Food for fuels? Last chance lobbying for the agrofuels industry

The agrofuels industry has presented itself as offering an environmental solution to lowering carbon emissions and has depended on heavy subsidies to survive. However, serious questions about pushing up food prices, land grabbing, deforestation and a net increase in carbon emissions are being deflected by an agrofuels industry keen to maintain subsidies and to avoid a reduction in usage targets. As the European Parliament this week plans to vote on the Commission's proposed amendments to its agrofuels policy, we look at the range of lobby strategies the industry is employing against the amendments, from front groups and trips abroad for MEPs to scientific disinformation.

Europe's transport is responsible for more than 20% of the EU's green house gas emissions (GHG), and its emissions are still rising.1 In 2009 two directives were approved to tackle this problem:

1. the Renewable Energy Directive (RED), that sets a target for 10% renewable energy in transport by 2020;

2. the Fuel Quality Directive (FQD) that sets a target for fuel suppliers to reduce carbon emissions of transport fuels by 6% by 2020.

But the consequences of these policies, which pushed up the consumption of agrofuels, have created major environmental and social problems and as a result, in October 2012 the European Commission published a proposal for amending both directives, as a first attempt to ameliorate some of these negative impacts.

The new proposal would impose a 5% cap on the amount of first generation agrofuels (those mainly produced from food crops) used for the 10% EU renewable energy in transport target. The rest of the 10% target would be achieved by electric cars and second generation agrofuels (agrofuels not made of food crops, but from cereal straw, waste, forest residues or tree monocultures, with industry developing genetically modified trees for this purpose2). A 60% energy saving would be applied to new agrofuel installations from July 2014 in order to improve the efficiency of agrofuel production processes. The proposal is now going through the European Parliament, where several committees will vote and two reports with opposing views on the issue will soon be discussed.

On June 20th, the Industry, Research and Energy Committee (ITRE) will vote on a report by conservative MEP Alejo Vidal-Quadras, which rejects the 5% cap. Another report by liberal MEP Corinne LePage, that would consider emissions from indirect land use change, will be voted on July 10th in the Environmental Committee (ENVI) (see Box).

Pressure on land use

One of the key issues is whether using agrofuels actually mean a net reduction in carbon emissions. The rush to produce agrofuels creates severe pressure for more agricultural land. Where this expansion occurs at the expense of forests and/or peat land, it results in substantial increases in greenhouse gas emissions from the soil and removed vegetation. But this expansion is often indirect, with agrofuel crops like sugar cane, palm oil and soy not being planted instead of actual forest, but instead forcing other crops or cattle into new lands obtained by deforestation3. This is known as ILUC or indirect land use change but industry rejects including consideration of ILUC in policy-making. The conclusions of a debate organized by the European Biodiesel Board and FEDIOL (the federation of the European vegetable oil and feedmeal industry) in the European Parliament were that this factor is “highly uncertain” and includes “systematic and structural deficiencies in the models4."

However, the European Commission's scientific body, the Joint Research Center (JRC) “unanimously agreed that, even when uncertainties are high, there is strong evidence that the ILUC effect is significant and that this effect is crop‐specific5.”

The European Commission recognizes ILUC risks in its proposal, but just as a reporting item, so they aren't included in accounts of emissions reduction. Lepage's proposal tries to include ILUC, while Vidal-Quadras sides with industry, as according to his report “not enough scientific evidence is available to introduce ILUC factors into EU legislation”.

There is an urgent need to reduce the use of food as fuel to zero. But at least introducing ILUC factor could stop the most damaging agrofuels.

Industry at cross-purposes

The agrofuel policy debate has united those defending their commercial concerns, created unusual alliances and caused new enmities. For instance, the Commission proposal to revise their policy triggered a unified response from the biodiesel and ethanol industry (European Biodiesel Board and ePure), the vegetable oil and feedmeal industry (FEDIOL), the grain trading lobby (COCERAL) and the big farmers´ lobby group Copa-Cogeca, who called the proposal “a masterpiece of irresponsible policy making6."

