Would a more consistent EU policy on biofuels support the agricultural sector and fast-track the transition to a low-carbon economy? (May 22)

Speakers: Pelkmans Luc, Pagani Patrick, Pacheco Joao, Corre Valérie
Moderator: Michalopoulos Sarantis

On the 22nd May 2024, PubAffairs Bruxelles organised an afternoon discussion on whether a more consistent EU policy on biofuels will support the agricultural sector and fast-track the transition to a low-carbon economy with Luc Pelkmans, Technical Coordinator, IEA Bioenergy; Patrick Pagani, Deputy Secretary General, Copa-Cogeca; Joao Pacheco, Senior Fellow, Farm Europe and Valérie Corre, Director Regulatory Affairs, Tereos and ePURE Board Member.

The debate was moderated by Sarantis Michalopoulos, Senior Network Editor.

Sarantis Michalopoulos opened the event by illustrating the topic of the discussion, namely the past and current EU policies on biofuels and the role of biofuels in the transition towards a low-carbon economy and their interrelations with the European farming sector. He introduced the panellists and providing further policy and economic context to the discussion. 

Subsequently, the moderator opened the panel discussion by asking Luc Pelkmans for which reason Europe, in contrast to other regions in the world has not decided to consistently facilitate the production of biofuels.

Luc Pelkmans stated that several countries in the world have joined forces in the Global Biofuel Alliance, which stresses the strategic importance of biofuels for transport decarbonisation. He also explained that several of the countries involved have an abundance of domestic feedstocks to support their internal production. In this regard, he mentioned the examples of sugar cane production in Brazil, corn and soy in the US, as well as India’s straw production. Mr Pelkmans also stated that India is seeking to increase its feedstock to reduce the reliance on imported fossil fuels.

The speaker went on by explaining that, in Europe, the first policies concerning biofuels started to feature in the agenda about twenty years ago and stated that these policy actions have triggered the discussion on topics such as indirect land use, which paved the way for the “food vs. fuel” debate. He subsequently said that, even though no real trade-off emerged, the bias is still in citizens’ and policymakers’ mind alike.

He continued by stating that biofuels and renewable fuels are one of the primary options for transport decarbonisation or ‘de-fossilisation’. Mr Pelkmans added that, on one hand, it is important to invest in transport electrification, while, on the other hand, the projections regarding this process tend to be overrated compared to what is happening in reality. Indeed, he continued, internal combustion engine cars are still being sold, which means they will still be in use, for the next 10 to 15 years, at least. He also remarked that the heavy-duty, maritime and aviation sectors will also rely on fossil fuels for the coming decades.

He concluded his contribution to the panel discussion by stating that, in order to move away from fossil fuels in transport, it is crucial for energy security purposes to use complementary solutions and not concentrate on only one single source. As part of the set of possible solutions, he listed electrification, renewable fuels, reducing energy demand and fostering energy efficiency. 

The moderator asked Patrick Pagani to give an overview of how EU policymaking on biofuels has affected the farming sector in the last twenty years. A second question concerned the importance of crop-based biofuels for European farmers.

Patrick Pagani started by highlighting the importance of putting the discussion into context, namely Europe’s 2050 zero-emissions objective and the goal to reduce emissions by 55% by 2030 compared to the 1990 levels. He also evoked a pivotal aspect of biofuel-related policies, such as the partnership and commitment between the agricultural and forestry sectors in reaching climate neutrality, reducing emissions, producing biofuels, bioenergy and biobased materials, as well as maintaining low-carbon zinc production, while replacing fossil fuels.

He continued by commenting on the need for policy consistency given the strong link between agriculture and the biofuels sector and explained that, on one hand, biofuels create important protein co-products that otherwise need to be imported, while, on the other hand, they offer additional revenue to farmers and ensure an increase in European food production, hence contributing to the overall EU strategic autonomy goals of both decarbonisation and food security.

He subsequently summed up his first part of the reply by highlighting that the production of biofuels coming from agricultural crops goes hand in hand with the production of energy and that this process is pivotal to both substitute fossil fuels and reduce dependency on other sources of energy. He also reminded the audience that the transport sector represents one-quarter of the EU emissions. Therefore, in order to decarbonise this sector, he argued that it is paramount to not exclude any technology from the toolbox available.

In response to a follow-up question by the moderator about how the inconsistencies of EU policymaking on biofuels have affected the EU farmers, Mr Pagani remarked again on the need for policy consistency. He also highlighted the importance of not limiting solutions which might be beneficial for the agricultural sector, such as the 7% cap which crop-based biofuels currently have. He added that, by producing protein-rich bioproducts, the EU reduces imports and emissions at the same time. He concluded his second part of the reply by stating that a change towards more investment-friendly laws and regulations is required in order to strike the right balance to foster both the economy and the decarbonisation process.

