3E Intelligence

A few pointers to some must-read reports or articles which I discovered in the last ten days:

• Nicholas Stern’s latest report “Key elements of a global deal on climate change“: not much different from his 2006 Stern review for the UK government but rings the alarm bell a bit harder as very little has really changed since then; mentions the 80-90% reduction target again without being concrete about the implications on our way of life (see my earlier: “Welcome to brave new world“);
• Herman Daly’s recent “Steady-State Economy” presentation to the UK’s Sustainable Development Commission: I do not like the term “steady-state” (it will be hard to convince decision-makers to back a concept which reminds them of immobility and state control, although it has nothing to do with both), but Daly still remains one of the greatest thinkers about how to put humanity back on a sustainability path. When will the Commission have the courage to invite him to one of its Green Week or Sustainable Energy week sessions?
• For all of us who think about offsetting their air travel, the Stockholm Environment Institute has done an excellent job reviewing different emissions calculators and offsetting schemes and concluded that they still need a lot of improvement. Read their report “Carbon offsetting and air travel“.
• Greenpeace published a new report questioning the latest “silver bullet”: carbon capture and storage. The report “False hope” is a must-read contribution to a difficult debate which will be in the spotlight during some conferences in Brussels in the next few months. So, if you want to contribute, make sure you get your ammunition
• Last but not least,  another hot topic on the current climate/energy agenda: the sustainability criteria for biofuels. This debate on how best to implement bio-energy standards should be broadened and develop into an “international standard-setting scheme for a sustainable use of natural resources” according to a brilliant paper by Ecologic’s Timo Kaphengst and Stephanie Schlegel.

This blog was very silent last week because I was in Washington DC participating in a fascinating two-day climate and energy conference organised by the Transatlantic Platform for Action on the Global Environment (T-PAGE). This dialogue forum was created to facilitate debate among members of EU and US civil society on climate and energy policies on both sides of the Atlantic.

The conference focused in a first-day expert workshop on the question how to reduce emissions from the transport sector and on the controversial US and EU biofuels policies. On the second day, a public event highlighted the lessons drawn from the EU’s emissions trading scheme (ETS) and US Congress plans for a similar cap-and-trade system and looked at public perceptions in the US and the EU about the global warming challenge.

Overall, the European participants painted a less rosy picture than EU institutions want to make believe. Not only was there the growing disappointment with the global effects of biofuels policies (one of the EU’s own environmental institutions now pleads for suspending the 10% target), but the evaluation of Europe’s climate flagship, the emissions trading scheme or ETS, was also rather bleak. It is obvious that up to now the ETS has not lived up to its expectations. Very few real technological investments as a result of pricing CO2 have taken place and the only ones who seem to have won from ETS are the financial traders (who therefore write very positive reports about ETS). It is doubtful whether the Commission’s new proposals will turn things around. Not only has the energy-intensive industry hijacked the debate with its “carbon leakage” panic but even the better parts of the Commission’s ETS review drew heavy fire at the conference. “When Europe’s power producers (who have made big windfall profits in the first phase of ETS) applaud the auctioning proposals of the new Commission package, you have to smell a rat” was the justified and smart observation of an ex-Commission official.

The US participants (mainly from environmental groups, academics and one representative of the Californian lawmakers) were quite optimistic that the wind in the US is changing and that a future administration will endorse stricter global warming targets. One of the doubts raised was whether this will happen fast enough so as to influence the outcome of the Copenhagen climate top of 2009. I also have my own personal doubts in case of a surprise win of John McCain in November. Will the US senator, when President, be able to turn his climate-sceptical party around or will he water down his own positions?

US as well as EU particpants agreed that we need to move to more sustainable transport modes but there was a lot of confusion in the debate on what would be the right approach (some went for CNG, others underlined the need for a breakthrough in electrification technologies, others again highlighted the need for serious transport demand reduction).

On biofuels, the general feeling was that it is time to “take the foot of the accelerator” and “rethink” our biofuels policies in view of rising food prices as well as negative effects on land use and the direct and indirect repercussions for the environment and global warming.

