IISD-led seminar offers global perspective on biofuel subsidies: issues policy brief

GENEVA—December 3, 2012—International stakeholders at the European Parliament will gather to discuss future biofuel policies at a high-level seminar on Tuesday, December 4, organized by the International Institute for Sustainable Development.

European Union biofuel policies, and subsidies that drive production, are under criticism for their impacts on the environment and food security.

The meeting takes place at a time of intense discussions in European policy circles on limiting the use of food-based biofuels for transport. Under a proposal recently published by the European Commission, food-based biofuels would contribute no more than 5 per cent of the renewable energy used for transport by 2020. Overall, the EU is seeking to meet 10 per cent of its transport fuels needs from renewable energy by the same year.

"The success of biofuels has been achieved in many instances at a high economic and social cost," said Peter Brabeck-Letmathe, chairman of Nestlé SA, one of the world's largest food companies. "These include substantial subsidies from already overstretched government budgets, increased food insecurity and depleted freshwater sources."

The seminar is co-hosted by GLOBE EU and Gerben-Jan Gerbrandy, Member of the European Parliament (MEP) and vice-chair of the Committee on the Environment, Public Health and Food Safety of the European Parliament.

"Rational policies should be based on understanding the real impacts of government support to biofuels on the environment and the society," said Sirpa Pietikäinen, MEP and chair of GLOBE EU. "The spiralling food versus fuel debate is just one example of how the real impacts may differ from intended designs."

Mark Halle, director of IISD-Europe, said overcoming the political barriers to reforming biofuel subsidies in the EU is a key part of the challenge. "The economic case against inefficient subsidies in the biofuel sector is proven. The challenges lie with the political economy."

To inform the discussion, IISD's Global Subsidies Initiative has prepared a policy brief, Cultivating Governance: Cautionary tales for biofuel policy reformers, which investigates the challenges of designing and implementing good biofuel policies. The policy brief pays particular attention to how policies can be effected by pressure from various interest groups. 

The paper stresses that biofuel subsidies often aren't the best policy to achieve the objectives of green innovative development and climate change mitigation. It recommends governments give priority to placing a price on carbon as a more effective option.

The global biofuels market was valued at US$83 billion in 2011, according to Clean Edge, a research and advisory firm. The International Energy Agency reports that global subsidies to biofuels amounted to US$24 billion in the same year. The largest share of subsidies, US$11 billion, was provided in the EU, followed by US$8 billion in the U.S.

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For more information, please contact Chris Charles, project manager, at: ccharles@iisd.org, +41 22 917-8595; or Damon Vis-Dunbar, communications coordinator, at dvis-dunbar@iisd.org, +41 22 917-8848.