Indirect land use change in Europe (considering the policy options)
The European Commission recently released updated results of modelling by the International Food Policy Research Institute of the likely indirect effects of the EU’s biofuels mandate. We critically assess this work, concluding that while there are inevitably areas that could be improved with further development it is a robust study and representative of best practice in the field of CGE modelling of iLUC. We note that in several areas criticisms made by the European Biodiesel Board do not appear to be well supported.
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The European Commission is mandated by the Renewable Energy and Fuel Quality Directives to recommend a specific methodology to deal with indirect land use change, if deemed appropriate based on the best available scientific evidence. Based on a simple spreadsheet model of available biofuel feedstocks and pathways under various policy alternatives, and treating the IFPRI MIRAGE modelling results as the best available evidence, we show that without action on iLUC there are unlikely to be significant (if any) net emissions reductions from European biofuel support policies. We note that based on UK DfT cost figures for 2020, the cost of carbon abatement with biofuels in the absence of measures to address iLUC could be around €2,500 per tonne of carbon dioxide abated.
We find that the introduction of iLUC factors, or of policies that otherwise prevented the use of the highest iLUC fuels (biodiesel from unused vegetable oil), would increase the expected carbon savings of the policy by a factor of ten, but note that it might be challenging to meet the current level of aspiration for total energy use with such strong policies. We suggest that even with conservative (high) estimates of the cost of sourcing low emissions and/or low-iLUC biofuels, effective iLUC reduction policies could cut the expected carbon abatement cost of EU biofuels policy by a factor of 5.
You can also read our briefing on the IFPRI MIRAGE results here.