EU Regulation and Meaningful Targets for Biofuel Deployment - Essay Example

?The food v. fuel debate: is it possible for EU regulation to set meaningful targets for biofuel deployment in the transport sector without leading to a world food crisis? By Student Name Course University Date Abstract Global concerns about climate change due to carbon emissions and greenhouse gases linked to the production and use of fossil fuels, particularly in transport motivated the EU’s policies on the production and use of biofuels as an alternative source of energy. However, concerns over the utility of producing and using biofuels have given rise to a debate over whether or not biofuels can provide the solution to the problems associated with fossil fuels. In particular, it has been argued that land conversion for biofuel production has not only pushed up the price of food and food-feed stock, but has contributed to environmental damages particularly with the conversion of forests, savannas and prairies. It has been argued that cumulatively, these unintended consequences will inevitably lead to a food crisis as demands for biofuels increase to meet national targets such as those established by the EU. On the other side of the debate, it is argued that any price increase in food crops is only short-term and is primarily related to an increase in the price of fossil fuels and population growth worldwide. This dissertation examines both sides of the argument and concludes that the EU can accomplish its national targets for biofuels without causing a food crisis. In particular, a review of literature suggests that many of the problems perceived with the production of biofuels are related to the production chain and can be resolved by improving and monitoring production channels and methodologies. This dissertation concludes that in the absence of biofuels, a food crisis is all but certain since the price of fossil fuels and its likely demise together with its environmental costs will most certainly have a negative impact on all consumer products, including food. Table of Contents Abstract 2 Introduction 4 Arguments Against the Production of Biofuels 6 Increase in Food Prices 6 Biofuels and the Environment 9 Arguments in Favour of Biofuels 12 Analysis 16 Conclusion 19 Bibliography 20 Introduction Between 2006 and 2008, the world’s crops reached unprecedented high levels of production and at the same time, the price of food increased significantly.1The accelerating price of food, particularly sugar and cereal runs parallel to an increase in the production of biofuels. Governments have increasingly introduced targets for the use of biofuels in the transport sector.2 In the EU, biodiesel is the most popular grade of biofuel and for the year 2003 alone, the EU produced 1,504,000 tonnes of biodiesel.3The year 2003 is important because it corresponds with Directive 2003/30/EC on the Promotion of the use of Biofuels or other Renewable Fuels for Transport. Directive 2003/30/EC had as its goal, “national targets” in which all member states would ensure that at least 2% of all fuels available would be biofuels.4 Directive 2003/30/EC was repealed by Directive 2009/28/EC on the Promotion of the use of Energy from Renewable Sources. Directive 2009/28/EC established a new national target for member states. Member states are required to make at least 20% of all fuel available, biofuels of other sources of renewable energy by the year 2020.5 The reason for the national targets is related to findings that 21% of “all greenhouse gas emissions” that are responsible for “global warming’ is attributed to transport and it is believed that the “percentage is rising”.6 The reduction of greenhouse gas emissions is important because it is harmful to the environment and in particular degrades the quality of soil and as such the quality and quantity of food.7 Even so, a worldwide debate centres on the threat of biofuel production to food security. This dissertation weighs both sides of the argument and concludes that the production of biofuels in the EU is necessary and national targets can be accomplished without leading to a global food crisis. While biofuel production has increased the price of food, rising fuel prices has had a more detrimental impact on the price of food. The production of biofuel, while seemingly linked to increased food prices, has actually mitigated the high cost of food arising from increases in fuel prices. As Sexton, Rajagopal, Zilberman and Hochman, point out, fuel prices have increased dramatically over the last decade and as a result have increased the cost of farm products such as equipment and fertilizers.8 The eminent depletion of oil and fuel in general, necessitates the production of renewable energy such as biofuels. In the absence of biofuels, a food crisis is more likely to occur. As Sexton, et al. argue, it is not biofuel targets that are responsible for the rise in food prices, but a lack of research and development on the more efficient production of biofuels.9 In this regard, the EU can establish national targets for biofuel without leading to a global food crisis. This dissertation, in examining the food vs. fuel debate will demonstrate how the EU can establish national targets for biofuel without leading to a global food crisis. This dissertation is divided into three parts. The first part of this dissertation examines the arguments against biofuels and the second