Understanding Sustainable Biofuel Production, the Eu Renewable Energy Directive and International Initiatives to Verify Sustainability

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UNDERSTANDING SUSTAINABLE BIOFUEL PRODUCTION, THE EU RENEWABLE ENERGY DIRECTIVE AND INTERNATIONAL INITIATIVES TO VERIFY SUSTAINABILITY

A discussion about the global importance of ensuring biofuels are produced sustainably and the international initiatives to drive the market in a socially acceptable and environmentally friendly well-managed direction

JULY 2011

AUTHORS David Glenister Sustainability Expert, Systems and Services Certification, SGS

Vanda Nunes Market & Product Development Manager, Systems & Services Certification, SGS ABSTRACT

This document aims to provide an insight into the issues associated with the sustainable production of biofuels. It discusses the contents of the 2009 European Renewable Energy Directive (2009/28/EC) along with the subsequent European Commission Communications (June 2010), which relate to the implementation of sustainability schemes. Following this it details the first seven sustainability schemes to gain European Commission approval, as of July 2011, as covering all the criteria specified in the 2009 European Renewable Energy Directive. Organisations wishing to produce and sell biofuels that can count towards an EU member’s renewables targets need to be assessed against the sustainability criteria outlined in the Directive. This paper explains how the sustainability criteria can be broken down and details what they refer to. It also discusses the initiatives and methodology for auditing, verifying and certifying compliance with these criteria and with the EU Directive, along with other legislation around the world. Ultimately, it guides any organisation operating in the biofuels industry through the EU requirements for market support and what is considered good practice on an international scale.

CONTENTS

I. EXECUTIVE SUMMARY 2

II. SUSTAINABLE BIOFUELS 3

III. THE EUROPEAN UNION RENEWABLE ENERGY DIRECTIVE 4

IV. EU COMMISSION APPROVED VOLUNTARY STANDARDS 4

V. GLOBAL SUSTAINABILITY INITIATIVES 5

VI. THE KEY PRINCIPLES AND CRITERIA FOR SUSTAINABLE BIOFUELS 11

VII. VERIFICATION AND CERTIFICATION OF SUSTAINABILITY 14

VIII. CUSTOMISED AUDITS AGAINST SUSTAINABILITY PERFORMANCE CRITERIA AND ISSUE OF A RENEWABLE ENERGY DIRECTIVE LIMITED ASSURANCE STATEMENT 14

IX. CONCLUSIOn 17

1 I. EXECUTIVE SUMMARY

Biofuels use is widely recognised as a potential solution to the problem of greenhouse gas emissions. They are increasingly providing an alternative to traditionally used and highly polluting fossil fuels for powering vehicles and heating buildings. The increasing use of biofuels also means that the world can become less dependent on oil and gas as these natural resources deplete further. As a result of the increased focus on these issues over recent years the biofuels industry has grown exponentially. However, much of this speed has been because of the identified profit potential of the market and not because of these environment and resource driven factors. Those with a true concern for the world have now realised that there are many issues that need to be considered as part of biofuels market development and that only if the market is properly controlled can these aspirations be met. As Achim Steiner, Under-Secretary General of the United Nations and UNEP Executive Director said: “There is no doubt that we need to decrease our reliance on fossil fuels and move to cleaner, more environmentally friendly options, but we need to make sure we are not creating more problems than we solve.” The main concern associated with bioenergy is that its increased production could have severe negative impacts on biodiversity. These could be aspects such as land- use change, the introduction of potentially invasive species, the overuse of water and even by indirectly causing other agriculture production to move into conservation areas. However, at the same time the production of biofuels has positive impacts too. As the plants grow they put oxygen into the atmosphere, jobs are created throughout the whole value chain and the increased use of biofuels over fossil fuels should reduce pollution. Essentially, it is recognised that with a proper framework in place which balances greenhouse gas emissions savings against the impact on biodiversity, water and food security, it should be possible to develop a truly beneficial industry. In-depth planning, monitoring and management is required globally, regionally, nationally and on a project-by-project basis. It is in response to this need that the European Union (EU) established the EU Renewable Energy Directive – legislation that forces any Economic Operator in the EU to verify the whole value chain of their products against a clearly defined set of criteria that, when met, guarantee that the biofuel has been produced in a sustainable manner. In addition to the EU Renewable Energy Directive there are also a number of global sustainability initiatives that are helping to drive the industry in a sustainable direction. The purpose of these initiatives is to support the industry in meeting the regulations targets and requirements as well as to approach the subject with even greater depth and vision.

2 II. SUSTAINABLE BIOFUELS

WHAT IS SUSTAINABILITY? BIOFUELS FROM associated with tropical forests or recently deforested areas, drained The term ‘sustainability’ in the context SUSTAINABLE SOURCES peatland or wetland or other areas high of resources refers to the ability of the Biofuels, which can be solid, liquid or in biodiversity or carbon stock.. This human race to sustain its existence on gas fuels derived from biomass, are includes any biomass plantations on planet earth. This involves taking care of internationally recognised as having a land that was previously covered in the needs and demands of the current clear role to play in the quest to reduce forest. In addition, the biofuel cannot society while continually ensuring that greenhouse gas (GHG) emissions and originate from areas designated for no damage is done to ecosystems to develop energy security. However, the protection of nature or from land or the environment. In the 1980s as the popularity of biofuels has grown, where rare, threatened or endangered when the importance of sustainable so too has the realisation that not all ecosystems or species exist. What this development was first realised the biofuels result in the same net benefit means in practice is that every entity in Bruntland Commission described it as: for the environment. Biofuels that have the production chain needs to be able ‘Development that meets the needs an undue impact or compete with food to provide evidence supporting their of the present without compromising crops are losing their political and market sustainable land use and processes. the ability of future generations to support, as they have been revealed as Starting from the farmer and the mill, meet their own needs.’ There are many unsustainable. Ultimately, only those moving on to the trading companies definitions of sustainability, but this that are sustainably produced can be that transport or adapt the product, is the most relevant and useful when considered truly renewable to the fuel supplier who delivers it to considering renewable energies such energy sources. a filling station and finally to the filling as biofuels that are now seen as critical For it to be said that a biofuel is from station, every supplier from the field to energy sources in the battle to decrease a sustainable source, the whole the end user must offer full traceability our dependency on non-renewable fuels value chain needs its sustainability of sustainability. This chain of custody such as oil and gas at the same time as guaranteed. This means that no approach to ensuring sustainability protecting the environment. part of the production, handling or means that for any given consignment transport of the biofuel can be seen of biofuels every detail of its production to be ecologically destructive in any meets the required parameters set that way. Essentially, the biofuel cannot prove its beneficial worth. be manufactured from raw materials

