Indirect land-use change (ILUC)

'Indirect land-use change' (ILUC) means that if you take a field of grain and switch the crop to biofuel, somebody somewhere will go hungry unless those missing tonnes of grain are grown elsewhere.

Economics often dictates that the crops to make up the shortfall come from tropical zones, and so encourage farmers to carve out new land from forests.

Burning forests to clear that land can pump vast quantities of climate-warming emissions into the atmosphere, enough in

theory to cancel out any of the benefits that biofuels were meant to bring.
The European Commission has run 15 studies on different biofuel crops, which on average conclude that over the next decade Europe's biofuels policies might have an indirect impact equal to 4.5 million hectares of land – an area the size of Denmark.
Some in the biofuels industry argue that the Commission's science is flawed and that the issue could be tackled by a major overhaul of agricultural strategy to improve productivity or by pressing abandoned farmland back into action. Waste products from biofuels production can also be fed to animals, they say, so reducing the pressure on land resources.

Conventional biofuels like biodiesel increase carbon dioxide emissions and are too expensive to consider as a long-term alternative fuel, a draft EU report says.

The study ‘EU Transport GHG [greenhouse gases]: Routes to 2050’ estimates that before indirect effects are counted, the abatement cost of reducing Europe’s emissions with biofuels is between €100-€300 per tonne of carbon.

At current market prices, this would make their CO2 reduction potential up to 49 times more expensive than buying carbon credits on the open market at €6.14 a tonne.   

But the EU’s authors conclude that it “it is not possible (and useful) to determine cost effectiveness figures for [conventional] biofuels” because their indirect effect - measured in cleared forests and grasslands (‘ILUC’) - make it a CO2-emitting technology.

The latest report will feed a growing unease about the reasons for the EU's original biofuels policy - justified in environmental terms - and the way it has developed since.

“The truth is that policy makers inside and outside Europe are doing biofuels for other reasons than environmental ones,” said David Laborde, a leading agricultural scientist and author of key biofuels reports for the European Commission.

“It’s a new and easy way to give subsidies to farmers, and it’s also linked to industrial lobbies that produce these biodiesels, and also what they will call energy security,” he told EurActiv.

“They want to diversify the energy supply, and keep their foreign currencies instead of buying oil from the Middle East. They prefer to keep it for something even if it is not efficient or even green,” he added.

The '10% target'

In 2007, the EU first set a 10% target for the use of blended biofuels in transport by 2020.

Although the target was re-sourced from ‘biofuels’ to ‘renewable energy’ in 2009, analysts say that 8.8% of the EU target will still be provided by biofuels, and up to 92% of that will come from conventional biofuels like biodiesel.

Industrial associations disagree, putting the EU’s ratio of sugar-based ethanol, one of the best-performing biofuels, to biodiesel, one of the worst, at 22%-78%.

But both the original announcement and the Renewable Energy Directive two years later conditioned biofuel use on subsequently neglected criteria of cost-efficiency, sustainability and, where available, the use of second generation fuels.  

“I don’t think we are there on cost-effectiveness,” said Géraldine Kutas, Brussels representative of the Brazilian Sugarcane Industry Association (UNICA).

“There are no monetary provisions to support this in the directive, and second generation biofuels are still a promise. They are not commercially available yet,” she said.

Even trying to address the issue of indirect sustainability criteria for biofuels had gummed up the EU's policy-making process, she acknowledged. 

French farmers

Research by EurActiv has uncovered evidence that the EU’s original biofuels target was set as much for industrial and political reasons, as environmental concerns.

Claude Turmes, the European Parliament’s rapporteur responsible for steering the Renewable Energy Directive into law, said that business lobbies had influenced his negotiations with the then-French Presidency of the European Council.

“There were two lobbies, the sugar farmers lobby and the German car industry who tried to prevent the EU’s CO2 and cars legislation,” Turmes (Greens/Luxembourg) told EurActiv.

“The origin of the 10% renewables in transport target was the fact that these two lobbies joined forces to impose it on the Commission.”

EU insiders spoken to by EurActiv agreed, saying that biofuels had been a quid-pro-quo demanded for the imposition of ‘greener’ measures in the directive that would encourage wind and solar energy, and cut emissions. 