Sarantis Michalopoulos asked Joao Pacheco whether he has seen any changes in the EU institutions’ approach to biofuels in the last five years, and what were his expectations for the next legislative mandate.

Joao Pacheco answered that he has not seen much of a change, but rather the same bias against biofuels, particularly regarding crop-based biofuels. He explained that the European Commission has clearly stated in different moments that the future of this sector was oriented towards advanced biofuels, rather than crop-based ones, without recognising the fact that both are intertwined and needed to scale up production. He went on by arguing that, thanks to the inputs from the European Parliament, the EU has reached a high level of consistency in terms of regulatory approach in the Renewable Energy Directive (RED) III, which, however, keeps fundamentally the same parameters for crop-based biofuels as the RED II, a maximum share of 7% of the agricultural production and flexibility of 1%.

He continued by stating that he expected that, in the next legislative term, there would be more recognition of the need for biofuels in transport decarbonisation. This re-evaluation, he explained, is due to the evidence that the EU climate targets cannot be achieved without biofuels, given the rush to supply biofuels for aviation, for which there is also a concern that the targets in place will lead to an increase of the costs for consumers.

He concluded his reply by highlighting a crucial element, namely the future of the internal combustion engine (ICE) which is poised to lead to a revision of the current legislation, most notably, the regulation on CO2 emissions for cars and vans scheduled for 2026. In light of the European elections, Mr Pacheco added, he has the impression that several political groups would like to further discuss these matters by adopting a more technology-neutral approach.

The moderator inquired Valérie Corre about the state of play of the current regulation and how the policymaking dynamics and the different changes that occurred have affected the biofuel industry.

Valérie Corre started by describing how, in her opinion, the EU has unfortunately become less investor-friendly. She elaborated on this statement by explaining that EU institutions started engaging with the need to decarbonise the transport sector and its heavy reliance on imported oil in 2003. Following this process, in 2009, given the new policy imputes, billions of euros were invested in biofuels in order to meet the objectives that the EU wanted to achieve, namely the reduction of both greenhouse gas emissions and the EU’s energy dependency, as well as renewing support to European farmers. She went on by explaining that, after this wave of investments, the “food vs. fuel” debate emerged, which rightfully raised the question of whether a conflict between fuel and food production existed.

In this regard she added that, although several studies, both institutionally and privately commissioned, concluded that there is not a “food-vs-fuel” dualism and despite the fact that the reality shows a synergy between the two, it was not enough to reverse the negative emotional perception that has been afflicting the biofuel sector. This process, she explained, created a zone of no trust, whereby investments in biofuels were slowed down or relocated outside Europe.

Ms Corre then proceeded by giving some of ePURE’s latest figures, as, in 2022, its members produced 5.71 billion litres of ethanol, together with 5.9 million tons of food and feed co-products, including high-protein animal feed. However, she highlighted, this constitutes only 80% of the total production capacity installed in the EU. Additionally, she went on by explaining that the EU has lost twenty years during which it could have decarbonised, and reduced its emissions and imports much more than it has done and that the loser of this lack of policy consistency is the EU economy and society as a whole. She furthered her arguments by taking the example of Brazil and the US, where the ethanol industry has enjoyed fifty years of incessant policy support.

Sarantis Michalopoulos asked a follow-up question to Valérie Corre based on Ursula von der Leyen’s statement that the next European Commission will be closer to the centre when it comes to policy making, asking whether this means that there is going to be a policy change when it comes to biofuels.

Valérie Corre argued that, rather than discussing possible political divides, what is currently needed in her opinion is pragmatism and science-based decision-making. Pragmatic politicians, she stated, shall review the stance on biofuels and the regulation on CO2 emission for cars, which is to be discussed again in 2026. She subsequently expressed the opinion that in the next legislative term, the EU could have a better approach to biofuels by taking into account empirical and scientific evidence and citizens’ needs.

She then emphasised the importance of evidence-based decision-making by stressing the fact that bioethanol in Europe contributed to more than 78% of greenhouse gas emissions reduction compared to petrol and supported food production. She also remarked the indispensable contribution of bioethanol to decarbonize road transport given that, according to the European Car Manufacturer Association (ACEA) report, in 2023, 69% of the cars sold on the EU market had an internal combustion engine. Since, these cars are going to be on EU roads for at least twenty years, she concluded that the increase in production of low-carbon fuels is urgent if the EU is to achieve its decarbonisation targets.

Sarantis Michalopoulos asked Luc Pelkmans whether Europe will be able to decarbonise road transport without first-generation biofuels and whether advanced biofuels will be enough to cover the gap of first-generation biofuels.

