19/10/2012 (PublicServiceEurope.com) - If the EU is to achieve its aim of ensuring 'truly sustainable' biofuels, it needs to look beyond greenhouse gas emissions and act to protect local people and the environment, say researchers.

The European Union has been a leader in the quest to build a more sustainable, low-carbon future. A central part of this effort is the Renewable Energy Directive, EU-RED, which includes a target of supplying 10 per cent of the European transport sector's energy from renewable sources by 2020.

In practice, this has led to a surge in biodiesel use, which accounts for over three-quarters of EU biofuels consumption. And it has led to a surge in demand for palm oil from Southeast Asia, both to make biodiesel, and to substitute for rapeseed oil being diverted to biodiesel production.

Now, three years into EU-RED implementation, pressure is mounting to revisit the biofuels target and the standards it sets for sustainability. There are concerns about deforestation and impacts on local people in producer countries, about many fuels' limited greenhouse gas emissions savings, and about rising food prices and potential scarcity.

This week, the European Commission presented a proposal to amend the EU-RED to limit to 5 per cent the use of food-based biofuels to meet the 2020 target, as well as to consider indirect land-use impacts in how biofuels are rated, and raise the greenhouse gas savings thresholds to 60 per cent.

The goal, says Commissioner for Climate Action Connie Hedegaard, is to ensure biofuels are "truly sustainable". Yet greenhouse gas emissions are only part of the picture. Our recent research, focused on palm oil concessions in Southeast Asia, shows the lack of effective mechanisms to deal with social and environmental complaints linked to biofuel production. The commission did not address biofuels' broader social and environmental impacts in the original EU-RED and it is time to correct that omission.

Biofuels are not inherently unsustainable, and, if properly produced, they can not only reduce global greenhouse gas emissions, but also help developing countries grow their economies and reduce their dependency on imported fossil fuels. The problems arise when neither the governments nor the buyers set limits and enforce standards to protect people and the environment.

New research from the Stockholm Environment Institute, which we presented at the European Development Days this week, illustrates the problems. Working with partners, we conducted case studies in Indonesia, Thailand, and Cambodia to document the extent of land-use changes and impacts on natural resources and livelihoods associated with the expansion of palm oil concessions.

We found local people can pay a steep price for the biofuels boom. For example, in Central Kalimantan province in Indonesia, villagers reported deforestation; water pollution and dumping of palm-oil mill effluent and other waste; a decline in fish stocks and aquatic plants; and redirected water flows. Plantations also dry out the adjacent community land, which lowers water tables, dries out wells, and forces people to give up traditional rice farming.

Worst of all, the government does little to address those impacts. Existing regulations are rarely enforced, due to political conflicts, corruption and lack of capacity. For producers, this means low or non-existent compliance costs, which allows them to sell their oil at highly competitive prices.

If the commission approves the proposed EU-RED amendment, new palm oil producers will be automatically disqualified on greenhouse gas grounds. However, the underlying problem will not have been addressed: the EU needs to recognise that sustainability is about far more than carbon emissions. In a new policy brief, we propose several ways to improve the EU-RED.

These key measures include aligning the directive with the EU's 'policy coherence for development' agenda, and introducing stricter and mandatory criteria for water resources and land use management, such as safeguards for ecosystem benefits and an emphasis on opportunities for smallholder farmers to gain markets access.

Other recommendations include incorporating the United Nations principle of 'free prior and informed consent' to require businesses to ensure consent from affected stakeholders, as well as prioritising more robust certification schemes and sustainability standards, such as those of the Roundtable on Sustainable Palm oil, and seeking to embed them in bilateral and multilateral trade agreements.

Such trade agreements are legal options that are expressly permitted and encouraged in the EU-RED, but no member states have so far pursued this option. Finally, we suggest strengthening traceability and transparency in the audit trail, to reward governments and companies that follow requirements and actively promote sustainable water and land management strategies.

We were encouraged by a substantive discussion of biofuels on Wednesday at European Development Days, where SEI executive director Johan L. Kuylenstierna presented our research. This is the EU's premier forum on international affairs and development, and that is the kind of dialogue and collaboration between the public sector, the private sector and civil society that is needed to ensure sustainable biofuels production.

We hope the proposed EU-RED amendment will build the momentum for reform, and will continue to work to build knowledge and science-based analyses to support policy-makers.