EXAMPLE BIOFUEL VALUE CHAIN FOR SUGAR CANE DERIVED BIO ETHANOL

Sugarcane field Harvesting Transport Ethanol and Transport to Harbour depot to factory energy production harbour depot

Transport Reloading in Transport to Destination depot Transport to depot destination depot destination to customer

3 4 III. THE EUROPEAN UNION RENEWABLE ENERGY DIRECTIVE

In June 2009 the European Union biofuels, preventing those that do not option to show compliance using a launched the Renewable Energy generate net greenhouse gas (GHG) voluntary certification scheme. The Directive with ambitious targets for savings and have negative impacts on communications go on to explain what all member states. The Directive biodiversity or land use from achieving is required of voluntary certification details how each country must assist market support. The sustainability schemes for sustainable biofuels. While in the overall goal: 20% of all energy criteria can be broken down into twelve there are other options discussed such used within the EU must come from different factors: Legality; Human and as national agreements and bilateral renewable sources by 2020 with 10% Labour Rights; Local Food Security; or multilateral agreements, voluntary of this being in the transport sector. Greenhouse Gas Emissions; Land certification schemes are discussed in Within the detail of the Directive, Rights; Rural and Social Development; the most depth. Within the Renewable development plans for the introduction Planning, Monitoring and Continuous Energy Directive and throughout these and development of renewable Improvement; Conservation; The use of subsequent communications the energy sources can be found. In the technology, inputs and management of European Commission is encouraging case of biofuels, this clearly outlines Waste; Water; Soil and Air. industry, governments and NGOs to use sustainability criteria that must be Shortly after the Renewable Energy recognised voluntary schemes as a means adhered to if the use of a biofuel from Directive was published, the European of proving the origins of biofuels as well as a particular source is to count towards Commission issued communications their greenhouse gas reduction. a member state’s renewable energy explaining how member states and target. Should these criteria not be met, organisations within the biofuels the biofuel is not considered to be a industry can implement and assess sustainable renewable energy source. biofuels against the sustainability By ensuring countries within the EU criteria and counting rules. As part of adhere to the sustainability criteria this, the EU gave organisations the the EU aims to limit the expansion of

5 IV. EU COMMISSION APPROVED VOLUNTARY STANDARDS

Using an approved voluntary or national • Bonsucro (previously the Better Sugar COMMON FEATURES OF THE EC scheme demonstrates an organisation’s Cane Initiative) APPROVED SCHEMES biofuels are certified as meeting • Roundtable on Responsible Soy (RTRS) Each of the seven approved schemes the sustainability criteria, and if the share these common features: necessary modules are used, the EU • Roundtable on Sustainable Biofuels (RSB) RED. On July 19, 2011, the European • 2BSvs Biomass Biofuels Sustainability 1. Production Standard – each assesses for sustainable production and Commission announced the first seven • RED Bioenergy Sustainability processing schemes to gain its approval. Each has Assurance Standard (RBSA) been rigorously checked to ensure all 2. Chain of Custody Standard – each • Greenergy (Brazilian Bioethanol the sustainability criteria are covered scheme provides buyers with full verification programme) effectively. The approval is valid for five supply chain insight, so that they can years and confirms that the scheme can Some countries, such as Sweden make credible claims based on tracing issue a certificate for a product that is already have legislation in place that the product back to source fully assessed and meets all its criteria. requires organisations and products to 3. EU RED – each scheme includes all be verified against a recognised scheme Here are the seven that now hold EC elements required within the EU RED approval: before they can be sold in that country. Others are preparing to introduce similar • International Sustainability Carbon legislation, with Italy scheduled to do Certification (ISCC) this in January 2012.

Physical compliant product is separated from physical non compliant product in accordance with the relevant voluntary scheme/standard. Physical product may be mixed only with other lots, batches, quantities or consignments only from compliant physical product. Documentation clearly separates between compliant product and non compliant product. The resulting batch(es) of compliant product may be tracked onward in the associated documentation through the chain of cudtody. This system allows those taking ownership of material to be certain Segregation that the material is (or is made from) product that originates from the certified farms. This is not only applicable to Biofuel but also for product destined for Food usage etc

Continuous accounting system or a fixed inventory period

Mass Balance

The certified product is completely decoupled from sustainability certificates, and both certified and noncertified products flow freely through the supply chain. Sustainability certificates would be issued by an independent body Book & Claim

6 V. GLOBAL SUSTAINABILITY INITIATIVES

The European Union Renewable along with initiatives developed by the instances these are related through an Energy Directive links to a wide and California Air Resources Board (CARB) area of the biofuels industry, for example varied range of sustainability initiatives and the Council on Sustainable Biofuel the Roundtable for Responsible Palm Oil that are being put in place around the Production (CSBP). Internationally or through organisations like Bonsucro world. The EU Directive is a Regional there are a wide range of institutions and the Roundtable on Sustainable initiative which covers all biofuels sold looking at sustainability projects and Biofuels, who unite organisations in the EU region. This is supported initiatives, including the United Nations across the biofuels industry. Here we by the European Committee for Environment Programme (UNEP) look at an overview of some of the key Standardisation’s (CEN) initiatives. and the International Organisation for sustainability initiatives that are currently In various countries across the globe Standardisation (ISO). A further group being worked on. national initiatives are in place, or are of initiatives bring together stakeholders being introduced. For example, the USA from a wide-ranging array of interested has a Renewable Fuels Standard (RFS) and associated parties. In some