Luc Pelkmans also reminded the importance of being realistic. He explained that there is a valuable advantage to fostering advanced biofuels, as they open up the feedstock base to all kinds of residues, such as lignocellulose, which is highly relevant as it is possible to grow energy crops in all kinds of abandoned areas. The speaker also stated that the EU needs to act as swiftly on so-called advanced biofuels in order to have laws and regulations that are supportive in the long term. He added that, in a ten-year timeframe, advanced biofuels will most probably not be able to substitute first-generation crops. He also explained that he did not find the distinction between first-generation and second-generation or advanced biofuels relevant as, in his opinion, it would be better to focus on the greenhouse gas balance of the given fuel as well as on the impact on indirect land use change or food production.

He subsequently concentrated his reply on what is currently happening in the transport sector as the market is valuing both advanced biofuels and so-called double-counting” biofuels. The speaker warned that there is a danger to privileged investments on cheap alternatives rather than to actual advanced technologies. The speaker concluded on a positive note, stating that there are some promising initiatives that are increasingly emerging, such as gasification, advanced ethanol and liquefaction.

Sarantis Michalopoulos asked Joao Pacheco what would be the most effective legislative proposal on biofuels in his opinion.

Joao Pacheco answered that a crucial aspect of the biofuel question is the future of the internal combustion engine. The principle of fuel neutrality, he argued, should be enshrined in EU legislation to achieve the goal of decarbonisation. Then, he proceeded, it would be necessary to take into consideration the existing legislation and change several aspects that, in his view, are detrimental.

Regarding the biofuels for aviation and the maritime sectors, the speaker stated that the EU has discriminated against first-generation biofuels or crop-based biofuels while adding Europe is starting to realise that there are not enough legitimate advanced biofuels on the market. Rather, Mr Pacheco added, there are a large quantity of biofuels that are advanced on paper, but whose origin is uncertain. He gave the example of biofuels produced from palm oil produced in millions of tons and massively imported into Europe. Given this setting, Mr Pacheco argued, the EU should not discriminate against advanced and so-called ‘non-advanced’ biofuels.

His second concern was that the current EU legislation in reality puts a lower cap than 7% on the use of crop-based biofuels, as EU member states that have a low percentage of land to produce biofuels cannot increase production or can only do it marginally. His third and last point concerned policy consistency, as he argued that the fluctuations in legislation and uncertainties have led European investments in biofuels outside of Europe, mostly in Canada, the US and India. He concluded his answer by stating that, while there is no need for radical change, the EU shall address these crucial issues.

The moderator then asked Valérie Corre whether it is possible for Europe to catch up with other parts of the world in terms of competitiveness if EU legislation changes in the next legislative mandate.

As stated beforehand Valérie Corre argued that the EU needs to recuperate investors’ trust and, in order to do so, she suggested forging a long-term decarbonisation plan with all stakeholders, including those who have doubts and/or fears about biofuels impact on food production and the environment. She recalled that biofuel producers are not arguing that bioethanol, biodiesel, and biogas alone are the only solution to decarbonise the transport sector, but there should rather be a combination of those, in addition to electrification. Subsequently, she clarified, the share of each of the components of the technology mix needs to be defined to foster investments in a coordinated and consistent manner.

However, Ms Corre also reminded the audience that the first step towards decarbonisation is to reduce consumption and insisted on the importance for all stakeholders and political parties to recognise biofuels as a strategic sector. In this respect, she took the example of Brazil and the US where, over the last fifty years, there have been many political swings, and none has jeopardised the stability of the sector, as there has been a common understanding of the social, economic and environmental importance of the biofuel sector. In this connection, she advocated for a clear long-term and stable plan to decarbonise the transport sector during the next legislative mandate.

The moderator asked Patrick Pagani whether he saw a contradictory approach when it comes to the EU protein strategy in light of the recent farmers’ protests and the fact that there is an increase of imports from third countries.

Patrick Pagani explained that farmers started protesting months ago as a result of an increase of cost and bureaucracy, a lack of simplification and, most importantly, a lack of security for the future. He added that farmers are willing to produce food and by-products which contribute to energy independence and support the production of protein. However, he highlighted, EU farmers also need both a medium and long-term perspective, as any other economic activity.

Going back to the question of the EU protein strategy, Mr Pagani argued that there is a need to enhance the EU strategic autonomy of protein production, which, he clarified, has ranked high in the Belgian Presidency agenda. A way to contribute to this process, he added, is to foster crop-based biofuels. The speaker also recalled ePURE’s figures which demonstrated that the production of protein was higher than the production of bioethanol.

He went on by saying that he supports the idea of a pact with all stakeholders as there is not yet a clear attribution of the amounts of crop production needed and from what technology they are produced. In this context, he agreed with Ms Corre on the fact that there needs to be a mix of energy sources, which will contribute to reducing Europe’s dependency. Mr Pagani eventually expressed the hope that, by the end of the year, the legislative mandate will set a strategy on protein production which has the right mix and includes by-products coming from crop-based biofuels.

