Fueling a Further Environmental Crisis? A Critical Look into Biomass in EU Law

With an anthropogenic climate crisis to mitigate, pressure has been high to lower emissions to net zero. Considering the energy industry’s massive contribution of more than two thirds of greenhouse gases (GHGs) globally, turning to renewable energy sources has been a vital element of the EU’s climate agenda. Consider also the crisis caused by the Russian attack on Ukraine, and here we are, in the midst of an energy havoc. Among the renewable energy sources classified by the EU, one has been particularly singled out: biomass. How is its use dictated under EU law? How has it evolved over time? And what are its trade-offs? –  a blog post written by Alexandros Kassapis.

The Renewable Energy Directive – RED I

First things first: the legal basics. Directive 2009/28/EC on the promotion of the use of energy from renewable sources, also known as RED I, was introduced in 2009. RES were defined and listed in Art.2(a), and instantly became open to vast EU subsidies.

RED I established binding minimum targets for RES share in the final energy consumption of all EU states, for some states as low as 10 percent (Malta) to as high as 49 percent  (Sweden) depending on their pre-existing RES capacities. The country goals were adapted to an EU-wide 20 percent RES target to be achieved by 2020. It also included a 10 percent  RES share for transport sub-target to be achieved by 2020.

Art.17 of RED I then presented sustainability criteria for biomass and their calculation methods. GHG savings thresholds Art.17(2), no-go areas for harvesting Art.17(3), and a duty on the Commission to report biennially on state measures to respect the sustainability criteria Art.17(7) were established, with applicability to domestically produced as well as imported biomass sources.

Apart from the most obvious criticism, that is the potential increase in hunger by the diversion of food crops for biomass, there has been widespread criticism regarding environmental consequences.

Criticism

Leading NGOs and even the EU agree that the set criteria were not stringent enough when considering one major environmental issue: indirect land use change (ILUC).

Feedstocks for biomass are typically grown in areas which were insofar used as agricultural land for food, feed or pasture. Their substitution triggers the extension of agricultural land, potentially to areas with ‘high carbon stock’. These are areas which sequester a high amount of carbon and are therefore significant carbon sinks, such as forests, wetlands and peatlands; they are necessary to absorb GHG emissions which are fuelling the climate crisis, and also to maintain biodiversity.

The South-East Asian jungle, for example, sequesters 1.1 gigatonne of CO2 per year, which is more than the CO2 emissions of the Netherlands and Germany combined. Deforestation has been running rampant, mainly caused by the cultivation of food crops such as oil palm trees and soy. Their classification as biomass can therefore lead to an exponential increase of agricultural areas to substitute any land lost.

Deforestation and agricultural use releases carbon stored in the trees and soil into the atmosphere and prevents future sequestration. Biodiversity levels also plummet. These consequences therefore highly contradict the use of biomass as a RES for environmental protection and gives rise to calls for legal safeguards to tackle ILUC, an issue which was addressed in the revision of RED I.

The birth of RED II

Directive (EU) 2018/2001 or RED II was adopted in 2018, reflecting the ambitious renewable energy goals of the EU 2030 Climate and Energy Framework. A 32% renewable energy target was stapled for 2030, with no minimum individual country shares. The RES for transport sub target also increased to 14 %. RED II also put forward more stringent sustainability criteria for biomass, as analysed below:

• First, the Directive sets national limits for the total contribution of biomass produced from food or feed crops, recognising that these could pose an ILUC risk. It introduces a cap on their use for transport at 7% for 2020 (Art.26(1)).
• Second, it promotes the use of  “advanced biofuels”, reference to which was completely absent in RED I. 17 feedstocks which are considered to provide advanced biofuels are presented in Part A of Annex IX, with their main common characteristic being that they are not derived from food or feed crops. They include straw, nut shells and mixed municipal waste, and they shall provide a minimum share of 2.5% in the transport sector by 2030 (Art.25(1)).
• Third, it updates the rules regarding biomass’ GHG emissions’ savings, with the threshold incrementally getting higher. (Art.9(10))
• Fourth, it increases the sustainability criteria for forest protection (Art.29(6)).
• Last and most controversially, it freezes and phases out support for biofuels considered to be environmentally unsustainable. According to Art.26(2), the consumption of high ILUC-risk biofuels produced from food or feed crops with a significant expansion into land with high carbon stock will have to remain at 2019 levels for the period 2021-2023, and thereafter gradually decrease until it reaches zero by 2030.

