Originally published as Covington E-Alert on October 23, 2012

On October 17, 2012, the European Commission presented a proposal that would limit the consumption of food crop biofuels and bioliquids in Europe.1 The proposal is intended to respond to allegations that food crop biofuels and bioliquids result in higher world food prices and indirect land use change (“ILUC”) gas emissions. It could result in a U-turn from the EU’s biofuels policy and significantly affect current and future investments in the sector.

The Commission’s proposal must now be considered for adoption by the European Parliament and Council. The following are likely to be the most controversial issues during the legislative procedure:

  • A 5% cap on the contribution of food crop biofuels to the current 10% renewable energy transport target. This cap would significantly prevent any further increase of the market share of food crop biofuels in Europe.
  • An increase of the greenhouse gas emission savings compared to emissions from fossil fuels that biofuels and bioliquids must achieve, and the extent to which installations already in operation may be grandfathered.
  • The possibility to include ILUC emission factors in the methodology to calculate the greenhouse gas emission savings required for biofuels and bioliquids. Such factors could effectively prevent the marketing of biodiesel in Europe.
  • The extent to which food crop biofuels should benefit from EU and Member State support.

This note briefly reviews the most important proposed changes affecting the production and consumption of biofuels in Europe and explains the legislative procedure that will follow.

Read the complete article here