part of this dissertation examines the arguments in favour of biofuels. The third part of this paper analyses both sides of the debate and demonstrates how and why the production of EU fuels are necessary and how the EU can establish national targets for biofuels without leading to a global food crisis. Arguments Against the Production of Biofuels Increase in Food Prices The main argument against the EU’s biofuel targets for the year 2020, is that developing countries will attempt to meet the demand at the expense of farming for food. In attempting to furnish developed economies such as the EU with biofuel products, farmers in developing countries where the high price of food is more detrimental, will focus more acutely on farming biofuel producing crops. This will not only limit the resources available for producing food, but will also drive up the price of food. For example, in some developing countries, cassava is a main food source, but it is also a good source of biofuels. With farmers in developing countries farming cassava for both food and biofuels, the demand for cassava increases as the food supply decreases.10 Cassava however, is not a useful example of the threat of biofuel production to food security. According to a report by the United Nations Conference on Trade and Development (UNCTAD), the market for cassava as a crop for producing biofuels is not fully developed. In fact, UNCTAD reports that in Africa, cassava is produced primarily for food and contributes significantly to “food security” on that continent.11 According to UNCTAD, only Asia, and in particular Thailand, produces cassava as a significant source of biofuel. In terms of food, cassava is available on the market at competitive prices and production worldwide has increased significantly over the last ten years or so.12 Any concerns about the availability of cassava as a food source is related to the risk of drought and the diseases that the plant is susceptible to.13In other words, there are currently no realistic fears that the production of cassava as a source of biofuels threatens food security globally. In developed countries where biofuel producing crops are grown, it is expected that the production of biofuel crops will increase the price of those foods and eventually lead to a food crisis for those particular crops. For example, corn is grown in the US and the US has a similar target to that of the EU for increasing the use of biofuels. The demand for biofuel crops is significant. According to Runge and Senauer: The enormous volume of corn required by the ethanol industry is sending shock waves through the food system…In March 2007, corn futures rose to over US$4.38 a bushel, the highest level in ten years.14 The use of corn for biofuels and the corresponding demand has also forced the price of wheat and rice up to unprecedented highs. This is because rice and wheat are consistently used to replace the shortage in corn and farmers are “planting more acres with corn and fewer acres with other crops”.15 Concerns over the production of corn as a source of biofuel and its corresponding negative impact on biofuels is a valid issue. To begin with, the US produces most of the world’s corn. Meanwhile the US has set national targets for biofuel production and use that are quite similar to those of the EU. The demand for corn is heightened when it is used as the major source of ethanol in the US. Corn is not only a significant source of direct food, it is also used for producing sugars, syrups and cooking oil and at the same time, corn is used as a main source of livestock feed.16 Worldwide, there is a high demand for corn and only a handful of countries produce enough corn to export corn beyond its borders. However, it must be noted that China has increased its production of corn for export purposes. In the meantime, many countries simply produce just enough corn for domestic use and are not harmed by the concentration of corn export to a handful of countries.17 Corn together with wheat, sugarcane, soybean, rapeseed and sunflowers are the main source of biofuels.18The problem however, is that these crops are also a major source of food supply.19 Another difficulty is that the resources used to produce food crops such as land, water and fossil fuels are the same resources used to produce biofuel plants.20 Thus the availability for resources is split between the production of food and biofuel crops and thus can result in a food shortage. The threat of a food crisis is exemplified by the world’s persistent population growth.21 What this means is that there is an increasing gap between the demand for food and the supply of food with the result that food prices will only continue to increase as the gap widens. The increase in food prices has been particularly hard on poor families in developing countries where half of the household income expenditures is on food. The most significant contributing factor is the increasing demand for and production of biofuel crops in the EU and the US. It is this increase in biofuel demand and production that has driven wheat and corn crop availability for food down resulting in increases in the price of oilseed, biofuel crops and other crops. The cost of food resulting from droughts have also been found to be more devastating because of the demand for biofuel crops.22 According to Banse, van Meijl, tabeau and Woltjier, the EU’s Biofuels Directive had driven