EU Plans to Foster International Trade in Biofuels
At an international biofuels conference hosted in Brussels last week, the EU Commission announced that imports will be an important policy tool in order to reach the EU’s ambitious goal of a 10% biofuels share by 2020. This came at a point when serious doubts were raised, even within the Commission, about the feasibility of the 10% goal.
The presence of five EU Commissioners in addition to Brazilian President Lula and EU President Barroso at the conference indicated the enormous importance biofuels have gained as a tool to fight climate change and to achieve energy diversification and income opportunities for rural areas. Interestingly, though, the European Commissioner for Agriculture and Rural Development, Mariann Fischer Boel, was not among the speakers.
EU Trade Commissioner Mandelson strongly argued for increased international trade in biofuels and emphasized that biofuels produced in countries like Brazil have a stronger carbon performance and are cheaper and cleaner than their European counterparts. The Swedish Trade Minister Sten Tolgfors would even like to abolish import tariffs on biofuels altogether. He criticized that Brazilian ethanol was still met with tariffs of up to 55% while the tariff on petrol was as low as 5%. Sweden and the Netherlands recently commissioned a comprehensive OECD study on a trading system for biofuels that will be released in spring 2008. In contrast to the European approach, the US biofuels strategy is much more focused on local production. Experts predict that this year US import figures for biofuels will be even lower than they were in 2006.
The other key aspect that was repeatedly raised last week in Brussels was the need for a sustainable production of biofuels. The EU plans to establish sustainability criteria or a certification system that would apply to imports as well as domestic production. Sustainability criteria will include environmental as well as social aspects of global biofuels production. The EU just finished a public consultation process and plans to publish a Renewable Energies Directive by the end of 2007. The sustainability discussion was initially pushed by countries like the Netherlands, United Kingdom and Germany after experts argued that certain biofuels had a negative greenhouse gas impact on the environment.
One way to significantly raise the environmental and energy-balance of biofuels would be to switch to greener, so-called second- or third-generation biofuels. These, however, won’t become economically viable until 2012 to 2017.