BIOFUELS SUSTAINABILITY INITIATIVES

REGIONAL NATIONAL

EUROPEAN RFS RTFO EU DIRECTIVE COMMITTEE FOR CARB LOW CVP STANDARDIZATION CSBP FUELS

CRAMER ISCC SUSTAINABLE BIOMASS

INTERNATIONAL INSTITUTIONS MULTISTAKEHOLDER

United Nations Environment Programme For Color document

UNEP PC 248 RSB FSC RTRS

RSPO BS

7 REGIONAL SUSTAINABILITY and other cross-cutting issues; GHG transportation fuel. From 9 billion INITIATIVES Emission Balance, Fossil Fuel Balance gallons in 2008 to 36 billion gallons and respective calculations using a by 2022 EU Renewable Energy Directive life-cycle approach and; Biodiversity • To include new categories of The EU Directive, as we have already and Environmental Aspects. As a result renewable fuel with separate volume covered in this paper, is the core there is a Standard in three parts in requirements for each document and enabling legislation for the drafting phase, each with a 2013 ensuring that only sustainably produced deadline. This ties in with the need to • To apply lifecycle greenhouse gas biofuels are successfully brought to comply with the 35% greenhouse gas performance threshold standards market within the EU region. With the saving over comparable fossil fuels to ensure that each category legislation becoming mandatory from by 1st April 2013, for biofuels from of renewable fuel emits fewer December 2010, EU countries are now production process in place prior to greenhouse gases than the petroleum in the process of aligning their own 23rd January 2008. This is one of the fuel it replaces legislation, Standards and guidelines so greenhouse gas saving targets detailed California Air Resources Board that key dates set out in the legislation within the EU Renewable (CARB) are met. Energy Directive. Launched a Standard in response to The European Committee for NATIONAL SUSTAINABILITY the Low Carbon Fuel Standard (LCFS) Standardization (CEN) Program for California which called for, INITIATIVES CEN develops European Standards that in 2007, a reduction of at least 10% in are channelled down for implementation United States of America the carbon intensity of transport fuels by all CEN National Standardisation by 2020. CARB then began coordinating Renewable Fuel Standard (RFS) bodies, who have the obligation to activities between the University withdraw any conflicting national The RFS has been developed by the of California, the California Energy standards when the CEN Standard is United States Environmental Protection Commission and other state agencies to introduced. The 27 countries of the Agency which implements regulations develop and propose a draft compliance EU, along with Croatia and three of the to ensure transportation fuel sold in schedule to meet the 2020 target. CARB countries in the European Free Trade the US contains a minimum volume also initiated regulatory proceedings to Association (EFTA) are members of of renewable fuel. The Standard was establish and implement the LCFS. CEN. Organisations and companies created as a result of the Energy Policy This regulation came into effect on wishing to purchase European Standards Act (EPAct) of 2005, and as stated in 15th April 2010. are directed to their national standards the Act, the original RFS program (RFS1) body for further information. required 7.5 billion gallons of renewable fuel to be blended into gasoline by 2012. Following the launch of the EU There has since been a RFS2 version Renewable Energy Directive, CEN has launched as a result of the Energy a technical committee (CEN/TC383) Independence and Security Act (EISA) working on Standards for ‘Sustainably of 2007. This expanded the Standard in produced biomass for energy several key ways: applications’. These cover: Economic and Social Impacts; Verification and • To include diesel, in addition to petrol Auditing; Indirect Effects; Terminology, • Increased volume targets for Consistency of Evaluation Methods renewable fuel blended into

8 Council on Sustainable Biofuel these are the RTFO’s obligated suppliers. Germany Production (CSBP) An obligated supplier must prove to the Renewable Fuels Agency (RFA) that International Sustainability Carbon The CSBP is a multi-stakeholder it has met its Obligation by producing Certification (ISCC) organisation supported in part by the Renewable Transport Fuel Certificates The ISCC, offers an international Natural Resource Conservation Service, (RTFCs) at the end of the year. certification system for Biomass and U.S. Department of Agriculture. It Biofuels (fuels and electricity) that includes growers, environmental and The Netherlands describes the rules and procedures social interest groups and all sectors The Cramer Commission for certification. The scheme is both of the industry. It was established EU RED approved and recognised by in 2007 to develop comprehensive In 2007 the Cramer Commission the German government. The German voluntary sustainability Standards provided a detailed biofuels report Federal Agency of Agriculture and Food for the production of biomass and its to the Dutch government. Using a (BLE) approves certification systems conversion to bioenergy. Its Standard variety of criteria it proposed a biofuels and certification bodies according to is designed to serve as the foundation certification scheme. It has since been Bio-Nachhaltigkeitsverordnung (Bio- for an independent third-party translated into policy for ‘reporting Sustainability). The ISCC has established certification program. requirements’ only rather than into any mandatory standards. The Cramer an internationally oriented, practical and The CSBP Provisional Standard for Commission’s ‘assessment framework’ transparent system for the certification Sustainable Production of Agricultural provides criteria and indicators but does of biomass and bioenergy. It covers a Biomass applies to biomass produced not detail how to ensure the criteria are reduction of greenhouse gas emissions, from non-food sources such as met. It acknowledges the difficulties the sustainable use of land, protection of dedicated fuel crops, crop residues in assessing biofuel production at the natural biospheres and social sustainability. and native vegetation. It addresses individual organisation level and how the full complement of sustainability France often the criteria only become apparent issues through principles, criteria, and on the regional, national and sometimes 2BSvs : biomass biofuel, indicators applicable to both agriculture international level. and silviculture. sustainability voluntary scheme Developed by French biofuels producers United Kingdom Sustainable Biomass as a scheme for all biomass and biofuel producers throughout the world. It Renewable Transport Fuel (based on NTA 8080) - The Netherlands was devised to give biofuels producers Obligation (RTFO) introduced the first system for the throughout the supply chain a means certification of all types of sustainable The RTFO requires suppliers of through which they can demonstrate the biomass in January 2011. fossil fuels to ensure that a specified sustainability of their products, in line with percentage of the road fuels they supply The system was launched by the requirements of the EU RED. The in the UK are from renewable fuel standardisation institute NEN and the 2BSvs scheme was included in the first sources. The target for 2009/10 is 3.25% Rotterdam Climate Initiative (RCI). seven schemes to be granted EC approval. by volume. The RTFO Order was last It is based on the Dutch technical It covers the verification of biomass amended in April 2009. The RTFO also agreement (NTA 8080), which describes production and collection by biomass requires companies to submit reports requirements for assessing the producers and first gathering entities as on the carbon and sustainability of their sustainability of solid, liquid and gaseous well as the requirements for mass balance biofuels. As most fossil fuel used for biomass for energy applications and systems for production plants and other road transport in the UK is refined or transport fuels. economic operators. imported by one of about 14 suppliers