Another major player opposed to the policy amendment is big oil; companies like BP, Shell, Total and Petrobras have invested billions into developing the agrofuel industry. Not all of them are pursuing first generation agrofuels, but many of them have established strategic partnerships and invested in startups in an effort to build out integrated supply chain delivery networks7. Introducing small amount of agrofuels means that their businesses look “greener” without actually making big changes.

Meanwhile an unusual ad-hoc alliance has emerged between the food industry and certain environmental and development NGOs in support of reforming the policy. Companies like Nestle and Unilever have signed a common letter8 with ActionAid, Oxfam and WWF to UK Prime Minister David Cameron urging him to take action to stop agrofuel targets, reminding him that “burning food for fuel as biofuels in petrol and diesel is having a serious impact on hunger in many developing countries”.

Meanwhile, the aviation industry argues for a limited change in policy, supporting agrofuels for planes but not for cars, as they consider that “airplanes don’t have an option” if they want to lower their GHG emissions9.

The current agrofuel targets are also an opportunity for the biotech industry and some GM crop producing countries: for instance, the European food market is blocked for Canadian or Australian GM canola due to consumer rejection, but using this crop for agrofuels is possible, meaning these countries are also lobbying the EU to keep the market afloat and avoid restrictions in the use of food crops for agrofuels.10

An industry in crisis

The European agrofuel industry has been heavily subsidized to raise its production capacity since the targets were set, thanks to a huge corporate lobbying effort.11 A recent report by Transport & Environment12 pointed out that the total annual public subsidy for agrofuels production in Europe is around €10 billion, equivalent to a Cyprus bailout every year (but with much friendlier conditions).

The agrofuel industry is producing far below its capacity, even though new plants are still being built: bioethanol production capacity has increased four-fold between 2006 and 2013, while the capacity use decreased from 89% to the current 65%. The biodiesel industry is performing even worse, with the production capacity also increasing four-fold in this period but the capacity use rate dropping from 55% to 47%.13 Spain, the EU's third biodiesel producer, is a good example of an “agrofuels bubble” created after the EU targets were set. Two thirds of Spanish biodiesel plants closed in 2008, and the industry was producing at 9% of the capacity.14 In 2010 75% of plants in Spain were closed and the production rate was at 10%.15 In 2013, production is still under 10%16, while closed plants account for millions in public subsidies.17 Industry blames “perfidious imports” from Argentina or Indonesia.18

We can see how a publicly subsidised business and investment opportunity has turned into a economic bubble in the process of deflating. To protect its existing investments, this industry needs to keep the EU targets as they stand and maintain the high level of subsidies. Besides, it is facing the pressure of agrofuel imports from the US (also massively subsidised), as well as Argentina and Brazil, while they need to secure large amounts of cheap raw material, most of it coming from outside the EU. With so much at stake, the EU agrofuels industry is doing its best to send emergency signals to EU decision-makers.

Scaremongering about job losses

As the Commission was about to publish its revised proposal, Máire Geoghegan-Quinn (Commissioner for Research, Innovation and Science) and her cabinet were receiving three lobby emails per hour, according to unofficial minutes accessed by Euractiv.19 Those emails painted a dramatic picture of an industry which could not survive at all without subsidies and targets. The European Biodiesel Board accused the Commission of “purposely causing the death of the whole EU biodiesel industrial sector” as the proposal would result in “closing hundreds of production sites worth many billions euros of recent investments and driving to the immediate loss of 50,000 direct and 400,000 indirect employments in the EU biodiesel production chain.” These figures include farmers and petrol vendors in Europe, quite unlikely to lose their jobs in case of an EU policy change, while research shows that in 2011 only 3630 people were employed in biofuel production facilities across Europe.20

Inviting MEPs on a “fact-finding” mission to Malaysia

Another strategy the agrofuels industry has employed was a fact-finding mission to Malaysia for MEPs. The European Energy Forum, a club of more than fifty MEPs and energy corporations (BP, Total, EDF, Vattenfal, Abengoa, Exxon, Shell or Statoil), in May 2013 organized the trip together with Neste Oil, Europe's biggest palm oil importer. This type of industry-MEP forum gathers MEPs from different political groups together with industry and enables 'under the radar' lobbying opportunities in the form of informal chats – these are unregulated by the European Parliament.

