“Are biofuels a cure worse than the disease?” This was the provocative but important question posed by Ronald Steenblik, a senior trade analyst for the respected OECD thinktank, who was speaking in a personal capacity at this week’s high level debate on EU subsidies reform chaired by Ms. Sirpa Pietikäinen, MEP and chair of GLOBE EU.
Behind Mr Steenblik’s comment is an assessment of biofuel subsidies that I share – namely, that the unintended social and environmental consequences of biofuels far outweigh the benefits claimed by its supporters.
In last week’s blog post I argued that the reason these negative impacts have gone largely ignored is to do with the vested interests and ‘Realpolitik’ that sits behind biofuels. This week’s discussion, organised by the International Institute for Sustainable Development (IISD), was an attempt to re-establish a dialogue based on evidence, not presupposition.
Three important points emerged from the discussion that I thought it was worth sharing.
Are biofuel subsidies in the public interest?
The first, made by Mark Halle, Vice President of the IISD, is an apt reminder of why it is important to debate the public interest of biofuel subsidies: the policy is enormously expensive and the value for money seriously questionable. The EU alone gives €8.5b in biofuel subsidies.
According to Mr Halle, this works out at between €90 and €1,400 per tonne of CO2 avoided in a market that averages €16-17. With significant public expenditure on this scale it is crucial that we are rigorous and objective in reviewing the effectiveness of biofuels against their stated objective to tackle climate change.
Do these subsidies accelerate climate change?
The second area of discussion dealt with precisely this point: just how successful are biofuel subsidies as a mechanism for mitigating carbon emissions? Panellist Raffaello Garofalo, Secretary General of the European Biodiesel Board, stressed the positive impact on farmers’ incomes and energy security of Europe, but also acknowledged that “it is true that on climate change [options such as] wind energy are more efficient than [biofuel]”. And, as I stressed in my own closing remarks, this is not only about greenhouse gases, it is also about water.
So why, at a time of economic austerity, are we investing so much on a policy that even supporters accept is at best a second rate solution?
But more than this, as Mr. Halle pointed out, there is even an argument that biofuels are exacerbating not addressing climate change: by investing in biofuels we are “extending the life of the internal combustion engine” and therefore diverting significant resources away from “better alternative solutions to mobility”.
What impact do the subsidies have on agriculture?
The third area of focus concerned the unintended negative consequences of biofuels. My blog last week touched on two of these – the significant impact on water security and the tendency of more competitively-priced foreign biofuel producers to use up subsidies set aside for the domestic market . There is also a third key impact, as Mr Steenblik highlighted: biofuel subsidies can often play domestic agriculture against itself. While crop farmers with the option of growing biofuels can benefit, those who cannot lose out from the rising price of land.
I am interested in readers’ thoughts on each of these questions. However, whilst it is essential that we interrogate the detail, we must not lose sight of the bigger, global perspective. As Gerben Jan Gerbrandy, MEP and Vice Chair of the Committee on the Environment, Public Health and Food Safety, said in his closing remarks: the FAO estimate that in 2050 we will need to produce about 70 percent more food than we do now. If we are to stand a chance of achieving this, we need to be more careful and critical about how we use land and particularly water.
Food for fuel in this light is not merely a question of political economy. It is a matter of conscience. We should not only freeze biofuel subsidies but phase them out altogether. I think with this fact-based discussion we made a step forward towards more sustainable biofuel policies.