That said, the conference confirmed to me once more that our exclusive focus on climate change makes us lose sight of the bigger sustainability challenge. Climate change is just one symptom of a bigger system crisis with lots of other dimensions (peak oil, gas and coal, high commodity prices, water shortages, biodiversity loss, population growth). Policymakers’ overemphasis on one dimension of this sustainability crisis might lead to effects which aggravate the other crises (see the link between biofuels, population and high oil prices on the one hand and the new hunger issue on the other). If policymakers do not connect the dots and see climate change as part of this huge overarching sustainability challenge, chances are that we will just sink deeper and deeper into the mud as exemplified by the flight into coal and tar sands as a result of the growing energy crunch. It is time to develop a transatlantic and global agenda on sustainability and create the governance structures needed for this system transformation.

Now that the EU’s policies on first-generation biofuels is getting more and more headwind, the biofuels advocates in Brussels (and globally) are holding a plea for quicker research and development of cellulosic or second-generation biofuels. In the impact assessment of its 23 January 2008 climate/energy package, the Commission foresees a 30% share of these new biofuels by 2020.

Cellulosic biofuels are made from non-food crops or waste products such as straw, grasses or wood left-overs (see Wikipedia on cellulosic ethanol).

There are several problems with cellulosic biofuels though. First of all, according to most experts, full commercial production is still ten years off. More fundamentally, a lot of the so-called waste products to be used for cellulosic biofuels are no waste. Nature does not know waste. What we call waste, are in reality nutrients for ecosystems and soils. Removing these waste products could actually lead to soil problems later.

Nevertheless, it makes sense to get more and better information on these second-generation biofuels.

The University of Berkely has this great YouTube video on cellulosic biofuels.

Further reading:

• George Monbiot (in the Guardian, Febr. 2008): The Last Straw
• WorldChanging: Second-generation biofuels (Febr 200

Martin Wolf is without any doubt one of the best European economic journalists of his time, although I do not always agree with his neo-liberal “let’s leave everything to the market” politics.

Today, the FT columnist launches a brilliant attack on the political support and subsidies for biofuels which he sees driven by “well-organised special interests“.

Wolf calls these subsidies “farm programmes masquerading as answers to energy insecurity and climate change“. He uses the recent Global Subsidies study of the International Institute for Sustainable Development to illustrate the foolishness of these very costly policies (see on this also my blog post from 4 October).

Wolf also rebuffs the five “rationalisations” that are used to justify the biofuels subsidies:

• these subsidies reduce farm support payments
• they lower petrol prices
• they reduce reliance on risky fossil fuels
• they are an efficient way to reduce greenhouse gas emissions
• they are only needed to establish the infrastructure.

This is then Wolf’s diagnosis which I can indeed agree with, but then the FT journalist moves on to the question “what to do?”

First the “negative” solutions: “eliminate increasingly popular (because apparently costless) mandates to use specific quantities of biofuels, since these shift all the risk of fluctuations in demand and supply of foodstuffs on to their use as food; discipline the stacking of subsidies on one another; and eliminate all open-ended supports for production before these become impossible to reverse“. No problem with most of those recommendation again, although I think a moratorium on first-generation biofuels might be easier.

Then Wolf’s “positive” ideas: “define the objectives and instruments of policy precisely, in terms of the overall goals of energy security and reductions in emissions of greenhouse gases; create a single global price of carbon that governs all activities; make producers compete for any support that is offered; let the markets decide on sale of flexible-fuel vehicles (and indeed the energy efficiency of vehicles); and, above all, move to free trade in biofuels”.

A lot here again with which I have no problems except for the “markets” bit. First of all, as the Stern report has clearly stated: “climate change [and I am so free to add energy insecurity] is the biggest market failure of our time”. Secondly, none of our energy sources has and can do without government support. If nuclear would not have had very generous subsidies in the past (and the present) we would not even have the debate on an energy renaissance. So the issue is not the subsidies, the problem is the special interests and their lobbying power! That being said, subsidies should be carefully considered, democratically decided and should not only follow an economic rationale but on sustainability rationale.

At a dinner debate organised by Friends of Europe and General Motors Europe on 16 October, EU Commission official Paul Hodson reacted to the Doornbosch-Steenblik report published for the Round Table on Sustainable Development of the OECD (the report is NOT an officially endorsed OECD document BTW).

