Initiatives Regarding Sustainability of Biofuels in Europe and their Potencial Impacts on Trade

Initiatives regarding sustainability
of biofuels in Europe and their potential
impacts on trade

Martin Junginger, Copernicus Institute, Utrecht University
(Netherlands) & IEA Bioenergy Task 40
With contributions from Jinke van Dam and Andre Faaij

2nd workshop on the impact of new technologies on the
sustainability of the sugarcane / bioethanol production cycle
Campinas, Brazil, 11 November 2009

Copernicus Institute
Sustainable Development and Innovation Management

Presentation overview
1.  Background: the need for sustainability
criteria and certification of (liquid) biofuels
2.  Comparison of current certification
systems
3.  Barriers and boundary conditions of
certification systems for biomass, impact
on trade & market perspectives
4.  What research agenda is needed for the
future?

Current bioenergy trade

Annual int. traded volumes of ethanol, biodiesel and wood
pellets > 4 million tonnes in 2009 and increasing rapidly

A future vision on global
bioenergy…

Copernicus Institute [GIRACT/Faaij, 2008]

Brazilian ethanol trade
1970-2009

Data for 2009 is estimated

Copernicus Institute [Walter et al. 2009, T40 CR]

Why to guarantee the sustainability of
biofuels?
•  Strong increase in production and trade

•  Criticism in the last years:

“GHG balances not OK”
“Endless subsidies needed”.
“Increases food prices”
“Contributes to deforestation”

How can sustainability of biofuels be
guaranteed?

Various approaches are possible:
Voluntary
certification (Combined Regula-
with) policy tions
systems *

National
Market NGOs Government
parties
International

Key characteristics certification systems (1):

Sustainability requirements translated into:

“The GHG balance of the production chain and use of
Principles: biomass is positive”

Criteria: “There is a net GHG emission reduction over the whole
biomass chain. This reduction is calculated with as
reference system fossil fuels”.

Indicators: “The GHG emission reduction is at least 30% for
biofuels”.

Verifiers: Calculation results based on defined GHG
methodology

Key characteristics certification systems (2)
Three options traceability trade chains:

•  Track and trace
The certified product is segregated from other products during
processing and transport. Its origin can be traced from the end
to the start of the value chain.
•  Mass Balance
The certified product can be mixed with other, non-certified
products. The certificate indicates the ratio of the sustainable
product based on mass balance
•  Book and Claim
The product traded is completely separate from the certificate. A
certain amount of certified produce can be booked and sold to
the market. The buyer can claim sustainability independently of
the final product received.

Summary regulation European Commission (1):
Derived from the Provisional edition of the text adopted by the Parliament on 17-12-2008:

Article Criterion
17.2 Full-chain GHG emission reduction >35% (increasing
over time)
17.3 Exclusion of lands with high biodiversity value
17.4 Exclusion of lands with high carbon stock that have
recently been converted into e.g. cropland
17.5 Exclusion of peat land unless proven that drainage of
previously un drained soil is not involved
17.6 Condition of good agricultural practice (EU)
17.7 Obligation to the Commission to report on soil, water and
air impacts and social impacts in regions that are a
significant source of feedstock

European Commission and Meta-standard
Approach (2):

•  European Commission (and also Netherlands,
others) will follow meta-standard approach
•  Benchmarking of systems that meet
requirements
Regulation European Commission
Forestry Agricultural Bioenergy systems
systems systems

RTRS RSPO NTA-8080
FSC
PEFC BSI ICSS
Sustainable Development and Innovation Management Etc.

THUS…..

•  Wide range of ongoing initiatives
Proliferation of
Initiative A B Schemes and
Differences in scope
F C
Initiative D
Initiative E
Criteria,
Organizational structure indicators,
methodologies
Criteria,
indicators, Organizational structure
methodologies

Every scheme is developing principles, criteria…
and organizational structure…

overview and comparison
of sustainability certification schemes (1)
Preliminary results: 59 initiatives (regulation +
systems) included
•  All relevant for (some) sustainability issues and/or
•  Various parts of the bioenergy value chain

* Substantially more forestry certification systems exist

Bioenergy initiatives on government level on different continents.