The so-called “fact-finding” visit involved key MEPs like Alejo Vidal-Quadras, rapporteur for the ITRE committee on agrofuels and conservative Christa Klass, shadow rapporteur for the European Peoples' Party in the ENVI committee on agrofuels. Unfortunately, the recently adopted MEP's code of conduct doesn't ban these kind of scenarios.21 Despite the fact that MEPs paid for their own plane tickets the trip was completely industry-biased, and other costs like hotels and food were paid by the companies involved. The trip included a short meeting with selected NGOs as a way to claim balance.

No surprise that the European Biodiesel Board, of which Neste Oil is a member, was really enthusiastic about the resulting Vidal-Quadras report that came out of the trip. In their view, “the work of MEPs Vidal-Quadras deserves strong support from those committed to promote EU economic recovery and GHG reduction."22

Denying the facts

Many international institutions have warned about the link between agrofuel demand and high food prices. A joint call in 2011 from FAO, the World Food Program, OECD, the World Bank and the International Monetary Fund, among others, asked G20 governments to “remove provisions of current national policies that subsidize (or mandate) biofuels production” as they found that the demand for food and feed crops for the production of agrofuels was a significant factor in increases in global food prices and volatility.23

Despite this heavyweight call, the agrofuels industry downplays the importance of food price spikes referring to European Commission reports concluding that “EU biofuels mandates are responsible for about a 1%-2% increase in corn, wheat and sugar prices over an entire decade."24

Accusing NGOs of emotional blackmail

According to the UN Special Rapporteur on the Right to Food, the available arable land in the EU is insufficient to produce all the needed feedstocks for agrofuels that compliance with the RED target would require. The EU's member states must therefore outsource agrofuels production to developing countries in order to meet the targets set.25 Currently, around 20% of all agrofuels consumed in the EU are imported. Of the remaining 80% produced in the EU, around half comes from imported feedstocks.26

 Many reports show the link between agrofuel demand and land grabbing in Africa,27 Asia28 and Latin America.29 But according to industry, “the facts of land-grabbing prove that EU biofuels policy was unfairly maligned by NGOs on this issue”, describing it as a “potent and even stomach-wrenching argument".30

Palm Oil... for truth?

When Lepage included the land use issue to try and better reflect environmental cost of agrofuels (known as ILUC, see Box) in her proposal, it turned her into a lobby target. If ILUC is considered, for example, under the EU's revised proposal most palm oil would no longer be an option. This crop is one of the most controversial used for agrofuels for its impacts on climate,31 hundreds of reported social conflicts on land32 and deforestation.33 Lepage's proposal is being criticized as promoting a “scientifically flawed concept” in Malaysian newspapers.34 She is even being accused of performing “an affront to national sovereignty and agricultural expansion in developing countries"35 by the Malaysian Palm Oil Council, a group with lobby offices around the world and whose Brussels offices are hosted by the Malaysian embassy.

Of particular note for its strange claims and odd alliances is the mysterious Malaysia-based Palm Oil Truth Foundation, which describes itself as an “international non-governmental and not-for-profit organization, without strings to the world of commerce and power”. It states that “there is no singular definition to truth that scholars would collectively agree” and produces page after page of attacks against activist groups opposing agrofuels and palm oil expansion. It also promotes on its website a leaflet produced by a libertarian right-wing Italian group called Libertiamo, “Disarming the Greens”36 (“'greenism' causes damage to the environment”) which analyses NGO public funding and concludes, “from that funding these NGOs regularly produce reports and evidence to justify those governments taking policy action against industries like palm oil. This creates a self sustaining cycle of misinformation that suits NGOs and government as vested interests.”

This shows how desperate some interests are to discredit the serious arguments made against agrofuels.

Time to end the use of food for cars

Agrofuel policy reform seems to be no longer discussed under the framework of climate change, but under the narrative of economy and job creation. Meanwhile the original transport target is not only not helping the climate – its main objective – it is creating severe environmental and social problems. Ideally agrofuels targets should be dropped entirely, but during the coming votes over the targets review in the European Parliament some positive steps can be taken, such as limiting the use of food for cars and avoiding the most damaging agrofuels. MEPs have the chance to change a policy that was a major mistake, and for this, they need to resist the intense lobbying campaign that is underway.

Photo by Rainforest Action Network