RTFO: day zero, infinite challenge

The Renewable Transport Fuel Obligation is coming into force today and applies to companies supplying more than 450,000 litres of fossil fuel a year across the duty point into the UK market. From now on, fuel suppliers are supposed to include 2.5% (by volume) of biofuels in their fuels. This target is supposed to increase to 5% by volume by 2010.
I say "supposed to" because the UK is doing pretty poorly in terms of biofuel sales. The sales only amounted to 0.45% by volume in 2006 and even if they nearly doubled in the first 5 months of 2007, I'd be really surprised if they exceeded 2% today.  With this delay, it will also be very difficult to reach the 5% target by 2010.
Considering that the European targets are 5.75% by energy content by 2010 (which is about 7% by volume), anyone can see that whatever happens the UK biofuels sales will fall well below the 2010 European targets!

But the British government still says it is leading the way in that it is imposing carbon and sustainability reporting on biofuels (the whole point of the RTFO and its genuine originality).
Although the idea is absolutely brilliant (making sure biofuels are produced in a sustainable manner), those who are still confident in the good will of the Department of Transport are going to be very disappointed.

First of all, the target for the biofuels GHG (greenhouse gas) emission savings are 40% for this year, 45% for 2009 and 50% for 2010 but this doesn't take into account the GHG emissions from displacement (i.e. the relocation of the displaced crops on new lands, which leads to indirect land use change- including deforestation today - and might make biofuels net emitters of GHG), and the calculation methodology is quite generous with co-products allocation (which artificially makes the savings higher).

Secondly, the target percentage of feedstock meeting qualifying environmental standards is only 30% for this year (the target is 80% for 2010); the chosen qualifying standards are not necessarily very stringent and the standards themselves are vague enough for the environment to be degraded but the biofuel to be certified.

But most of all, the obligation is only to report. It is ok to say "dunno" and this will make your biofuel a certified one. It looks quite easy to have "renewable and sustainable" biofuels with such a scheme in place.

Unfortunately, this is only the reported part of biofuels in this scheme. With hunger riots all around the world and increasing food prices, the food versus fuel debate cannot be avoided.

Of course, biofuels are not the only cause for the rise in food prices, the main reasons being the increase in fossil fuel prices (upon which conventional agriculture is heavily dependent), the sudden increase in meat consumption in China and India (where more and more people can afford buying more meat and dairy products, that have more embedded cereals than their previous diets), and the recent poor yields in key areas (e.g. droughts in Australia and Ukraine).

But even Gordon Brown acknowledged (last week) that biofuels development is aggravating the rise in food prices in a letter to the Japanese PM.

For these reasons, the RFA (Renewable Fuel Agency - in charge of implementing the RTFO) started a review on the indirect effects of biofuels. Who knows what the conclusions will be and how they will affect the current biofuel policy. But this could totally challenge the current trends in biofuels production.

But beyond biofuels, this context could be the chance for poor countries to switch from an agriculture focused on export crops (to supply our coffee, cocoa, etc.) to a food-producing agriculture that would make them gain more food sovereignty (which would make them less vulnerable to the world market fluctuations). Rather than wasting money on GMOs and their hypothetic benefits, it is also time to work on how to sustainably increase yields of agriculture in these countries. In a word, time to rethink agriculture in holistic way!

Comments

[Miles]

How are the co-products allocated Jérémie? In the draft EU Directive it's done on the basis of energy value. The logic being that energy content is more objective and demonstrable than product value or most likely alternative use.

[Jérémie]

I was waiting you on this Miles.
The co-product issue is a very tricky one I have to admit.
The following paper http://www.dft.gov.uk/rfa/_db/_documents/310308_RFA_Technical_Guidance_Part_2_v1.2.pdf
says that the RFA has already determined default values of most co-products. It also says that the substitution approach is the most representative one (and I agree with this). But the choice for what it substitutes doesn't send good signals to me (as you say, the alternative use of a co-product is very difficult to demonstrate). In the methodology, edible co-products derived from biofuel production are nearly systematically substituting US soymeal, which is well known for being very GHG intensive. Then it's easy to get lots of credits when you compare with the worst-case scenario. In that, I think the methodology does artificially increase the presumed GHG savings from biofuels.
As to glycerine and other "chemical" co-products, they are allocated on a market basis, and it's very difficult for me to relate that to actual GHG emissions.
Regarding the EU directive proposal, I hear here and there that the energy allocation has been chosen by the EU because it favours EU feedstocks. I don't know if it's true or not but anyway the energy allocation reflects reality even less than the substitution approach.
I don't have an answer to how co-products should be accounted for but I like the approach of Uwe Fritsche, in this paper http://www.biofuelstp.eu/downloads/WWF_Sustainable_Bioenergy_final_version.pdf .
The hypothetic standard would require that bioenergy cultivation reduces GHG emissions by 67% compared to oil and that the conversion process is at least 67% efficient (taking into account by-products for which proof of use must be given). Within such scheme, there would be no artificial gain in biofuel GHG savings.
Hope this answers your question!

[Miles]

Ah... Uwe's approach sounds quite similar to the CDM methodology where the project must demonstrate leakage on a case-by-case basis. I can see the logic of the EU approach, although classifying by-products with energy value when they probably won't be sold to energy markets is slightly odd. The Commission does compare results using energy value and other techniques in Annex 7 of this monster:
http://ec.europa.eu/energy/climate_actions/doc/2008_res_ia_annex_en.pdf

[Bishop Hill]

Jeremie

To support your assertion that fossil fuel price rises are the main cause of food shortages, you link to a George Monbiot article in which he says:

"The production of biofuels will consume almost 100m tonnes, which suggests that they are directly responsible for the current crisis."

[Nathan Rive]

BH - I think we can all agree that biofuels have contributed to food price increases - but I haven't seen any breakdown that suggests that they are the main contributor. FAO seem to point to oil as well:
http://www.time.com/time/business/article/0,8599,1684910,00.html

Their report highlights biofuels as well, however:
http://www.fao.org/docrep/010/ah877e/ah877e01.htm

With an impending slowdown, we can expect oil prices to fall, and see this issue relax somewhat.

I'd like to see someone do some CGE modelling to see if they can do a deconstruction of relative impacts of oil prices and biofuels on food prices. I'll see if someone at GTAP has done it...

[Bishop Hill]

You're right Nathan - I've seen nothing convincing either way. I was really just pointing out that the article didn't support Jeremie's case.