Frustrated biofuels producers argue the new EU renewable energy directive will not deliver on transport and, as a result, Europe has no hope of meeting its 2030 climate and energy goals. But other solutions waiting in the wings are changing the debate and adding extra uncertainty to the role biofuels will play in the future

Headache:
Decarbonising transport is a tricky business. While electrification is increasingly seen as a solution, biofuels have traditionally been held up in the EU was a way to reduce the sector’s emissions

Bad reputation:
Linked to deforestation, the destruction of habitats and smallholders losing their land, biofuels, in particular palm oil, have become embroiled in controversy

Carbon footprint:
By fuelling deforestation, and the accompanying release of carbon dioxide, biofuels may be worse for the climate than fossil fuels

Moving forward:
Advanced biofuels, or non-food biofuels made primarily from wastes, are seen as holding more promise than earlier offerings, but they are expensive and it is taking time to get them to market

The next step:

Other low-carbon liquid fuels, such as power-to-liquids, underpinned by electrolysis-driven hydrogen production, are being touted as having significant future potential
Transport is one of climate policy makers’ biggest headaches. In Europe, it is the one sector which has resisted the gradual decline in emissions. Transport makes up about a quarter of Europe’s greenhouse gas emissions. It has almost caught up with industry and power, and is the main cause of air pollution in cities. Road transport is by far the main culprit. One way the EU has tried to deal with the problem is by offering an array of incentives to develop cleaner fuels to replace diesel and petrol. Biofuels are the original alternative fuel. They are renewable liquid fuels made from biomass or any organic matter derived from plants, animals or waste. In practice, most biofuels to date have been made from food crops such as rapeseed, palm oil and maize, but in future more will come from wastes, such as sewage sludge and forestry residues, and non-land based crops like algae. As far back as 2003, EU legislation required member states to set indicative national targets for biofuels. “Biofuels were the only available renewable energy source to start decarbonising the transport sector,” the European Commission, the EU executive, explains in a report published at the beginning of 2019.

A tornado unleashed

Biofuels were created by policy. But not everyone believes it was climate policy. Sergio Ghizzardi, a veteran filmmaker who spent ten years making a documentary, Green Gold, about biofuels, says climate change was the cover story for a rescue operation for European farmers. “Agriculture was at the heart of the EU,” he explained in November 2017 at the release of his film. “And [at the end of the 1990s] the agricultural lobby was complaining. The European Commission had to give them something.” Ghizzardi’s film tracks “how a political decision taken in Brussels can cause a tornado on the other side of the planet”. That tornado is depicted with images of forests burned to the ground in Indonesia to make way for palm oil plantations and small farmers in Argentina dispossessed of their land to make room for big soy businesses. Palm oil, more than any other feedstock, has become emblematic of the controversy that embroils biofuels today.

Existential threat

The fear is that by fuelling deforestation, and the accompanying release of carbon dioxide into the atmosphere, biofuels made from feedstocks like palm oil may be worse for the climate than fossil fuels. This has led to a severe backlash by policy makers and the public. It is a backlash that today threatens to engulf the entire bio-economy. More than 120 civil society organisations from 40 countries around the world warned in an open letter in November 2018 that scaling up biofuels, other kinds of bioenergy and bio-products, such as bio-plastics, “poses risks to the climate, the environment and people”. A month earlier, Commission Vice President Jyrki Katainen had launched an updated bio-economy strategy for the EU in which he spoke of “huge opportunities” for “the renewable segment of the circular economy”. But the prefix “bio” is attached first and foremost to “degradable” in the Commission’s mind. The EU’s assault on single-use plastics is intended to fight litter, notably all that plastic swimming around in the oceans. Whether that plastic is fossil- or bio-based is beside the point. Stakeholders in the bio-materials business are starting to recognise that renewable feedstock is not enough to make a product sustainable. Customers want recyclability. Renewability has become a nice to have or even a risk in light of concerns about competition for land.

Treading lightly

The phase-out of unsustainable palm oil is the sole purpose of an EU proposal issued by the Commission in February and finalised, after public consultation, on 13 March 2019. The job of the proposal — in effect an add-on to the EU renewable energy directive agreed in 2018 as part of the 2030 Clean Energy Package — is to define what feedstocks are at high risk of causing deforestation. The directive foresees a freeze of such feedstocks at 2019 levels and a phase-out from 2023-2030. Palm oil is the only feedstock singled out, with the justification that the best available scientific evidence suggests that nearly half of palm oil expansion has been on forested land. The figure for soy, the next worst offender, is 8%. Environmentalists called the decision to label palm oil as unsustainable a “breakthrough”, in the words of Brussels-based green transport NGO Transport & Environment (T&E). But it warned too against the remaining “loopholes” for low-risk palm oil. Indeed, the proposal is not as brutal as it might be. The EU is, after all, negotiating a free trade agreement with Indonesia, a top palm oil supplier. Perhaps to this end, the Commission introduces the possibility for additional palm oil production to be certified as low-risk, especially if it comes from smallholders or abandoned or severely degraded land. The smallholder exemption is particularly controversial. Experts agree smallholders are the primary threat to forests. On-the-ground initiatives, such as the Oil Palm Adaptive Landscapes project led by a group of international organisations, universities, consultancies and local grower associations, work to raise awareness and edge farmers towards sustainability. Only palm oil certified as sustainable by EU-approved certification schemes is turned into biofuel, the biofuel industry says.

