initiatives regarding sustainability of biofuels in europe and their potencial impacts on trade
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Copernicus Institute Sustainable Development and Innovation Management
Initiatives regarding sustainability of biofuels in Europe and their potential
impacts on trade
Martin Junginger, Copernicus Institute, Utrecht University (Netherlands) & IEA Bioenergy Task 40
With contributions from Jinke van Dam and Andre Faaij
2nd workshop on the impact of new technologies on the sustainability of the sugarcane / bioethanol production cycle
Campinas, Brazil, 11 November 2009
Copernicus Institute Sustainable Development and Innovation Management
Presentation overview
1. Background: the need for sustainability criteria and certification of (liquid) biofuels
2. Comparison of current certification systems
3. Barriers and boundary conditions of certification systems for biomass, impact on trade & market perspectives
4. What research agenda is needed for the future?
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Current bioenergy trade
Annual int. traded volumes of ethanol, biodiesel and wood pellets > 4 million tonnes in 2009 and increasing rapidly
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A future vision on global bioenergy…
[GIRACT/Faaij, 2008]
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Brazilian ethanol trade 1970-2009
[Walter et al. 2009, T40 CR]
Data for 2009 is estimated
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Why to guarantee the sustainability of biofuels?
• Strong increase in production and trade
• Criticism in the last years:
“GHG balances not OK” “Endless subsidies needed”.
“Increases food prices” “Contributes to deforestation”
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National
International
How can sustainability of biofuels be guaranteed?
Various approaches are possible:
Voluntary certification systems *
Regula-tions
Market parties
NGOs Government
(Combined with) policy
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Key characteristics certification systems (1):
Sustainability requirements translated into:
Principles:
Criteria:
Indicators:
Verifiers:
“The GHG balance of the production chain and use of biomass is positive”
“There is a net GHG emission reduction over the whole biomass chain. This reduction is calculated with as reference system fossil fuels”.
“The GHG emission reduction is at least 30% for biofuels”.
Calculation results based on defined GHG methodology
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Key characteristics certification systems (2) Three options traceability trade chains:
• Track and trace The certified product is segregated from other products during processing and transport. Its origin can be traced from the end to the start of the value chain.
• Mass Balance The certified product can be mixed with other, non-certified products. The certificate indicates the ratio of the sustainable product based on mass balance
• Book and Claim The product traded is completely separate from the certificate. A certain amount of certified produce can be booked and sold to the market. The buyer can claim sustainability independently of the final product received.
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Summary regulation European Commission (1):
Article Criterion 17.2 Full-chain GHG emission reduction >35% (increasing
over time) 17.3 Exclusion of lands with high biodiversity value 17.4 Exclusion of lands with high carbon stock that have
recently been converted into e.g. cropland 17.5 Exclusion of peat land unless proven that drainage of
previously un drained soil is not involved 17.6 Condition of good agricultural practice (EU) 17.7 Obligation to the Commission to report on soil, water and
air impacts and social impacts in regions that are a significant source of feedstock
Derived from the Provisional edition of the text adopted by the Parliament on 17-12-2008:
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European Commission and Meta-standard Approach (2):
• European Commission (and also Netherlands, others) will follow meta-standard approach
• Benchmarking of systems that meet requirements
FSC
Regulation European Commission
PEFC
RTRS
BSI
RSPO
ICSS
NTA-8080
Etc.
Forestry systems
Agricultural systems
Bioenergy systems
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THUS…..
• Wide range of ongoing initiatives
B Initiative A
Organizational structure
Criteria, indicators,
methodologies Organizational structure
Criteria, indicators,
methodologies
C
Initiative D Initiative E
F
Proliferation of Schemes and Differences in scope
Every scheme is developing principles, criteria… and organizational structure…
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overview and comparison of sustainability certification schemes (1)
Preliminary results: 59 initiatives (regulation + systems) included • All relevant for (some) sustainability issues and/or • Various parts of the bioenergy value chain
* Substantially more forestry certification systems exist
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Bioenergy initiatives on government level on different continents.
