COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT ON INDIRECT LAND-USE CHANGE RELATED TO BIOFUELS AND BIOLIQUIDS Accompanying the document Proposal for a Directive of the European Parliament and of the Council amending Directive 98/70/EC relating to the quality of petrol and diesel fuels and amending Directive 2009/28/EC on the promotion of the use of energy from renewable sources
Date: 2012-10-17
Institutions: European Commission
Subjects: atmospheric pollutant, biofuel, energy crop, environmental standard, greenhouse gas, reduction of gas emissions, renewable energy, utilised agricultural area

EUROPEAN 
COMMISSION 

Brussels, 17.10.2012  
SWD(2012) 344 final 

COMMISSION STAFF WORKING DOCUMENT 

EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT 
ON INDIRECT LAND-USE CHANGE RELATED TO BIOFUELS AND BIOLIQUIDS

Accompanying the document 

Proposal for a 
Directive of the European Parliament and of the Council 

amending Directive 98/70/EC relating to the quality of petrol and diesel fuels and 
amending Directive 2009/28/EC on the promotion of the use of energy from renewable 
sources  

{COM(2012) 595 final} 
{SWD(2012) 343 final} 

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COMMISSION STAFF WORKING DOCUMENT 

EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT 
ON INDIRECT LAND-USE CHANGE RELATED TO BIOFUELS AND BIOLIQUIDS 

Accompanying the document 

Proposal for a 
Directive of the European Parliament and of the Council 

amending Directive 98/70/EC relating to the quality of petrol and diesel fuels and 
amending Directive 2009/28/EC on the promotion of the use of energy from renewable 
sources  

1. 

INTRODUCTION 

The  Renewable  Energy  and  Fuel  Quality  Directives  (the  Directives)1,2  both  include  an 
obligation  to  review  the  impact  of  indirect  land  use  change  on  greenhouse  gas  emissions 
associated with biofuels and if appropriate to accompany this review with a proposal on ways 
to minimise that impact. In response, the Commission published a report3 in December 2010 
which  (i)  identified  a  number  of  uncertainties  and  limitations  associated  with  the  economic 
models  used  to  estimate  indirect  land  use  change;  (ii)  acknowledged  that  the  impact  of 
indirect  land  use  change  can  reduce  greenhouse  gas  emissions  savings  associated  with 
biofuels;  and  (iii)  indicated  that  if  action  is  required,  indirect  land  use  change  should  be 
addressed  under  a  precautionary  approach.  That  report  also  set  out  that  the  Commission 
would  prepare  an  Impact  Assessment  based  on  the  four  options  identified  in  the  report, 
accompanied, if appropriate, by a legislative proposal to amend the Directives. 

2. 

PROBLEM DEFINITION 

Most of today's  biofuels  are  produced from crops grown  on agricultural  land such  as wheat 
and  rapeseed.  When  agricultural  or  pasture  land  previously  destined  for  the  food,  feed  and 
fibre markets is diverted to the production of biofuels, the non-fuel demand will still need to 
be  satisfied.  Although  this  additional  demand  can  be  met  through  intensification  of  the 
original production, bringing non-agricultural land into production elsewhere is also possible. 
It is in the latter case that land use change occurs indirectly, (i.e. hence the term indirect land-
use change). In the case that this production is realised through the use of additional land, its 
conversion could lead to substantial greenhouse gas emissions being released if high carbon 
stock areas such as forests are affected as a result.  

Estimating  the  greenhouse  gas  impact  due  to  indirect  land-use  change  requires  projecting 
impacts  into  the  future,  which  is  inherently  uncertain,  since  future  developments  will  not 

1 
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3 

Article 7d(6) of Directive 2009/30/EC and Article 19(6) of Directive 2009/28/EC. 
The requirement in the Renewable Energy Directive also applies to bioliquids. References to "biofuels" 
in this document should also be taken as applying to bioliquids.  
COM(2010) 811. 