9 INTERNATIONAL INSTITUTIONS of the effects, direct and indirect, that MULTISTAKEHOLDER SUSTAINABILITY SUSTAINABILITY INITIATIVES increased biofuels production could INITIATIVES cause if it is not precisely managed. United Nations Environment Roundtable on Sustainable International Organisation for Programme (UNEP) Biofuels (RSB) Standardisation (ISO) UNEP is the arm of the United Nations The RSB is an international initiative (UN) focused on the environment. It The ISO develops and publishes coordinated by the Energy Center aims to lead the world in caring for the International Standards. It is a network at EPFL in Lausanne, Switzerland. It environment by inspiring, informing, of the national Standards institutes of was created in 2007 to co-ordinate and enabling people to improve their 163 countries, one member per country, international efforts to ensure biofuels quality of life without compromising with a Central Secretariat in Geneva, are produced sustainably. It brings that of future generations. UNEP Switzerland. ISO is a non-governmental together farmers, companies, works in many areas within this organisation that brings together the non-governmental organisations, scope. A key focus when it comes to public and private sectors to enable experts, governments, and inter- biofuels is environmental assessment, consensus solutions that meet the governmental agencies. requirements of both business monitoring and reporting. UNEP In 2008 the RSB launched a ‘version- and society. assists the international community zero’ third-party certification system by providing access to environmental The ISO is in the process of developing for biofuels. The standard is a set of data and it helps governments to use an International Standard (ISO 13065) principles and criteria developed through this information for the benefit of their to address sustainability issues linked a multi-stakeholder process. It covers societies in terms of planning and to bioenergy. The standard is being all aspects of environmental, social and sustainable development. produced by the ISO project committee economic issues relating to biofuels. ISO/PC 248 which held its first meeting UNEP has established an International A second version of this voluntary in April 2010. This committee includes Panel for Sustainable Resource Standard was then issued on 12th participating delegations of ISO Management, which, after in-depth November 2010. This latest version national members from 20 different research, produced in 2009 a report describes the social and environmental countries, with a further 13 countries titled ‘Towards Sustainable Production requirements operators must meet holding ‘observer’ status. It aims to and Use of Resources: Assessing in order to be certified currently. As achieve standardisation in the field of Biofuels’. The report examines options of March 2011 the RSB certification sustainability criteria for production, for more efficient and sustainable scheme became fully operational, supply chain and the application of production of biomass, covering first with organisations throughout the bioenergy. ISO/PC 248 brings together generation biofuels and the global and biofuels supply chain expected to international expertise and best practice regional situation. It covers lifecycle receive certification in 2011. The RSB to discuss the social, economic and analysis, water as a limiting factor, scheme is recognised by the German environmental aspects of bioenergy, and land use change issues and impacts Federal Agency of Agriculture and Food identify criteria that could prevent it from plus ways that relevant factors can be (BLE) for meeting the German Bio- being environmentally destructive or approached sustainably. Finally it calls Sustainability requirements and approved socially aggressive. for mandates, targets and Standards by the EU Commission for meeting the to be science based and to cover all requirements of the EU RED.

