Memorandum by the Environmental Industries
Commission (EIC)
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 330 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. This response is from that Group and is,
therefore, focused purely on the issues relating to biofuels.
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 has introduced 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.
EIC has worked with Government and NGOs to develop
clear, robust and sensible sustainability standards for biofuels.
We would encourage Government to apply these standards as soon
as possible and to press for tough standards at EU level in the
Renewable Energy Directive.
QUESTION 11
What are the costs and benefits of the present
generation of biofuels?
Growing crops for biofuels has the potential
to generate numerous local environmental, social and economic
impacts both positive and negative.
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.
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 and Renewable Energy Directive will be
central to ensuring transport energy crops have beneficial impacts.
Impact on food production
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 may start to face a
choice between importing either biofuels, or food or both.
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.
Impact on farmers
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.
Will there be a second generation of biofuels
and, if so, what are the estimated costs?
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.
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 RTFO.
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 fertiliser 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.
What are, or are likely to be, the carbon emission
impacts of first and second generation biofuels, and what are
the other relevant environmental effects?
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".
However, if biofuels are produced without making
real carbon savings and sustainability a key requirement of Government
support then there 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.
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).
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.
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.
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.
12 June 2008
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