The European Commission's Proposal and Potential Effects on Biodiesel

Zach Herrera
December 14, 2012

Submitted as coursework for PH240, Stanford University, Fall 2012


Both the production and demand for biofuels have risen dramatically over the last decade. Within the European Union, this growth has been spurned by a self-mandated goal of obtaining 20% of the total energy need from renewable sources by the year 2020 and of ensuring that 10% of all transportation fuel originates from renewable sources, such as biofuel. This mandate has triggered significant growth in domestic biodiesel production. [1] However, recent controversies and unsettling counter-arguments to the sustainability of biodiesel production have derailed the European Union's commitment to biodiesel.

The European Commission's Proposal

In October of 2012, the European Commission(EC) reversed its history of support for growth in the biodiesel industry by proposing a cap on food-based biofuel so that only 5% of all transport fuel in the European Union could come from "cereal and other starch rich crops, sugars and oil crops." [2] While these proposals will not be directly implemented, if it all, for at least several years they at least indicate a strong disillusionment by the European Union with the current state of biofuels.

The EC objects to the expansion of biofuel production by directly citing the concept of indirect land usage change(ILUC). [2] ILUC refers to the amount of greenhouse gas released by the destruction of the natural environment already existing on arable land when that land is repurposed towards crop development. Studies into biofuel production using switchgrass in America have already shown that taking into account environment destruction can severely warp the greenhouse gas benefits of biofuel use and release far more greenhouse gases then saved, even over periods of decades. [3]

This applies especially to biodiesel because modeling based on current European incentives ties a 5 million hectare increase in the amount of land used for cultivation of crops destined for biofuel to these incentives. [1] While this may not be large compared to total arable land, much of this difference is predicted to occur in Southeast Asia as the percentage of biodiesel consumed by the European Union and produced from palm oil is predicted to increase from 4 to 17% by 2020. [4] Here, rainforests are clear-cut to make way for palm-oil plantations, a process with a particularly harsh ILUC and striking effects on the environment, as seen in Fig. 1

Industry Response and Implications for the Future

As expected, industry response to the proposed cap has been overwhelmingly negative. The reaction has been exacerbated by the perceived suddenness of the reversal in policy as multiple companies have ramped up their investment over the last 4 years since the EU originally set original renewable fuel goal. Since these investments were made under the perception that the demand for biofuels would substantially increase during the push for the 2020 goal, millions of dollars are set to be lost if the cap comes into play. [5] Modeling from 2008 predicted an increase in biodiesel production of nearly 11 billion liters by 2020 if incentives were retained versus a predicted decrease by 5 billion liters were incentives completely removed. [1]

In addition, cutting incentives will make the discovery and commercialization of fuel dependent on more ideal sources, such as waste and by-product feedstocks, more difficult especially since investment in biofuels will become very unattractive given the predicted losses caused by this single proposal and the prospect of further cuts in the future. Ironically, the commercialization of second-generation biofuels is actually a strong component of the European Commission's hope for future development, as the proposal itself aims to establish significant incentives towards development of biofuels not derived from crops. [2] Time will have to tell if these incentives will be large enough to encourage development or if technology will stagnate due to a lack of investment.


The European Commission's decision ultimately reflects tension between the two main causes for investing in biofuels: the need to address environmental concerns by reducing overall CO2 emissions and the need to develop renewable energy. This proposal shows that the former has become a higher priority than the latter among the European Union and shows that the image of biofuels as the way forward has become tarnished. In order to maintain its presence in the EU, biodiesel needs to develop independently of crops. At the same time, the EU needs to be wary of how quickly it implements such large changes since this could backfire and instead of generating support for second-generation fuels, this proposal could stagnate European biodiesel.

© Zach Herrera. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.


[1] M. B. Fonseca et al., "Impacts of the EU Biofuel Target on Agricultural Markets and Land Use: a Comparative Modelling Assessment," European Commission Joint Research Centre, EUR-24449-EN-2010, June 2010.

[2] "Proposal for a Directive of the European Parliament and of the Council Amending Directive 98/70/EC Relating to the Quality of Petrol and Diesel Fuels and Amending Directive 2009/28/EC on the Promotion of the Use of Energy from Renewable Sources," European Commission, COM(2012) 595 final, October 2012.

[3] T. Searchinger et al., "Use of U.S. Croplands for Biofuels Increases Greenhouse Gases Through Emissions from Land-Use Change," Science 319, 5867 (2008).

[4] "Commission Staff Working Document Impact Assessment Accompanying the Document: Propposal for a Directive of the European Parliament and of the Council Amending Directive 98/70/EC Relating to the Quality of Petrol and Diesel Fuels and Amending Directive 2009//28/EC on the Promotion of the Use of Energy From Reneweable Sources," European Commission, SWD(2012) 343 final, October 2012.

[5] D. Carrington, "Biodiesel Dealt a Blow By EU Policy Changes," The Guardian, 21 Sep 12.