Support for first generation biofuel is waning in the European Union.
The European Union’s environment committee recently voted in favour of capping traditional biofuel production at 5.5 percent of total energy consumption for transportation purposes by 2020. The European Commission had proposed a five percent cap.
It represents a stark reversal from the EU’s original target to get 10 percent of transport fuel from renewable sources by 2020, primarily first generation biofuel. That target was established in 2008.
The shifting tide in European biofuel policy is of concern to Canada’s canola industry, which supplies the EU’s biodiesel sector with a substantial amount of raw material.
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“We’re disappointed because (the vote) creates a lot of uncertainty in the investment environment, but we still see Europe as an export opportunity for Canadian canola,” said Brian Innes, manager of market access for the Canola Council of Canada.
Canola sales to Europe have averaged $200 million a year over the past three years, with Canada shipping an average of 190,000 tonnes of seed and 75,000 tonnes of oil annually.
The hope is those numbers will grow once Canada finalizes a free trade agreement with the EU.
Innes said the proposed changes to the 2020 target do not effect the current requirements for biodiesel in the EU, but it will cap future canola sales. As well, the change in government policy creates considerable market uncertainty.
European biofuel producers and their suppliers are furious at the policy U-turn. They said the proposed limit of 5.5 percent of total transport fuel use was far too low and would lead to plant closures and job losses.
“Biofuels were part of the solution less than five years ago and are now seen as a problem,” said Nathalie Lecocq, secretary general of FEDIOL, the EU vegetable oil industry body that supplies the raw material for biodiesel.
“The industry will stop investing in advanced biofuels if the EU keeps sending conflicting signals.”
Studies have underlined the potential environmental damage caused by some biofuel, particularly biodiesel, which accounts for more than two-thirds of the estimated $16.7 billion EU biofuel sector.
Most recently, a study by the EC’s in-house research body, Joint Research Centre, confirmed the findings of earlier EU studies that biodiesel made from crops such as rapeseed does more harm to the climate than conventional diesel.
Innes refuted those findings, saying canola biodiesel reduces greenhouse gases by more than 90 percent compared to conventional diesel.
The canola council is working with partners in the EU’s biodiesel industry to keep tabs on what happens with the proposal.
“We would follow their lead on this one, and from what we understand, there’s a long way to go in this process yet,” he said.
