Volley of criticism means shaky outlook for EU biofuels
FWi -- It has been an eventful few weeks for biofuels in Europe. Each week has brought another volley of criticism. Like a punch-drunk boxer, the biofuel industry is still there fighting, but to take the analogy further, a stumbling fighter attracts fewer bets.
It is no wonder that potential investors are looking elsewhere for better prospects, a development that could leave Europe dependent on imported biofuels, removing one of their main advantages. So what has led to this situation?
First we had the publication of the Renewable Energy Strategy and the Gallagher Review into the indirect effects of biofuel production. Both of these were reasonably balanced documents, and while I have a few queries about some of the assumptions made by Gallagher (particularly the different treatment of set-aside and unproductive land), overall they provide a sound framework that will still allow the European industry to move forward.
OPEC claims dismissed
Further mud was flung at biofuels by the oil cartel OPEC, which claimed that 40% of the price of crude oil could be attributed to bioethanol. The main European, Brazilian and North American bioethanol trade associations quickly responded in an open letter which politely suggested that OPEC president Chakib Khelil was talking out of his bottom. Since you, as head of OPEC, provide no explanation for what in our view constitutes a self-serving and misleading statement that goes counter to any independent analysis of the fuels market today, one can only conclude that OPEC views competition with biofuels as a direct threat, they wrote.
Next, the Organisation for Economic Co-operation and Development (OECD) published a report on 16 July which concluded that biofuels are currently highly dependent on public funding to be viable. The OECD says US, Canada and the European Union government support for the supply and use of biofuels is expected to rise to around $25bn a year by 2015 from about $11bn in 2006.
'The reduction of greenhouse gas emissions is a primary reason for current biofuel policies, but the savings are limited. Ethanol from sugar cane - the main feedstock used in Brazil - reduces greenhouse gas emissions by at least 80% compared to fossil fuels. But emission reductions are much smaller from biofuels based on feedstocks used in Europe and North America.'
It is no wonder that potential investors are looking elsewhere for better prospects, a development that could leave Europe dependent on imported biofuels, removing one of their main advantages. So what has led to this situation?
First we had the publication of the Renewable Energy Strategy and the Gallagher Review into the indirect effects of biofuel production. Both of these were reasonably balanced documents, and while I have a few queries about some of the assumptions made by Gallagher (particularly the different treatment of set-aside and unproductive land), overall they provide a sound framework that will still allow the European industry to move forward.
OPEC claims dismissed
Further mud was flung at biofuels by the oil cartel OPEC, which claimed that 40% of the price of crude oil could be attributed to bioethanol. The main European, Brazilian and North American bioethanol trade associations quickly responded in an open letter which politely suggested that OPEC president Chakib Khelil was talking out of his bottom. Since you, as head of OPEC, provide no explanation for what in our view constitutes a self-serving and misleading statement that goes counter to any independent analysis of the fuels market today, one can only conclude that OPEC views competition with biofuels as a direct threat, they wrote.
Next, the Organisation for Economic Co-operation and Development (OECD) published a report on 16 July which concluded that biofuels are currently highly dependent on public funding to be viable. The OECD says US, Canada and the European Union government support for the supply and use of biofuels is expected to rise to around $25bn a year by 2015 from about $11bn in 2006.
'The reduction of greenhouse gas emissions is a primary reason for current biofuel policies, but the savings are limited. Ethanol from sugar cane - the main feedstock used in Brazil - reduces greenhouse gas emissions by at least 80% compared to fossil fuels. But emission reductions are much smaller from biofuels based on feedstocks used in Europe and North America.'