10 FSC™ Forest Management and Roundtable on Responsible sustainable palm oil production and Forest Product Chain-of-Custody Soy (RTRS) have been further adapted for use by each producer country through FSC is an independent, non- The RTRS is an international multi- National Interpretation. Producers are governmental, not-for-profit organisation stakeholder initiative founded in 2006 certified through strict verification of established to promote the responsible that promotes the use and growth of the production process to the Principles management of the world’s forests. responsible production of soy through and Criteria by accredited certifying Established in 1993 as a response to a global Standard for responsible agencies. All other companies in concerns over global deforestation, FSC production. As of 2011, the global the global palm oil supply chain that is widely regarded as one of the most market will be able to buy RTRS certified process or use sustainable palm oil important initiatives of the last decade soy. The RTRS Standard’s certification products need to be certified to ensure to promote responsible forest system for the Chain of Custody was that market claims are valid and can management worldwide. created in the second half of 2010 to be verified.Through supply chain Forest management certification is allow for this certified soy to go to certification, a company proves that an independent assessment of the the market. its operations comply with the rules forest management unit to check that a Before its launch the RTRS carried governing the entire supply chain of forest complies with the internationally out extensive field-testing as well as RSPO-certified palm oil products. recognised standards of the Forest producing national interpretations of Bonsucro (previously named the Stewardship Council (FSC™). the documents for countries such as Better Sugar Cane Initiative) – In 1993, the FSC also published a Argentina, Brazil, Paraguay, India, and standard which outlined 10 principles recently Bolivia, Uruguay and China. Bonsucro (BS) The RTRS program also covers chain of and criteria for forest stewardship and BS aims to improve the social, custody that includes the components of the requirements for Chain-of-Custody environmental, and economic mass balance and non-GM (segregation). (CoC). Forest Product CoC certification sustainability of sugar cane by promoting In particular, the Standard implements involves tracking the origins of wood to sustainability through a global Standard, the requirements of the EU Renewable guarantee its authenticity through the with the aim of continuously improving Energy Directive and is EC recognised. entire supply chain. It also provides an sugar cane production and downstream assurance to customers, stakeholders Roundtable on Sustainable processing. BS is focusing on significant and investors of the quality of forest social and environmental issues Palm Oil (RSPO) management at the original source of associated with sugar cane cultivations the timber. In response to the global call for such as soil productivity; rational water sustainably produced palm oil, the FSC is a certification system that use; effluent management; biodiversity RSPO was formed in 2004 to promote provides internationally recognised maintenance; and equitable labour. the growth and use of sustainable standard-setting, trademark assurance BS promotes the implementation of palm oil products through credible and accreditation services to companies, sustainable sugar production to reduce global Standards and the engagement organisations, and communities these social and environmental impacts of stakeholders. This not-for-profit interested in responsible forestry. while maintaining or enhancing the association unites stakeholders economic status of farmers. The FSC label provides a credible from seven sectors of the palm oil BS launched its sustainability Standard link between responsible production industry - oil palm producers, palm in July 2010 as the result of a multi- and consumption of forest products, oil processors or traders, consumer stakeholder process. Along with the enabling consumers and businesses to goods manufacturers, retailers, banks ten key principles and criteria the BS make purchasing decisions that benefit and investors, environmental or nature Standard is designed to comply with people and the environment as well as conservation NGOs and social or the EU Renewable Energy Directive and providing ongoing business value. developmental NGOs. is recognised as achieving this by the The RSPO Principles and Criteria European Commission. As a result of for Sustainable Palm Oil Production BS’ work sugar cane buyers are able to were adopted in November 2005, choose sugar that has been produced pilot implemented for two years, and according to agreed, transparent and released for use from November 2007. verifiable criteria. They provide generic Standards for

11 STANDARD CLASSIFICATIONS FOR BIOFUEL SUSTAINABILITY INITIATIVES

The table below clarifies where each standard orginates from and whether it is a certification, verification or guidance standard.

Well-known Sustainability Initiatives Certification Verification Guidance Initiating Body for Biofuels Standard Standard Standard

Renewable Fuel Standard (RFS) United States x

California Air Resources Board (CARB) United States x x

Council on Sustainable Biomass Production United States x (CSBP)

Renewable Transport Fuel Obligation (RTFO) United Kingdom x

LOW CVP FUELS United Kingdom x

CRAMER Netherlands x

Sustainable Biomass (based on NTA 8080) Netherlands x

Stockholm Environment Institute (SEI) Sweden x

International Sustainability and Carbon Germany x Certification (ISCC) Bioenergy and Food Security Criteria and Germany x Indicators (BEFSI)

Roundtable on Sustainable Biofuels (RSB) Multi-stakeholder x

FSC Forest Management Multi-stakeholder x FSC Forest Product Chain-of-Custody

Roundtable on Responsible Soy (RTRS) Multi-stakeholder x

Roundtable on Sustainable Palm Oil (RSPO) Multi-stakeholder x

Bonsucro - Better Sugarcane Initiative (BS) Multi-stakeholder x

2BSvs Biomass Biofuels Sustainability France x

RED Bioenergy Sustainability Assurance Abengoa x Standard (RBSA) Greenergy (Brazilian Bioethanol Brazil x verification programme)

The Renewable Transport Fuel Obligation (RTFO) is, at time of publication, a verification standard. However, this is expected to change by the end of 2011.

12 VI. THE KEY PRINCIPLES AND CRITERIA FOR SUSTAINABLE BIOFUELS

The sustainability criteria initially • Equal Remuneration of Men and (GHG) emissions saving from the use detailed in the EU Renewable Women Workers for Work of of biofuels compared with their fossil Equal Value fuel equivalents. Currently the required Energy Directive and later • The Abolition of Forced Labour GHG saving is 35% for any biofuels discussed further in the June 2010 produced from plants that have come EC Communications can be broken • Discrimination in Respect of into operation after 23rd January 2008. Employment and Occupation down into twelve major areas Any in operation before this date needs • Minimum Age for Admission to comply with the 35% savings by or key principles. By ensuring to Employment 1st April 2013. The saving required is that organisations operating in • Prohibition and Immediate Action for set to increase to 50% or more with the biofuels industry meet these the Elimination of the Worst Forms of effect from 1st January 2017, with a sustainability criteria the use of Child Labour requirement that by 1st January 2018 this rises again to at least 60% for their products can be counted 3) Local food security biofuels that have come into production towards renewable energy targets The impact from biomass cultivation on or after 1st January 2017. and obligations as well as receiving needs to be carefully monitored. One In other parts of the world, such as the financial support and investment. area of concern is that of its effects on U.S. there is separate legislation that food production and local prosperity covers the biofuels that are being sold. 1) Legality as a result of land-use changes such Any suppliers into these regions need to Member states must adhere to the as displacement. This needs to be ensure that the appropriate GHG saving EU legislation, namely the Renewable considered very carefully for any biofuel targets are being met in line with the Energy Directive, introducing or adapting seeking to be qualified as sustainable. regulations in place. national legislation to support it where The Directive requires that all relevant 5) Land rights appropriate. This may apply to laws on sources of information on this subject land rights, environmental protection, are investigated, including the UN Food Often it is unclear as to the ownership labour issues, chemical use and waste and Agriculture Organisation (FAO) of the land that producers are looking to disposal. All organisations operating world hunger map. The biofuels that are turn into areas for growing biofuels raw within the biofuels industry are then promoted to gain market support are products. This change in land use may obliged to work within the national intended to be those that use degraded mean that local people are displaced legislation rules for the countries in land, which is not suitable for food and with that lose their ability to feed which they are doing business and crops and is therefore a development themselves and their families and to with this they meet the requirements of agricultural productivity. It is also maintain a reasonable quality of life. It of the EU legislation. On a wider scale critical that the biofuel production does may also mean that legal battles are organisations also need to comply with not have a significant impact on food entered to determine who holds land any relevant international treaties or prices. For any groups or communities rights and can therefore decide on the conventions. As discussed below, these that are susceptible to food insecurity land usage. Minority groups are likely could be relevant to human and labour this is a crucial factor. It could be that to be the worst effected by this with rights, but equally they could be about they struggle with food supplies as the women and vulnerable indigenous biological diversity issues, wetlands or result of farming practices, the change in people of the most concern. climate change. the way their community manages food 6) Rural and social development availability or because of the ways in 2) Human and labour rights which food or other resources are traded The European Commission is, as EU member or third party countries as a result of biofuel production. All the outlined in the Directive, tasked with must understand and implement related food security issues need very monitoring the impact of biofuels on the Conventions of the International careful evaluation. social sustainability. Part of this is Labour Organisation (ILO). These are ensuring that Community environmental 4) Greenhouse gas emissions Conventions concerning: requirements for agriculture are not EU member states are required to prove compromised for any communities • Forced or Compulsory Labour that any organisation operating in their producing the raw materials. This means • Freedom of Association and country is working in accordance with environmental and social minimum Protection of the Right to Organise the GHG saving requirements outlined requirements must be respected, • Application of the Principles of in the EU Renewable Energy Directive. something that is not always the case in the Right to Organise and to The sustainability criteria include an countries outside the EU. Organisations Bargain Collectively increasing target for Greenhouse Gas need to ensure that their products

