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

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Another innovation in the model is the introduction of a land use module which allows for substitutability between land classes, classified according to agro-ecological zones (AEZs), and land extension possibilities. The team assessed greenhouse gas emissions (focusing on CO₂) associated with direct and indirect land use changes as
generated by the model for the year 2020, and separately quantified the marginal ILUC for each
feedstock crop.

The team derived the 5.6% share for first-generation land-using biofuels by deducting the expected share in 2020 of other renewable road transport fuels from the 10% RED target. (Non land-using first generation biofuels such as recycled waste oil and animal fats are not included in the 5.6%). The authors also examined the impact of a change in the EU biofuels trade policy
regime, with an elimination of import tariffs, in a full multilateral scenario and in a bilateral scenario (with the MERCOSUR countries only).

Among the findings:

• ILUC does indeed have an important effect on the environmental sustainability of biofuels. However, the size of the additional EU 2020 mandate, under current
  assumptions regarding the future evolution of renewable energy use in road transport, is sufficiently small (5.6% of road transport fuels in 2020) and does not threaten the environmental viability of biofuels. If the underlying assumptions should change however, either because the mandated quantities turn out to be higher and/or because the model assumptions and parameters need to be revised, there is a real risk that ILUC could undermine the environmental viability of biofuels.

• Nonlinear effects, in terms of biofuels volumes and behavioral parameters, pose a risk.

• In terms of trade policy, the main result is that biofuels trade liberalization would lead to slightly more ILUC effects through deforestation outside the EU (especially in Brazil). But this is compensated by the use of a more efficient biofuel (sugar cane ethanol) that improves emissions savings and results in an improved CO₂ emission balance. At the same time such an effect can take place only if the share of ethanol in total biofuel consumption can increase drastically from 19% to 45% by 2020.

• Effects on food prices will remain limited (maximum +0.5% in Brazil, +0.14% in Europe). Although EU biofuel policy has no significant real income consequences for the EU, some countries may
  experience small negative effects, particularly oil exporters (-0.11% to -0.18% of real income by 2020)
  and Sub-saharan Africa (-0.12%) due to the fall in oil prices and rise in food prices, respectively.

• Analysis of ILUC by crop indicates that ethanol, and particularly sugar-based ethanol, will generate the highest potential gains in terms of net emissions savings. For biodiesel, palm oil is the efficient feedstock in terms of CO2 emissions, even if peatland emissions are taken into account.

• The mix between ethanol and biodiesel is important. Depending on the
  flexibility allowed for the ratio between the two biofuels, land use effects and trade policy effects can be very different.

Resources

• Global trade and environmental impact of the EU biofuels mandate (March 2010)