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Leaping Before They Looked: Lessons from Europe’s Experience with the 2003 Biofuels Directive

Although the current U.S. focus on boosting biofuel production and usage may be well-intentioned, caution regarding unintended consequences of these policies is warranted. In 2003 the EU issued a Directive promoting the use of biofuels and other renewable fuels for transport. The Directive sought/seeks to have biofuels account for 2% of EU transport fuels by 2005, 5.75% by 2010, and in a 2007 addendum, 10% by 2020.

The EU mandate was primarily driven by farm policy, to create new outlets for agricultural and forestry products, and to diversify rural economies. Reduced emissions of greenhouse gases (GHG), energy security, and improved environmental impacts were cited as ancillary benefits of the policies. However, due in part to global market forces and economic efficiencies in developing countries, the result is that the Directive has exacerbated some of the very problems it was designed to solve, driving up food prices, leading to increased deforestation in tropical countries, worsening global warming, and increasing imports of bio-oils.

The developing world offers both cheap land and inexpensive labor for bioenergy crop production, and tropical energy crops such as palm oil offer greater energy yields and lower production costs than traditional oil seeds and grains. The impact of the EU Directive has been to increase competition for food, water, land, and other resources in developed and developing countries, and to increase GHG emissions, tropical deforestation, and biodiversity loss. Biofuel production also encourages large-scale land-clearing and monoculture cropping, with attendant poverty, human rights abuses, and ecological degradation.

Importantly, while tropical deforestation is occurring at a staggering rate in many countries seeking to produce biofuels for the new and growing markets, the destruction of boggy peatlands in Southeast Asia now represents one of the leading sources of global warming emissions worldwide. The process of draining, clearing, and burning peatlands for palm oil plantations releases the equivalent of 8% of global carbon dioxide (CO2) emissions from fossil fuel use, making Indonesia the 3rd ranking emitter of CO2 emissions in the world, behind only the U.S. and China.

EU member countries are also now realizing that the climate benefits of even those biofuels produced within the EU are in many cases overstated. Some life-cycle analyses (LCAs) of biofuel production cite increased use of nitrogen-based fertilizers as negating much of the climate benefits associated with biofuels, and a new batch of research indicates that the benefits may be erased altogether by climate-harmful deforestation caused by displaced food production.

These unintended consequences – though not all unanticipated – highlight the need for updated, comprehensive tools to analyze the true net impacts of policies that increase biofuels use, particularly as the U.S. contemplates following the same path that the EU has traversed. Current LCAs do not account for GHG emissions and other impacts to global warming that may be caused by changes in land use; food, fuel, and materials markets; and impacts and demand for natural resources such as water. Until we develop these tools to inform policy development, we should exhibit great caution in regards to biofuels production and use, and should take heed of lessons being learned elsewhere.

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