Credibility challenge

Palm oil has been a feedstock of choice because it is cheap. Francois Ioos from oil major Total said at a conference in February 2019 that the company’s flagship La Mède bio-refinery near Marseille, France, needs palm oil for “technical and economic” reasons. The refinery is due to start operations “in the coming weeks”. And a bill passed by the French National Assembly to end tax breaks for palm oil biofuel from 2020 is likely to be amended, a French government official admitted at the same conference in Brussels, hosted by the ISCC certification body. In other words, France is not really about to shut down palm oil. Many European biofuel producers hoped for a clear condemnation of palm oil in the Commission’s latest proposal to restore credibility to a beleaguered industry. The European bioethanol lobby, ePURE, warned in a statement on 26 February 2019 that the Commission’s draft proposal “would incite negative sentiment towards European biofuels policy, even though biofuels produced from European feedstock provide tangible benefits to the climate”. Bioethanol saves 70% greenhouse gas emissions on average, according to the group. ePURE welcomed the revised text on 13 March, but like T&E, warned that it still fell short of fully removing deforestation-causing palm from the EU transport mix. Palm oil is a feedstock for biodiesel, not bioethanol. But ePURE’s equivalent for biodiesel, the European Biodiesel Board (EBB), has long fought a trade war against imports of what it claims are underpriced biofuels. The German Union for the Promotion of Oil and Protein Plants (UFOP) reported a big increase in biodiesel imports from Argentina (soy) and Indonesia (palm oil) in 2018 after pressure from the World Trade Organization forced the EU to end anti-dumping duties. Europe, the world’s biggest biodiesel producer, is increasingly meeting its needs with imports, it warned. Indeed, at the end of January 2019, the Commission announced that US soybeans meet the biofuel sustainability criteria of the current EU renewable energy directive. Earlier in the month, it reported a doubling of US soybean imports in the previous year. Green MEP Bas Eickhout, who has led the European Parliament’s work on biofuels, calls soy “the new palm oil” in terms of deforestation.

Frustration

Increasing imports may be worrying for the future of their business, but European biofuel producers are targeting their real ire these days at the new EU renewable energy directive, which entered force at the end of 2018. This sets a target of 14% renewables in transport by 2030, up from 10% by 2020. But if the various multiple counting provisions incorporated in that 14% are subtracted — notably for biofuels made from waste, electricity and renewables in aviation and shipping — the new directive will deliver just 7.4% renewables in transport, said Elmar Baumann, head of the German Biofuel Industry Association (VDB), at a Fuels of the Future conference in Berlin in January 2019. Germany needs almost three times that to meet its EU-approved climate goals, the VDB chief added. The new renewable energy directive “is of no use for achieving our German climate targets”, he concluded. Future investment to fill the gap could come if the German government raises its national greenhouse gas reduction quota for fuels, Baumann suggested. This is currently set at 6% for 2020 in line with the EU’s fuel quality directive. Europe as a whole already has 7.6% of renewables in transport, says Eurostat. These are mostly crop-based biofuels. Industry argues such targets are indispensable to decarbonise the transport sector cost-effectively in the short term. Its disappointment over the new renewables directive is shared by others. Jenny Walther-Thoss at WWF Germany agrees the new directive’s targets are too diluted by multiple counting. She also says it could push industry further. German biofuels already deliver a “much higher” greenhouse gas emission reduction than the 50% required by the new directive.

Advanced biofuels

Everyone agrees the future lies in advanced biofuels, defined in EU law as non-food biofuels made primarily from wastes, such as the organic fraction of municipal waste, straw, or forestry residues. Advanced biofuels have a separate 2030 target of 3.5% in the new EU renewable energy directive. (Crop-based biofuels are capped at 7%.) Yet advanced biofuels have been slow to get off the ground. They are more expensive to produce and may compete for resources with more lucrative end-products such as chemicals. At a conference dedicated to advanced biofuels held in Brussels in April 2018, a Commission official suggested they would only “really take off” after 2030. Paolo Frankl, head of renewables at the International Energy Agency (IEA), summed up the frustration of many in the room when he retorted that Europe risked missing out on the next big industrial opportunity if it did not speed up. The world has changed since biofuels were given their first targets 25 years ago. Electricity is the noisy new kid on the block. Biofuels still have a role to play, certainly, but the original alternative fuel is no longer the only alternative fuel. Nor is that fuel so self-evidently zero carbon as once thought. Looking ahead, it is up to EU member states to square the circle between their targets for renewables in transport, on the one hand, and climate change, on the other, in national climate and energy plans that must be finalised by the end of this year (drafts are already with the Commission). In the meantime, the EU’s new palm oil legislation will enter into force in two months, unless the European Parliament or member states object (which seems unlikely).

Liquid fuels versus electricity

And change is on the horizon as the fuel and automotive industries team up to push for a future for low-carbon liquid fuels. These are biofuels, but further into the future also power-to-liquids, underpinned by electrolysis-driven hydrogen production. This is essentially a battle for the future of the internal combustion engine. FuelsEurope, the European refining association, has commissioned research to demonstrate that low-carbon liquid fuels, combined with efficiency improvements, could deliver the same emission reductions from cars and vans as electrification, at half the infrastructure cost. The new battlefront is not oil versus biofuel, but liquid versus electric.

Writer: Sonja van Renssen