]

50. Dr Dominic Spracklen told us that if the aim of biofuels policy is to reduce GHG emissions, the Government should instead focus on improving the efficiency of fossil fuel use and conserving remaining forests. He also argued that restoring natural forests or grassland habitats on cropland not needed for food is a highly cost effective way to reduce GHG emissions.[57] His research suggests that reforesting land sequesters 'two to nine times more carbon over a 30 year period than the emissions avoided by the use of biofuels'. Ultimately, he said, 'carbon-free transport fuel technologies are needed to replace fossil hydrocarbons'.[58] Dr Spracklen also told us that the costs associated with habitat restoration for carbon sequestration in the UK, where costs are likely to be higher, would be between 20 to 100 £/tC and that the IPCC indicates that for 10 £/tC 'large amounts of carbon could be sequestered through forest restoration'.[59] In a direct comparison to expenditure on road transport biofuels, he told us that 'forest restoration… could sequester a significantly larger fraction of carbon'.[60] There are also co-benefits to the more sustainable management of the landscape through habitat restoration 'such as prevention of desertification, provision or forest products, maintenance of biological diversity, and regional climate regulation'. Such action also avoids the additional environmental strains that an expansion in biofuel production might create.[61]

51. The Stern Review also identified avoiding deforestation as relatively cheap way to mitigate climate change.[62] In order to finance this the Review suggested that incentives be created for the maintenance of forest areas. It concluded that the international community should provide compensation for the maintenance of carbon sinks, and that such action is 'urgent' given the scale of the problem:

Without prompt action emissions from deforestation between 2008 and 2012 are expected to total 40 Gt CO₂, which alone will raise atmospheric levels of CO2 by ~2ppm, greater than the cumulative total of aviation emissions from the invention of the flying machine until at least 2025.[63]

52. Biofuel sustainability standards by themselves are unlikely to be able to prevent biofuels from causing environmental damage in the UK and internationally. Other mechanisms are required to protect carbon sinks from land conversion.

53. The stimulation of biofuels production by the Government and EU is reckless in the absence of effective mechanisms to prevent the destruction of carbon sinks internationally. The Government must ensure that carbon sinks are effectively protected before providing incentives for the use of biofuels. The Government should also explore the development of international mechanisms to enable the creation of new carbon sinks.

54. In relation to the UK more work is needed to ensure that carbon stores are better protected and managed. For example, the better management of UK upland peat bogs alone could store up to 40,000 tonnes of carbon per year, the equivalent of removing 2% of cars from England's roads.[64] Given the potential for such interventions, Professor Richard Bateman argued that current biofuels policy is strongly incompatible with better environmental management.[65] He argued that we do not have the required information to be able to decide whether it would be better from a GHG emission reduction perspective to grow biofuels on a hectare of land or to restore habitat on the land instead. To enable this he believes that a landscape 'integrated carbon accountancy model' should be developed to ensure that 'we can start to judge what the effect of a particular decision… will have on our landscape'.[66] Before such a model is in place he thought that it is too early to 'talk about a [biofuels] industry'.[67]

55. DEFRA published 'Securing a healthy natural environment: An action plan for embedding an ecosystems approach' in November 2007. Joan Ruddock MP, Minister for Climate Change, Biodiversity and Waste, said in the foreword that it 'sets out an ambitious programme of work to deliver a decisive shift towards an ecosystems approach in our policy-making and delivery. It aims… to develop better ways to value the natural environment in decision-making'.[68] The valuation of such ecosystem services is important and could enable better land use decisions to be taken as suggested by Professor Bateman. The document outlines a number of core principles for embedding an ecosystems approach in policy making:

Taking a more holistic approach to policy-making and delivery, with the focus on maintaining healthy ecosystems and ecosystem services.
Ensuring that the value of ecosystem services is fully reflected in decision-making.
Ensuring environmental limits are respected in the context of sustainable development, taking into account ecosystem functioning.
Taking decisions at the appropriate spatial scale while recognising the cumulative impacts of decisions.
Promoting adaptive management of the natural environment to respond to changing pressures, including climate change.[69]

56. We argue that current biofuels policy fails in relation to all these core principles because:

biofuels policy could undermine attempts to 'maintain healthy ecosystems';
the 'value of ecosystem services' is not reflected in the policy as it is seeking to emulate an ecosystem service (GHG reductions) that an ecosystem could more effectively provide;
a potential increase in intensive agriculture will place pressure on 'environmental limits';
the 'cumulative impacts of decisions', (which might be manifested as, for example, increased diffuse pollution) are not reflected in current policy; and
the added environmental stress that biofuels could place on the environment could hinder the natural environment's ability to respond to climate change.

