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Chatham House report: Biofuels are not sustainable

17 April 2013

Current biofuels pose significant sustainability problems, according to a new report by the British think tank Chatham House. The report—“The Trouble with Biofuels: Costs and Consequences of Expanding Biofuel Use in the United Kingdom”—also concludes that biodiesel from vegetable oils is worse for the climate than fossil diesel.

Current biofuel standards do not ensure that biofuel use is sustainable, says the report. Agricultural biofuel use increases the level and volatility of food prices, with detrimental impacts on the food security of low-income food-importing countries. Agricultural biofuel use also drives expansion of agriculture into areas of high carbon stock such as rainforest or peatland, resulting in indirect land-use change (ILUC), the emissions from which may outweigh any greenhouse gas savings the biofuels are able to offer.

Neither ILUC nor food security is addressed in UK sustainability criteria. In the absence of such safeguards, increasing biofuel consumption could have significant environmental and social consequences outside the United Kingdom, warns Chatham House. It is unclear whether such safeguards will be agreed at the EU level.

In the current financial year (2013/14) UK biofuel use will increase to 5% of transport volumes, which is likely to cost UK motorists in the region of $700 million (£460 million) in the current financial year. If the UK is to meet its EU obligations, the annual cost to UK motorists is likely to rise to around $2 billion (£1.3 billion) a year by 2020, estimates the report.

The analysis of carbon emission abatement costs shows that biofuels are not a cost-effective means to reduce emissions from road transport. Carbon abatement costs, excluding emissions from indirect land-use change, are in the range of $165-$1,100 per tonne of carbon dioxide equivalent (CO2e). This compares unfavorably with an appraisal price of around $87 per tonne.

Accounting for ILUC emissions increases abatement costs for agricultural biofuels to between $330 and $8,500 per tonne of CO2e, depending on the feedstock. Biodiesel from vegetable oils is found to be worse for the climate than fossil diesel. Analyzed fuels that were found to produce no carbon abatement relative to fossil diesel include FAME biodiesel (assumed to be a 50:50 blend palm oil and rape seed), as well as biodiesel produced from rapeseed, soybeans, or palm oil.

The only type of biodiesel with favorable sustainability characteristics was biodiesel from waste products such as used cooking oil or tallow, with estimated abatement costs of around $200 per tonne of CO2e.

It was assumed in the cost analysis that biodiesel from used cooking oil had no ILUC emissions. However, this assumption may be incorrect, especially at higher levels of use. Feedstock cost comparisons in the report show that the current price of refined palm oil is less than the price for used cooking oil. Therefore, it may be economically rational for market participants to source refined palm oil, recycle it quickly and then supply it as used cooking oil at a profit. While there is no verified evidence, the European Biodiesel Board has voiced a concern that fraudulent sales of palm oil as used cooking oil may not be unusual in the European Union.

The author of the report, Rob Bailey, says, “Current biofuels are at best an expensive way of reducing emissions. At worst they produce more emissions than the fossil fuels they replace and contribute to high and unstable food prices. Policymaking needs to catch up with the evidence base.”

Source: Chatham House