SEI Publication

Author(s): Johnson, F.X., H. Pacini, E. Smeets

Year: 2012

In: Occasional Paper 78, Center for International Forestry Research (CIFOR), Bogor, Indonesia.

Type: Paper



Link to SEI author(s):

Transformations in EU biofuels markets under the Renewable Energy Directive and the implications for land use, trade and forests

This report reviews and analyses the impact of the EU Renewable Energy Directive (EU-RED) on biofuels markets, exploring key linkages across regions and policy regimes, with a special focus on land use change, trade and forest protection.

Many countries and types of enterprises are now entering the biofuels market, and new political stakeholders are engaging in the policy process and affecting the direction of these markets. The report aims to explore synergies and conflicts that are arising in the broader, global context.

The expansion in biofuels markets creates economic opportunities for developing countries to export to the EU while building their own domestic markets. Imported biofuels can have lower land use impact and GHG emissions than those produced in the EU, due especially to the high efficiency of some feedstocks in tropical and sub-tropical regions. However, the land-intensive nature of bioenergy creates risks for deforestation or reduction of biodiversity if proper land use governance policies are not developed and implemented.

The EU-RED provided safeguards for undesirable land use change through sustainability criteria, but they create additional costs that small-scale producers may have difficulties absorbing. Developing countries have also expressed concerns about the fair trade implications of the additional requirements and the need to rely on third-party certification schemes.

Bilateral or multilateral agreements could offer an alternative mechanism to provide technical and institutional support to developing countries and could also provide incentives for promoting more sustainable land use policies. Such agreements are allowed under the EU-RED but are not yet well-explored given the dominance of third-party certification schemes.

The paper also looks at how the EU-RED addresses direct and indirect land use change (dLUC and iLUC). It finds dLUC is handled fairly well, although some smaller forested areas are not well covered in the definitions. The use of a general iLUC factor rather than a crop-specific factor could penalise those feedstocks and regions that have smaller impacts. Significant uncertainties remain in iLUC modelling, particularly in subnational land use dynamics and the difficulty of capturing socio-economic variables in large models; significant methodological improvements are needed if these models are to serve as a basis for policy design.

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