In their study “Biofuels, is the cure worse than the disease”, the two OECD consultants concluded that using biofuels to reduce greenhouse gases comes at a very high cost and therefore recommend to phase our biofuels subsidies. “The cost of obtaining a unit of CO2-equivalent reduction through subsidies to biofuels is extremely high, well over $500 per tonne of CO2-equivalent avoided for corn-based ethanol in the United States“, says the report. According to a table in the report (page 7), the CO2 reduction costs for European biodiesel would be between 340 and 1300 dollars.

Commission biofuels expert Hodson took issue with these conclusions of the Doornbosch report saying it included a lot of double counting. The Commission’s own services, said Paul Hodson, have calculated much lower cost figures: 20 euros for biodiesel and 50 euros for palmoil-based biofuels at an oil price of 60 dollars.

• Conversion of arable land to produce biofuels should be forbidden for five years, until science has made enough progress to create “second-generation” biofuels. This is the recommendation of a UN Special Rapporteur on the Right to Food. See Swissinfo for more on this story. Science Magazine Nature also has an editorial questioning corn-based biofuels (”Kill king corn“). The excellent Biopact blog questions the EU’s and US support for domestic biofuels production refering to a new think tank report of the International Food & Agricultural Trade Policy Council (IPC): “domestic biofuels are not very energy efficient, they do not offer significant reductions in greenhouse gas emissions, they are not cost effective, they push up food prices and they are based on large amounts of subsidies and protectionist trade barriers“.
• There is an urgent need for standardised carbon reporting according to a letter written to the UK government by the Aldersgate Group, a coalition of  leading UK businesses, environmental NGOs and members of parliament. “Despite improvements in the number of companies disclosing information on carbon dioxide and other greenhouse gases, current reporting levels are still too low, and what is disclosed is not comparable because of the use of different calculation methods“. Read the Guardian for more.

The production of first-generation agro-fuels does not only have questionable environmental and social effects but it is also a very expensive way of trying to deal with the climate change effects of transport.

European public support for first-generation biofuels is not a cost-effective way to reduce greenhouse gas emissions, according to a new report by the Global Subsidies Initiative presented in the European Parliament on 3 October.

EU countries spent at least 3.7 billion euros on subsidies for biofuels in 2006 but this figure might be seriously underestimated, says the report, as transparent information on these subsidies is very hard to obtain. The authors of the report question the rationale behind these subsidies:

“The cost of obtaining a unit of CO2-equivalent reduction through biofuel subsidies, for example, is estimated to be € 575 to € 800 for ethanol made from sugarbeet, around € 215 for biodiesel made from used cooking oil, and over € 600 for biodiesel made from rapeseed. Governments could achieve far more reductions for the same amount of public funds by simply purchasing the reductions in the marketplace. For the price of one tonne of CO2 reduction through EU biofuel subsidies, more than 20 tonnes of CO2-equivalent offsets could be purchased on the European Climate Exchange“. 

Here are the report’s key recommendations to EU and national policy makers:

• “avoid instituting new consumption mandates for biofuels;
• eliminate all tariffs on imported fuel ethanol;
• resist providing new specific subsidies to the industry, and move to re-instate fuel-excise taxes on biofuels where this has not already been done;
• improve the information available on government support provided to the biofuels industry, as well as
  enhance transparency on the effects of such support on production, capacity and trade in biofuels;
• put in place an evaluation process that can thoroughly assess the cost-effectiveness of each Member State’s support policies in attaining all three of the objectives underlying the EU biofuels policy.”

During a recent seminar organised by the German Marshall Fund in Brussels, I heard EU commission expert for biofuels Paul Hodson express his growing frustration with all the negative news about the agro-fuels in the last twelve months. “Once I was proud of what I was doing”, Paul said, “but now I feel more and more like I am being looked upon as a pornographer”. Knowing Paul personally I really understand his predicament. With very ambitious EU targets (5.75% biofuels to be used for transport by 2010 and 10% by 2020), Hodson and his colleagues are trying hard to keep up the credibility of the EU’s biofuels action by defining sustainability certification criteria for the use of the alternative fuels. But maybe, in view of some recent reports, they should have the courage to question the policy alltogether and propose a moratorium on further promotion of biofuels until more research has been done into its environmental and economic impacts.