13 present no risk to the livelihood of with a high biodiversity value is detailed the year it cannot be used for biofuel local people and the opportunities for within the Directive as not being suitable production. This is because the land has rural and social development are all for sustainable biofuels and must be a high carbon stock. Information on the examined, targeted and documented. conserved. The following land should measures taken for water protection This applies whatever the size of the not be used for the cultivation of the raw is required. organisation and wherever they sit materials for biofuels: Another key issue with regard to within the supply chain. It is then up • Primary forest or undisturbed water is the prevention of excessive to the organisations to ensure they wooded land water consumption, especially in areas work with the local authorities to help • Nature protection areas where water is scarce. According communities grow and develop with to the United Nations Environment the opportunities that the biofuels • Land that is internationally recognised Programme (UNEP) the water needed production brings. as important for the protection of for biofuels production can be up to 400 rare, threatened or endangered 7) Planning, monitoring and times greater than that needed for the ecological systems or species (e.g. on production of the equivalent traditional continuous improvement a international conservation of fossil fuels. This means that ensuring By incorporating this rising scale of nature list) biofuels can be produced without over required GHG saving the Directive • Natural grassland with natural species exploiting or damaging water resources demands the continual improvement and ecological characteristics is a major challenge for the industry. and monitoring of biofuel sources • Non-natural grassland which is Supply chains need to be better and with it organisations will need to species rich and not degraded managed so that water use as well as implement planning to increase the water quality impacts are minimised. GHG saving to the levels required. Information on the measures taken However, consideration for planning, for restoration of degraded land is also 11) Soil monitoring and continuous improvement required. It is this degraded, marginal or To be classed as sustainable biofuels goes further than this and stretches abandoned land that is considered ideal and they cannot come from land that was into every other key principle. Best the most suitable for biofuel crop growth. peatland on or after January 2008. practice, screening processes and 9) Use of technology, inputs and Undrained soil must not be drained in quality assessments need to be put in order to cultivate and harvest the raw waste management place across the board and improvement materials for biofuels. Information on targets should be set in all areas. The Renewable Energy Directive sets the measures taken for soil protection As a stakeholder in a local area any out rules to support farmers, which fall is required and soil impact must be organisation in a biofuel’s value chain under common agricultural policy. These monitored. Practices should be put should be looking at ways to improve are supported by farmers’ schemes, in place that prevent or reverse soil the region, in terms of reductions in which are designed to structure the degradation. A continuing plan for poverty and improved resources. As minimum requirements for agricultural assessing the on-going capabilities of such, plans to implement these goals in good practice. producers to maintain soil quality is also practice should be drawn up, along with To be able to prove agricultural good necessary. Both soil where the crops are long-term objectives. practice, members of a biofuels value produced and soil around this area that is affected by any part of the production 8) Conservation chain need to monitor the use of chemicals and potentially hazardous process must be assessed for impact. Any land used or planned-to-be used technologies. They need to ensure that for biofuels production is required 12) Air throughout all production processes to be crosschecked against the any technologies or chemicals used Information on the measures taken for air Millennium Ecosystem Assessment. are improving efficiencies and do not protection is required so that pollution can This assessment is compiled from damage the environment or cause harm be monitored and minimised throughout data detailing those areas that need to the local community in any way. the supply chain. It is important that conservation because they provide technologies used are evaluated, along basic ecosystem necessities in times 10) Water with each supplier’s knowledge and of crisis. These could be such things as The sustainability criteria require that capabilities to operate them in a beneficial watershed protection or erosion control. where biofuels raw materials are being manner. Pollutants released could impact It is important that these areas are left produced, the groundwater and surface the greenhouse gas emissions saving unaffected by biofuel crop growth. water quality is protected. Also, if calculation and as such need reviewing Biodiverse land is very important to the land has been wetland e.g. covered or both from an air-polluting standpoint and future wellbeing of the planet. Land saturated with water for all or most of for GHG emissions.

