Analysis Finds That First-Generation Biofuel Use of Up to 5.6% in EU Road Transport Fuels Delivers Net GHG Emissions Benefits After Factoring in Indirect Land Use Change

A new report by researchers at the International Food Policy Research Institute (IFPRI) has calculated that the use of up to 5.6% of first-generation, land-using biofuels in EU road transport fuels delivers a net greenhouse gas reduction benefit (13 Mt CO₂ savings in a 20-year horizon) even after factoring in indirect land use change (ILUC) effects.

However, the authors note, “simulations for EU biofuels consumption above 5.6% of road transport fuels show that ILUC emissions can rapidly increase and erode the environmental sustainability of biofuels.”

The report is the first of four studies commissioned by the European Commission in response to the Council and Parliament’s request to examine the indirect land use change effects of biofuels. The Commission decided to release this study immediately after its completion in order to ensure full transparency on this important issue. The other three studies are still underway.

Background. In 2009, the European Union adopted the Renewable Energy Directive (RED) which included a 10% target for the use of renewable energy in road transport fuels by 2020. Renewable energy options for road transport included first- and second-generation biofuels and electricity. The RED also established environmental sustainability criteria for biofuels consumed in the EU: a minimum rate of direct GHG emission savings (35% in 2009 and rising over time to 50% in 2017) and restrictions on the types of land that may be converted to production of biofuels feedstock crops (direct land use changes only).

The revised Fuel Quality Directive (FQD), adopted at the same time as the RED, includes identical sustainability criteria and targets a reduction in lifecycle greenhouse gas emissions from fuels consumed in the EU by 6% by 2020. The European Parliament and Council asked the Commission to examine the question of indirect land use change (ILUC), including possible measures to avoid this, and report back on this issue by the end of 2010. In response, the Commission launched the four studies.

The IFPRI study. The primary objective of this study were to analyze the impact of possible changes in EU biofuels trade policies on global agricultural production and the environmental performance of the EU biofuel policy as concretized in the RED. The study pays particular attention to the ILUC effects, and the associated emissions, of the main feedstocks used for first-generation biofuels production.

The study uses a global computable general equilibrium model (CGE)—an extensively modified version of the existing MIRAGE model—to estimate the impact of EU biofuels policies. The IFPRI team developed a new modeling of energy demand which allows for
substitutability between different sources of energy, including biofuels.

They extended the underlying Global Trade Analysis Project (GTAP) database to separately identify ethanol (with four subsectors), biodiesel, five additional feedstock crops sectors, four vegetable oils sectors, fertilizers, and the transport fuel sectors. The model was also modified to account for the co-products generated in the ethanol and biodiesel production processes and their role as inputs to the livestock sector. Fertilizer modeling was also introduced to allow for substitution with land under intensive or extensive crop production methods