26 August 2013

Researchers revise ‘overestimated’ biofuels subsidies

Europe wasting a huge amount of money to support biofuels that often do more harm than good to the environment

Experts, who estimated that the biofuels industry received the equivalent of a €10-billion “Cyprus bailout” in public support in 2011, have shaved the figure by a fifth.

The International Institute for Sustainable Development (IISD), an environmental consultancy, apologised “for the error and any confusion it has caused”[www.iisd.org/media/press.aspx?id=250].

The original IISD research calculated that biofuels received between €9.3 and €10.7 billion of public support in 2011. This figure exceeded the amount of private capital invested in the industry.

The consultancy issued on Friday (23 August) an addendum to the study ‘Biofuels: At What Cost?’, released in April, revising downwards its estimate of the tax exemptions the industry received the same year, from €5.8 billion to between €2 and €2.5bn.

But the IISD has kept its estimated level of public support making up the rest of the original subsidies total the same, reducing the net figure by just €3.7 bn.

A number of MEPs and NGOs had touted the figure as evidence of the unsustainability of certain biofuels. To Jos Dings, the director of Transport and Environment (T&E), a green campaign group which had used the number, the estimate remains large.

“It’s a regrettable mistake from the part of the consultants. But what must be stressed is that the revised estimate of EU biofuels subsidies does not change the fundamental issue: we, in Europe, are wasting a huge amount of money to support biofuels that often do more harm than good to the environment,” he told EurActiv in an email.

The study was also recently deemed incorrect by the environmental consultancy, Ecofys. Ecofys is a well-respected environmental consultancy used by both sides of the heated biofuels debate, a fact which may lend credence to their review of the data, which was commissioned by the Association of the German Biofuels Industry (VDB).

But Ecofys admitted that their calculation, which estimated that the IISD figure for biofuels subsidies may have been overblown by some 50 to 60%, may have lacked rigour.

“Although the review of Ecofys was only conducted on a rough basis, the roughness of our assessment does not explain the differences in the outcomes,” said Matthias Spöttle, the Ecofys researcher responsible for the review.

“We conclude that the outcomes of the study on biofuels’ subsidies should be critically questioned.”

The Ecofys report questioned the methodology of the IISD, saying it could not verify the amount of tax exemptions the industry received because this should be calculated based on the actual volume of the biofuels exempted, a figure not present in the IISD report.

The International Energy Agency, in its 2012 World Energy Outlook, estimated EU biofuels subsidies at €8.4 bn, 2 to 3bn more than the revised IISD number.

Parliamentary debate
The accuracy of the study may have important knock-on effects for EU legislators, who are attempting to gauge the value of biofuels as a viable long-term energy solution.

Corinne Lepage, the French MEP in charge of the legislative report on biofuels, called to end by 2018 subsidies for biofuels which did not provide a significant net reduction in CO2 emissions. She referred to the original IISD figure in parliamentary debates.

Public support for the biofuels industry has been deemed necessary to enable member states to meet the EU’s target of sourcing a 10% share of transport fuel to renewable energy by 2020.

Members of the industry have championed biofuels as a renewable alternative to heavy CO2-emitting fossil fuels.

“We need to ensure that we have a return on investment as the only customers we have are oil industries so we need to ensure that there’s an incentive for an alternative to fossil fuels and public support is a way to do so,” said Isabelle Maurizi, the European Biodiesel Board’s project manager.

Estimates on public support were “always a bit complicated” to work out and much depended on the methodology used, she said. Maurizi did not say how much public support to the industry would be enough, or whether a limit to subsidies could be appropriate at some point.

Despite protests from the biodiesel industry, Climate Commissioner Connie Hedegaard, has slammed some biofuels for being worse CO2-emitters than the fossil fuels that they replace, meaning that they would be unworthy of large-scale budgetary support.

Last year, the European Commission proposed setting a 5% upper limit on the share of the transport mix that first-generation biofuels such as biodiesel and ethanol could make up by 2020.

The IISD study underwent peer-review by the Organisation for Economic Co-operation and Development, the Fraunhofer Institute, the UK environment department, the International Council on Clean Transportation (ICCT) and Oxfam.

Source: EurAktiv, press release, 2013-08-26.

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