Sarantis Michalopoulos asked the panellists whether they thought a consistent plan for biofuels will happen in the next legislative mandate. 

Valérie Corre warned that, without a plan for biofuels, there will be no investment and the EU will become increasingly dependent on low-carbon fuels imports to decarbonize road transport. She added that, if there are investments, these will be made outside of the EU where legislation is not blocking investments.

Joao Pacheco suggests reviewing the European Green Deal as a whole. He explained that the Green Deal was excessively ideology-driven, without a realistic assessment of its implementation. He argued that the actual question does not lie within the objectives of the Deal, but rather the way to achieve them. He reminded that, six months ago, there was a sort of “pause” in the finalisation of EU Green Deal-related legislation as the European Commission, several member states and MEPs realised that the EU was taking the wrong steps. Mr Pacheco expressed his conviction that the realisation of the problematics of the current model will result in a re-evaluation of the European Green Deal as well as in the identification of better courses of action to achieve its goals. 

Patrick Pagani highlighted the new polycrisis reality, which consists of the overlapping impacts of the Covid-19 pandemic, the Ukraine war, the rise of energy costs, as well as the need for society to recognise the strategic role of ensuring energy production in Europe. In order to highlight the importance of considering this new reality, in which food and energy security need to be highly reconsidered, Mr Pagani referred to Copa-Cogeca’s Manifesto, which repositions agriculture as a strategic asset for both food and energy security. The speaker also highlighted the importance of bringing back the question of competitiveness in the EU public debate through a multi-stakeholder dialogue.

Luc Pelkmans agreed with what the other panellists touched upon, namely that the European Green Deal has the right targets, but the way to achieve them can sometimes be debatable. He also noted that the goal to decarbonise by 2050 is also shared by other regions of the world. He subsequently stated that the EU is starting to realise that all aspects of the (bio)economy are connected and need to be interlinked. He also added that, so far, some policymakers have been working in silos and have sometimes privileged one policy aspect over another. This process, he continued, has undermined the likelihood of finding compromises and striking the right balance. Mr Pelkmans also agreed that it would be more productive to enter into a dialogue in which all stakeholders abandon bold positions to move forward in a more coordinated manner.

The moderator asked Joao Pacheco whether he sees similar conversations to the ones occurring in Europe in other parts of the world.

Joao Pacheco, a former EU ambassador in Brazil, explained that, in that country, although biofuels were initially put forward by the military regime, President Lula pursued the same policy as it has been considered important and beneficial. The speaker clarified that the same has applied to the US, where biofuels are seen as an economic domain that contributes to national security and is beneficial for the farmers, as well, while pointing out that discussion is sometimes triggered by the oil sector which would prefer a solely market-based competition. The speaker added that, in countries such as India, the biofuels sector is also seen as beneficial and is thus increasingly being developed.

Luc Pelkmans commented on Mr Pacheco’s reply by stating that European policymakers realise that decarbonisation has to be conducted sustainably. He explained that, in countries such as Brazil and the US, biofuels are also evaluated based on their performance in terms of greenhouse gas emissions savings and, added that the better they perform, the more they are rewarded. In Brazil, this is supported by the RenovaBio programme, whereas in the US, especially in California, they have low-carbon fuel standards.

When it comes to India, he added, the benefits exceed energy security as the country not only fosters crop-based biofuels but also the use of crop residues, many of which are currently burned in the field thereby severely impacting air quality. Mr Pelkmans summed up his arguments by stating that discussions are ongoing almost everywhere. In the US, for instance, there are voices which are critical towards biofuels. These last, however, do not block the policy-making process but rather want to make sure that biofuel production occurs sustainably, without having large implications on biodiversity.

Valérie Corre reminded the audience that, at the last two G7 meetings and in particular in the one on the 30th of April, the role of sustainable biofuels to achieve the collective goals was supported. She went on by explaining that there are a lot of conflicting thoughts at both member states and EU level, despite evidence-based decision-making suggesting otherwise.

Do you wish to know more about the issues discussed in this debate? Then check out the selected sources provided below!

New car registrations: +13.7% in April 2024; battery electric 11.9% market share, Press Release, Association of European Car Makers – ACEA

Biofuels production and development in the European Union, International Energy Agency – IEA

Transport biofuels: Emerging economies lead accelerating growth in biofuel use, International Energy Agency – IEA

India could triple its biofuel use and accelerate global deployment, International Energy Agency – IEA

Biofuel Policy in Brazil, India and the United States – Insights for the Global Biofuel Alliance, International Energy Agency – IEA

What does net-zero emissions by 2050 mean for bioenergy and land use?, International Energy Agency – IEA

IEA Bioenergy (2023). Implementation Agendas: Compare-and-Contrast Transport Biofuels Policies (2021-2023 Update), International Energy Agency – IEA