FLAWS IN BIOFUELS AND FOOD PRICE ARGUMENTS

Posted by Brian Gardner on 23/10/13
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The basis of the case against the use of food crops in the production of biofuels is that it raises food prices and leads to environmental degradation in crop exporting third countries. This is the justification for the European Commission’s proposal to limit food crop utilisation in the production of biofuels. The proposal is that such use should be limited to 5 per cent of the EU’s Renewable Energy Directive (RED) total – rather than the currently planned 8.5 per cent  target by 2020 in the existing legislation.
Claims that biofuel production raises food prices or leads to the destruction of natural habitats in food exporting countries are highly questionable. The major weakness in the arguments appears to be the relatively small proportion of the world cereal and oilseed production represented by biofuel use. Currently, less than 1 per cent of global farmed area is used for the production of biofuel feedstocks. If the EU’s current renewable energy policy were amended to include the 5 per cent ‘first generation feedstock’ (cereals and oilseeds) limit then, it is estimated  by the Commission’s own analysis,  cereal usage would fall by 10 per cent; if a subsidised RED programme were abandoned altogether then the usage in biofuel production would be halved.
However, the effect on cereal prices which would be slight, for the simple reason that only a very small proportion of EU cereal production is used in biofuel production. According to the Commission only 6 per cent of the EU wheat crop and 8 per cent of other cereal crops are converted to ethanol. The five per cent limit would result in only very marginal reduction in producers prices for grains:  -4 per cent for wheat and -3 per cent for maize. If there were no EU subsidised EU biofuels policy then cereal use would be halved, but EU cereal prices would be 7 per cent lower and the maize price 6 per cent lower. Such price reductions would have no impact on EU consumption; the impact on retail food prices would be infinitesimal.
More significant is the impact on the vegetable oils sector – both in the internal EU market and on the international market. If there is any significant ‘indirect land use change’  (ILUC) it will be here. The Commission’s estimate is that the 5 per cent usage limit would result in a 17 per cent drop in the EU rapeseed price; removal of the biofuels policy completely would result in a fall in price of close to 50 per cent. Most importantly, the world price of palm and other oils would fall by at least 15 per cent.  In fact, there would be a world surplus of vegetable oils which would depress the incomes of major developing country palm oil producers – Malaysia and Indonesia. While  only 17 per cent of world vegetable oil production is used to produce biofuels, the bulk of that use comes from these two countries.
The practical implication- rather than that of environmental policy theory – is the damage to the export industries of these two countries. There is no evidence to indicate that additional land will have been brought into production to meet this increased demand from Europe. It Is becoming increasingly clear that the Commission’s  5 per cent limit proposal is merely a piece of political window dressing designed to palliate the anti-biofuels lobby. What Euro-Parliamentarians should be doing is questioning the whole justification of the EU’s biofuels policy. Is it worth spending €8+ billion year for a renewable energy feedstock source which gives only marginal gains in GHG emission reduction? This money would be far better spent on subsidising so-called ‘second generation’ feedstock sources and biodigester plants which would not only give real gains in emission reduction, but also deal with real environmental problems created by excess sewage, food wastes and accumulation of other compostable rubbish.<23/10/2013>

 

 

 

One Response to FLAWS IN BIOFUELS AND FOOD PRICE ARGUMENTS »»

  1. Comment by David Muscat | 2013/10/25 at 09:28:31

    But you miss the point entirely Sir.

    We can make the Renewable Fuels from general Waste Biomass sent to market for sales at less than €urocents 54 per litre – so that after adding the EU tax – this means that it will sell for under €uro 1-00 per litre.

    This is a single (or common) Biofuel made from Waste Biomass to replace both oil-based gasoline/petrol and Diesel for less than €uro 1-00 per litre without any impact on Food Prices – LARGE OR SMALL – whatsoever.

    The implication of this for the EU and the Wider World is by far more important than the defensive stance being made here that making Biofuels from Food Cops does not harm food prices for the issue is irrelevant. There is now no need to even contemplate using Food Crops to make the Biofuels.

    Indeed this is exactly the debate espoused just last week in the EurActiv discussions which preceded this BlogActiv. In fact this is the discussion that has continued over the past two years with the developments surrounding the programmed developments in Malta Italy Greece the Netherlands and the UK in the parallel developments to make such Biofuels using the ultimately simplest of process routes developed in the 19th Century. This is the innovation which was passed across the EU and the Governments of the member states from the Mediterranean through to the UK that raised so much interest and excitement in the industry.

    Effectively by producing Biofuels made from Waste Biomass the EU could replace between 20% and 40% of its needs for oil imports by manufacturing its own fuels from its Wastes. Just compare that to the balance of payments of importing oil thus removing its total and underlying reliance on importing oil for road transportation.

    Using Waste Biomass as the input material – including that discarded in Municipal Solid Wastes and from Other areas of discarded Waste, including Agriculture and Farming including Animal Manures; Foods and Drinks Production; Industry and Commerce; Forestry, Woods and Saw Mill production; and Waste Water Sludge etc., has no impact at all on Food Prices. It also does not need to encompass hikes in prices for Treating the Residual Waste Biomass from the Waste Industry, quite the contrary it can work with a lower price. Thus with the cost of producing these Biofuels now controlled to such levels the advantages go even further.

    Using Waste Biomass will reduce the cost of waste treatment to around a third (maybe even less) of the current process routes currently being followed with the Municipal Solid Waste Treatment sector. This is long overdue and a further benfit to the Public.

    Sir, and Ladies and Gentlemen in the EU, and MEPS and Directors General and EU Commissioners take note of this response here. We in the European Union – the General Public – want these Biofuels delivered to us in the EU at these prices as they are well-known to be realistic, and we expect you our EU to assist in delivering this to us. For too long it has been said that Biofuels (or indeed any Green Fuels or Green Energy) would always cost us more. This development programme is suggesting the complete opposite. We implore you to assist in bringing this development forward at pace before countries like China or India take it on board and any developments that it may have given to us in the EU are lost forever. We are currently still importing Biofuels to the EU, this development shows that it need not be so.

    A Biofuel made in the EU and selling at €uro 1-00 per litre as a replacement to both oil-based gasoline and Diesel which sells for anywhere between €1-30 and €2-10 per litre is a vote winner for me.


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Commentary on European developments from the perspective of long term professional interest in European and international agriculture and food policy, nurtured over three decades spent in Brussels observing and analysing the development of the CAP. more.



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