an increasing demand for biofuel crops and has led to “an increase in land use”.23 In turn, this has reduced the availability and supply of food crops negatively impacting “agriculture globally and within Europe”.24 In other words, the EU’s biofuels policy and laws, which are mirrored in the US have functioned to set off a chain reaction within the global agricultural market. These policies and laws have increased the demand for biofuel crops which are also a main source of food globally. The limited land and water available globally for farming and producing food crops are not being over-extended to produce first and second generation biofuel crops, leaving food crop in leaner supplies. Meanwhile the demand for food is increasing as the global population grows. As a result, the price of food increases and this means less food for the poorer families. Biofuels and the Environment Although biofuels are arguably a method for reducing carbon and therefore greenhouse emissions, the reverse can occur. The use of land for producing biofuel crops have given way to the “conversion of rainforests, peatlands, savannahs or grasslands”. 25 Thus as a direct result, a “biofuel carbon debt” may occur with the release of 17 to 420 times “more C02 than the annual greenhouse reductions that these biofuels would provide” in the replacement of fossil fuels.26 According to a report by the OECD, not all biofuels can effectively substitute for conventional oils or for reducing the greenhouse emissions. In addition to contributing to the marked increase in food and feed prices, some farming practices contribute to environmental degradation. Some of the environmental damages include “degradation of biodiversity and soil fertility and increased rates of soil erosion, excessive water abstraction and water pollution”.27 The production of biofuel feed has also resulted in a “net increase in greenhouse gas emissions”.28 Studies claiming that using biofuels instead of gas reduces greenhouse remissions because biofuels retard carbon via growing feedstock do not take into consideration carbon emissions that occur when farmers use grassland and forests for crops replacing grain for biofuels. It is estimated that with respect to ethanol from corn, rather than reducing carbon emissions by 20%, greenhouse emissions almost doubles in 30 years.29 The conversion of grassland and forest occurs as farmers respond to an increase for demand and an increase in prices for food crops. If biofuels are grown from switchgrass on corn lands in the US, emissions will increase by 50%. This conversion is heightened by biofuel targets.30 Fargione, Hill, Tilman, Polasky and Hawthorne argue that although biofuels are potentially a source of lower carbon energy sources, the lower carbon emissions from biofuels are linked to how biofuels are produced. Fargione, et al., argue that: …converting rainforests, peatlands, savannas, or grasslands to produce food crop-based biofuels in Brazil, Southeast Asia, and the United States creates a “biofuel carbon debt” by releasing 17 to 470 times more C02 than the annual greenhouse gas (GHG) reductions that these biofuels would provide by displacing fossil fuels.31 On the other hand, when biofuels are produced from “waste biomass or biomass grown on degraded or abandoned agricultural lands” that have perennial plants there or “little or no carbon debt” and therefore greenhouse gas reductions are not only “immediate” but also “sustained.”32 Hill, Nelson, Tilman, Polasky, and Tiffany compared the environmental damages associated with the production of biofuels, namely ethanol and biodiesels. Hill, et al., argue that in order for biofuels in general, to be viable energy alternatives they have to “provide a net energy gain,” “have environmental benefits,” “be economically competitive” and “be producible in large quantities without reducing food supplies.”33 In this regard, ethanol has 20% energy utility over the energy used to produce it while biodiesel has a 93% gain over the energy used to produce it. Biodiesel emits only 1%, 8% and 13% respectively in nitrogen, phosphorus and pesticide pollution for each unit of energy while ethanol’s emissions are substantially more. Moreover, biodiesel releases 41% less greenhouse gas than fossil fuels while ethanol releases just 12% less per unit of energy.34 The more advantageous performance of biodiesels over ethanol are explained by the simplicity involved in producing biodiesels. Much less agricultural activities are involved in the production of biodiesels. In converting the feed stock to biodiesel, the process is efficient. The reality is, it is impossible for ethanol and biodiesels to replace fossil fuels without having an effect on food.35 According to Hill, et al., if all the land used for producing corn and soybeans in the US were converted to the production of biofuels, only 12% of demands of biofuels would be satisfied and only 6% of biodiesels.36 According to the House of Commons’ Environmental Audit, the Swiss government funded research into the environmental damages associated with the production of biofuels. The study results indicated that in a many ways, using fossil fuels is not as damaging as the damages associated with producing biofuels. In this regard, biofuel production is linked to “acidification and excessive fertiliser use, biodiversity loss, air pollution and the toxicity of pesticides”.37 The House of Commons’ Environmental Audit also noted that tax concessions are only allowed for biofuels that are better for the environment than fossil fuels in Switzerland. As a result, on biofuels made from waste including vegetable oils and wood biomass attract tax concessions. The House of Commons’ Environmental Audit also suggested that broadly, biofuels’ potential to reduce environmental damages compared to fossil fuels are largely dependent on how and where biofuels are produced.38 Arguments against biofuels as a source of renewable energy do not dismiss the potential of biofuels to reduce carbon emissions as compared to fossil fuels. The main argument against biofuels is related to the production methods in response to demands for biofuels. Farmers seeking to meet the demand for biofuels tend to use production methods that limit its potential to reduce carbon emissions and at the same time, limit the availability of food crops. Arguments in Favour of Biofuels The production of biofuels is a partial solution to the food crisis, at worst. A growing global population, the increase in the price of fuel, and competition for access to land and sea are the main culprits in the increase in food prices. When the consequences of climate change are added to these problems, a food crisis is inevitable.39 It therefore follows, that biofuels per se, are not responsible for the increase in food prices. There are a number of production and policy practices involved that prevent the use of biofuels as a viable alternative to transport fossil fuels. It has also been argued that there is no real competition among farm lands for food and biofuel production. Farmers have increased production for first generation crops that are used for both food and biofuels. It has also been found that biofuel crops are produced on “marginal lands” for the most part and therefore, lands not used for food crops are typically used for the production of biofuels.40 However, Rathmann, Szklo and Schaeffer argue that some agricultural lands have been transformed for the production of biofuels. However, this shift in land use is entirely insignificant and if it contributes to an increase in food prices, this is only a temporary setback as the price of food should stabilize with savings on renewable energy.41 According to Birur, Hertel and Tyner, oilseeds are used in the EU for the production of biodiesel. As a result, there are export restrictions on oilseeds in the EU and while increasing the production of oilseeds, the EU imports oilseeds from Brazil. While this is expected to increase the price of oilseeds and food generally throughout the world, a trade balance is expected in the long-run. The trade balance is expected in savings relative to the use of biodiesels which will lower the cost of manufacturing and services.42 Ewing and Msangi argue that the national targets for biofuel production and use in the EU will not threaten food security worldwide. While it can be argued that an increase in biofuel production has contributed to an increase in food prices, this is not necessarily a bad thing. An increase in production of crops used for both food and biofuels have been particularly profitable for farmers in developing countries and has therefore increased the wealth of poor families in those countries. As a result, “purchasing power” improves in developing countries so that the poor is in a better position to pay for the increase in food prices.43 It is accepted that there are nearly 850 million people who do not receive sufficient food worldwide. It is also accepted that concerns that the increased production of biofuels will cut into available foods and increase food prices so that many more will be deprived of food. However, as Pingali, Raney and Wiebe argue, agricultural lands and crops have always been used for sources other than food. The global market place has always found a way to adjust to those changes and the increased production of biofuels is no different.44 One adjustment that can be made to the demand for biofuels and concerns about a pending food crisis is the production of non-food crops for biofuels. According to Ahmad, Yasin, Derek and Lim, microalgae is a non-food source that can be converted to biodiesel. Moreover, microalgae has also been found to be a sustainable source of biodiesel energy.45Murphy and Power also suggest that grass can be used in Ireland to meet national targets for biofuels under the EU Directive. According to Murphy and Power, grass crops in Ireland covers more than 90% of Ireland’s farm land. In addition, it is not necessary to rotate grass and yearly ploughing is not necessary which releases toxins. Grass also “sequesters carbon in the soil”.46 It would also take less land to produce biofuels from grass than it would to produce biofuels using rapeseed.47 A study conducted by Harrison is instructive. The study was conducted by tracking and analysing prices in food crops, ethanol and fossil fuel since the 1980s to 2009. The results indicated that the price of food crops have been increasing since the 1980s as a result of supply shortfalls in relation to population growth and the increasing price of fossil fuels. The increasing price of fossil fuels drives the demand for biofuels which in turn increased the price of food, but only in the short term. It is also important to note that increases in fossil fuel prices corresponds with the demand for biofuels and this put a strain