€10bn A Year: The Cost Of Keeping EU Biofuel Policy Alive

April 17, 2013 Biofuels cost cash-strapped EU member states €10bn in 2011-the same as the bailout of Cyprus-and a figure that is projected to get bigger as Europe increases its use of the fuel. A new report from the International Institute for Sustainable Development (IISD) reveals that increasing biofuel volumes from a current requirement for 5 per cent in transport fuel to 8.6 per cent by 2020 would require between €28.8bn and €33.1bn of additional cumulative public support between 2014 and 2020. Economic and environmental cost It’s not just the cost of the EU biofuel policy that is under fire-earlier research has revealed that the policy is doing nothing to reduce greenhouse gas emissions from transport and in some cases is actually emitting higher emissions than diesel fuel, when indirect land-use changes (ILUC) are accounted for. T&E’s programme manager for fuels, Nusa Urbancic, said: “We already know that the EU’s biofuels policy does not help the climate, and this study demonstrates that it does not help our economy either. “The annual €10bn of support Europe gives to biofuels equals a Cyprus bailout every year. This amount may double if countries insist on meeting the 10% target. Member States should realise that freezing biofuels at current levels, as the Commission proposes, will not only save emissions, but a lot of money to,” she adds. ISSD’s study, entitled ‘Biofuels – At What Cost? A review of costs and benefits of EU biofuels policies’, evaluates the amount of support that the biofuel industry receives compared to its turnover, and analyses what the financial impacts of meeting the EU’s 10 per cent Renewable Energy Directive (RED) target would be between 2014 and 2020. Support outstripping investment The study, co-funded by IISD and environmental organisations BirdLife Europe, the European Environmental Bureau (EEB) and Transport & Environment (T&E), shows that the support rate is well over half of the turnover of the European biofuels sector, which was around €13bn to €16bn in 2011. The annual support is also higher than the total investment in biofuel production facilities from 2004 till now, which stands at about €6.5 billion. This suggests that the current support is particularly inefficient in protecting these investments. EEB’s Agriculture and Bioenergy Senior Policy Officer, Faustine Defossez, said: “The industry clamours that biofuels investment must be protected at all costs, yet yearly support to keep biofuels afloat is greater than the total initial investment in production facilities. We are paying to keep this inefficient machine running despite the fact that it does not deliver the environmental and economic goods initially sought!” The study also suggests that tighter CO2 standards for cars are a more cost-effective and environmentally sound way to reduce GHG emissions from transport. If invested in low carbon cars, €10.7bn spent annually in support of the industry could save 40MT of CO2 and pay for itself through reduced oil imports. €10.7bn is roughly the cost of imposing a 80g of CO2/km average for new cars, instead of 95 g/km of CO2 by 2020 as currently proposed, and would allow the EU to cut emissions by this impressive figure. “This policy is just too expensive for what it delivers, as governments are already struggling to financially support an import dependent policy that does not even distinguish between biofuels,” concluded Trees Robijns, EU Agriculture and Bioenergy Policy Officer at BirdLife Europe. .

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