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necessarily follow trends of the past. Moreover, the estimated land-use change can never be 
validated, as indirect land-use change is a phenomenon that is impossible to directly observe 
or measure. Therefore modelling is necessary to estimate indirect land-use change. 

In the context of the requirement under the Directives for biofuels to achieve the greenhouse 
gas savings specified, and the 6% reduction in greenhouse gas intensity required by the Fuel 
Quality  Directive,  the  key  problem  addressed  in  this  Impact  Assessment  is  whether 
greenhouse gas emissions associated with indirect land use change should be addressed, and if 
so in which way.  

3. 

SUBSIDIARITY 

The rationale for European action in the field of biofuels has already been decided with the 
adoption of the Fuel Quality and Renewable Energy Directives, which create a single market 
in  renewable  and  lower  greenhouse  gas  intensity  energies  for  transport.  As  any  measures 
proposed to deal with indirect land use change are likely to require modifications to existing 
Directives, these have to be coordinated and harmonized across the EU. 

4. 

POLICY OBJECTIVES 

As  described  in  the  introduction,  this  impact  assessment  is  focused  on  the  specific 
requirement  in  the  Directives  related  to  greenhouse  gas  emissions  from  indirect  land  use 
change and it does not consider any wider environmental and social impacts associated with 
the  use  of  biofuels.  As  such,  the  general  objectives  presented  in  the  Impact  Assessment 
translate into the following specific/operational objective to:  

Minimise  the  impact  of  indirect  land-use  change  on  greenhouse  gas  emissions  of 
biofuels, within the wider policy objectives of the targets that by 2020 at least 10% of 
transport  fuels  are  renewable  and  that  greenhouse  gas  intensity  in  road  transport 
fuels is reduced by at least 6% compared to 2010.  

5. 

POLICY OPTIONS 

The policy options considered in the impact assessment are described in the table below. 

Options/sub-options and 
their combinations 

Description 

A) Taking no action for 
the time being while 
continuing to monitor 
ILUC 

This  option  refers  to  the  Commission's  bi-annual  monitoring  and  reporting  of 
impacts, including indirect land use change, as required by the Renewable Energy 
Directive4,  the  first  of  which  is  due  in  2012.  The  option  also  implies  continued 
monitoring  of  the  scientific  developments  related  to  estimating  indirect  land-use 
change emissions. 

During the latest consultation, Option A was preferred by those stakeholders who 
believed that the current state of development of the models was not appropriate to 
base  policy  approaches  upon.  This  included  most  of  the  industry,  farmers' 
associations and biofuel producing third countries.  

B) increase the minimum  Option  B  aims  at  a)  compensating  for  the  estimated  indirect  land-use  change 

4 

Article 23 of 2009/28/EC. 

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greenhouse gas saving 
threshold for biofuels 

C) introduce additional 
sustainability 
requirements on certain 
categories of biofuels 

emissions  through  requiring  higher  direct  savings,  and  thereby  improving  the 
greenhouse  gas  performance  of  the  biofuels  consumed  and;  b)  reducing  indirect 
land-use change emissions through raising the threshold to such a level that many 
of  the  biofuels  with  estimated  large  indirect  land-use  change  emissions  are 
excluded.  

Option  B  was  not  preferred  by  any  specific  stakeholder  group  during  the  lastest 
consultation. 

Option  C  consists  of  introducing  additional  sustainability  requirements  aimed  at 
mitigating the risk of indirect land-use change emissions. Option C1 aims to do so 
through introducing requirements to reduce deforestation that Member States and 
third countries supplying biofuels to the EU would need to comply with, as well as 
measures  aimed  at  increasing  the  availability  of  feedstocks  in  a  sustainable 
manner; Option C2 measures are instead targeted at criteria for producing biofuels 
through practices with minimal risk of causing indirect land use change emissions. 
As well as options C1 and C2 being assessed in isolation, option C2 is assessed 
in combination with option D (where the biofuel production has to comply with 
requirements under option D unless it is produced under the conditions described 
in option C2).  

