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Market News

 July 11, 2007
EU sees need for biofuels imports

 Brussels, Belgium -- European Union officials have said that the regional bloc will have to seek out biofuels imports from developing countries and other areas in order to meet EU goals to reduce oil dependency and cut greenhouse gas emissions.

EU leaders committed at the March 2007 European Council to a binding minimum target for each member state to achieve at least 10% of their transport fuel consumption from biofuels. Transport is responsible for around one third of all carbon dioxide emissions in the EU with road vehicles relying almost entirely on oil as a primary energy source.

Europe will fail to meet its 10% objective without a major rise in imports from countries like Brazil, warned EU Trade Commissioner Peter Mandelson at an international conference organised by the Commission on 5 July. The conference was attended by Brazilian President Lula Da Silva and followed hard on the heels of the first ever EU-Brazil summit, held one day before.

Mandelson said that Europe should not favour domestic production of biofuels with "weak carbon performance" if "cheaper, cleaner" biofuels can be imported. Brazil produces ethanol from sugar cane in a process that is more energy-efficient than grain-based ethanol.

Currently, biofuel such as ethanol are classified as agricultural goods and enjoy relatively high tariff protection in Europe in order to support the development of the biofuel market and protect European farmers against foreign competition.

However, since there is not enough European land available to produce sufficient amounts of fuel and feed, the EU will have to further open up its doors to imports from third countries, said a number of EU Commissioners speaking at the conference. In the Commission's view, this can be achieved either by means of a multilateral agreement, at the World Trade Organisation, or through bilateral deals, such as the new strategic partnership launched with Brazil on 4 July.

Officials asserted the market opening in Europe would also benefit developing countries -- currently the main producers of biofuel crops, such as sugar cane and corn. Others warned that increased deforestation and loss of biodiversity due to increased demand for land, water and resources to support energy crop agriculture. Some EU members are also opposed to any cuts in tariffs on crops.

Mandelson did says that the development a biofuels import market "must be tempered by environmental reality", so that it does not lead to destruction of rainforests or unsustainable agricultural practices.

Energy Commissioner Andris Piebalgs said that Europe could feasibly fulfil the 10% target by 2020 with only domestic biofuels production, by using 'set-aside' agricultural land and by reducing the rate at which arable land is being abandoned in the EU. However, the purely domestic approach is not considered feasible under current trade rules, or desirable from an economic standpoint, he added.

For more, including official documents, see Euractiv.



For More Information: EurActiv