Developments in EU member states’ biofuel policies
05 February 2009
The USDA has produced an analysis of the evolution of EU member states’ biofuel policies in the light of concerns over high global food prices and the sustainability of EU biofuel policies. It reports that the French government is seeking to ‘reduce significantly, if not eliminate, the fiscal incentives for first-generation biofuels by 2012, within the framework ‘of a 7% incorporation rate for biofuels into transportation fuels by 2010’. Hungary is following this French lead with regard to the incorporation rate for transportation fuels. Ireland meanwhile has a 4% volume target for biofuel usage (3.2% by energy value), and the Dutch government has reduced its blending target for 2010 from 5.75% to 4%. The UK government for its part is believed to be considering slowing down the rate of incorporation of biofuels into transportation fuels to a 0.5% increase per annum. The German government has switched the basis for calculating its biofuel targets from energy content to reductions in greenhouse-gas emission.
Editorial comment
Since a central component of the EU biofuels policy is to create market certainty in order to encourage investment in second-generation biofuels, it is unclear what the impact of the revision of national policies to meet recommended targets will be on the incentive to invest in second-generation technologies. The danger is that ad hoc revisions could serve to undermine the longer-term objective of this policy, while incurring short-term environmental costs (linked to the excessive stimulus to first-generation biofuels). Alternatively, an undermining of the stimulatory effect on investment in second-generation biofuel technology could extend market opportunities for preferred biofuel suppliers to countries whose production has higher reductions in greenhouse-gas emission (e.g. ACP sugar-cane producers).