Notes:
Initiatives to make agriculture / forestry in general more sustainable not included in
figure (e.g. sugar cane production Brazil)
Copernicus Institute Source: van Dam, Faaij, Junginger, forthcoming

Some of the Principles included in initiatives:

Initiative Human and Biodiversity Soil carbon
labour rights conservation

European Commission* - X X
IDB X X -
GBEP X X X
BSI X X -
FSC X X -
Renewable Fuel Standard - - -
NTA-8080 X X X
SWAN label X X -
ISCC X X -
SEKAB X X -
CO2 star label - - -
Greenergy X X X

Proposals GHG reduction requirements:
Initiative Proposal
European Commission* 35% GHG reduction (to 60% over time)
RSPO In preparation
Better Sugarcane Initiative < 0.4 t CO2 / t sugar

RSB Significantly reduce GHG emissions
Renewable Fuel Standard 20% GHG reduction renewable fuels
LCFS California 10% GHG reduction in 2020 compared to
baseline
SEKAB label 85% GHG reduction
CO2 label 60% GHG reduction biodiesel rapeseed
SWAN label 1/3 volume fuel gives < 50 g CO2eq/MJ fuel
Proposals Netherlands, Germany and UK
Copernicus Institute for biofuels in line with EC

Measuring the indicators:
Initiatives in development GHG methodologies for bioenergy in
Europe (as of December 2008)
Initiative Biomass included Allocation matters ILUC LUC Calculated N2O Default values
emissions
EC Biofuels and By energy content ILUC penalty under Formula soil (JEC 2007) in EU, Conservative
bioliquids for regulation discussion carbon / default IPCC outside EU

UK-RTFO Biofuels Subtraction is 1st Conversion forest Calculated, IPCC approach Conservative
choice only monitoring
Germany Biofuels, Bioenergy Allocation by In discussion, risk Formula soil Included, IPCC Conservative
for heating and energy content adder approach? carbon, IPCC when data limited
power to be (LHV)
included
Netherlands Two tools: a) Allocation by Methodology Methodology based Included, IPCC Conservative /
Biofuels and b) Bio- energy content proposed on IPCC when data limited typical / best
energy for heating (monitoring) practice
and power
Wallonia (Belgium) Main biomass Not included Not included Not included Not included Provided by
sources for Wallonia
bioenergy for power government
Electrabel / Bioenergy for Not included Not included Not included Not included Some data
Laborelec heating and power provided
Swan label (Nordic Biofuels Subtraction is 1st Not mentioned No negative Included Yes. Not for
countries) choice balance is required production
RSB (based on
CopernicusBiofuels
Institute Guidelines are ILUC to be Based on IPCC To be addressed Criteria for
draft standard under development minimized. Under
Sustainable Development and Innovation Management methodology and acceptable default
2008) discussion. values values under
development

Proposals Chain of Custody:
Initiative Book and Track and Mass balance
Claim trace
European Commission* X
RSPO X X X
FSC X X
PEFC X X
SEKAB label X
ICSS X X X
NTA-8080 Netherlands X X X



•  28 initiatives cover the sustainability of biofuels
•  From which 17 are developing principles

* In some cases both development of principles and regulation in process

Initiatives in USA (preliminary)
Principles Biofuels Biodiesel Bioethanol
Renewable Fuel Standard X
LCFS California X
Regulation State X
Massachusetts
Sustainable Biodiesel X X
Alliance
Council on Sustainable Planned X*
Biomass Production
National Biodiesel Board X x
* Focus on cellulosic bioenergy facilities


Initiatives in Europe
Principles Biofuels Biodiesel Bioethanol
European Commission X X
CEN TC 383 X X
Netherlands – governm. X X
Germany – government X X
UK-RTFO – governm. X X
Switzerland – governm. X
SEKAB - label X X
Greenergy – label X X (resource)
SWAN label X X (resource)
CO2 star label X
CEO report (NGO) X

Example initiatives
Greenergy and SEKAB label (1):
Greenergy:
•  Scope: sugar cane production for bioethanol
•  Coverage: biomass from Brazil, to be used in UK (by company
Greenergy)
•  Intention: adaptation for the RTFO standard (will follow
principles Better Sugarcane Initiative)

SEKAB:
•  Scope: ethanol from sugar cane in Brazil
•  Coverage: biomass from Brazil, to be used in Sweden
•  Intention: developed for Swedish market

Note: Principles for sugar cane are also in development by the
Better Sugar Cane Initiative!

