Are Biofuels Really Better for the Environment?

The final weeks of 2010 have seen a flood of attention directed towards biofuels.  NPR had a three part series highlighting some of the challenges of ethanol including how it raises food prices, although many people would describe U.S. support for ethanol as more about agricultural policy than energy policy.  Biofuel company LS9 raised about $30 million in new funding and Pike Research released a report predicting a 20% increase over the next six years in biomass related capital investment, which includes biofuel and energy products.

Probably the most significant announcement however was that the European Commission (EC) is looking at reevaluating the environmental benefits of biofuels over conventional sources of energy for transportation.  In a report issued last week the Commission took a close look at what it refers to as the effects of indirect land use change.  The basic concept is that as agricultural land in some areas is converted to fuel oriented crops new land will be needed for food production.  The clearing of new land has a carbon impact and depending on where the new land comes from, for example if someone cuts down rainforest in Indonesia in order to create new agricultural areas, the negative carbon impact of opening food production in new areas could substantially offset the positive effects of using biodiesel.

The EC adopted two connected goals in 2009 of a 10% share for renewable energy in the transport sector and a 6% reduction in the greenhouse gas intensity of fuels used in transport.  This study throws into question the degree to which biofuels should be the renewable energy source of choice to help meet the greenhouse gas reduction goal for the transport sector.  Surprisingly, the report makes no mention of third generation biofuels from algae, which are supposed to be able to generate 30 times as much energy per acre as land crops, as a possible way to minimize these land use challenges.  Perhaps this will be addressed in the six month impact assessment the EC is planning as a follow on to this study in order to figure out whether it needs to change its renewable energy and fuel quality directives.  It will be interesting to see whether this report or any follow on assessments have an impact on how other countries incorporate biofuels into their energy policy planning.



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