14 15 VII. VERIFICATION AND CERTIFICATION OF SUSTAINABILITY

The sustainability of biofuels is responsibility to ensure that all related • Ask that variations are explained measured across the whole chain documentation is prepared and ready • Ensure claims and calculations are of custody with sustainability claims for auditing. revised and corrected as necessary required for raw products, intermediate • An Auditable System • Provide a final verification conclusion products and final products, ensuring This should normally be a Quality that every link in the chain from field System that covers quality assurance, Once this assessment process has been to distribution is covered. According to supplier approval, full record completed and the final verification Article 18.1 of the Renewable Energy documentation and traceability. conclusion has been made, some Directive economic operators should voluntary schemes are then able to assess the sustainability of biofuels • Auditing Skills provide the organisation being assessed using a mass balance system which: Any auditing and verification body with a sustainability certification to used must have the appropriate support their claim. a) Allows consignments of raw material specific skills to audit each or biofuels with differing sustainability sustainability criteria as well as the characteristics to be mixed; necessary generic auditing skills to b) Requires information about the assess and verify organisations sustainability characteristics and sizes and biofuels. of the consignments referred to in Any auditing and verification body point (a) to be assigned to making a sustainability assessment of the mixture; an organisation does so using the c) Provides for the sum of all following process: consignments withdrawn from the • Identify the organisation’s activities mixture to be described as having the relevant to the sustainability criteria same sustainability characteristics, in the same quantities, as the sum of all • Identify the organisation’s systems consignments added to the mixture. and general organisation in relation to the sustainability criteria Both the Mass Balance System and the Sustainability Criteria that inform it • Check the effective implementation of for a given biofuel need to be verified, control systems related to the above ideally through a voluntary scheme • Assesses the organisation to an that is recognised by the European established ‘limited assurance level’ Commission (and potentially other and make a risk based statement legislation bodies) for this purpose. on the organisations sustainability performance VERIFICATION REQUIREMENTS • Perform a risk analysis of material Any voluntary scheme verifying the misstatement from the organisation’s sustainability of the criteria needs to information provided evaluate claims using the methodology • Verify related to the risk analysis outlined in the EU Communication • Verify and sample the organisation’s documents. This essentially means an activities, covering its full scope assessment of the management and complexity of documents within an organisation needs to be made along with an • Gather evidence in line with the external, independent audit of the sampling methods and the information sustainability criteria: needed for full verification of greenhouse gas, mass balance • Document Management chain of custody, land use change, Organisations are required to have environmental and social principles an auditable system related to sustainability claims they make, • Request that the organisation provides showing evidence from the previous further or missing information for five years as a minimum. It is their the audits

16 VIII. CUSTOMISED AUDITS AGAINST SUSTAINABILITY PERFORMANCE CRITERIA AND ISSUE OF A RENEWABLE ENERGY DIRECTIVE LIMITED ASSURANCE STATEMENT

Organisations that cannot easily A CUSTOMISED AUDIT OF BIOFUEL Once the criteria had been outlined be assessed against the structured SUSTAINABILITY FOR THE SEKAB turned to the recognised sustainability criteria outlined in the SEKAB GROUP international auditing body, SGS to EU Renewable Energy Directive and help set up and manage the audit The Swedish SEKAB Group prides itself the supporting voluntary certification programme, verifying that the on taking the lead in environmentally schemes can be evaluated by a production meets the sustainability friendly, well-managed ethanol Customised Audit Solution. Essentially, requirements at every stage. It is with production. It was one of the first the same requirements still stand for the experience and knowledge of this companies in the world to supply a biofuel to be classed as sustainable, auditing body that the auditing process verified sustainable ethanol. SEKAB’s however the way they are analysed can was fine-tuned and brought to fruition. ethanol is from Brazilian sugarcane be different in terms of the information and is used in fuels for cars, buses and As a result, SEKAB can now show its used, the calculations performed and trucks. Through an audit and verification clients, NGOs and other interested the analysis of the greenhouse process SEKAB is able to guarantee that parties a totally transparent process. gas savings. its ethanol production meets specific The company has increased assurance As with the voluntary schemes, the requirements for sustainability. As a that they are supplying “sustainable” auditing body needs to have the result of the verification, SEKAB has ethanol. With this approach SEKAB also appropriate skills and expertise to seen an increase in consumer trust in demonstrated its proactive stance in assess organisations against the areas the overall sustainable benefits of the the market while educating all suppliers of sustainability that need to be verified. biofuels they produce. in its chain about the requirements of Any auditing body that has this capability sustainability. An added benefit was that Swedish consumers buy ethanol-based is then in a position to work with an the criteria also provided best practice fuels mainly because they want to organisation that requires a customised examples to all kinds of agriculture. decrease their dependency on fossil audit to develop a process and fuels and move to renewable energy Overall, this put the SEKAB suppliers assessment that meets their needs and sources. But there has been a lot of at the front of this movement, able to those of the EU. This is effectively the debate in Sweden, as in many other learn with their clients and the auditing development of a comprehensive set of countries, about how sustainable body about how to prepare for the future instruments based on the framework of ethanol really is. In the Swedish press demands of the global biofuels market. the EU Renewable Energy Directive. there were a lot of articles about forced During the development of a Customised labour in Brazil, and deforestation of Audit Solution checklist, minimum the rainforest. evidence levels, guidance and training But, back in 2007 when the negative for expert auditors are put in place. As press hit its peak, there was no auditing, a result of a successful Customised certification or international Standard as Audit an organisation receives a Limited to how ethanol should be produced in a Assurance Report. For Customised sustainable way. SEKAB therefore spent Audits that have been developed to 18 months developing a framework prove regulations compliance this report – Verified Sustainable Ethanol - with provides the evidence. criteria that cover the entire lifecycle of ethanol from the sugarcane fields all the way through to its use in cars.

