Environmental Sustainability Updates

EU drafts reveal biofuel’s environmental damage | Reuters.

It turns out the policymakers are starting to take note of unintended consequences.

The EU aims for its 500 million citizens to get about a tenth of their road fuels from renewable sources such as biofuels by 2020, but some EU officials want the target reduced in a review in four years time.

However, there seems to be some confusion (at least in the article!) about what’s important. First, food prices:

Modeling exercises are starting to show unwanted impacts spreading across the planet via commodity markets. “The simulated effects of EU biofuels policies imply a considerable shock to agricultural commodity markets”

Food prices are an obvious worry, especially in poorer countries (in richer countries, it has been argued that food prices are actually too low).

Than, there’s the problem of land use change and loss of forests and biodiversity:

“Current and future support of biofuels…is likely to accelerate the expansion of land under crops, particularly in Latin America and Asia,”

Plus the risk of irreversible loss:

“It carries the risk of significant and hardly reversible environmental damages,”

…

At the center of the debate is an issue drily referred to as “indirect land use change,” which has put palm oil producers in Malaysia and Indonesia in the cross-hairs of environmentalists.

Critics say that regardless of where they are grown, biofuels compete for land with food crops, forcing farmers worldwide to expand into areas never farmed before — sometimes by hacking into tropical rainforest or draining peatlands.

There’s the clear problem of emissions from deforestation – plus the usual “symbolic species” argument:

Burning forests to clear the land can pump vast quantities of climate-warming emissions into the atmosphere, cancelling out any theoretical climate benefit from the fuel. Iconic species such as Orangutans are also put under renewed pressure.

And all of this takes place in a setting of uncertainty:

But the impact studies and emails show for the first time that European policymakers are also seriously worried about the impact on tropical forests, wetlands and savannah. However, they are struggling to quantify the likely damage.

Personally, I see two competing claims – the usual double whammy: that on the one hand we want to maintain our standard of living in the EU, while improving the livelihood of people in developing nations. This means people in South America, Asia or Africa face an opportunity cost related to conservation, because the land now occupied by forests is an unused natural capital good.

On the other hand, we want and need to to conserve natural ecosystems and the services they provide.

This whole debate, rich and complex as it already is, happens in a context of two pressing (and contradicting) pressures: the impact of Climate Change and the perception of future scarcity of fossil fuels.

Not good.

If you think about it, fossil fuels and agricultural commodities have a sticker price; nature does not. What it means is we need to put a price on nature – and schemes like REDD or Biodiversity Offsets could go some way into that. How much is it efficient to develop, how much to conserve?
Punchline: Coming soon to a market near you.