The EU’s repeal of antidumping duties on imports of US ethanolin mid-May could pave the way for increased shipments to Europe of the biofuel. European ethanol producers have raised concerns over the environmental impact of increased imports, but deeper questions over the sustainability of biofuels remain unanswered.
The European ethanol association, ePURE, voiced concerns over the harmful impact of the decision on European ethanol producers, especially as other destinations for US ethanol exports – including Brazil, China, Peru and Colombia – either have measures in place against US imports, or are considering them.
Some in the market suggested additional shipments to Europe from the US would be limited in any case. Although the removal of the Eur62.30/mt tariff is a significant cost reduction, the economics to ship ethanol on the route have been marginal. In addition, Europe's requirements for sustainability certification and a minimum of 50% greenhouse gas savings limit the amount of US product that is eligible for use in the EU.
Weaker forward prices in the European ethanol market, combined with logistical constraints, could also be major hurdles to further imports.
Growing share of transport fuelBiofuels are seen as part of a transition to a low-carbon energy future, alongside other “clean” fuels, such as LNG and electricity. Both of these other solutions have their own issues. Gas produces some emissions when combusted, and is energy intensive in its extraction, cooling and shipping. And, at least for now, electric cars through their construction supply chains and power generation sources, are not the clean solution they one day could be.
Biofuels are a small but significant part of the European road fuel mix, displacing around 5% of gasoline and diesel demand, which together account for around 95% of road transport fuel on the continent, ePURE says.
Diesel demand in Europe, including biodiesel, was 5.15 million b/d in 2018, slightly up from 5.14 million b/d in 2017, while total gasoline and ethanol demand was 2.00 million b/d, up from 1.91 million b/d, S&P Global Platts Analytics data show.
The EU in 2009 took the decision to mandate a minimum 10% share for renewable energy in transport by 2020, with member states forecasting that 8% would be met through “conventional” biofuels. This was revised in 2015 to set a 7% ceiling to the contribution from conventional biofuels.
EU countries adopt biofuel blending quotas in different ways. E5 gasoline, with a 5% ethanol content, is common in much of Europe, though E10 is gaining ground in several countries. Some countries mandate the same biofuel blending level across both gasoline and diesel, while others apply different percentages.
Ethanol's green credentials contestedePURE says repealing the antidumping duty will also damage the EU’s climate ambitions, saying US ethanol is more carbon-intensive than European ethanol. And adding to woes are allegations of fraud in the European biofuels market, where UK and Dutch authorities have launched an investigation into UK fuel supplier Greenergy and various third parties. But the EU’s reliance on biofuels in its climate targets is itself questionable.
Biofuels are problematic at a more fundamental level than gas and electricity, and one that has troubled economies and societies since pre-industrial times.
The use of biofuels such as wood in pre-industrial societies set a limit to economic growth, posing a problem for land owners: to grow crops for fuel or for food. The modern use of biofuels has come up against these same issues, and added to them. In their modern incarnation, they have brought a series of unintended consequences: food crop displacement, rising cereal prices, land use change as forests and savannah are devoted to growing fuel crops, habitat destruction and increased emissions not counted under existing narrow definitions. And this is before considering consequences that we are only beginning to understand, such as the impact on soil quality of removing “waste” biomass from ecosystems.
The limitations of biofuels come down to the amount of energy available through plant photosynthesis. Pre-industrial societies had a limited, though renewable, energy source. Historically, as populations grew, more woodland had to be cleared for fuel, crops and living space.
The industrial revolution’s use of fossil fuels changed all this. By tapping the accumulated energy of millions of years of photosynthesis in the form of decayed plant and animal matter, humans had access to an energy source unparalleled in history. Fossil fuels provided a huge, though limited, reserve of energy. At the same time, they started to unleash the millions of years' worth of stored carbon and its associated environmental impact.
Though renewable, biofuels are limited, and not necessarily sustainable. The EU’s Renewable Energy Directive II seeks to ad some of the issues, phasing out the use of food crops, and trying to mitigate the impact of change in land use.
But even judged purely on emissions, biofuels don’t measure up well. The use of nitrogen-based fertilizers for growing biofuel crops generates nitrous oxide, whose contribution to global warming is hundreds of times worse than CO2. Studies have also shown that protecting uncultivated land saves many times more carbon emissions than planting the land with biofuel crops.
There are also unquantified impacts that are not yet well understood, but which nonetheless could be devastating – for example, the risk of soil degradation as organic matter "waste" is used for biofuels, instead of its nutrients going back into the ground.
The best contender for a sustainable biofuel is that from used cooking oil and fat, though this makes up little more than 10% of biofuels produced in Europe and the US – the two largest biofuels markets – Platts Analytics data show.
Policy makers have focused on blending mandates, anti-dumping measures and legislating over the least bad alternative land use. To deliver on wider climate objectives, they need to look deeper.