Example initiatives
Greenergy and SEKAB label (2):
PRINCIPLES GREENERGY LABEL
1.  Carbon Conservation
2.  Biodiversity Conservation Includes: compliance national laws and regulations + various good
3.  Soil Conservation agricultural practices (soil management plan)
4.  Sustainable Water Use
5.  Air Quality
6.  Workers Rights and Working Relationships
7.  Land Rights and Community Relations
Only in SEKAB label
PRINCIPLES SEKAB LABEL
1.  GHG emissions: At least 85% GHG reduction compared with petrol
2.  Efficiency harvest: At least 30% mechanization of the harvest now, plus a planned increase
in the decree of mechanization to 100%
3.  Biodiversity: Zero tolerance for felling of rain forest
4.  Workers rights: Zero tolerance for child labor
5.  Rights and safety measures for all employees
6.  Environment: Ecological consideration in accordance with UNICA environmental initiative
7.  Continuous monitoring that the criteria are being met

Soil includes: implementation plan for soil conservation

ing!
In general: criteria Greenergy label more specified h opp
fo rs
h risk
Copernicus Institute Hig

Potential barriers and boundary conditions

•  Sense of urgency – international production &
trade is growing fast
•  But, with too many initiatives on various
levels, a danger of fragmentation and
incompatible certification systems exists –
prevent proliferation of standards
•  Stakeholder involvement in producing
countries often neglected, especially
smallholders

Potential barriers and boundary conditions
•  Compliance with WTO rules and international treaties
•  Some sustainability criteria may actually conflict with
each other
•  Additional costs of meeting the sustainability criteria
(and cost of certification) will have to be evaluated
•  Inclusion of not enough/soft criteria will result in
“greenwashing” (fear of NGO’s)
•  Inclusion of too many criteria will may in fact create
new market barriers (fear of industry and producers)
•  Monitoring of compliance crucial, otherwise the
“cheaters” may win (fear of both NGO’s and industry)


Mandatory certification not the only option
Several policy tools/strategies to pursue the sustainability:
•  Certification: Only biomass that is certified according to
criteria derived from sustainability principles is allowed to
be imported
•  Product-Land Combinations: Only biomass from regions
that comply with sustainability principles allowed for import
Government decides which products/regions are eligible
for government support
•  Regionalization: In this strategy, Europe utilizes its own
biomass resources before importing biomass from
developing countries
•  Self-regulation: code-of practice defined by parties
involved in production and trade

Fundamentals of the criteria (I)
•  It is a process; developing, deploying and
optimising the required procedures takes time
–  Deployment of monitoring
–  Increasing share in total market
–  Spillover to conventional agriculture
•  Dynamics (land-use, economic &
technological development, infrastructure
build-up) change over time.
–  Increasing scale of production
–  Improvement in agriculture and livestock (!)
–  Improving quality of governance and oversight (!)


Fundamentals of the criteria (II)
•  Merging the field level to macro-level; changes
in land-use affect about all other impacts
–  Scenario (thus strategy/policy-) dependent.
–  Good field level performance may be overruled by
macro-developments
–  Water and biodiversity ‘somewhere in between’
•  From safeguard to stabilisation to positive side
effects (e.g. Environmental Goods & Services
and contributing to development):
–  Soil preservation & restoration
–  Opportunities for biodiverstiy
–  Water retention functions


Concluding…
Good insight in sustainability performance of bioenergy
chains is highly needed to guide development
pathways. This requires:

 Unification of methodologies.
 Harmonization of systems.
 Development of methodologies, indicators and
related performance norms
 Development of local and regional databases
 Sound methodology to weigh individual criteria
 Global convergence, dialogue and deployment
priority (leadership needed).