17 THE CORE ELEMENTS OF A SUCCESSFUL BIOFUEL SUSTAINABILITY CERTIFICATION PROGRAMME

Auditor Training Accreditation & Governance Complaints & Certification Protocol Grievance

Standard Audit Secretariat

Transport Consumer Producer Support Sustainable Production

Traceability & Chain of Custody Claims

Source: NewForesight and Bonsucro

18 A CUSTOMISED AUDIT PROVING Directive (EU RED), Lantmännen 2010, there were no approved industry- LANTMÄNNEN AGROETANOL’S EU RED Agroetanol, along with many other wide schemes available. SGS was COMPLIANT SUSTAINABLE BIOFUEL biofuels producers, began to look for therefore asked to develop and conduct ways to meet the requirements it laid a customised audit solution, tailored to PRODUCTION out. Lantmännen Agroetanol recognised the organisation, industry and location. Lantmännen Agroetanol is the energy that to continue operating successfully By working with SGS Lantmännen division of the Swedish Lantmännen in the biofuels industry it needed to have Agroetanol was able to prove its Group, which operates across the Nordic transparent fully sustainable operations operations meet the requirements of the region. Owned, by around 36,000 and evidence to prove it. EU RED. Swedish farmers, Lantmännen is a Lantmännen Agroetanol takes As a result of gaining the limited large-scale farmers’ co-operative. Over responsibility for all parts of the assurance statement verifying its a number of decades Lantmännen has production process and with this EU RED compliance, Lantmännen developed and diversified into what is able to control the variables that Agroetanol has experienced a very it is today and as such Lantmännen biofuels produced by supply chains with positive reaction from its customers. Agroetanol produces and markets many different parties involved may Its ability to sell EU RED compliant bioethanol from the excess grain find difficult to do. For Lantmännen material from the beginning of 2011 produced in Sweden. With the growing Agroetanol the major aspect of was necessary for the continued sale international demand for biofuel for the compliance with the EU RED was to of bioethanol across Europe, but at transport sector especially, Lantmännen take its direction and intention and to the same time customers in Sweden Agroetanol has been well placed to grow use it to put a management and quality recognised how quickly it had reacted to with the industry. In Sweden, all regular system in place. the regulations and the industry needs. petrol already includes 5% bioethanol. When Lantmännen Agroetanol first Following the introduction of the needed its capabilities assessed in European Union Renewable Energy

19 IX. Conclusion

The EU Renewable Energy Directive provides a very detailed and beneficial framework for guaranteeing that only sustainably produced biofuels gain market support within the EU region. It is clear from the legislation and from all the global sustainability initiatives that providing guarantees for biofuels is a very complex issue that involves detailed and in-depth assessment of the whole value chain. Looking at the EU Directive requirements in terms of the criteria and calculations it quickly becomes apparent why the EU Commission strongly recommends the use of a voluntary scheme to perform the biofuel value chain analysis. By choosing to work with a recognised body that can verify and certify production processes, organisations can feel confident that they do truly meet all the requirements that are laid out. In addition to this, it allows them to prepare on-going development plans to meet each legislative target date that is specified and to generally improve in relation to each sustainability criteria. It is clear from the vast number of international initiatives that the sustainable production of biofuels is a growing issue that will increase in visibility over the coming years. However, with the EU and other related legislation in place it should be the case that only truly sustainable biofuels can survive. With only these gaining international support, biofuels should be able to fill the gap for an environmentally sound and sustainable fuel for the future.

ABOUT THE AUTHORS David Glenister is a Qualified Lead career in SGS three years before the Auditor of ISO 14001 Environmental Systems & Services Certification role David Glenister Management Systems, ISO 9001 began. During this period she worked Sustainability Expert, Systems and Services Quality Management Systems. In in the Consumer Testing, Minerals Certification, SGS addition David Glenister is a qualified and Industrial Business Units, always DDavid Glenister was appointed Sustainability Report Assuror to Global in sales management, marketing and International Sales Manager for SGS Reporting Index (GRI G3), AA 1000 and business development. Systems & Services Certification during Renewable Transport Fuel Obligation. Vanda Nunes is a Social and January 2007. In this capacity, David David Glenister graduated in 1985 Environmental Auditor and has Glenister has responsibilities for the from Kings College, University of participated in many schemes and development of major international London with a BSc (Hons) Degree in standards for code of conduct and Certification (3rd Party) and Customised Natural Sciences. social audits in Brazil, the Americas and Audit Solutions (2nd Party) Audit Europe. She is also a tutor for SA 8000 Programmes. David specialises in and sustainability issues Finance Oil, Gas, Mining and Vanda Nunes for agribusiness. Energy Sectors. Market & Product Development Manager, Systems & Vanda Nunes leads Latin America David Glenister is an expert in Services Certification, SGS Business Development in Sustainability Sustainability Audit Programmes and Vanda Nunes has held the position for Biofuels, and has contributed has developed major international of Market & Product Development towards the main schemes in contracts in the Clean Energy and Manager for SGS Systems & Services development such as ISCC, BSI, RSB. Mining Sectors working with companies Certification for nine years. She is RTRS, ISO PC 248, IETHA and ABIOVE. such as BP, Chevron and Exxon Mobil responsible for the development She has also participated in many global and Newmont Mining Corporation. and sales of major International conferences on sustainable biofuels. David Glenister is leading the Certification (3rd Party) and Customised She holds a bachelor in Business International Business Development Audit Solutions (2nd Party Audit Administration, with a specialization in in Sustainability as part of Global Programmes). Vanda is also Head of the International Trade and Sustainability Project Finance and is developing Food sector in Brazil for certification, Management from the Fundação projects incorporating the Social and testing and inspections. She started her Dom Cabral. Environmental Risk Management approach of the Equator Principles adopted by major Global Financial Institutions and Industry Sector Sponsors.

20 ABOUT SGS SGS is the world’s leading inspection, verification, testing and certification company. Recognised as the global benchmark for quality and integrity, we employ over 64 000 people and operate a network of more than 1 250 offices and laboratories around the world. We are constantly looking beyond customers’ and society’s expectations in order to deliver market leading services wherever they are needed. Partnering with SGS opens the door to better performing processes, increasingly skilful talent, consistent and compliant supply chains and more sustainable customer relationships delivering profitable competitive advantage. Work with the global leader and take your commitment to the next level in managing sustainable biofuels. We have a history of undertaking and successfully executing large-scale, complex international projects. With a presence in every single region around the globe, our people speak the language and understand the culture of the local market and operate globally in a consistent, reliable and effective manner. SGS is a leading independent body helping organisations improve their performance related to sustainable development.

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