Subsidies for sustainably produced biofuels must not be abandoned

Publish date: October 7, 2010

Written by: Lorelei Limousin

BRUSSELS – On October 5th, Member of the European Parliament Luís Paulo Alves, hosted an event, presenting on the Global Subsidies Initiative (GSI) report about the European Commission’s biofuels policies. The report focused on the policies fiscal costs and environmental impacts. The report advises the EU to enforce the polluter pays principle, thus stress the price of CO2 and support only R&D programs on biofuels. However, Bellona thinks that subsidies for energy and products based on sustainably produced biomass can still be defended as part of the solution to fight climate change.

As an introduction, Mr Vis-Dunbar from the International Institute for Sustainable Development (IISD) summarized the objectives of biofuel subsidies; reducing energy imports and energy costs and cutting the CO2 emissions- and showed their counter-effective consequences.  

The presentation was based on a report made by the FiFo Institute for Public Economics on behalf of the Global Subsidies Initiative (GSI) of the IISD. The aggregate European support is estimated to €440 million in 2008 and consists in different mechanisms such as market price support, fuel tax exemptions, research, etc. The report focuses on European support to ethanol and biodiesel (first generation biofuels), mainly supported through excise tax reductions.  

The authors were critical to supporting biofuels when they have negative impacts on the environmental factors such as biodiversity and greenhouse gas (GHG) emissions, or they contribute to rising commodity prices.

However, the main question at the meeting was whether or not the benefits of biofuels –such as emissions reductions- outweigh the negative unintended consequences. The controversial topic of indirect and use change (ILUC) is a key element in these calculations. ILUC is the impact caused by the displacement of an existing land use practice (cropping, grazing) as a result of a new land use practice coming into place. Getting the numbers for this impact right is extremely difficult. The NGO Transport & Environment wants the Commission to take ILUC into consideration in European policies. However, as Paul Hodson from the Energy department at the Commission, acknowledged the impact of ILUC on GHG emissions, he disagreed strongly with the value of this impact.

Tone Knudsen from Bellona misses the nuances in this debate – “biofuels can be produced sustainably and unsustainably – so a difference must be made” she says. And further explains: “since it is possible to produce biomass for bioenergy and bioproduct purposes in a way in which it represents an improvement for climate and environment, these types of production methods and biomass types should be encouraged by governmental support in an early phase.

“We need sustainable biomass for purposes where we don’t have environmentally friendly alternatives, so at the same time fossil fuels subsidies should be phased out, and other alternatives such as renewable electricity to supply electric cars should be encouraged as well” she added.


Read the full report here and find more information on the subject here.