Working Paper

Analysis of high and low indirect land-use change definitions in European Union renewable fuel policy

The European Union (EU) will continue incentivizing the use of biofuels and other renewable fuels through its recast Renewable Energy Directive for 2021-2030 (RED II). This directive includes a provision to limit and phase out by 2030 the contribution of biofuels produced from feedstocks that are “high indirect land-use change (ILUC) risk.” Feedstock production that is certified as low ILUC risk is exempt from this limit and phase out. The European Commission is required to set criteria to define both high and low ILUC risk biofuels by February, 2019.

High ILUC risk biofuel feedstocks are defined as those with significant expansion onto high carbon stock land. We find strong evidence that 40-53% of oil palm expansion in Indonesia and Malaysia has occurred on high carbon stock land in recent decades, including forest, wetlands, and shrubland. There is some evidence that significant expansion of soy in South America occurs on savannah and dry forest, with some expansion into the Amazon rainforest in recent years. This evidence strongly supports classifying palm oil, and suggests consideration of classifying soy, as high ILUC risk feedstocks.

Low ILUC risk biofuel feedstocks are defined as avoiding displacement of food and feed crops through improved agricultural practices or through cultivation of areas not previously used for crop production. Our analysis finds that these provisions would not necessarily ensure that certified feedstock is additional and thus genuinely reduces ILUC, especially for palm oil. If interpreted in a simplistic way, enough palm oil could be certified as low ILUC risk to double the current amount of palm biofuel consumed in the EU without reducing ILUC impacts. We recommend implementing robust criteria to ensure that feedstock certified as low ILUC is additional. The European Commission could look to the example of the additionality protocol in the Clean Development Mechanism, a program certifying greenhouse gas reduction projects in developing countries.


Alternative fuels