Low ILUC potential of wastes and residues for biofuels

Low ILUC potential of wastes and residues for biofuelsIn October 2012 the European Commission published a legislative proposal to amend the RED and FQD aimed at addressing indirect land use change (ILUC). One of the proposed measures is a further incentive for biofuels produced from wastes, residues and (ligno) cellulose material. The Commission proposes to count these biofuels two or four times towards national biofuel mandates. While biofuels produced from wastes and residues can be very sustainable and achieve high direct GHG savings compared to fossil fuels, they are not necessarily ILUC-free. If, for example, a quantity of straw was used for animal feed and is now being used for ethanol production, more animal feed production is needed to compensate the loss of animal feed. This study examines a number of waste and residue material and assesses to what extent a ‘surplus’ of the materials exists which can be used to produce biofuels without causing ILUC; the rules laid down in the LIIB certification module1 are used for this purpose. The materials assessed in this study are cereal straw, woody residues, used cooking oil (UCO) and corn cobs.

In order to assess the low ILUC potential for each of the materials this study first identifies the available theoretical potential of each of the materials. This is the quantity of the material which is available and could in theory be harvested or collected. Subsequently the sustainable potential is estimated. This is the quantity which can be harvested or collected in a sustainable way, taking into account the need to protect, for example, soil quality. Finally the low indirect impact or low ILUC potential is estimated. This potential takes into account the current non-bioenergy uses of the material. Displacing these uses could lead to ILUC and therefore these existing uses are deducted from the sustainable potential. Because UCO is traded globally its potential was assessed also outside the EU while the other materials were analysed at EU and Member State level.

This report shows that the assessed waste and residue materials assessed here all have considerable theoretical potentials, smaller but still substantial sustainable potentials and varying low ILUC potentials. For corn cobs the low ILUC potential could not be established, while straw, woody residues and used cooking oil all have a substantial low ILUC potential. Results can differ significantly from Member State to Member State. Germany, France and some other Member State for example have a large surplus of straw available while the Netherlands and Poland currently have a straw deficit. Using straw to produce ethanol in the latter two Member State poses a serious risk of negative indirect impacts. UCO is widely used as a biofuel already and this study shows that on the one hand ample ILUC-free potential is available, whilst on the other hand that UCO collection can be a dodgy business in certain regions, which makes quality control challenging. The use of UCO as cooking oil or for human consumption in China, Indonesia and possibly Argentina and dumping of UCO in rivers in some regions poses particular problems for public health and the environment. Using UCO which would otherwise be dumped to produce biodiesel can be highly beneficial beyond it being low ILUC.

From low ILUC EU woody residues, low ILUC EU cereal straw and globally available UCO a total quantity of 17Mtoe of low ILUC biofuels could be produced: 11.2Mtoe from woody residues, 3MTOE from cereal straw and 2.8Mtoe from UCO. This estimated total would equal almost 60% of the total forecasted quantity of biofuels in the EU in 2020 when single counted and around 120% with double counting in place. The challenge is not the availability of ILUC-free feedstocks but in the willingness to invest in sufficient biofuel production plants which can reap this potential.

This study shows that a substantial quantity of cereal straw and forestry residues could be harvested and used for biofuels, but that an even greater quantity cannot be harvested without risking serious negative sustainability impacts. The current proposed positive lists for multiple counting do not limit the quantitative use of specific materials, in theory allowing both straw and ‘bark, branches, leaves, saw dust and cutter shavings’ (woody residues) to be completely harvested and used for biofuels. In order to reconcile the need for truly sustainable biofuels and the need to avoid negative sustainability impacts it would be necessary to introduce a maximum removal rate for primary land-using agricultural and forestry wastes and residues before these materials are included in the positive lists. It would be good to specify the removal rates at Member State level and if feasible an even more detailed regional specification. More research is needed to determine appropriate maximum removal rates.

When creating effective incentives for the use of wastes and residues as sustainable biofuel feedstocks it is advisable to take into account current uses of the feedstock. This study shows that this can require great efforts and results are often estimates, but in order to promote truly sustainable biofuels it is worth the effort.

Direct and indirect sustainability of biofuels

Increasing volumes of biofuels are blended in fossil petrol and diesel in many regions of the world. In the European Union, biofuels are mainly blended in order to mitigate climate change. The use of biofuels is promoted in two EU directives, the Renewable Energy Directive (RED)2, which requires 10% renewable energy in transport in 2020 and the Fuel Quality Directive (FQD)3, which requires fuel suppliers to reduce greenhouse gas emissions by 6% in 2020 throughout the supply chain from oil well to car wheel. Both the RED and FQD targets will be mainly met by the blending of biofuels.

