Summary: 5 July 2007, Brussels - Speech by Stavros Dimas, Member of the European Commission, responsible for environment, at the International Biofuels Conference
Ministers, Ladies and Gentlemen, colleagues,
It is an honour and a pleasure to participate in this International Biofuels Conference.
Fighting climate change is a serious issue that requires credible answers. There are no "one fits all" solutions. Those available have some positive but also, potentially, some negative effects.
It is only through a rigorous analysis of all the positive and negative elements that credible and serious choices can be made.
Biofuels are considered to have an important role to play not only in addressing climate change, but also in achieving a sustainable and secure energy supply.
However, biofuels is an umbrella term used to describe all fuels derived from organic matters. These fuels have very different characteristics and could put pressures on the environment and on society.
For example, it takes a lot of energy both to grow corn and to convert it into biofuels. Cultivating a crop demands large quantities of fertilisers and pesticides, which have in themselves environmental and energy costs.
Some biofuels are also very expensive. With the price of oil at 56 dollars, the production of a litre of petrol has a price of an average of 30 euro cents. In order to produce a litre of ethanol with the same energy power 37 cents are needed in Brazil, 45 in the United States and 75 in Europe. It is therefore clear that biofuels produced in this way could be economically viable and sustainable only if subsidies are provided.
A staggering problem is the space that the production of feedstock for biofuels will require. A study of the Worldwatch Institute published in June 2006 indicates that, if we consider the most common biofuels widely available today, Brazil will need only 3% of its agricultural land to produce 10% of its entire fuel consumption. However, for the same quantity, the United States would need 30% of its agricultural land and the European Union 72%.
Moreover, the cultivation of food related feedstock, for biofuels takes over land that is currently used for food production. The effects of this could raise questions of ethics.
Possible consequences have already been seen in Mexico because of the steep increase in the price of tortillas, the main source of calories for 50 million Mexicans that live in poverty. The same problem will have to be confronted by other developing countries already facing hunger.
Even in the United States, the growth of the biofuel industry has triggered increases not only in the prices of corn, oilseeds and other grains, but also in the prices of seemingly unrelated crops and products. Food processors that use crops such as peas and sweet corn have been forced to pay higher prices to keep their supply secure.
Such an increase of costs has already been passed on to the consumers. Poultry is for example more expensive because of the higher price of corn.
A study published by the OECD yesterday indicates that biofuels could lead to considerable rises of food prices in markets. The price of grain "would likely rise by 20 to 50% over the next decade".
From an environmental point of view, even bio-fuels largely available today do not contain any sulphur or poly-aromatic substances.
However, biofuels are not necessarily advantageous in terms of carbon dioxide production if the full life-cycle approach from well to wheel production to consumption is considered. Emissions from tractors and from transportation of raw materials and biofuels to and from refineries need also to be included in the calculations. Moreover, biofuels could cause an increase of the quantity of VOCs, which are very dangerous for human health.
Expanded deforestation is another very serious risk. This will have negative effects on bio-diversity, will increase desertification, will cause people displacement and will enhance the risks of floods. The world's forests are already depleted of an area equivalent to the size of Portugal every year.
Rain forests are converted into crop fields which have an estimated value of 200 to 500 USD per hectare. This same hectare has a value of approximately 10.000 USD as carbon dioxide storage - far more than the most productive tea or palm plantation if one ton of carbon dioxide is traded at about 20 USD. As a recent World Bank report put it "Farmers are destroying a 10.000 USD asset to create one worth 200 USD".
Other biofuel productions put huge pressure on water supplies, thus risking negative effects on already scarce resources in many developing and developed countries. Concentration on the cultivation of one crop only could cause serious impoverishment of the soil and therefore increase the risks of desertification.
So, is everyone really mistaken by thinking that biofuels can help combat climate change and achieve a sustainable and secure energy supply ?
Is the European Union wrong in its decision taken in the March European Council of this year, that 10% of its energy production should come from biofuels by 2020 ?
The answer to both questions is "no", but only if biofuels and the 10% target are, as in the words of the European Council, "subject to production being sustainable, second-generation biofuels becoming commercially available and the Fuel Quality Directive being amended accordingly to allow for adequate levels of blending".
The key elements are therefore two : sustainability and second generation bio-fuels. This is the watershed. These are the foundations of every choice on bio-fuels. This is how the 10% target of the European Union will be achieved, in an environmental and social way. Second generation biofuels are, in fact, not food related.
The European Union is betting on bio-fuels for its climate change and energy policies provided they respect these two criteria.
With these two criteria in mind, it is expected that the problems I have outlined so far would be addressed, thus making bio-fuels good for the environment, for the society at large and for the economy.
The technology for the production of bio-fuels is still in its infancy. However, scientists working on it have grander and already very concrete ideas in their minds. They are concentrating on ways in making bio-fuels from non-food crops and waste bio-mass without putting additional pressures on the environment and on social development.
For example, an idea that is being developed is to produce ethanol from the conversion of cellulose-rich organic matter.
Second generation biofuels made from non-food sources could offer higher CO2 savings in relation to both conventional fuels and first generation biofuels.
This would also assure an optimal use of the agricultural potential in the European Union.
As said, we must therefore discourage the use of environmentally, socially and economically harmful biofuels. We must promote those that have a proven well-to-wheel sustainable and energy substitution performance.
The Commission recently proposed the Fuels Quality Directive, a legislation that would require transport fuel suppliers to gradually reduce the life-cycle greenhouse gas emissions of the fuel that enters the EU market. This system would encourage the use of biofuels that have the least impact on the environment.
The proposal has been received favourably by the European Parliament and many Member States, which have called for sustainability criteria being included for the use of biofuels.
Ladies and Gentlemen,
The European Union is committed to do its part in promoting the sustainability of biofuels.
We are fully aware that we will not be able to reach our goal alone. International cooperation is vital.
The biofuels market is rising rapidly. And, as demand grows, a framework must be established in order to create a global market of sustainable biofuels.
It would be meaningless, for example, to try and reduce greenhouse gas emissions in one country and to have that offset by greater emissions in another.
The pursuit of sustainability must therefore be at the core of the development of biofuels internationally.
A number of initiatives to encourage the sustainability and certification of biofuels are currently being set up in countries producing and consuming these fuels. We can all benefit from these experiences, we can work towards common sustainability criteria. A certification system is important, but there is the need to be careful on how to construct it. Illegal logging is still a serious problem and we therefore need to learn from that experience so as not to repeat the same mistakes.
The Commission believes that such initiatives will benefit from a broader international framework on the promotion of sustainable land use and combating deforestation.
This conference is an important step in tackling some of these complex issues.
I look forward to hearing the results of your discussion and to cooperating with all of you in the future.
Thank you.
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