European sugar farmers had suffered in the 2006 Common Agricultural Policy reform which reduced the guaranteed sugar price by 36% and opened up the European sugar market to global competition.

A guaranteed market for agrifuel made from sugar-based ethanol held out some prospect of compensation. And the strength of the French farmers lobby made removing the 10% target “an absolute no go area” for Paris, Turmes said.

“The farm industry was obviously interested in biofuels, biochemicals and the bio-economy more generally,” Kutas added.

But Europe’s sugar farmers profited far less from the EU’s biofuels policy than growers of feedstocks for biodiesel, better suited to the continent’s diesel-based auto fleet.  

Car industry

EU officials say that the car industry was also instrumental in pushing for the biofuels target to be included as a compromise to bridge the gap between the 130g of CO2 per km that the EU wanted as a target for 2012 and the 140g that the car industry was prepared to offer.

“It was no secret,” a source told EurActiv. “It was very clear what they were lobbying for and it went all the way up the Commission”.

As a result, officials in the EU’s energy directorate responsible for biofuels did not treat research which questioned the fuel’s environmental credentials in the same light as that which supported it, multiple sources confirm.  

The EU’s biggest error was “that we started to make a policy without knowing the effect it would have,” Laborde said.

“We are now discussing the land use effect after saying for ten years that we need biofuels to reduce emissions,” he went on. “It was a serious mistake.”

Indirect emissions proposal

Brussels is due to publish a proposal measuring the indirect emissions caused by biofuels later this year, distinguishing between low-emitting biofuels such as ethanol and high-emitting ones like biodiesel.

But the EU’s decision-making process has been paralysed by the ongoing dispute between its energy directorate – which does not want ILUC factors considered – and its climate directorate, which does. And there are other problems too.    

Both the Renewable Energy and Fuel Quality directives contain ‘grandfathering’ clauses exempting all existing biofuels installations as of 2014 from further legislation until 2017.

As the biofuels industry’s existing capacity is already on the cusp of meeting the 10% target, according to a new report by the environmental consultants Ecofys, this would create massive overcapacity.  

The Institute for European Environmental Policy has calculated that on current trends, land conversion of between 4.7 million and 7.9 million hectares would be needed to accommodate the extra biofuels production, an area roughly the size of Ireland. 

But the introduction of any ILUC factor would probably rule out high-emitting conventional biodiesels, the majority of Europe’s biofuels production.

That would create a political backlash in EU states such as France and Germany, and potentially tear up the compromise which allowed the Renewable Energy Directive to be passed in the first place.  

For now, the proposal remains stuck in the corridors of an EU that appears equally frightened of the political consequences of admitting a policy mistake and the environmental consequences of denying it.

CCRES special thanks to 

Brussels Network Office:

International Press Centre

Boulevard Charlemagne, 1 b1

B-1041 Brussels

CROATIAN CENTER of RENEWABLE ENERGY SOURCES (CCRES)

Sustainable Consumption

SUSTAINABLE Consumption by CCRES


Some 2 billion new consumers will have joined the global middle class by 2030, bringing almost 80% of the world's population into a "consumer" bracket. Providing for the next generation of consumers in a sustainable manner presents an enormous opportunity for global companies.

In the search for solutions, leaders must navigate a complex network of systems interlinkages, difficult trade-offs and powerful feedback loops within the political, business and natural environments. In this context, it is time to use sustainability as an innovation platform that helps to reinvigorate the global economy, aligning sustainability with improved living standards less reliant on consumption of natural resources.

Leaders can position themselves to succeed in this changing framework by redefining their strategies, products and services, and redesigning value chains to embrace "absolute sustainability".

The World Economic Forum's Sustainable Consumption Initiative consolidates discussions on sustainability in a way that is relevant to industry. The initiative aims to catalyze collaborative action by embracing a common vision of sustainable consumption and developing shared ideas to integrate this into business practice.

Over 100 consumer industry executives and experts in sustainability, business strategy and product design took part in workshops to explore these themes presented in the report Sustainability for Tomorrow’s Consumer: The Business Case for Sustainability.