When the European Union agreed upon the RED and FQD targets in 2008, concerns over the sustainability of biofuels and competition with food led to the inclusion of mandatory sustainability criteria for biofuels in both directives. These criteria were the first mandatory requirements for biofuel sustainability worldwide. Biomass produced for biofuels consumed in the EU now has to meet more stringent sustainability requirements (most notably land-use and GHG related) compared to biomass for food, animal feed or other purposes.

The focus on biofuel sustainability and the emerging discussion on Indirect Land Use Change (ILUC) also led to the inclusion of the ‘double counting provision’ in the RED5, which aims to increase the use of biofuels produced from wastes, residues and (ligno)cellulose materials by counting these biofuels twice towards national targets. This means that if for example a national biofuel mandate of 4% is in place, the target could be met by the supply of 2% biofuels produced from waste or residues. The reason for this incentive for biofuels from wastes and residues is the notion that no agricultural land is required to generate waste and residue materials. The double counting provision has led to a large increase in the consumption of biofuels from used cooking oils and animal fats in recent years. The FQD does not include a double counting provision but also in this directive biofuels produced from wastes and residues have the advantage that they have a relatively high GHG saving and are thus attractive compared to biofuels with a lower GHG saving because fewer litres of residue-based biofuels are needed to meet the FQD target. Wastes and residues as a feedstock for the production of biofuels will be the focus of this study.

The sustainability criteria for biofuels in the RED and FQD only address aspects directly related to the production of biofuel feedstocks. Since 2008, increasing attention has been raised to indirect sustainability aspects of biofuel feedstock production. ILUC currently dominates the EU debate on biofuels; it is the effect that when existing cropland is used for biofuel feedstock production, the previous land use is displaced and as a result there is an increased risk that non-agricultural land is converted into cropland elsewhere. ILUC can therefore lead to higher GHG emissions and loss of biodiversity. ILUC, its quantification and possible policy measures have been debated in the EU since 2008. In October 2012 the European Commission published a legislative proposal6 to amend the RED and FQD aimed to address ILUC. This would mean that the use of biofuels will be subjected to a more stringent sustainability regime which also aims to address negative indirect sustainability aspects. Members of the European Parliament and Council are currently discussing the proposal. One of the measures which the Commission proposes as a solution against ILUC is a further incentive for biofuels produced from wastes and residues. The Commission considers these biofuels to cause little or no ILUC and proposes to introduce quadruple counting of certain wastes and residues (as well as lignocellulose and non-food cellulose materials) in addition to the existing double counting provision. In its proposal, the Commission has included lists of specific feedstocks which would be eligible for double or quadruple counting towards national renewable energy targets.

Wastes and residues should be part of the solution, not the problem

While biofuels produced from wastes and residues can be very sustainable and achieve high direct GHG savings compared to fossil fuels, they are not necessarily ILUC-free. If, for example, a quantity of straw was used for animal feed and is now being used for ethanol production, more animal feed production is needed to compensate the loss of animal feed. This additional feed production could come from additional harvest of straw but if in situations where straw is scarce, more agricultural crops are needed to produce additional animal feed. This could lead to an increased demand for agricultural land which could lead to the conversion of land into agricultural land elsewhere in the world and associated negative impacts on biodiversity and carbon stocks. Another example is the use of animal fats, which has been used for decades by the oleochemical industry. In recent years, increasing quantities of animal fats have been diverted towards biodiesel production, leading to increased competition between the oleochemical and biodiesel industries for raw materials. Because animal fats are not available in limitless quantities, their increased use as a biodiesel feedstock could cause the oleochemical industry to use palm oil as a feedstock instead of animal fats. Using animal fats for biodiesel could have the indirect impact of increased palm oil use by the oleochemical industry, which could indirectly cause the conversion of forests to palm oil plantations in Southeast Asia.

This could for example be done by limiting incentives to those wastes and residues which do not cause ILUC or by tailoring them in such way that only the available surplus of waste and residue materials is steered towards biofuels.

The question – what role can waste and residue materials play to mitigate ILUC as a low ILUC biofuel feedstock? – deserves further analysis and is the central question of this report. If it can be demonstrated that a certain material has no or low ILUC impacts, it would be credible to incentivise its use as part of an effort to reduce ILUC, for example by including the material in the positive lists for double or quadruple counting or to allow its use under a specific sub-target for ILUC-free biofuels.