INSIGHT: Is EU biofuels policy equipped to survive?

26 November 2008 15:26  [Source: ICIS news]

By Simon Robinson

 

LONDON (ICIS news)--In the world of biofuels people bother about where the products come from and whether they are really of any benefit in use, unlike in conventional fuels where there is a lot less thought to provenance.

 

But could this care for the environment become a barrier to trade? There is a strong legislative basis for this, in the EU, at least.

 

It comes from the Treaty establishing the EU, which says it “shall contribute to the general objective of developing and consolidating democracy and the rule of law, and to that of respecting human rights and fundamental freedoms ” under Article 177(2)

 

Article 177 is supplemented by Article 11(1) of the Treaty which identifies developing and consolidating “democracy and the rule of law, and respect for human rights and fundamental freedoms ” as an overall objective of the EU’s common foreign and security policy. 

 

A lot of the likely raw materials that could be used to make biofuels for the developed world will - in the short term at least - come from southeast Asia and Latin America; two areas, which unlike Europe, have significant areas of unspoiled, unfarmed land.

 

There is considerable concern among green groups about the impact that converting forest to plantations for palm oil, will have on the biodiversity of nations such as Malaysia and Indonesia.

 

Green groups are also worried about the effects of clearing more land in Latin America too to grow sugarcane to make ethanol on the climate of the region and biodiversity.

 

There are also concerns over the human rights of the indigenous people and tenant farmers who may be disturbed to make way for such plantations in both regions.  

 

There has also been policy pressure in the EU to develop sustainability standards for biofuels. The proposals will be put to the vote at the upcoming European Parliament vote on the EU climate package.

 

The drive to do develop standards is often based around the ideas of prior informed consent, due process and the rule of law as well as ideas of sustainability and protecting biodiversity.  

 

This helps reassure consumers that the biofuels they will use in the future will be ethically sourced, from sustainable sources and will have a minimal carbon footprint.

 

The difficulty is that these standards are linked to public policy on biofuels, which are often subsidised by governments, and could easily be seen as a non-tariff barrier to trade.

 

Some countries have taken that line already with representations from Malaysia. A number of other countries have complained too.

 

Ron Steinblik and Richard Doornbosch argue in their publication Biofuels: Is The Cure Worse Than The Disease that discrimination in trade on the basis of a production method is highly contentious, and has been the nub of several precedent-setting trade disputes at the World Trade Organization (WTO).

 

In relation to trade, the proliferation of different standards is a cause for concern, as exporters will face the increasing cost of certification and bureaucratic complexity, they say.

 

Fortunately, the fact that countries and non-governmental organisations seem to have acknowledged these types of potential problems early suggests that some of the barriers created by national regulation of organic standards may be avoided in the case of biofuels.

 

Encouragingly, the EU, for one, has expressed its intention to apply its proposed system of certificates in a non- discriminatory way to domestically produced biofuels and imports.

 

Nevertheless, the growth of sustainability standards and regulations is a continuing challenge to fair and indiscriminate trade that should be confronted with great care and a healthy wariness.

 

It would be interesting to see if the EU's biofuels policy would be robust enough to survive a legal challenge.

 

The public’s attitude to motor fuels probably means there is little support for the high ethical standards that some seek to apply to biofuels.

 

Is the European Commission’s policy gold plating the public’s expectations? Only time will tell.

 

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By: Simon Robinson
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