on ethanol producing crops in particular.48 In fact, as Harrison stated, that as oil prices escalates increases the cost of energy and in turn increases the cost of food in general.49 Matthews and Tan also argue that studies claiming that converting land use to biofuel crops and efforts to make up the shortfall in food crops will result in more carbon emissions than using fossil fuels do, are not based on sound methodological studies. As it is, there is no evidence of a carbon crisis in the production of biofuel crops. Moreover, any evidence of land conversion has been shown to be sporadic and insignificant.50 The best argument in favour of the production and use of biofuels is found in the reasons for the EU’s implementation of the policy for national targets. The first and perhaps most important reason is energy security. By producing renewable energy in the form of biofuels, the EU is taking measures to prevent dependence on a foreign source of energy and the resulting volatility associated with this dependence. Secondly, the EU is promoting the use and production of biofuels to reduce greenhouse gas and carbon emissions. Although, this goal is contested, carbon emissions and greenhouse gases associated with land conversion for biofuels is only a short term concern. This is because second generation biofuel crops can be grown on land that is not useful for growing food crops. The third reason for the biofuel targets is to increase agricultural output for the benefit of the farming sector.51 The main arguments in favour of the production and use of biofuels lend support to the EU’s concerns and goals for establishing national targets. Essentially, concerns about a food crisis relative to the rising price of fossil fuels, carbon emissions from fossil fuels and the danger of fossil fuels running out surpass any concerns about a food crisis resulting from the production and use of biofuels. While there are viable concerns about the link between biofuels and food security, those concerns appear to have workable solutions and are for the most part unfounded. Analysis A review of the literature reveals that arguments that question the utility of biofuels as an alternative source of energy are only related to the production of biofuels. This is important, because all concerns about the price and environmental damages associated with fossil fuels are related to both the production and use of fossil fuels. There are no concerns associated with the environmental damages associated with the use of biofuels. Concerns relative to the environmental damages associated with biofuels are linked to production channels. When the problems associated with production channels are examined, it is obvious that these problems are not unworkable and even if they were not unworkable, biofuels remove at least half of the problems associated with the production of fossil fuels. The use of biofuels have not been found to cause environmental damages and have not been found to be associated with dangerous levels of carbon emissions. In other words, if it was impossible to resolve the environmental issues associated with land conversion for the production of biofuel crops, producing and using biofuels remains an improvement on the production and use of fossil fuels. This is because, the use of fossil fuels is linked to environmental contamination. Regardless, researchers have determined that it is possible to produce biofuels without incurring the problems perceived and predicted. To begin with, any environmental damages and price increases relative to the production of biofuels are only short-term. The opposite is true with respect to the production and use of fossil fuels as its future availability is expected to decrease progressively. Secondly, the environmental damages associated with fossil fuels can only be mitigated through the use of an alternative energy source such as biofuels. In the absence of an alternative energy source, and the sole reliance on fossil fuels a food crisis is virtually guaranteed. This is because not only will fossil fuels be depleted eventually, but in the meantime, climate change associated with carbon emissions and greenhouse gases from the use of fossil fuels will certainly limit soil fertility and land available for growing food crops and feed stock for animals for food. Researchers have also argued that production channels can be improved to remove the land conversion problems associated with the growth of biofuel crops. There are several alternative solutions to this problem. The main solution is for governments to regulate and monitor the farming of biofuel crops to safeguard against the conversion of forests and other lands that are necessary for safe ecosystems. Land conversion restrictions can resolve the environmental concerns associated with deforestation, without compromising national targets for the increased production and use of biofuels. As previously pointed out in this dissertation, second generation crops can be used for biofuels and second generation crops can be grown on land that cannot be used for the growth of food crops. In this regard, it is not necessary for farmers to resort to land conversion tactics. First generation crops may at the most, result in land sharing in which fertile land is used for the production of food crops and biofuels. This will obviously result in a lower supply of some food crops and will inevitably drive the