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Research Report

Transformations in EU biofuels markets under the Renewable Energy Directive and the implications for land use, trade and forests

Francis X. Johnson
Henrique Pacini
Edward Smeets
Copyright Date: Jan. 1, 2012
Pages: 69
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Table of Contents

  1. (pp. 1-3)

    The Renewable Energy Directive of the European Union (EU-RED) has established targets for renewable energy that its member states must meet by 2020, including a separate and uniform target of 10% renewable energy in the transport sector (EC 2009a). The expectation that most renewable energy sources for transport would be based on liquid biofuels raised concerns about the social and environmental impacts of this increased demand, leading to calls to establish sustainability requirements. Indeed, some organisations were calling for the establishment of sustainability criteria even before the EU-RED was officially proposed (WWF 2006). Sustainability criteria for biofuels were subsequently established...

  2. (pp. 4-11)

    In this chapter, we provide an overview of the market and policy context for biofuels in the EU and globally, considering the historical developments in production and trade. We begin by outlining the current status of biofuels markets and trade, including both bioethanol and biodiesel. The markets for woody biomass are also discussed, as they have relevance for second-generation biofuels. Also reviewed briefly are a number of competitive issues and environmental impacts that arise due to growing demand for both fuel and fibre from woody biomass and the related technological developments.

    As with most energy markets in their early phase...

  3. (pp. 12-20)

    The EU-RED represents a major shift in the approach to renewable energy in the EU and globally, through the use of mandated renewable energy targets and a combination of measures designed to expand renewables rapidly in all sectors. The approach in the transport sector differed from previous efforts in the application of sustainability criteria to biofuels, regardless of whether they originated within the EU. As these criteria included provisions for GHG reductions, the EU-RED marks a significant departure from Kyoto/UNFCCC guidelines by extending responsibility beyond the borders of the consuming country or end-use market, thus making EU bioenergy users responsible...

  4. (pp. 21-30)

    A wide variety of voluntary sustainability schemes have emerged in response to the expansion of biofuels and bioenergy markets globally. The proliferation of schemes has led to considerable confusion from the perspective of policymakers, investors and other market actors: the schemes have different definitions and approaches and cover different impacts; a clear need for harmonisation and coordination has been identified (Scarlat and Dallemand 2011). The schemes also differ in the financial and administrative costs associated with certification and monitoring. Although these costs will be small in financial terms in developed countries, they will be more significant in LDCs, where technical...

  5. (pp. 31-40)

    The EU-RED sustainability criteria are particularly aimed at preventing the conversion of areas of high carbon stock and high biodiversity for the production of biofuels. In this chapter, the impact of biofuels expansion in the EU on land use and tropical forests is analysed by examining the definitions, implementation and relevant categories of land use. Direct land use change (dLUC) is addressed in Section 5.1. Sections 5.2 and 5.3 examine indirect land use change (iLUC), which is more complex to analyse. Sections 5.4 and 5.5 consider the uncertainties associated with evaluating land use change and the implications for tropical forests....

  6. (pp. 41-46)

    In this chapter, we consider in more detail the impacts associated with imports of biofuels to the EU based on the National Renewable Energy Action Plans (NREAPs). Section 6.1 provides an overview of expected biofuels consumption and imports according to the NREAPs. In Section 6.2, the projections of biofuel production and imports as included in the NREAPs are compared with the assumptions and results of studies on the effects of dLUC and iLUC due to the EU biofuels policy. The focus is therefore on the structure of imports, the ratio of bioethanol to biodiesel in production and imports, and the...

  7. (pp. 47-48)

    The target of 10% renewable energy in transport established in the EU-RED and the accompanying sustainability criteria have transformed the market for biofuels in the EU and globally in several ways. First, the mandated targets create a guaranteed market, offering clearer signals to biofuel producers and investors both in the EU and elsewhere. Second, the viability of the EU biofuels market – and thus the extent to which investment is seen as secure – is effectively defined through the sustainability criteria: only those regions and operators that prove compliance will be eligible to sell (or export) into the EU market....