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European Biofuel Policy: How Far Will Public Support Go?

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Handbook of Bioenergy Economics and Policy

Part of the book series: Natural Resource Management and Policy ((NRMP,volume 33))

Abstract

The strong biofuel expansion experienced in the European Union (EU) originates in the incentives set up by Member States (MSs) within a global framework provided by the EU. A significant part of the EU rapeseed production (more than half) is now channeled into the energy market. MSs support the development of biofuels through subsidies/tax exemptions, mandatory blending, and import barriers (at least for ethanol). Several motivations for supporting biofuels have been put forward. For some MSs, the motivation was clearly to increase agricultural income (e.g., in France and Germany). In other cases, biofuels (produced domestically or imported) were mainly seen as a means to abate GHG emissions. Public support for biofuels has recently been questioned. Some potentially negative effects of biofuels (most notably the indirect land use change) have fueled the debates in the EU Parliament and Commission over the adoption of the 2008 Renewable Energy Directive. These discussions have led to the adoption of less stringent mandatory incorporation targets for 2020 (with respect to the initial 2007 proposal), as the objectives are now set in terms of “renewable fuels” (i.e., biofuels, hydrogen, and green electricity). In spite of an agreement on targets for 2020, some important questions still need to be addressed. The indirect land use change triggered off by biofuel production is the most critical. The ability of the Commission to come up with a clear methodology to address this issue is a necessary condition for the enforcement of the biofuel targets.

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Notes

  1. 1.

    Air quality objectives are set out in the Air Quality Directive 2008/50/EC (European Parliament and Council, 2008).

  2. 2.

    The blending of biofuels in fossil fuels is also constrained by the Fuel Quality Directive 98/70/EC (European Parliament and Council, 1998). A proposal for its revision has been formulated by the EC in January 2007 and adopted in December 2008 as part of the “Climate Change and Energy Package”. The final version mainly aims at tightening environmental quality standards for a number of fuel parameters and enabling higher blending levels for ethanol in gasoline.

  3. 3.

    Note however that the market structure greatly varies across countries. In France, Diester Industrie controls 7 plants and enjoys a near monopoly position. In Germany, production is more evenly divided between 5 firms.

  4. 4.

    The European Union (EU) has launched anti-dumping investigations into imports of biodiesel from the US following complaints by the European Biodiesel Board (EBB) trade association. The EBB claims that the EU biodiesel industry has been damaged unfairly by imports from the US where biodiesel produced in that country or elsewhere can be blended with a very small amount of mineral diesel (to form B99 fuel) to receive a $1/gallon ($0.26/liter) blending subsidy, before being shipped to the EU. The US subsidy amounts to $264/m3 ($300/t or €200/t), said the EBB (FO Licht, 2008).

  5. 5.

    Hence, the difference between consumption and production of ethanol in 2007 observed in table 2 (424,000 tons) is smaller than the total imports of ethanol in 2007 observed on figure 3 (989,000 tons), which entails other uses of ethanol, such as food.

  6. 6.

    For an extensive discussion on the international trade of biofuels, see ESMAP (2007).

  7. 7.

    Note that Germany has introduced a provision to prevent biodiesel produced from soybean and palm oil to benefit from mandates and other tax cuts until sustainability criteria are decided.

  8. 8.

    This would also require that a high degree of public support is maintained as well as the current (high) level of border protection as the wheat/sugar-beet ethanol would hardly compete with the sugarcane Brazilian ethanol.

  9. 9.

    The scenario involves 20% of biodiesel consumption coming from imports. Besides, 30% of the biofuels are obtained from second-generation technologies.

  10. 10.

    As pointed out by Fargione et al. (2008), the sizeable production of biofuels on a global scale will lead to the conversion of land (mainly in the Americas and Southeast Asia) for biofuel production (or food/feed production when the existing agricultural land has switched to biofuel production). The conversion of land within previously undisturbed ecosystems will lead to large CO2 emissions stemming from the burning and microbial decomposition of the organic carbon sequestered in the soil and plants.

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Acknowledgments

Financial support received by the “New Issues in Agricultural, Food and Bio-energy Trade (AGFOODTRADE)” (Small and Medium-scale Focused Research Project, Grant Agreement no. 212036) research project, funded by the European Commission, is gratefully acknowledged. The views expressed in this paper are the sole responsibility of the authors and do not necessarily reflect those of the Commission.

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Authors and Affiliations

  1. AgroParisTech, UMR Economie Publique, F-75005, Paris, France

    Jean-Christophe Bureau

  2. INRA, Paris, France

    Hervé Guyomard

  3. INRA, UMR Economie Publique, Paris, France

    Florence Jacquet

  4. INRA, UMR Economie Publique, F-75005, Paris, France

    David Tréguer

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  1. Jean-Christophe Bureau
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  2. Hervé Guyomard
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  4. David Tréguer
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Correspondence to Jean-Christophe Bureau .

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Editors and Affiliations

  1. Dept. Agricultural & Consumer Economics, University of Illinois, Urbana-Champaign, W. Gregory Dr. 1301, Urbana, 61801, U.S.A.

    Madhu Khanna

  2. ACDIS, University of Illinois, East Armory Ave. 505, Champaign, 61820, U.S.A.

    Jürgen Scheffran

  3. College of Natural Resources, University of California, Berkeley, Giannini Hall 206, Berkeley, 94720-3310, U.S.A.

    David Zilberman

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Bureau, JC., Guyomard, H., Jacquet, F., Tréguer, D. (2010). European Biofuel Policy: How Far Will Public Support Go?. In: Khanna, M., Scheffran, J., Zilberman, D. (eds) Handbook of Bioenergy Economics and Policy. Natural Resource Management and Policy, vol 33. Springer, New York, NY. https://doi.org/10.1007/978-1-4419-0369-3_23

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