The Great Biofuel U-Turn: Biofuels Once Seemed like the Answer to Our Energy Prayers-A Carbon-Neutral Way of Weaning Ourselves off the Dreaded Fossil Fuels. but Then Doubts Began to Emerge about Their Eco-Credentials, and That Initial Enthusiasm Is Beginning to Wane

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Sometimes, governments get things wrong--badly wrong--and alter the planet's human and natural geography in ways that were never intended. One such embarrassing event is now unfolding--over the promotion of biofuels.

The European Commission, once a keen promoter of biofuels, has now reined in its enthusiasm, admitting that in some instances, biofuels can be as bad as fossil fuels. On 17 October last year, the commission announced a policy U-turn that will stop many EU governments pumping subsidies into biofuel production.

INDIRECT EFFECTS

Biofuels--liquid fuels made from live plant matter used to have few critics: environmentalists were happy as they emitted less carbon when burnt than fossil fuels: farmers were happy to have a new market (and even happier when governments offered direct subsidies, tax breaks and minimum-biofuel-content fuel-blending rules); the energy sector liked selling a 'green' product; and car manufacturers liked the idea that they could keep making combustion engines. But slowly and surely, environmental experts started chipping away at the biofuel model, especially those made from food crops such as rape seed, palm oil and soy.

First, they pointed out that some biofuel feedstock plantations would be grown on virgin natural land, destroying carbon sinks and promoting burning, while wiping out vital habitats. But even when direct land-use changes were factored in to the environmental cost-benefit models, biofuels still came out ahead of fossil fuels.

But then the specialists argued that indirect land-use change effects (ILUCs) needed to be considered. Here, Farmer A switched to biofuels, while Farmer B received Farmer A's old food contract and cleared some forest to create new fields. And while it's almost impossible to pinpoint cases where such a scenario has taken place, common sense dictates that it does.

A European Commission report released this summer admitted as much: 'It is clear that ILUC emissions are significant so that some biofuels save few or no emissions compared to the fossil transport fuels they replace.'

Brussels officials have now proposed limits to tax breaks, subsidies and blending rules--insisting that these are now focused on non-food biofuels, such as fuels made from waste food, timber, straw or algae. Indeed, the commission proposes that half of all biofuels whose production receives this support must come from non-food feedstocks.

Potential ILUC effects will now be considered when assessing the greenhouse gas performance , of biofuels: each feedstock will get an ILUC factor, which will be added to the assumed amount of carbon generated by a biofuel's production and use. Once these calculations are done, many biofuels once considered to be sufficiently green to secure tax breaks and subsidies under EU law will be labelled as too dirty, and governments won't be able to actively support them.

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GOVERNMENT SUPPORT

And this matters. According to International Energy Agency estimates, in 2009, EU subsidies (including mandates) stood at US$2.1billion for bioethanol and US$5.8billion for biodiesel. Meanwhile, the Global Subsidy Initiative estimates that the EU spent 3.2billion [euro] in 2007 and 3billion [euro] in 2008 for biofuel research and development (R&D) spending. Subsidies provided to UK farmers for growing bio-feedstocks have also been rising, jumping from 9.3million [pounds sterling] in 2009-10 to 13.7million [pounds sterling] in 2010-11, according to the Department for Environment, Food and Rural Affairs.

In Germany--the EU's biggest biofuel producer the government initially granted extensive tax exemptions for biofuels in order to stimulate market growth. But since 2007, tax incentives have been increasingly replaced by regulatory measures such as mandatory blending requirements. …