Recognizing that the issue of sustainability cannot be adequately addressed by any single company or even a single industry, the Forum has brought together leading companies from the following sectors: Chemicals, Energy, Food & Beverage, Logistics & Transport, Media, Investors, IT & Communications, and Retail & Consumer Goods.

This led to the next phase which developed a shared vision to place sustainability at the heart of business models for industries at all stages of the value chain detailed in the report Redesigning Business Value: A Roadmap for Sustainable Consumption.

Looking at product life cycles through the lens of sustainability, there are many hurdles which are common both along and across value chains. Some of these hurdles can be looked at as “collaboration hotspots”, where multiple stakeholders can work in tandem to develop systemic solutions. In consultation with stakeholders of the project, three focus areas that presented immediate and significant opportunities across the value chain were selected and working groups set up.

The Driving Sustainable Consumption project is managed by the World Economic Forum and is led by a diverse Project Board of Industry Partner companies, including:

Alcoa Aegis Media Agility, Best Buy, Deloitte, Edelmann, Henkel S.C., Hill & Knowlton (WPP), Kraft Foods, METRO, Nestlé, Nike Inc., Novozymes, Publicis Groupe, SAP, SAS, Johnson & Son, Sealed Air Corp., Unilever, Wipro.

It is commonly stated that the mining and metals industry’s environmental and social performance is under increasing scrutiny from NGOs. Not only civil society in fact. The media, financial analysts, business partners, investors, shareholders, “conscientious consumers”, etc: Today everybody wants to participate to a greener world, somehow. There's much talk of capitalism and sustainability being increasingly interrelated - that environmental and social impacts need to be included along with quarterly sales projections in corporate strategies and the financial bottom line. In fact, participation of the private sector to the global effort of reducing poverty, combating biodiversity loss, global warming, etc. is perceived by the general public as a new legitimate corporate value. They are many other individual business reasons for the mining industry to adopt responsible practices with respect to environmental and social management: access to land, reputation, which links to “licence to operate”, access to capital. As the ICMM Secretary General puts it: “demonstrating a commitment to biodiversity conservation is now an essential element of sustainable development for the mining and metals industry”.

Of course this is not a matter of “greenwashing” and communication only. Serious innovation efforts and entrepreneurship courage is necessary to create sustainable policy environments. Compensations measures, such as building schools or hospitals, in addition to normal compliance with laws and regulations in place, does not appear sufficient to shows company’s commitment to participate to that necessary global effort. It even sometimes looks like an odd present, like “disconnected” from real life.

Innovation however, and the strategically combined use of « Sustainable Consumption and Production » tools and instruments, which we briefly make a description below, gives companies the opportunity to show an integrated commitment to real life. Offering solutions, creating the momentum, fixing the headlines, can even helps them staying away of problems. Some companies even manage to pave the way to NGOs and other policy makers towards putting in place new practical tools, policies and expressions of environmental and social sustainability. Because they see the voluntary rules and norms more as a business opportunity then as a constraint probably.

In addition to the enforcement of “classic” state control regulations (such as environmental and social impact assessment, pollution control, social policies, etc., which are well-known) and certification measures, an honestly used and balanced mix of the third generation of sustainable management tools can put a company, its clients, partners, investors, shareholders, etc. in a virtuous position.

Companies tend to focus on their employees and on the surrounding local communities. But it should also consider a range of government and multilateral institutions with an interest in or responsibility for the management or protection of natural resources, investors or providers of insurance, conservation interests, including international, national or local NGOs as well as academic or research institutions. Even the consumer can feel involved in social management (see the backstory approach below).

Environmental policy tools: finding the good mix

These approaches are not adapted to all kind of activities. Each company shall strategically focus on one or more complementary instruments, depending on it’s own corporate culture and on the host country culture. They include regulatory tolls, economic tools, tools based on information and education and communication tools:

Regulatory and contractual tools (compulsory or voluntary) :

· « Environmental impact assessments » and « social impact assessments » ;

· Standards and norms for production, wastes, water quality, dust, air pollution… but also for distribution and products quality. No need to put more emphasis on these first generation of “command and control” type of norms ;

· Voluntary and negotiated (contractual) instruments. Whether concluded with communities, administration and other local stakeholders or with business partners: distributors, transport, etc. This is an interesting solution because a highly flexible instrument. In the first case, they can include management plans. In the second type, social and environmental aspects can be specified.