price of some food crops upward. However, since second generation crops for the production of biofuels can be grown on land not suitable for food crops, the increase in price of food crops is only a temporary setback. Researchers have also found that other plants such as grass covering a large part of the agricultural lands in Ireland can be used to produce biofuels. Certainly, this is likely to be true in other countries. As the grass requires less maintenance and no ploughing and contains carbons in the soil, grass is a viable alternative to biofuel crops that also serve as a source of food. Grass is also a viable alternative to land conversion and will resolve many of the problems associated with environmental damages in the production of biofuels and the problems associated with dividing farmlands between the production of biofuel crops and food crops. Microalgae has also been found to be a viable non-food crop source of biofuels. In other words there are non-food crops available for the production of biofuels. It is therefore necessary for further research and development around the possibilities for producing biofuels from non-food crops and for using available lands without having to resort to deforestation and without having to share production of biofuel crops with food crops. When considering the options available for the production of biofuels, it is clear that the production of biofuels do not necessarily causes environmental damages and that crop sharing in terms of agricultural lands are also unnecessary. Therefore, environmental damages and price increases as a result of a food shortage linked to crop sharing are unnecessary and unintended consequences of the production of biofuels. Even if crop sharing is necessary, it is only a short-term problem and when compared to the long-term problems associated with the production and use of fossil fuels, society can bear the costs of crop sharing in the short-term. Considering the solutions to the problems associated with the production of biofuels and the long-term problems associated with the production and use of fossil fuels, the EU can meet its national targets without causing a food crisis globally. If the EU and other nations do not set and meet national targets for the production and use of biofuels, a food crisis is far more likely. Fossil fuels have proven to be unreliable in terms of availability, prices and environmental damages. As experience have shown, the price of fossil fuels continue to increase. Moreover, the damages associated with the production and use of fossil fuels is well-documented. Therefore, reliance on fossil fuels as a source of energy is tenable, at best. Research findings indicate that had it not been for the price increases in fossil fuel production and use, the environmental damages associated with the use and production of fossil fuels and its decreasing availability, the production of biofuels would not have been necessary. The obvious implications are that the continued reliance on fossil fuel as the main source of energy is detrimental to food security. Conclusion In the final analysis, the production and use of biofuels is necessary to safeguard against or at the very least, reduce the risk of a food crisis globally. As indicated, the production of biofuels can be managed in a way that eliminates or significantly reduces, the risk of shorter supplies of food crops and corresponding higher prices and the associated environmental damages. It therefore follows that, at worst, in the short-term, the production of biofuels have contributed to an increase in the price of food crops. However, there are other, irreversible factors contributing to the price increase in food crops. These contributory factors are the increase in oil prices, the decreasing availability of oil and a population explosion worldwide. These contributory factors are also long-term and will likely create and sustain a food crisis. The production and use of biofuels resolve these issues by providing an alternative and safer source of energy and at the same time increases agricultural demands and in doing so increases the spending power of parts of a growing population. Bibliography Textbooks Birur, Dileep, K.; Hertel, Thomas, W. and Tyner, Wallace, E. ‘The Biofuels Boom: Implications for World Food Markets.’ In Frank Bunte and Hans Dagevos (Eds.) The Food Economy: Global Issues and Challenges. (The Netherlands: Wagingen Academic Publishers, 2009). Great Britain: Parliament House of Commons: Environment Audit, Are Biofuels Sustainable? 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Mitchell, Donald. ‘A Note on Rising Food Prices.’ (July 2008) The World Bank Development Prospects Group, Policy Research Working Paper, 4468, 1-21. OECD. ‘Biofuels: Linking Support to Performance: Summary and Conclusion’. (7-8 June 2007) Joint Transport Research Centre, Round Table, 1-36. Statutes Directive 2003/30/EC on the Promotion of the use of Biofuels or other Renewable Fuels for Transport. Directive 2009/28/EC on the Promotion of the use of Energy from Renewable Sources. Internet Sources UNCTAD. ‘Infocomm Commodity Profile: Cassava.’ (2009-2013). UNCTAD. http://www.unctad.info/en/Infocomm/AACP-Products/COMMODIRY-PROFILE---Cassava/ (Retrieved 25 November 2013). UNCTAD. ‘Maize’. (2009-2013). UNCTAD. http://www.unctad.info/en/Infocomm/AACP-Products/Commodity-Profile---Corn/ (Retrieved 25 November 2013). Read More