Simplistic and Damaging Biofuels Policy Must be Reformed

Chairman of the cross-party Environmental Audit Committee and former Shadow Minister of Agriculture, Tim Yeo MP, writes about limitation of current policies on biofuels.

Earlier this year the Environmental Audit Committee looked at biofuels, to try to untangle conflicting reports about their usefulness in lowering greenhouse gas emissions from vehicles, and to investigate concerns that their production might cause environmental damage.

We found that although certain biofuels, such as bioethanol, can indeed help to reduce greenhouse gas emissions from vehicles, many could have serious environmental impacts and might even lead to an increase in greenhouse gas emissions overall.

Take palm oil. Given its usefulness it is used in a vast array of products from cosmetics to food. The market for palm oil is already immense and there is a significant incentive to chop down highly biodiverse rainforest. The UN estimates that the combined pressures of logging, fire and palm oil production could result in the total destruction of Indonesia’s lowland rainforest by 2012, putting orang-utans perilously close to extinction in the wild.  We found that the booming market in biofuels would add yet another strong incentive to plant more oil palms.

And here is the irony. These rainforests store vast amounts of carbon. It would take 50-100 years for biofuels produced on such land to make up for the initial release of carbon. Such a perverse outcome could be avoided with a robust international system to protect forests – but the Government is pressing ahead with this policy in the absence of such a system.

To help avoid this it has been suggested that we could source biofuels from within the UK and EU. But even this could have detrimental environmental impacts from the renewed intensification of agriculture. Such damage might be justified if biofuels are an effective way to reduce emissions. However this is not necessarily the case. Indeed, biofuels are one of the least effective and most expensive measures for reducing greenhouse gases. If a farmer grew biomass (solid organic matter such as wood) for burning in a boiler, the cost to reduce one tonne of carbon dioxide would be £36. If a farmer grew wheat to produce biofuel it would cost as much as £152 to reduce carbon dioxide by the same amount. The Government knows this – these figures were taken from its own analysis.

It is often suggested that growing our own biofuels will contribute to Britain’s fuel security. Although this might be true, this argument is overstated. Firstly, biofuels rely on fertilisers and pesticides produced from oil products for their production and therefore their price will follow the price of oil. Secondly, we will be unable to produce the volume of biofuels required to fuel our transport system and therefore much of it would have to be imported. A recent review published by the OECD concluded that biofuels are unlikely to provide a solution to rising oil prices. If we are serious about improving fuel security, in the absence of a technical solution we should focus on improving fuel efficiency.

So why are biofuels so popular? It would appear that they have become a way to provide alternative subsidies for agriculture. Indeed the Committee was told that this is the primary motivation for many EU countries. The Global Subsidies Initiative estimates that the EU spent €3.7 billion in biofuel subsidies in 2006 alone. This figure does not include payments that can not be tied directly to biofuels, but will nevertheless still subsidise biofuel production (such as the Single Farm Payment) and is therefore likely to be an underestimate.

The tragedy is that there could be new biofuel technologies on the horizon (so-called second generation biofuels) that could make a real contribution to tackling climate change. Redirecting the money currently being spent subsidising conventional biofuels could make real in-roads in developing these more advanced and less damaging technologies.

In its Report my Committee concluded that biofuels policy needs to ensure that damaging deforestation does not occur, that the only the most effective forms (in terms of both greenhouse gas emission reductions and cost) of biomass utilisation should be supported and that there should be a focus on the development of more advanced biofuel technologies. Until these measures are in place we argued that there should be a moratorium on biofuel targets.

Ours is just one among a number of voices calling for the reassessment of biofuels policy. The concerns that have been raised appear to have made a slight impact on the Government – it has initiated a review of biofuels, and in the Budget Alistair Darling announced the removal of a tax break for biofuels. Nevertheless, the Government is still pushing forward with plans to require biofuels make up 5% of road fuels in the UK by 2010.

If the Government is to stand any chance at all of meeting its target to reduce emissions by 20% by 2020, then  it has to have a more thoughtful and sophisticated approach to policy making.