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The wider context of EU biofuel policy

05 June 2008

Addressing the European Policy Centre ‘Dialogue on biofuels’ the EU Agriculture Commissioner rejected efforts to ‘scapegoat’ EU biofuels policy for the surge in world food prices. She highlighted the surge in Indian and Chinese demand, increased speculative investments and recurrent poor harvests in key producing areas as major contributing factors. She also sought to place EU biofuels policy in the broader context of EU policy initiatives around energy security and climate change. Biofuels were particularly important in the transport sector ‘a heavy polluter’, and EU policy initiatives were intended as a bridge to aid the transition to the next generation of biofuels (by reducing investments risks through providing an assured market). Making the switch to ‘next generation biofuels’ is seen as critically important to attaining wider environmental objectives. It is in this context that the EC has proposed safeguards to ensure that ‘a given biofuel would count towards a member state’s target only if it made a greenhouse-gas saving of at least 35% compared to fossil fuels’. Significantly this is to apply ‘both to domestic production and to imports’. There is furthermore the possibility that this greenhouse gas saving threshold could be increased from 2015.

With regard to imported biofuels Commissioner Fischer Boel maintained that ‘strict sustainability criteria’ are to be applied and rigorously enforced since ‘it will make the difference between doing business with the European Union, and not doing business!’.

Editorial comment

The ‘bridging’ objective of EU biofuels policy has important implications for the nature of the market opportunities available to potential ACP biofuel exporters. It suggests that as the EU makes the transition to next generation biofuels, so the criteria applied to imported biofuels are likely to become stricter. Careful assessments will need to be made of biofuel investment decisions targeting the EU market to ensure that the capital invested in biofuel production for export can be recouped before 2015, when the criteria applied to imports could become stricter. While with greenhouse-gas saving rates of around 74% for sugar-cane-based biofuels, the sugar sector is likely to be the last sector affected, the likely tightening up of criteria applied to imports from 2015 will need to be built into any planned investments in biofuel development, particular where off-season feedstock crops with lower greenhouse gas saving rates are required to ensure full utilisation of the capital equipment installed.


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