Notes: Initiatives to make agriculture / forestry in general more sustainable not included in
figure (e.g. sugar cane production Brazil)
Source: van Dam, Faaij, Junginger, forthcoming
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Some of the Principles included in initiatives:
Initiative Human and labour rights
Biodiversity conservation
Soil carbon
European Commission* - X X IDB X X - GBEP X X X
BSI X X - FSC X X - Renewable Fuel Standard - - - NTA-8080 X X X SWAN label X X - ISCC X X - SEKAB X X - CO2 star label - - - Greenergy X X X
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Proposals GHG reduction requirements:
Initiative Proposal
European Commission* 35% GHG reduction (to 60% over time)
RSPO In preparation
Better Sugarcane Initiative < 0.4 t CO2 / t sugar
RSB Significantly reduce GHG emissions
Renewable Fuel Standard 20% GHG reduction renewable fuels
LCFS California 10% GHG reduction in 2020 compared to baseline
SEKAB label 85% GHG reduction
CO2 label 60% GHG reduction biodiesel rapeseed
SWAN label 1/3 volume fuel gives < 50 g CO2eq/MJ fuel
Proposals Netherlands, Germany and UK for biofuels in line with EC
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Measuring the indicators:
Initiative Biomass included Allocation matters ILUC LUC Calculated N2O emissions
Default values
EC Biofuels and bioliquids
By energy content for regulation
ILUC penalty under discussion
Formula soil carbon / default
(JEC 2007) in EU, IPCC outside EU
Conservative
UK-RTFO Biofuels Subtraction is 1st choice
Conversion forest only
Calculated, monitoring
IPCC approach Conservative
Germany Biofuels, Bioenergy for heating and power to be included
Allocation by energy content (LHV)
In discussion, risk adder approach?
Formula soil carbon, IPCC
Included, IPCC when data limited
Conservative
Netherlands Two tools: a) Biofuels and b) Bio-energy for heating and power
Allocation by energy content
Methodology proposed (monitoring)
Methodology based on IPCC
Included, IPCC when data limited
Conservative / typical / best practice
Wallonia (Belgium) Main biomass sources for bioenergy for power
Not included Not included Not included Not included Provided by Wallonia government
Electrabel / Laborelec
Bioenergy for heating and power
Not included Not included Not included Not included Some data provided
Swan label (Nordic countries)
Biofuels Subtraction is 1st choice
Not mentioned No negative balance is required
Included Yes. Not for production
RSB (based on draft standard 2008)
Biofuels Guidelines are under development
ILUC to be minimized. Under discussion.
Based on IPCC methodology and values
To be addressed Criteria for acceptable default values under development
Initiatives in development GHG methodologies for bioenergy in Europe (as of December 2008)
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Proposals Chain of Custody:
Initiative Book and Claim
Track and trace
Mass balance
European Commission* X RSPO X X X FSC X X PEFC X X SEKAB label X ICSS X X X NTA-8080 Netherlands X X X
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overview and comparison of sustainability certification schemes (2)
• 28 initiatives cover the sustainability of biofuels • From which 17 are developing principles
* In some cases both development of principles and regulation in process
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overview and comparison of sustainability certification schemes (3)
Initiatives in USA (preliminary) Principles Biofuels Biodiesel Bioethanol
Renewable Fuel Standard X LCFS California X Regulation State Massachusetts
X
Sustainable Biodiesel Alliance
X X
Council on Sustainable Biomass Production
Planned X*
National Biodiesel Board X x * Focus on cellulosic bioenergy facilities
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overview and comparison of sustainability certification schemes (3)
Initiatives in Europe Principles Biofuels Biodiesel Bioethanol
European Commission X X CEN TC 383 X X Netherlands – governm. X X Germany – government X X UK-RTFO – governm. X X Switzerland – governm. X SEKAB - label X X Greenergy – label X X (resource) SWAN label X X (resource) CO2 star label X CEO report (NGO) X
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Example initiatives Greenergy and SEKAB label (1):
Greenergy: • Scope: sugar cane production for bioethanol • Coverage: biomass from Brazil, to be used in UK (by company
Greenergy) • Intention: adaptation for the RTFO standard (will follow
principles Better Sugarcane Initiative)
SEKAB: • Scope: ethanol from sugar cane in Brazil • Coverage: biomass from Brazil, to be used in Sweden • Intention: developed for Swedish market
Note: Principles for sugar cane are also in development by the Better Sugar Cane Initiative!
