There are a number of things that strike me. The Department’s press release states that “[t]he obligation will be on the companies in question and at no cost to the taxpayer”. True. The cost will be to the traveller.
The opposition and the farmers quickly noted that biofuels would be mostly imported and called for support for domestic production. That could well violate EU and WTO rules. It would pose a cost to the taxpayer, and make biofuels even more expensive.
The Irish biofuels target of 4% by 2010 anticipates the EU biofuels target of 10% by 2020. It is not clear whether Ireland is engaged in prudent preparation for the EU target, or whether it is marching ahead of the music.
The biofuels target is justified on two grounds. The first is climate change. This is doubtful. A carbon tax would appropriately incentivise biofuels. The biofuels target is double regulation from a climate perspective. It is also not guaranteed that biofuels reduce greenhouse gas emissions. The rules state that biofuel emissions should be at least 35% below the emissions of the petrol or diesel replaced. This 35% per litre of fuel. As biofuels have a lower energy density, the saving per kilometre driven is less than the nominal 35%. More importantly, the nominal emissions from biofuels explicity exclude the nitrous oxide emissions from soils. N2O may turn the climate balance in favour of fossil fuels.
Biofuels may not be produced from crops grown on land that was converted from virgin forests. That rule is pointless. If history is any guide, the Brazilians will put corn on soya-land, put soya on pasture land, and chop down the trees to make way for the cows. (This is because of relative transport costs, not because of EU rules.) The “Sustainability Criteria” ignore such second- and third-order implications.
Security of supply is the second justification for the biofuels standard. Diversification does not necessarily bring security. Four percent is small, and most of the biofuels will blended into petrol and diesel. A shortage of oil would increase the costs of agricultural production, and would have everyone scrambling for biofuels. The correlation between the price of oil and the price of biofuels is so high that diversification brings few benefits.
There is great hope for biofuels, however. We have spent the last 10,000 years perfecting plants for food. We have ignored plants for energy. We can therefore expect rapid progress. The promises of second- and third-generation biofuels are astounding — but not ready for the market yet. The current regulation protects an infant industry at the risk of locking it into outdated technologies.