During  the  latest  consultation  on  policy  options,  most  stakeholders  supported  the 
use of international action to address indirect land-use change emissions, although 
not necessarily in the same terms as outlined in option C1. Most NGOs supported 
option C2 as a potential exemption from the application from option D.  

D) attribute a quantity of 
greenhouse gas emissions 
to biofuels reflecting the 
estimated indirect land-
use change impact 

Option D is the option referred to in the Directives, and involves incorporating the 
estimated indirect land use change emissions values in the existing greenhouse gas 
methodology for biofuels. Relevant exemptions are provided in situations that do 
not trigger indirect land-use change emissions (i.e. non-land using feedstocks such 
as waste and algae, and when direct land use change is caused).  

Most  NGOs  and  a  few  industrial  stakeholders  from  the  non-biofuel  sectors 
supported this option during the last consultation. This was also the most supported 
option  during  the  international  scientific  expert  workshop  organised  by  the  Joint 
Research Centre in November 2010. 

E) limit the contribution 
from conventional 
biofuels to the 
Renewable Energy 
Directive targets. 

Option E aims at minimising the indirect land use change impacts of biofuels by 
limiting  the  amount  of  conventional  biofuels  that  can  be  counted  towards  the 
Renewable  Energy  Directive  targets  to  current  production  levels  at  5%.  This  is 
done  through  a)  limiting  the  consumption  of  biofuels  with  a  risk  of  indirect  land 
use  change  and  b)  increasing  the  amount  of  advanced  biofuels,  with  lower  risks, 
needed to achieve the 10% Renewable Energy Directive transport target.  

Although  Option  E  was  not  included  as  one  of  the  shortlisted  options  by  the 
Commission  in  the  last  consultation  exercises,  options  aimed  at  limiting  the 
amount  of  conventional  biofuels  while  increasing  the  incentives  for  advanced 
biofuels were favoured by NGOs and certain industrial stakeholders. 

6. 

ASSESSMENT OF THE POLICY OPTIONS 

On the basis of the analytical work presented in this Impact Assessment, it is possible to draw 
a number of conclusions:  

(1) 

the  estimated  indirect  land-use  change  emissions  are,  despite  the  better 
understanding  and  recent  improvements  in  the  science,  vulnerable  to  the 
modelling framework and the assumptions made; 

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(2) 

(3) 

(4) 

the  use  of  biofuels  in  the  EU  saves  emissions,  also  when  estimated  indirect 
land-use  change  emissions  are  included.  In  addition,  the  models  indicate  a 
hierarchy of biofuel types according to their indirect land-use change impacts, 
these  being  considerably  higher  for  typical  biodiesel  feedstocks  (oil  crops), 
than for bioethanol feedstocks (cereals, and sugar crops);  

given  the  strong  reliance  on  conventional  biodiesel,  and  to  a  lesser  extent 
conventional bioethanol, in projected biofuel volumes to 2020, there is a high 
risk  that  the  estimated  indirect  land-use  change  emissions  will  significantly 
reduce the expected savings from the policy if no action is taken to mitigate 
indirect land-use change emissions; and; 

the  development  of  advanced  biofuels,  using  low-value  resources  as  straw, 
wood  and  forestry  residues  is  slower  than  previously  expected,  as  the  costs 
associated  with  producing  such  fuels  is  higher  than  the  alternative 
conventional biofuels.  

There are reasonable grounds to believe that indirect land-use change emissions could partly 
undermine  the  greenhouse  gas  savings  offered  by  using  biofuels.  In  application  of  the 
precautionary principle, option A) is therefore discarded. 