Two recent reports questioned the global political fever on biofuels. 

First of all, a study by Doornbosch and Steenblik (”Biofuels: is the cure worse than the disease?“) for the OECD Roundtable on Sustainable Development looked at the impacts of biofuels production on the food market, the environment and biodiversity and concluded:

• “The rush to energy crops threatens to cause food shortages and damage to biodiversity with limited benefits”;
• “Second-generation technologies hold promise but depend on technological breakthroughs”;
• “The economic outlook for biofuels seems fragile”;
• “Government policies supporting and protecting domestic production of biofuels are inefficient…(…) and not cost-effective”;
• “Liberalising trade in biofuels is difficult but essential for global objectives”
• “Certification of biofuels is useful for promoting good practices but cannot be trusted as a safeguard”.

The media reporting on this study (most media talked about “the OECD report” although this was not an officially endorsed OECD document) led to a lobbying storm with renewable energy and biofuels organisations calling on the OECD to disavow the study (see Bioenergy Pact).

The second report came from Nobel-prize winner Paul Crutzen who challenged the positive climate effects of the use of biofuels in a study published in Atmospheric Chemistry and Physics Discussions. According to Crutzen and his team, the emissions of nitrous oxide (N₂O) from agro-crop production could negate the positive climate impacts of switching to biofuels and, as N2O has a bigger impact than CO2 on climate change, could even lead to higher greenhouse gas emissions overall (see also Bioenergy Pact).

Further reading:

• Earth2Tech: “And now, the biofuel backlash“
• EurActiv: LinksDossier Biofuels: the next generation

Swedish truck and bus manufacturer Volvo presented no less than 7 biomass-driven (”CO2-free”) trucks during the 2007 European Transport Forum in Brussels yesterday. With its high-level campaign the company wants to demonstrate that it can provide the car engine technologies needed for the alternative fuels to take off. Although there is a lot of vocal support from industries and policymakers for the new fuels, traditional fuel producers seem to be reluctant to start producing them in large quantities. Volvo itself admitted that it had a hard time finding the necessary fuels to show off the trucks outside of the conference venue. When representatives of the fuel sector present in the conference were challenged to respond to this issue, no one apparently dared to take up the challenge.

One remarkable element of the debate was that Volvo CEO Leif Johansson explicitly refered to “peak oil” as one of the drivers (together with climate change) for his company’s resolve to build the new bio-diesel and bio-gas trucks. “We are approaching the peak of oil production”, Johansson said. Quite a surprising statement from a commercial vehicle manufacturer but then again his home country Sweden has some time ago already taken the lead in Europe on trying to become the first non-fossil fuel country. I hope the Brussels EU policy makers were listening.

During the debate which I had the pleasure to moderate I felt that Mr Johanssen evaded a bit my questions on the predictable struggle for biomass material from the transport, the food and the wood and paper sector. Several NGOs as well as a recent OECD report have warned that the “rush to energy crops threatens to cause food shortages and damage to biodiversity with limited benefits”.

Mr. Johansson admitted that it would be a good idea to bring the leaders of the different sectors together to find a constructive cooperation for biomass raw material but also warned against a system of central political planning to deal with this issue. I personally think it could be one of the tasks for the EU to provide this kind of permanent collaboration forum between different sectors (including NGOs) on future uses of biomass.

The presentations of Leif Johansson and two of his colleagues can be found on the European Transport Forum website:

• Presentation Leif Johansson
• Presentation Jan-Eric Sundgren
• Presentation Hakan Karlsson

More extensive news coverage of the event at eTrucker.com.

In an article in the magazine Science, a team of UK researchers has attacked the European Union’s ambitious biofuels targets (10% by 2020) saying reforestation would be a much better way to reduce greenhouse gas emissions. The researchers from Leeds University and the World Land Trust calculated that new forests would absorb nine times the amount of “avoided emissions” from the use of biofuels. Moreover, imports of biofuels into the EU could lead to more deforestation in developing countries.

More on this issue at BBC News and the Bioenergy pact blog.