19th Mar 2018

OECD questions EU rush to boost biofuels

The EU's aim to boost the use of biofuels as part of wider plans to reduce greenhouse gas emissions has received a serious blow from the Organisation for Economic Cooperation and Development (OECD), grouping the world's 30 most developed countries.

The Paris-based body argues that state subsidies for biofuels could lead to food price hikes and damage to forests and natural habitats while its impact in terms of the fight against climate change may be only limited.

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"The current push to expand the use of biofuels is creating unsustainable tensions that will disrupt markets without generating significant environmental benefits," an OECD study to be unveiled on Tuesday (11 September) says, according to the Financial Times.

The document is set to be discussed by ministers and government experts from the member countries - among them 19 EU states.

It puts a serious question mark over the union's agreed commitment to secure that 10 percent of transport fuels comes from biofuels by 2020.

The goal is part of a key climate change package agreed by EU leaders in March, with German chancellor Angela Merkel - chairing the talks as the bloc's then president - suggesting that state subsidies as well as clearly set thresholds are crucial for the new sector and environment-friendly technologies to develop.

But according to the OECD report, biofuels would cut energy-related emissions by a maximum of 3 percent while they would most likely mean a huge cost for taxpayers.

The EU could end up paying ten times more than the US for incentives to boost the production of ethanol.

At the moment, Washington puts aside $7bn a year meaning it costs over $500 for each tonne of carbon dioxide that is avoided.

The authors of the study point out that state subsidies - instead of adequate prices for biofuels in the market - would subsequently create pressure to replace forests or wetlands with farms for bio-energy crops.

Moreover, the experts predict that any global shift towards biofuels would lead to soaring food prices, something that would most strongly affect developing countries.

Instead, they urge governments to phase out biofuel subsidies, using "technology-neutral" carbon taxes so that the markets find the best ways of reducing greenhouse gases.

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