Biofuel Subsidies to Continue Under New EU State-Aid Guidelines

EU Graphic.PNGOn Wednesday, the European Commission issued long-awaited guidelines on how member states should award state subsidies to renewable-energy technologies. Though much of the attention has focused on solar power, this document may also indicate that the European Union has given up trying to rein in biofuels. Campaigners say the guidelines show that the Commission has abandoned its intention to encourage second-generation biofuels that are not produced from food crops and are seen as less environmentally damaging.

EU member states have been subsidizing biofuels since a 2008 target was set requiring them to source 10% of their transport fuel from renewable sources by 2020. But since then, campaigners have said that EU subsidies drive land-grabs in the developing world and divert food crops to use as fuel. Because of changes in land use (ILUC) and deforestation resulting from it, first-generation biofuel is causing more CO2 to be released into the atmosphere than it saves through use as a fuel, it is alleged. Critics say second-generation biofuel not derived from food crops should be incentivized in EU policy instead. In 2012, the Commission proposed that only half the 10% target should be met with first-generation biofuel. But there was fierce resistance from the traditional biofuel industry. Last year a vote in the European Parliament, and a subsequent decision by member states, deferred the proposal until 2015.

In January, the Commission seemed to be sticking to its guns. In its proposal for new 2030 climate targets, the Commission insisted: “Food-based biofuels should not receive public support after 2020.” But according to the latest draft, the guidelines will allow subsidies to all types of biofuel to continue. A provision in an original draft from last year specified that aid “can only be granted to installations that do not produce biofuels from cereal and other starch-rich crops” as defined by the Commission’s 2012 proposal. This sentence has been deleted. The new text has also dropped the earlier draft’s distinction between food-based and advanced biofuel.

Campaigners have reacted angrily. “Now the Commission wants to allow EU governments to continue support and expand these biofuels,” said Tara Connolly of Greenpeace. “It is back to square one.” However, biofuel companies say it is right to continue subsidies until 2020 as long as member states still have a target to meet. More information can be found here.

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