Bloomberg News

EU Biofuels Targets to Cost $166 Billion, Study Says

February 03, 2012

(Adds European Commission comment from second paragraph.)

Feb. 2 (Bloomberg) -- European Union policies to promote the use of biofuels for transportation will cost consumers as much as 126 billion euros ($166 billion) between now and 2020, two environmental groups said.

The fuels, gasoline substitutes derived from plants, probably won’t cut greenhouse gases because forests are chopped down to make way for biofuel plantations, Friends of the Earth and ActionAid said today in an e-mailed statement. The European Commission said that while biofuels cost more than fossil fuels, it’s “reasonable” for motorists to pay extra.

The EU aims to get 10 percent of its transport energy from biofuels, hydrogen and renewable power by 2020. The target aims to help cut the bloc’s emissions 20 percent from 1990 levels. The lobby groups said those goals will add a cumulative 94 billion euros to 126 billion euros just to fuel costs by 2020.

“Consumers and taxpayers are paying a premium for this policy, which achieves very little and we think causes a lot of damage to the environment as well as hunger and poverty,” Robbie Blake, biofuels campaigner for Friends of the Earth Europe, said in a phone interview. “What we really need to be focused on is reducing transport energy use by improving energy efficiency in cars and through better public transport.”

EU Response

EU energy spokeswoman Marlene Holzner said today in an e- mail that the biofuels target may increase cereal prices by as much as 6 percent and rapeseed costs by as much as 10 percent.

The commission is monitoring the effects on food prices. She said efficiency improvements alone won’t achieve the carbon cuts needed, and that pursuing renewables is necessary.

“Most renewable energy is at present more expensive than fossil energy,” Holzner said. “It is important to recognize the financing for renewable energy as growth-enhancing expenditure that will provide greater return in the future. It is reasonable to let the consumers of, in this case, motor fuels, pay for the costs.”

Replacing gasoline with biofuels in the EU cuts emissions 21 percent, after land use changes have been taken into account, Holzner said, citing a study prepared for the Commission in October by the International Food Policy Institute. The EU in June 2010 set up controls to prevent biofuels from damaging forests, wetlands and nature reserves.

An independent consultant, Malcolm Fergusson, carried out the cost analysis for Friends of the Earth and ActionAid. He extrapolated analysis relating to the costs in the U.K. and Germany across the EU. Fergusson was previously head of climate change policy at the U.K. government’s environment agency.

--With assistance from Ewa Krukowska in Brussels and Todd White in Madrid . Editors: Reed Landberg, Randall Hackley

To contact the reporter on this story: Alex Morales in London at amorales2@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


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