Biofuels – can Europe deliver the results?

When the European Commission launched its energy strategy proposals three weeks ago (10 January), it included in its recommendations "a massive growth" in biofuels - that is, fuels derived mostly from plant crops.

The Commission’s ambition, which it set out in that strategy is that, by 2020, 14% of transport fuels would be biofuels. Such growth in the biofuels market, in turn, is aimed at helping achieve targets for the use of renewable energy, needed to help the EU achieve climate change targets.

The Commission is also hoping that domestically grown energy crops will reduce the EU’s dependence on imported energy. So biofuels are also expected to contribute to the EU’s strategy on improving energy security. Another perceived benefit is that biofuels could provide a rewarding market for farmers in the EU growing the appropriate energy crops.

So across a range of policy areas, a lot of hopes are being pinned on biofuels, a technology which promises much but has yet to deliver.

The EU had a target for 2005 of replacing 2% of transport fuel with biofuels. In 2005 there were only two EU states where biofuels made up more than 1% of transport fuels. In Germany, where biodiesel has 6% of the diesel market, biofuels as a whole have 3.75% of the market. In Sweden where bioethanol has taken 4% of the petrol market, biofuels have 2.23% of the market. The chances of the EU meeting its next target of 5.75% by 2010 are very slim - and yet the Commission is expected to propose in the first half of this year legislation setting a binding minimum target of 10% of transport fuel by 2020.

Closing the gap between the current reality and these targets will entail enormous investment. On the whole, biofuels are currently much more expensive than hydrocarbons. Their development will require new infrastructure and much improved technology. The car-makers and the energy sector are only the most obvious of the industries affected.

This week the Commission proposed changes to the fuel quality directive that should help the development of biofuels, by lifting the limits on the amount of biofuel that can be blended with conventional fuel. Oil company Shell says it is the world’s largest distributor of transport biofuels and since 2002 has invested millions in second generation research. International energy giants DuPont and BP recently announced the creation of a partnership to develop, produce and market new improved biofuels. European Energy Commissioner Andris Piebalgs is pushing the car industry to show its support, saying that biofuels are "more or less the only game in town for road transport, at least in the short term". About €400 million has been set aside for biofuels under the Commission’s seventh framework programme for research (FP7). But there will be far-reaching consequences for many other industries.

European farming could be transformed by large-scale development of energy crops and not just for arable farming - the switch in land-use and competition for plant-oils will have knock-on effects on livestock farming. The food industry, too, is concerned about the development of a market that could compete for raw materials.

Underlying the arguments over the development of the biofuels industry are substantial economic interests, fighting a deadly serious battle.

To complicate matters, the perceived environmental benefits of biofuels are the subject of dispute. Using biofuels ought to deliver savings in greenhouse gas emissions, but not all biofuels are produced sustainably and some crops create other environmental damage. The challenge for the EU is to encourage the development of good biofuels and discourage perverse environmental effects.

EU policies affecting the development of biofuels

• Biofuels directives 2001 and 2003

Legislation committing Europe to getting 5.75% of its fuels from biofuel by 2010 and approving tax breaks for biofuels. Likely to be followed by a directive setting 10% as the target later this year

• Fuel quality directive 2003

Allows EU fuels to be blended with up to 5% biofuels. Now proposed to revise it to 10%

• Biomass action plan 2005

Lists 20 actions to promote biomass and biofuels, including ‘biofuels obligations’ to increase the availability of biofuels

• European strategy for life sciences and biotechnology 2002

Framework for technology developments, including second-generation biofuels

• 7th Framework Programme for Research (FP7) 2006

Allocates €2.35 million to energy research for the period 2007-13. €400 million likely to go to biofuels

• Voluntary car emission reduction deal 1998

Asks EU carmakers to bring carbon dioxide emissions down to 140 grammes per kilometre by 2008. Likely to be replaced by legislation - proposals due out this month

• EU climate change policy

Sets Europe the challenge of getting 12% of its energy from renewables, including biomass, by 2012. Likely to be replaced by binding legislation replacing this with a 20% by 2020 target later this year

• Common Agricultural Policy

Sets out funding for crops grown in Europe. Currently under revision

When the European Commission launched its energy strategy proposals three weeks ago (10 January), it included in its recommendations "a massive growth" in biofuels - that is, fuels derived mostly from plant crops.