57. We welcome the recently published action plan for embedding an ecosystems approach as it shows that Government is seeking to take better decisions in relation to the UK's natural environment and the protection of ecosystem services. But biofuels policy currently fails to follow such an approach. There are significant knowledge gaps relating to land management for sustainable bioenergy production and for carbon sequestration. In order to align biofuels policy to an ecosystems approach the Government must commission work to assess:

the potential in the UK for carbon-oriented land management;
how UK land managers might better be rewarded for maintaining, improving or creating carbon sinks and other ecosystem services; and
the potential for UK sustainable bioenergy production.

Food security

58. In October 2007 the UN special rapporteur on the right to food, Jean Ziegler, said that it is 'a crime against humanity to divert arable land to the production of crops which are then burned for fuel', due to the impact that this could have on levels of hunger.[70] The International Monetary Fund (IMF) acknowledged that demand for biofuels in the US and EU had resulted in higher prices for a range of agricultural commodities. This trend has been exacerbated by poor harvests, animal disease outbreaks and demographic changes.[71] It stressed that such commodity prices have a disproportionate impact on the poor in developing countries. Due to these issues the IMF said that 'until new technologies are developed, using food to produce biofuels might further strain already tight supplies of arable land and water all over the world, thereby pushing food prices up even further'.[72] WWF and Friends of the Earth both told us that they were concerned about the impact of biofuels on food security.[73]

59. BP accepted that biofuels could increase agricultural commodity prices, in particular in developing countries, but that increased economic activity from biofuels could also 'improve or create market mechanisms the absence of which is often at the core of food shortages and high prices in developing countries'.[74] It argued that the situation should be closely monitored.[75] The NFU pointed out that concern about food security can be mitigated through increasing feedstock production by utilising 'spare agricultural capacity', including set-aside land. It also argued that efficiencies in biofuel feedstock production will increase yields yet further.[76] Bayer CropScience argued that the food or fuel debate is 'alleviated somewhat when a crop can be used for fuel and food [as] when food security is an issue' feedstocks allocated for fuel production can be diverted to food.[77] It did accept that farmers are likely to grow crops that give them a favourable return on their investment. This might mean that fuel could be produced over food even if there are food security problems.

60. In the future, developments in biofuel technology might lessen the potential impacts on food security. There is significant interest in the development of non-food crops that do not compete for the same agricultural requirements as food and fodder crops. There is interest too in plants that can grow on marginal land and that require less agricultural inputs such as fertiliser. This would expand the land available for biofuel production without necessarily decreasing the land available for food production.[78] However, such crops might still displace food crops as farmers plant those crops which produce the most return. Therefore non-food biofuel crops could be grown on high grade agricultural land.

61. The Minister, Jim Fitzpatrick MP, confirmed that the Government is concerned about the issue of food security. He said that they are 'hopeful that the European mechanism will be equally strong in protecting developing countries and protecting communities'.[79]

62. A number of trends indicate that food security concerns will increase in the longer term even in the absence of a large biofuels market. These include land availability pressures and demographic changes. In addition, climate change might add further to the need to intensify agricultural commodity production for food production due to changes in weather patterns leading to water stress and increased flooding.[80]

63. A large biofuel industry based on current technology is likely to increase agricultural commodity prices and, by displacing food production, could damage food security in developing countries. Only when technology improves and an appropriate regulatory framework is in place should biofuels be utilised. When these changes have occurred barriers to free trade in bioenergy could be removed to allow developing countries to take advantage of the market and so that UK taxpayers can take advantage of lower prices. Even then impacts on food security should be closely monitored.

64. Given long-term demographic and climate change trends that might add further to food security problems we question whether transport biofuels have a long-term role.

20 Ev 76 Back

21 Environmental Audit Committee, Eleventh Report of Session 2005-06, Outflanked: The World Trade Organisation, International Trade and Sustainable Development, HC 1455 Back

22 ''Green fuels ' could be bad for the environment', Friends of the Earth press release, April 2007, www.foe.co.uk Back

23 Ev 51 Back

24 Ev 59 Back

25 Ev 60 Back

26 ibid Back

27 'Fertiliser prices jump as planting grows', Financial Times, 26 October 2007 Back

28 Richard Doornbosch & Ronald Steenblik, OECD Round Table on Sustainable Development, Biofuels: Is the cure worse than the disease?, 11-12 September 2007, www.oecd.org Back

29 Richard Doornbosch & Ronald Steenblik, OECD Round Table on Sustainable Development, Biofuels: Is the cure worse than the disease?, 11-12 September 2007, www.oecd.org Back

30 Zah R, Hischier R, Gauch M, Lehmann M, Böni H, Wäger P, "Life Cycle Assessment of Energy Products: Environmental Impact Assessment of Biofuels", Bern: Bundesamt für Energie, Bundesamt für Umwelt, Bundesamt für Landwirtschaft; 2007 Back

31 European Environment Agency, How much bioenergy can Europe produce without harming the environment?, 2006 Back