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Example initiatives Greenergy and SEKAB label (2):
PRINCIPLES GREENERGY LABEL 1. Carbon Conservation 2. Biodiversity Conservation 3. Soil Conservation 4. Sustainable Water Use 5. Air Quality 6. Workers Rights and Working Relationships 7. Land Rights and Community Relations
PRINCIPLES SEKAB LABEL 1. GHG emissions: At least 85% GHG reduction compared with petrol 2. Efficiency harvest: At least 30% mechanization of the harvest now, plus a planned increase
in the decree of mechanization to 100% 3. Biodiversity: Zero tolerance for felling of rain forest 4. Workers rights: Zero tolerance for child labor 5. Rights and safety measures for all employees 6. Environment: Ecological consideration in accordance with UNICA environmental initiative 7. Continuous monitoring that the criteria are being met
Includes: compliance national laws and regulations + various good agricultural practices (soil management plan)
Soil includes: implementation plan for soil conservation
Only in SEKAB label
In general: criteria Greenergy label more specified
High risk for shopping!
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Potential barriers and boundary conditions
• Sense of urgency – international production & trade is growing fast
• But, with too many initiatives on various levels, a danger of fragmentation and incompatible certification systems exists – prevent proliferation of standards
• Stakeholder involvement in producing countries often neglected, especially smallholders
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Potential barriers and boundary conditions • Compliance with WTO rules and international treaties • Some sustainability criteria may actually conflict with
each other • Additional costs of meeting the sustainability criteria
(and cost of certification) will have to be evaluated • Inclusion of not enough/soft criteria will result in
“greenwashing” (fear of NGO’s) • Inclusion of too many criteria will may in fact create
new market barriers (fear of industry and producers) • Monitoring of compliance crucial, otherwise the
“cheaters” may win (fear of both NGO’s and industry)
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Mandatory certification not the only option Several policy tools/strategies to pursue the sustainability: • Certification: Only biomass that is certified according to
criteria derived from sustainability principles is allowed to be imported
• Product-Land Combinations: Only biomass from regions that comply with sustainability principles allowed for import Government decides which products/regions are eligible for government support
• Regionalization: In this strategy, Europe utilizes its own biomass resources before importing biomass from developing countries
• Self-regulation: code-of practice defined by parties involved in production and trade
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Fundamentals of the criteria (I) • It is a process; developing, deploying and
optimising the required procedures takes time – Deployment of monitoring – Increasing share in total market – Spillover to conventional agriculture
• Dynamics (land-use, economic & technological development, infrastructure build-up) change over time. – Increasing scale of production – Improvement in agriculture and livestock (!) – Improving quality of governance and oversight (!)
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Fundamentals of the criteria (II) • Merging the field level to macro-level; changes
in land-use affect about all other impacts – Scenario (thus strategy/policy-) dependent. – Good field level performance may be overruled by
macro-developments – Water and biodiversity ‘somewhere in between’
• From safeguard to stabilisation to positive side effects (e.g. Environmental Goods & Services and contributing to development): – Soil preservation & restoration – Opportunities for biodiverstiy – Water retention functions
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Concluding… Good insight in sustainability performance of bioenergy
chains is highly needed to guide development pathways. This requires:
Unification of methodologies. Harmonization of systems. Development of methodologies, indicators and
related performance norms Development of local and regional databases Sound methodology to weigh individual criteria Global convergence, dialogue and deployment
priority (leadership needed).
