biofuels and international trade: the european perspective · bioethanol 129 142 164 243 413 340...

Biofuels and International Trade:The European perspective

Laurent Javaudin

Delegation of the European Commission to the U.S.

2US Chamber of Commerce – Washington DC - 29 January 2008

27 Member States

490 million people

The European Union


Outline

1- The rationale behind the EU biofuels mandate

2- EU policy instruments and the 10% marketshare target for biofuels by 2020

3- Implications for trade, standards andsustainability

4- Conclusion


Why a target for biofuels? (1)Reduction in CO2 emissions

Greenhouse gas emissions (tCO2eq/toe). Source: JRC/EUCAR/Concawe

3,7

2

0,7

3,4

2,42

0,4

1,2

diesel biodiesel

from rape

second-

generation:

BTL from

farmed

wood

petrol bioethanol

from sugar

beet

bioethanol

from wheat

bioethanol

from sugar

cane

(imported)

second-

generation:

ligno-

cellulosic

ethanol from

farmed

wood


Why a target for biofuels? (2)Oil Dependence

Biofuels cost more than fossil transport fuels, but in themedium term they are the only way to reduce oildependence in transport: it is available now, on a largescale

Signals for the future:

– Car makers need a signal to build for high biofuelblends;

– industry needs a signal to invest in second generation;

– the oil market needs a signal that we are serious aboutalternatives


Outline




4- Conclusion


EU policy frameworkfor renewable energy

Policy papers and legislation adopted

► Fuel Quality Directive - March 2003

► Biofuels Directive – May 2003

► Energy taxation Directive – October 2003

► Biomass Action Plan – December 2005

► Biofuels Strategy – February 2006

► EU “Climate Change and Energy” Package – 23 Jan 2008


Climate Change andRenewable Energy Package

► Centerpiece: Decision on 20% reduction in CO2emissions (30% if the US, China, and India makesimilar commitments) with 1990 as base year;Directive on cap-and-trade program ETS

► Communication on 20% increase in energyefficiency;

► Communication on Carbon capture and storage;

► Renewable Energy Directive (solar, wind, hydro-electric, biomass): legally binding target of 20% forthe share of RE in EU energy consumption by 2020(8.5% in 2005).


Climate Change andRenewable Energy Package

► Biofuels:

Art. 3.3: Legally binding minimum target of 10%for all MS by 2020 (1% in 2005)

Sustainable production of biofuels

Art. 4: National Action Plans on how to achievetargets (no later than 30 March 2010)

► No interim binding target

► All fuel stations should be obliged to sell (Art. 18):

►A 7% biodiesel blend by the end of 2010

►A 10% biodiesel blend by the end of 2014


Biodiesel 340 451 580 956 1440

Bioethanol 129 142 164 243 413

340

451

580

956

1440

413

243

142 164129

0100200300400500600700800900

100011001200130014001500

2002 2003 2004 2005 2006

inm

illio

ngallo

ns

EU biofuels production: strongincreases from a low basis

Capacity:2.4 b g by2007

Capacity:1.7 b g by2008


Crops for biofuels:share of total production

40%

50%

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10

00

Tn

Rapeseed Cereals Sugarbeet Wine alcohol

2004 2005 2006 (estimation)

0,4%

1,5 %

0,8%

5%

38%

41%

60%


3.8

2.2

1.0 0.90.7

0.5 0.5 0.5 0.4 0.4 0.30.2 0.1 0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.0

Ger

man

y

Sweden

Franc

e

Austri

a

Lith

uania

Malta

Italy

Polan

d

Spain

Slove

nia

Latvia

UK

Hungar

y

Czech

Republ

ic

Ireland

TheNeth

erlands

Luxe

mbo

urg

Cypru

s

Eston

ia

Portu

gal

Belgium

►EU: 1% market share

Biofuels in EU Member States% of road transport fuels (2005)


Outline




4- Conclusion


Impact of the 10% target:Key assumptions

► Agricultural policies as of March 2007

► World Market price : FAPRI-OECD (projections incorporate part of biofuelpolicies of other countries)

► 55% of consumption of transport fuel in 2020 would be Diesel

10% share for biofuels: 11 b gallons (35 Mio t) biofuels in 2020, i.e.

