Working Paper

EU Biofuel Policies and The Regulation of Indirect Land Use Change

Kiel Working Papers, 1768

The contribution of biofuels to reducing greenhouse gas emissions (emissions) has recently been questioned by leading scientists because production of biofuel feedstocks causes indirect land use change (ILUC) that in turn causes emissions. The European Commission (EC) put forward policy proposals to control for ILUC that we discuss in this paper. Firstly, we provide a definition of ILUC, briefly present ILUC modelling approaches and display their methodological and data-related shortcomings. As models are neither able to calculate a biofuel feedstock- nor a location-specific ILUC emission factor, modelling results cannot be used to implement a biofuel feedstock- or location-specific ILUC regulation. Thus, we find that the only effective policy for the EC would be to increase the minimum emission saving threshold. What threshold would rule out all biofuel options with a negative emission balance depends essentially on the risk that one is willing to accept for violating the positive emission balance of certain biofuel options. Going beyond the policy proposals of the EC, we conclude that, in the end, ILUC can only be controlled by requiring that all agricultural production is made subject to sustainability assessments by implementing sustainable land use planning and by preventing illegal deforestation.

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Publication Date
JEL Classification
Q42, Q58, Q56, Q16