Thinktank: Biofuels are too expensive – and they dont always reduce emissions
Sustainability rules won’t help reduce biofuels’ impact on food security and the environment, according to a new report out today. The paper predicts European targets for adding fuel made from crops to petrol will cost UK motorists £1.3 billion a year by 2020.
According to research by Rob Bailey at thinktank Chatham House, transport fuel made from crops or vegetable oils is not a cost-effective way to reduce greenhouse gas emissions.
Biofuel targets have been controversial ever since scientific studies began indicating that these fuels may have a far higher impact on greenhouse gas emissions than previously thought. The government remains committed to the targets, however.
Policy measures
Biofuels currently make up about five per cent of fuel used in the UK transport network. But this is likely to grow in the future as a result of a complicated nest of EU and UK level targets.
The 2008 Renewable Energy Directive requires the EU to get ten per cent of transport fuels from ‘renewable’ sources by 2020. Meanwhile, the 2009 Fuel Quality Directive demands that transport fuels must reduce greenhouse gas emissions per unit of energy by six per cent below 2010 levels by 2020.
In the UK, the government intends to deliver on both directives through the Renewable Transport Fuel Obligation (RTFO). The RTFO requires that an increasing amount of the fuel used for road transport comes from biofuels.
Following a review of the social and environmental impacts of biofuels, the government has frozen the RTFO at five per cent. But the Chatham House briefing points out that if the UK is going to meets its EU targets it will have to keep increasing the amount of biofuels in the UK transport sector.
Where does UK biofuel come from?
The use of palm oil in biofuels has raised environmental concerns because there is evidence that rainforests in South America and Asia have been cleared to make way for palm oil plantations.
But Chatham House’s briefing says the UK now imports “minimal” amounts of palm oil for use as a biofuel. Instead, just over half of biofuels used in the UK are made from corn from Europe or the USA:
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Most of the rest comes from waste products such as used cooking oil or animal fats:
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Sustainable biofuels
The EU and UK both introduced biofuel sustainability criteria following the publication of several studies that indicate biofuels could damage the environment. Most notably, the criteria requires that biofuels imported into the EU must result in a greenhouse gas saving of at least 35 per cent over their lifecycle, compared to fossil fuels.
The renewable energy industry argues that the sustainability criteria allows the government to “robustly differentiate between sustainable and unsustainable biofuels”.
Land use change
Using crops and edible oils in the transport sector increases demand for agricultural land around the world, the briefing says. So even biofuels that are located in less ecologically sensitive areas can indirectly lead to more destruction of high-carbon land like rainforests or peatlands as the agricultural land use expands to feed the world’s population.
This effect isn’t included in the sustainability criteria. Chatham House’s briefing argues that if the greenhouse gas emissions from indirect land use change are taken into account, then corn shouldn’t qualify as a ‘sustainable’ biofuel at all.
Waste cooking oil also gains double credits under the UK’s RTFO scheme, because it’s viewed as more sustainable. The briefing says that prices for waste cooking oil have rocketed – in some cases so that they are higher than virgin oils. Bailey explains to the BBC that this has created a perverse incentive:
“It creates a financial incentive to buy refined palm oil, cook a chip in it to turn it into used cooking oil and then sell it at profit”
Food security
Food security is another issue the sustainability criteria don’t account for. Increasing demand from the food and transport sectors for agricultural commodities such as sugar, wheat, corn and edible oils could drive up food prices around the world. The Chatham House briefing says:
“[T]he weight of expert opinion identifies biofuels as an important contributing factor to recent food market instability.”
It adds that the use of cereals like corn as a biofuel is of particular concern:
“Across the different agricultural commodities, cereal price spikes are most closely associated with increases in poverty and bouts of instability in low-income food-importing countries”
Costs of biofuels
Biofuels are a more expensive form of energy than fossil fuels – so incorporating them adds to the cost motorists have to pay for transport fuels. Chatham House calculates the cost of achieving emissions reductions through biofuels by examining different possible transport fuel mixes and estimating how much they will cost.
The UK Department for Energy and Climate Change estimates that a carbon price of about £57 per tonne of carbon dioxide is needed to reduce emissions in line with the government’s climate change targets. Chatham House concludes that the costs of reducing the equivalent amount of greenhouse gas emissions using transport biofuels is considerably higher – about £108 – £717.
It also suggests that if the UK sources ten per cent of transport fuels from biofuels by 2020 as demanded by the renewable energy directive, it will cost motorists an additional £1.3 billion.
Not a rational strategy
Overall, concludes Chatham House, the current generation of biofuels are an expensive way of reducing emissions. Particularly, using vegetable oils as a source of biodiesel “is no longer a rational mitigation strategy” because it it so expensive – and may even be worse for the cimate than fossil fuels.
It adds that sustainability criteria included in the UK and European level legislation are “not sufficient to ensure sustainability of biofuels” – arguing that it is probably not possible to meet the current European targets sustainably at all.