5.7b gallons Biodiesel (19 Mio t),

5.3b gallons Bioethanol (16 Mio t)

► Second generation biofuels assumed to cover 30% of domestic needs by2020

► Import share of 25% for second generation feedstocks (wood chips fromtemperate climate zones)

► Production of biodiesel would remain in the EU

Imports of feedstocks and ethanol are a result of the analysis – No legal limiton the share provided by imported material


Sources of feedstock forbiofuels production in 2020

(5.7b gallons)(5.3b gallons)

http://ec.europa.eu/agriculture/analysis/markets/biofuel/impact042007/index_en.htm


Biofuels standards andInternational Trade

1. International Standards for Biofuels

Brazil, the US and the EU have established expertworking groups on international compatibleStandards for biodiesel and bioethanol.

2. The International Biofuels Forum

Brazil, the US, China, India, South Africa & the EUhave created the IBF aiming to facilitateinternational trade of biofuels


► Most biofuels bring environmental benefits but….

high-GHG biofuels production pathways

Risks for biodiversity (forests, high value areas )

► The EU Directive (Art.15) establishes 4 sustainability criteria to avoid:

“Bad” performing biofuels in terms of GHG savings– at least 35% (including GHG effect of land-use changes) relative to

their fossil fuel equivalent to count towards the 10% target

Use of Land of high biodiversity value in January 2008 (ex: Forestuntouched by man, protected areas, highly bio diverse grasslands)

land use changes leading to loss of soil carbon stocks (forests,wetlands)

Feedstock produced not using best agricultural practices

Commission to monitor the impact of EU biofuels policy on food prices,and food supplies in developing countries (Art. 20).

Biofuels:the sustainability criteria


3 Formulae to calculate the GHG impact (art 17):

► Default values (Annex VII) – subject to review in the future. For instance:

► Sugar beet ethanol 35%

► EU-produced corn ethanol 49%

► Sugar cane ethanol 74%

► Rapeseed biodiesel 36%

► Palm oil biodiesel with no methane emissions51%

► Actual costs/ savings in the production pathway (including fromprocessing, transportation and distribution)

► Mix of actual costs/ saving and default values

2nd Generation biofuels should be given twice as much as 1st generationbiofuels in contributing towards national target on overall renewableenergy

Commission to produce a report in 2010 and 2012 assessing whether thesystem is working/ could be improved

Biofuels:the sustainability criteria


Outline




4- Conclusion


Renewable energy: a key element of a sustainable future

– Significant reduction of GHG emissions

– New opportunities for Energy security, rural economies

Concerns about environmental risks and market imbalancesmust be taken seriously, but

– The 10% minimum target can be achieved withoutunmanageable tensions between food, feed and energymarkets

– Opportunities for International trade, but Productionpathways and land use with undesirable consequenceswill be discouraged

Conclusion


EC President Barroso – Building a global low carbon economy:http://ec.europa.eu/commission_barroso/president/focus/energy-package-2008/index_en.htm

DG Energy and Transport web site:http://europa.eu.int/comm/energy/index_en.html

Energy research web site:http://europa.eu.int/comm/research/energy/index_en.html

Factsheet - Biofuels in the european union: an agricultural perspectivehttp://ec.europa.eu/agriculture/publi/fact/biofuel/2007_en.pdf

DG Agriculture and Rural Developmenthttp://ec.europa.eu/agriculture/biomass/biofuel/index_en.htm

Thank you for your attention [email protected]

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biofuels and international trade: the european perspective · bioethanol 129 142 164 243 413 340...

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