Next-generation biofuel needs old-style policies
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Next-generation biofuel needs old-style policies
Europe’s half-hearted attempt to help next-generation biofuel has clearly failed.
Among the technologies most capable of helping Europe’s transformation to a post-carbon economy is next-generation biofuel, which uses agricultural and forestry residues and waste as its feedstock.
A recent study – “Next-generation ethanol and biochemicals: what’s in it for Europe” by Bloomberg New Energy Finance – concludes that, by using just 25% of such residues and wastes available in Europe today, next-generation biofuel could displace up to 62% of the EU’s forecast consumption of petrol from fossil fuels by 2020 and reduce road transport’s greenhouse-gas emissions by 12 percentage points, to 16%.
The technology required is not some distant vision. It is available today at the pump in Denmark, which also boasts the world’s biggest demonstration plant, producing bioethanol from wheat straw collected from local farms.
And that is not all. Bloomberg also concludes that, within the EU, this new industry could generate €31 billion in revenue and create up to one million jobs by 2020, most of them in rural areas and farming communities.
Here is a technology that would help the EU meet its energy-security goals and invigorate its agricultural base, and promote the goals of the Europe 2020 strategy: smart growth, innovation and climate action.
So why is this fuel not being embraced by the EU? Simply put, the EU’s current legislative framework is sorely lacking.
The European Commission has, partially, recognised the potential impact of next-generation biofuel. The renewable energy directive (RED) authorises member states to count twice the contribution that next-generation biofuel makes to achieving their target of ensuring that renewable sources supply 10% of transport power by 2020.
But this amounts to the sum of support given to next-generation biofuel. We were sceptical from the outset about the impact of double-counting as a means of promotion, and the national implementation plans that show how each member state plans to fulfil its RED targets have proved us right: of the 27 countries, no more than three have implemented the double-counting rule or are actively looking at what next-generation biofuel could mean for their farmers and their citizens.
This glaring absence of national initiatives to take advantage of double-counting confirms our conviction that without additional policy incentives and mandatory targets to stimulate take-up of next-generation biofuel, Europe will not overcome the technical and market obstacles inhibiting widespread investment.
We note, for example, that the market price for the current generation of conventional biofuel makes it almost competitive with gasoline from fossil fuels, so it is currently relatively easy to meet the EU’s renewable targets with conventional biofuel. The double-counting measure is clearly insufficient to overcome this price gap.
Experience has shown repeatedly that all new renewable-energy technologies require initial subsidies and solid policy support in order to compete with fossil fuels, which themselves still benefit from significant subsidies.
A long overdue first step – and a prerequisite for support – is a comprehensive assessment of the direct and indirect environmental impact of the use of residue sources for next-generation biofuel. We are confident this would confirm the conclusions reached by Bloomberg. Incentives should include mandatory blending levels for next-generation biofuel, incentives for collection of biomass feedstocks, and construction support or temporary production support for pilot and demonstration projects.
Such incentives could be enough to kick-start investment on the scale necessary to deliver the benefits pinpointed by Bloomberg. With the obvious failure of current policy in this important field, allowing next-generation biofuel to compete against ‘low price, high cost’ fossil fuel should be a priority. It is time to choose a more effective option.
Tony Long is the director of WWF’s European policy office. Steen Riisgaard is the president and chief executive of Novozymes, a producer of bio-industrial products.
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