Ref. Ares(2015)4173087 - 08/10/2015 The land use change impact of biofuels consumed in the EU Quantification of area and greenhouse gas impacts The land use change impact of biofuels consumed in the EU Quantification of area and greenhouse gas impacts By: Hugo Valin (IIASA), Daan Peters (Ecofys), Maarten van den Berg (E4tech), Stefan Frank, Petr Havlik, Nicklas Forsell (IIASA) and Carlo Hamelinck (Ecofys), with further contributions from: Johannes Pirker, Aline Mosnier, Juraj Balkovic, Erwin Schmid, Martina Dürauer and Fulvio di Fulvio (all IIASA) Date: 27 August 2015 Project number: BIENL13120 Reviewers: Ausilio Bauen (E4tech), Michael Obersteiner (IIASA) and the Scientific Advisory Committee: - Prem Bindraban, Don O’Connor, Robert Edwards, Jacinto Fabiosa, David Laborde, Chris Malins, André Nassar, Koen Overmars and Richard Plevin Project coordination: Michèle Koper (Ecofys) This study has been commissioned and funded by the European Commission. A cooperation of Ecofys, IIASA and E4tech ECOFYS Netherlands B.V. | Kanaalweg 15G | 3526 KL Utrecht| T +31 (0)30 662-3300 | F +31 (0)30 662-3301 | E [email protected] | I www.ecofys.com Chamber of Commerce 30161191 ii Acknowledgements The study consortium is grateful for the useful information and the many comments, questions and recommendations we received throughout the preparation of the study between September 2013 and June 2015 from a wide variety of stakeholders, including representatives from industry associations, NGOs and scientific experts, either by attending one of the eight stakeholder meetings we organised during the study process or by corresponding with us per email. We also thank the European Commission Steering Committee for their input and reviews. In particular, we would like to thank our Advisory Committee members, who agreed to review the study approach, progress and draft results on a voluntary basis: Prem Bindraban, Don O’Connor, Robert Edwards, Jacinto Fabiosa, David Laborde, Chris Malins, Andre Nasser, Koen Overmars and Richard Plevin. We would also like to thank Alexandre Gohin for his critical comments on our initial study approach. The input received from many sides improved the quality of our study, while at the same time the study consortium bears the full responsibility for this study. ECOFYS Netherlands B.V. | Kanaalweg 15G | 3526 KL Utrecht| T +31 (0)30 662-3300 | F +31 (0)30 662-3301 | E [email protected] | I www.ecofys.com Chamber of Commerce 30161191 iii Executive Summary Introduction Biofuels are promoted as an option to reduce climate emissions from the transport sector. As most biofuels are currently produced from land based crops, there is a concern that the increased consumption of biofuels requires agricultural expansion at a global scale, leading to additional carbon emissions. This effect is called Indirect Land Use Change, or ILUC. The EU Renewable Energy Directive (2009/28/EC) directed the European Commission to develop a methodology to account for the ILUC effect. The current study serves to provide new insights to the European Commission and other stakeholders about these indirect carbon and land impacts from biofuels consumed in the EU, with more details on production processes and representation of individual feedstocks than was done before. ILUC cannot be observed or measured in reality, because it is entangled with a large number of other changes in agricultural markets at both global and local levels. The effect can only be estimated through the use of models. The current study is part of a continuous effort to improve the understanding and representation of ILUC. Background Most biofuels today use feedstock grown on land that is suitable for food, feed or material production. An increase in biofuel consumption could therefore lead to cropland expansion in one of two ways: Directly, when new cropland is created for the production of biofuel feedstocks. This is called direct land use change, or DLUC; Indirectly, when existing cropland is used for biofuel feedstock production, forcing food, feed and materials to be produced on new cropland elsewhere. This expansion is called indirect land use change, or ILUC. Direct and indirect land use change are intertwined in reality. They can lead to changes in carbon stocks on land, most notably through loss of above and below ground living biomass and soil organic carbon, which leads to an increase of greenhouse gases in the atmosphere. However, the uptake of carbon by crops and the effective use of co-products from biofuel production can partly compensate these emissions. The outcome of emission quantification studies present the net result. This study aims to quantify emissions resulting from the existing EU biofuel policy up to 2020. The study therefore enables policy makers to assess the complete climate impacts associated with biofuel policies. Biofuel policies aim to mitigate climate change, but high emissions could compromise biofuels’ ECOFYS Netherlands B.V. | Kanaalweg 15G | 3526 KL Utrecht| T +31 (0)30 662-3300 | F +31 (0)30 662-3301 | E [email protected] | I www.ecofys.com