Economic instruments:

· Voluntary taxes (on production, transport, etc. such as the payment of carbon credits to compensate the company’s « carbon footprint »). The idea is to give sense to money, then corresponding to a global cause, while helping local people. It can be externalized and given to an international conservation organisation, to projects, to foundations, etc. These funds can also be versed to the company own projects. We could for example think about the making of a marine protected area for a fishing industry, or the making of a community conserved area for a local factory, the investment in acres of protected forest (carbon sinks) in Brazil for a mining company, etc… ;

· Green public procurement: They consist in buying green technologies for the company itself, such as solar systems, clean and energy efficient buildings, the use of recycle paper, bio-ethanol propelled machines, etc. This way, products, infrastructures and services have already « internalised the environmental costs ».

Tools based on information and education:

· Making of “sustainability reports”: The company regularly informs the public, partners, and shareholders on its green and social performances ;

· Diverse guaranties on the origin of the product used and on the processes. For example, companies are finding themselves held responsible for the whole backstory of their products (as illustrated by the film “blood diamonds”). “A product's backstory is everything that happened to get the object or service to us, everything that will happen behind the scenes while we use it, and everything that will happen after it leaves our lives.

· Fair trade networks ;

· Labels, such as the « Forest Stewardship Council Label (FSC) » for wood. These labels can also guaranty the respect of social norms ;

· Certification; a whole array of industries are now coming into compliance with third-party accountability systems that certify whether or not that company's actions meet basic environmental and social standards ;

· Traceability of products and processes, etc.

Conclusion

The choice of appropriate measures, their combination and their timely implementation are crucial. It should be tailored to the company’s culture as well at to the local demand and international trends. Selected tools and procedures should first of all be enrooted in country’s culture and practices. For example, when managing natural resources and social aspects in Senegal, negotiation and concertation of all the stakeholders is a key to success. We could imagine setting up such a concertation group as a basis for some policy work done or implementation of a global management, with projects, etc. In addition, communication should not only be top down but also bottom up to account for and recognize diversity of interests involved. Use of local language is important as well as sensitization and capacity building. Use of local or national external organisations (such as facilitators) can help developing a spirit of trust and collaboration, etc. In a word: the processes and communication are as important as the tools used.

One solution is to go step by step, by conducting a feasibility study and by testing different tolls in combination, probably with a good balance between the three kinds of instruments (regulation, economic, information) to progressively reduce the company’s environmental footprint.

Selected bibliography

- Benefit Streams from Mining in Tanzania: Case Studies from Geita and Mererani. Siri Lange in cooperation with ESRF, Chr. Michelsen Institute (R 2006: 11) ;

- Good Practice Guidance for Mining and Biodiversity, published by International Council on Mining and Metals (ICMM in association with IUCN), London, UK, 2006 ;

- Transparency and Accountability in Africa’s Extractive Industries: The Role of the Legislature, edited by Shari Bryan & Barrie Hofmann, National Democratic Institute for International Affairs, W DC, 2007 ;

- The impact of extractive industry activities on the rights of local communities ASADHO /Katanga, NIZA briefing paper 2007 ;

- Undermining Communities and the Environment: A Review of the International Finance Corporation’s Environmental, Health and Safety Guidelines for Mining, Bank Information Center – Center for Science in Public Participation – Earthworks – Oxfam International – WWF International, September 2007 ;

- A mine of information? Improving communication around the Rio Tinto ilmenite mine in Madagascar, Panos London, October 2007;

- Mali, Mining and human rights. International fact-finding mission report, FIDH, September 2007 ;

- Carbon footprints in the supply chain: the next step for business, the Carbon Trust, UK, 2007 ;

- The Trade and Environmental Effects of Ecolabels: Assessment and Response, UNEP (date ?) ;

- The use of economic instruments in environmental policy : opportunities and challenges, UNEP, 2004 ;

- A legal framework for the integration of environmental, social and governance issues into institutional investment, UNEP finance initiative, 2005 ;

- Defining Global Business Principles: Options and Challenges, IIED, 2004.

More info at :solarserdar@gmail.com

CROATIAN CENTER of RENEWABLE ENERGY SOURCES (CCRES)