Biofuels a high-cost means to reach renewable transport fuel targets in Germany and the UK
GENEVA—February 2, 2012—European taxpayers and consumers will pay a high price to meet European Union targets for renewable transport fuels, according to new research by the International Institute for Sustainable Development's Global Subsidies Initiative (GSI) and the FiFo Institute for Public Economics at the University of Cologne.
Under the EU's Renewable Energy Directive, 10 per cent of transport fuels used in the EU must come from renewable sources by 2020. Member states are placing large bets on biofuels to meet that target.
The role that biofuels should play in Europe's transport policy is being hotly debated. The benefits potentially include greater greenhouse gas (GHG) reductions, localized production and greater energy security. However, biofuels have also been criticized for generating GHG emissions from the clearing of forests, loss of biodiversity and increased food prices that ripple through international markets.
Two reports, by GSI and FiFo, examine the economic costs of meeting the EU's renewable transport fuel targets by using biofuels.
The reports find that U.K. consumers will likely pay between £1 and £2 billion per year (approx. €1.6 to €3.2 billion) in higher transport fuel prices by 2020. In Germany, consumers are expected to pay €1.4 to €2.2 billion per year.
Meeting the renewable transport fuel target also entails significant cost to government coffers. The U.K. and German governments, together with the EU, provide a range of subsidies to encourage biofuel production, including excise tax duties, grants and support to infrastructure and payments to farmers.
The research finds that a growing portion of agricultural subsidies are going to farmers who produce biofuel stock under the EU's Single Payment Scheme (SPS). While SPS payments to farmers in the U.K. for growing biofuel stock are relatively low, they are growing rapidly and have more than doubled in the two-year period ended April 14, 2011 from April 15, 2009. SPS payments to German farmers growing biofuel stock amounted to €372.25 million in 2009.
Despite these costs to taxpayers and consumers, 90 per cent of transport fuel will still come from oil. "Even if the targets are met, the impact is fairly small in terms of the overall picture," said Peter Wooders, senior economist at IISD and a co-author of the U.K. report.
"We encourage governments to explore alternatives and assess these against biofuels," Wooders said.
Please see the reports: Biofuels – At What Cost? Mandating ethanol and biodiesel consumption in the United Kingdom and Biofuels – At What Cost? Mandating ethanol and biodiesel consumption in Germany. -end-
For more information, please contact Peter Wooders at [email protected] or Damon Vis-Dunbar, IISD's GSI communications coordinator, at +41 22 917-8848 or [email protected].
About IISD
The International Institute for Sustainable Development (IISD) is a globally recognized think tank with 3 decades of experience working to solve the world’s most pressing sustainable development challenges. We combine deep expertise in a wide range of issues with a collaborative approach to research, policy advice, and hands-on support to ensure these solutions are brought to life. Headquartered in Winnipeg, Manitoba, we are a diverse team of over 300 professionals working from offices in Canada, Switzerland, and other locations around the world.
You might also be interested in
Midpoint of the UN Tax Convention Negotiations: Where do talks stand?
The negotiations for a new UN Framework Convention on International Tax Cooperation have hit their halfway point. Here's a look at where things stand, what was on the table this round, and what's coming next.
Canadian Exporters Face New Reporting Costs as Carbon Border Taxes Multiply
The European Union’s carbon border tax will add new compliance costs for Canadian businesses that trade certain products, especially steel and aluminum, to the bloc. The increased costs—linked to differing demands for measuring, reporting, and verifying a product’s greenhouse gas emissions across the growing number of countries adopting border carbon adjustment (BCA) mechanisms—“make it tough for any exporter to those markets,” Aaron Cosbey, senior associate at the International Institute for Sustainable Development (IISD), told The Energy Mix.
Experimental Lakes gets $2M for major facilities upgrade
A one-of-a-kind research station is studying small lakes to inform freshwater science all over the world is getting a new facility with more space for scientists and students. Located between Dryden and Kenora, the International Institute for Sustainable Development’s Experimental Lakes Area allows scientists and students to run experiments on 58 small lakes in the area.
Province investing $2M to ‘ensure northwestern Ontario remains a global leader in freshwater science and research’
The Government of Ontario is making a targeted investment to “strengthen northern Ontario's leadership in freshwater science, support research and innovation and create new educational and economic opportunities in the region.” On Aug. 13, the Northern Ontario Heritage Fund Corporation (NOHFC) — a regional granting subsidiary of the provincial government — announced that it will be investing $2 million to build a new Centre for Climate and Lake Learning at the International Institute for Sustainable Development Experimental Lakes Area (IISD-ELA), which is located about halfway between Kenora and Dryden.