Barriers and Opportunities for
International Bioenergy / Ethanol trade

Martin Junginger & Andre Faaij (UU),
Simonetta Zarrilli (UNCTAD), Fatin Ali Mohamed (UNIDO),
Peter-Paul Schouwenberg (Nidera) (task leaders) and all T40
members


Rationale: bioenergy trade is growing rapidly – many
opportunities and barriers arising all the time

Aim: get an up-to-date overview of what market actors
currently perceive as major opportunities and trade barriers
for the current and future development international
bioenergy trade for three internationally-traded bioenergy
commodities: 1) bioethanol 2) biodiesel 3) wood pellets.

Method: Online questionnaire at
http://task40.questionpro.com

Approach stakeholder through Task 40 & UNIDO network


Results
Questionnaire: 105 fully completed + 87 partially completed
questionnaires

Argentina: 9 &
Brazil 4
responses


Results


Overview of barriers
and opportunities for ethanol trade

Major opportunities

(Major) barriers


Some comments from the industry
on sustainability criteria for liquid biofuels
•  Argentinian respondent: “..must be established by
working jointly with the Emerging Market countries. Until
now, most of it is being imposed on them…”
•  Australian respondent: “Complexity. Sustainability
Standards required of Biofuels not required of other trade
commodities with environmental, social and GHG
impacts. Continuing future uncertainty due to ongoing
review provisions of EU Renewable Energy Directive.
Unclear which Standards, Certification and Chain of
Custody procedures will be applied. Will be used as non-
tariff barriers.”
•  Swedish respondent: Depending on how the criteria is
constructed there is a risk that the criteria is used to
protect domestic markets. We prefer definition of no-go
areas and the same rules both for food and bioenergy
production

Some comments from the industry
on sustainability criteria for liquid biofuels

•  “sustainability criteria should be designed in a way that is
workable for operators, especially considering that biofuels
are commodities traded on a world-wide basis… efforts
should be focused on drawing clear rules for the chain of
custody and balances reporting requirements for individual
operators (producers, traders, end-users…)”
•  “Discriminating against specific crops/producing regions: this
would strongly contradict WTO principles and would not
deliver the expected outcome of sustainability criteria, which
is to protect biodiversity”
•  “… applying sustainability criteria to biofuels or bioenergy only
can be considered as a first step. However, on a longer-term
perspective, the certification of all biomass regardless of the
final use should be considered…

Our wish list (I): improve key
insights and data:
•  Embed technological learning of
bioenergy systems properly in models
(production, supply and conversion
systems). [Bottom-up]
•  Learning of agricultural and livestock
management (in relation to prices,
settings and policies). [Bottom-up]

Our wish list (II): Biophysical
models ~ environment:
•  Water [regional level; bottom-up]
•  Biodiversity (resolve methodological
issues; management options and
reference situations).
•  Proper incorporation of residues and
wastes.
•  Marginal and degraded lands [data!!!]


Our wish list (III): modeling
frameworks:
•  Integrate biophysical and macro-economic
models (partly tackled: OECD, FAO, UU/LEI-
IMAGE/GTAP, IFPRI-Stanford).
•  2nd (+) generation options
•  Biomaterials
•  Non-agricultural lands (forest, marginal,
degraded, etc.)
•  Feedbacks prices (and policies) on learning
and intensification.
•  Backed by concrete examples; model
verification.

Argentina; example Different scenario’s
full impact analysis for land-use and
agricultural
management

Compares soybean
(biodiesel) to
switchgrass (pellets)

Focus on more
marginal area in one
province (La Pampa)

Follows main
principles of Cramer
Van Dam et al., 2009
framework

Net GHG balance in kg CO2 eq /
tdm per year from Switchgrass
cultivation for bioenergy for
different scenario’s

Copernicus Institute Van Dam et al., 2009

Soil erosion rates in t soil/
ha/yr for Switchgrass and
Soybean

Copernicus Institute Van Dam et al., 2009

Model framework
Baseline
situation
Split model
specialty/bulk
Projections of chemicals
final energy
demand Biomass blending
Bottom-up Top-down
shares
modeling Economic
(Excel based) Feedstock types modeling
Technology (LEITAP)
Productivity factors
database

Cost and supply
of biomass Bottom-up results Top-down results


Thank you for your attention!
•  Much of this material will become
available at:
www.bioenergytrade.org

Questions / further work:
H.M.Junginger@uu.nl


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