Chamber of Commerce 30161191 iv mitigation potential. Insights of this study can assist policy makers in designing future EU biofuel policy in such way that land use change impacts are effectively addressed. ILUC modelling Because ILUC occurs through global market mechanisms with many direct and indirect effects, it can only be modelled, not measured. Direct measurement will only provide partial accounting of the total effects. Previous studies have tried to quantify ILUC related emissions, to understand whether the use of biofuels really avoids greenhouse gas emissions on a global scale and by how much. The current study focuses on biofuels consumed in the EU. Note that it does not discuss whether biofuel producers should be held accountable for effects that are indirectly induced by their actions but which take place outside their control. Nor does it answer the question regarding how it can be ensured that biofuels actually reduce greenhouse gasses emissions compared to fossil fuels, within a certain timeframe. The aim of this study is only to model biofuel induced land use change and its greenhouse gas emission consequences, as consistently as possible, using a tailored version of the GLOBIOM model. Whilst this is not the first study that quantifies land use change impacts of EU biofuels – it follows a study published by the International Food Policy Research Institute (IFPRI) in 2011 (Laborde, 2011) – the current study quantifies for the first time land use change emissions from advanced biofuel feedstocks as well as several ‘alternative scenarios’, as further explained below. The study is relevant for the discussion on the 2030 EU policy framework for energy and climate change. The study follows the general principles of ILUC modelling used in earlier studies, in which a “world with additional biofuels” (the policy scenario) is compared to the same world “as it would have developed without the additional biofuels” (the baseline). In this study, the policy scenarios are based on the European Union Renewable Energy Directive1 (commonly known as ‘the RES directive’ or ‘the RED’). The computed ILUC impact of the additional biofuels follows from the difference between emissions in the policy scenarios and those of the baseline. This difference is then attributed to the additional biofuel demand in the policy scenarios. The results of this study, commonly referred to as ‘ILUC values’ (or ‘factors’), are in fact the sum of direct and indirect emission effects. When comparing a policy scenario with a baseline, it is certain that the difference in quantity of land conversion and its greenhouse gas impact results from the difference between scenario and baseline: the additional biofuel demand. The modelling does not show to what extent the land conversion is caused directly or indirectly. For this reason, this study speaks about ‘LUC values’ rather than ‘ILUC values’ and about ‘land use change’ rather than ‘direct or indirect land use change’. Even the term ‘land use change emissions’ does not fully cover the different sources of emissions included in the final results, as some of the emissions are related directly to the change in crop or plantation type, which impacts carbon stock in biomass and soil. These emission savings are 1 Directive 2009/28/EC ECOFYS Netherlands B.V. | Kanaalweg 15G | 3526 KL Utrecht| T +31 (0)30 662-3300 | F +31 (0)30 662-3301 | E [email protected] | I www.ecofys.com Chamber of Commerce 30161191 v deducted from the land use change related emissions, leading to the LUC values. For each modelled scenario we provide a precise breakdown of the result into various contributing factors. This study includes various emission sources and sinks linked to related to biomass and soil carbon stocks. This includes direct soil carbon emissions resulting from the removal of forestry residues from forests2. Not included are emissions directly related to the biofuel production chain, including emissions related to feedstock cultivation and processing, biofuel production, transport and distribution. Box 1 gives an overview of emission sources included in this study. Box 1: Overview of emissions included in this study and emissions not included Emission sources included in this study Peatland oxidation: emissions caused by peatland drainage due to oil palm plantation expansion. Soil organic carbon: changes in carbon stored in soils. Natural vegetation reversion (foregone sequestration): avoided emission savings due to reduced afforestation or reduced return of cropland to other natural land due to increased use of cropland. This effect takes place in particular in Europe where a trend exists of cropland abandonment. Natural vegetation conversion emissions: release of carbon stored in forest biomass or natural biomass, at the moment the land use change occurs. Agricultural biomass: changes in carbon stored in agricultural crops. These can either be biofuel feedstocks cultivated as a direct consequence of increased biofuel demand, or other crop cultivation, triggered indirectly by increased biofuel demand.