The Delegated Regulation 2019/807 was passed to assist the implementation of the latter provision by setting the necessary criteria for (1) the certification of low ILUC-risk biofuels and (2) to determine which high ILUC-risk feedstocks result into the significant expansion of the production area into land with high carbon stock. Only one fuel was identified: palm oil.

This essentially means that countries can still use such biofuels, but they will not count for their RES shares, and will hence also not be available for subsidies.

Palm Oil - Fuelling a Dispute

The world’s two leading producers of palm oil, Indonesia and Malaysia, have claimed that the relevant criteria for high ILUC-risk biofuels as identified in the Delegated Act constitute a discriminatory measure. They have both requested the World Trade Organisation (WTO) for a Panel to deduce whether that is the case.

Indonesia requested consultations with the EU in December 2019, alleging that the EU has not respected relevant international standards by restricting imports without adequate stakeholder notification about the process or taking into account circumstances which apply to developing countries where the goods are being produced. Malaysia, on the other hand, claimed in January 2021 that there is among others a violation of Article III:4 of the GATT, since the measures result in the less favourable treatment to imported palm oil than they do to ‘like’ domestically derived biofuels.

Both claims are currently undergoing the WTO dispute settlement process and there has been plenty of arguments supporting either side. As for the socioeconomic consequences, Solidaridad Network, which focuses on sustainable supply chains, argues that almost three million oil palm smallholder farmers will be negatively affected by this decision. In the same vein, the World Economic Forum indicates that a phase out of palm oil will pose a threat to livelihoods and allow for the exploitation of resources from countries which would require much less stringent criteria, if any.

Meanwhile, others argue that it is easy for farmers to substitute palm crops with other food crops which can be used as biofuels, such as soy, and therefore overcome the economic consequences. This could, nevertheless, increase the ILUC-risk of other crops. It should also be noted that the EU Commission recently put ahead a controversial law which bans the import of commodities linked to deforestation, which would also give rise socioeconomic trade-offs.

The EU has not hesitated to take actions which have a big impact on deforestation abroad (since palm oil is virtually not produced in its territory). It is interesting to explore how the EU addresses forest biomass in cases which impact its domestic landscape and what controversies rise there. All this, while looking into amendments to RED II.

RED II Is Revised!

On July 2021, the Commission adopted a proposal to revise RED II to match the ambition of the Fit for 55 package, which aims to deliver a 55% reduction in GHGs by 2020 compared to 1990 levels. A new target of 40% RES was agreed. Soon after, a Commission Proposal to increase the RES target to 45% came with the RePower EU plan, attempting to tackle the energy insecurity following caused by the Russian invasion on Ukraine.

Although further safeguards were put on forest biomass under both plans, such as extending no-go areas to cover peatlands (Art29), there has still been major debate over inadequate forest protection.

Our Forests

It should firstly be made clear that the majority of renewable energy in Europe is based on forest biomass. Several stakeholders in the revision of RED II had advocated for a complete ban on the use of forest biomass, while NGOs such as Fern claim that no increase in sustainability criteria can negate the economic incentives the EU has placed to burn forest biomass. There is even a clear conflicting interest with the upcoming EU Regulation on Nature Restoration, which seeks to achieve an increasing trend for standing and lying deadwood and forest connectivity.

It is therefore quite vital to note that “not all biofuels are created equal” – as a biofuel industry representative said. Although tightening sustainability criteria is welcome, the ongoing climate and biodiversity crises require utmost attention in every step taken by the EU in the biomass sector.

In Conclusion…

A message to the EU: Focus on having advanced biofuels as a small part of the energy mix and gradually phase out the use of all other forms of biomass. Particularly these with a high ILUC-risk, high GHG emissions and those derived from forest biomass. Is the EU law on biofuels really reflecting a global environmental leader?