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Martin Junginger & Andre Faaij (UU), Simonetta Zarrilli (UNCTAD), Fatin Ali Mohamed (UNIDO),
Peter-Paul Schouwenberg (Nidera) (task leaders) and all T40 members
Barriers and Opportunities for International Bioenergy / Ethanol trade
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Rationale: bioenergy trade is growing rapidly – many opportunities and barriers arising all the time
Aim: get an up-to-date overview of what market actors currently perceive as major opportunities and trade barriers
for the current and future development international bioenergy trade for three internationally-traded bioenergy commodities: 1) bioethanol 2) biodiesel 3) wood pellets.
Method: Online questionnaire at http://task40.questionpro.com
Approach stakeholder through Task 40 & UNIDO network
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Results
Questionnaire: 105 fully completed + 87 partially completed questionnaires
Argentina: 9 & Brazil 4 responses
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Results
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Overview of barriers and opportunities for ethanol trade
(Major) barriers
Major opportunities
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Some comments from the industry on sustainability criteria for liquid biofuels
• Argentinian respondent: “..must be established by working jointly with the Emerging Market countries. Until now, most of it is being imposed on them…”
• Australian respondent: “Complexity. Sustainability Standards required of Biofuels not required of other trade commodities with environmental, social and GHG impacts. Continuing future uncertainty due to ongoing review provisions of EU Renewable Energy Directive. Unclear which Standards, Certification and Chain of Custody procedures will be applied. Will be used as non-tariff barriers.”
• Swedish respondent: Depending on how the criteria is constructed there is a risk that the criteria is used to protect domestic markets. We prefer definition of no-go areas and the same rules both for food and bioenergy production
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Some comments from the industry on sustainability criteria for liquid biofuels
• “sustainability criteria should be designed in a way that is workable for operators, especially considering that biofuels are commodities traded on a world-wide basis… efforts should be focused on drawing clear rules for the chain of custody and balances reporting requirements for individual operators (producers, traders, end-users…)”
• “Discriminating against specific crops/producing regions: this would strongly contradict WTO principles and would not deliver the expected outcome of sustainability criteria, which is to protect biodiversity”
• “… applying sustainability criteria to biofuels or bioenergy only can be considered as a first step. However, on a longer-term perspective, the certification of all biomass regardless of the final use should be considered…
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Our wish list (I): improve key insights and data:
• Embed technological learning of bioenergy systems properly in models (production, supply and conversion systems). [Bottom-up]
• Learning of agricultural and livestock management (in relation to prices, settings and policies). [Bottom-up]
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Our wish list (II): Biophysical models ~ environment:
• Water [regional level; bottom-up] • Biodiversity (resolve methodological
issues; management options and reference situations).
• Proper incorporation of residues and wastes.
• Marginal and degraded lands [data!!!]
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Our wish list (III): modeling frameworks:
• Integrate biophysical and macro-economic models (partly tackled: OECD, FAO, UU/LEI-IMAGE/GTAP, IFPRI-Stanford).
• 2nd (+) generation options • Biomaterials • Non-agricultural lands (forest, marginal,
degraded, etc.) • Feedbacks prices (and policies) on learning
and intensification. • Backed by concrete examples; model
verification.
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Argentina; example full impact analysis
Different scenario’s for land-use and agricultural management
Compares soybean (biodiesel) to switchgrass (pellets)
Focus on more marginal area in one province (La Pampa)
Follows main principles of Cramer framework Van Dam et al., 2009
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Net GHG balance in kg CO2 eq / tdm per year from Switchgrass
cultivation for bioenergy for different scenario’s
Van Dam et al., 2009
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Soil erosion rates in t soil/ha/yr for Switchgrass and
Soybean
Van Dam et al., 2009
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Model framework
Cost and supply of biomass
Technology database
Projections of final energy demand
Baseline situation
Top-down Economic modeling (LEITAP)
Bottom-up modeling
(Excel based)
Bottom-up results Top-down results
Biomass blending shares
Feedstock types Productivity factors
Split model specialty/bulk
chemicals
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Thank you for your attention!
• Much of this material will become available at: www.bioenergytrade.org
Questions / further work: H.M.Junginger@uu.nl
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