Consideration  has  also  been  given  to  options  for  introducing  additional  sustainability 
requirements  on  certain  categories  of  biofuels,  including  certain  actions  that  could  be 
implemented  at  both  country  and  project  level.  With  regard  to  country-wide  sustainability 
criteria,  the  assessment  showed  that  this  option  would  need  to  be  implemented  globally  in 
order to be fully effective. In respect of project level actions, the Impact Assessment showed 
that although biofuels produced under these conditions could be effectively promoted through 
being  considered  as  exemptions  to  the  application  of  ILUC  factors,  these  criteria  are 
insufficiently developed at this time to be included in legislative proposal as no certification 
scheme currently exists. As such, option C) must also be discarded. 

With  regards  to  a  threshold  increase,  as  described  for  option  B),  this  option  would  seem 
effective in reducing indirect land-use change as long as it leads to the replacement of those 
biofuels with estimated high indirect land-use change emissions (i.e. vegetable oils) by those 
with  estimated  low  emissions  (i.e.  cereals,  sugars  and  advanced  biofuels).  However,  the 
effectiveness  of  a  threshold  increase  to  60%  (i.e.  a  reduction  of  indirect  land-use  change 
emissions of 70%, from 46 Mt of CO2-eq./yr to 14 Mt CO2-eq./yr in 2020) would be reduced by 
two thirds if further improvements in the greenhouse gas balance of main vegetable oil crops 
to  levels  which  seem  technologically  feasible,  can  be  achieved.  As  such,  the  uncertainty 
around  the  effectiveness  of  this  approach  would  always  remain  high  unless  much  higher 
thresholds are applied across the board, which would discriminate against biofuels with low 
estimated  indirect  land-use  change  emissions.  This  option  in  isolation  has  therefore  been 
discarded. 

Option  D  concerns  the  introduction  of  factors  to  demonstrate  compliance  with  the 
sustainability criteria as well as the reporting of greenhouse gas emissions towards emission 
reduction  targets.  This  would  seem  the  most  effective  option  in  reducing  indirect  land  use 
change emissions (i.e. a reduction of indirect land-use change emissions of 85%, from 46 Mt 
of CO2-eq./yr to 8 Mt CO2-eq./yr in 2020). However, the application of this option in isolation 
would  require  major  industrial  adjustment  which  does  not  seem  achievable  in  the  period  to 
2020.  This  is  because  it  would  require  a)  the  exclusion  of  all  vegetable  oil  biodiesel  which 

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today represents the vast majority of the market; b) unrealistic levels of bioethanol given the 
current  blend  limits;  and  c)  unrealistic  levels  of  advanced  biofuels  coming  into  the  market. 
Moreover, the introduction of factors in the sustainability criteria would not take into account 
the  limits  of  the  modelling  in  the  policy  design.  As  such,  the  application  of  this  option  in 
isolation has been discarded.  

The  remaining  option  E,  i.e.  limiting  the  amount  of  conventional  biofuels  counting  towards 
the Renewable Energy Directive transport target to current production levels, would also be 
effective  in  reducing  indirect  land-use  change  (i.e.  a  reduction  of  indirect  land-use  change 
emissions of 55%, from 46 Mt of CO2-eq./yr to 21 Mt CO2-eq./yr in 2020). In addition, this option 
would require moderate industrial adjustment as it would only exclude vegetable oil biodiesel 
beyond  current  production  levels  in  the  run  up  to  2020  and  would  not  necessarily  pose  a 
technical challenge from a blending limit perspective, while providing a strong incentive for 
increasing  the  share  of  advanced  biofuels.  The  incentives  for  producing  advanced  biofuels 
would be strong, as the amount of double counted advanced biofuels would need to increase 
significantly5. Option E thus appears to provide a basis of a suitable way forward.  

This Impact Assessment shows that a balanced approach based on option E, accompanied by 
complementary elements of options B and D and additional incentives for advanced biofuels, 
would  be  the  best  way  to  minimise  estimated  indirect  land-use  change  emissions.  This  is 
because 

(1) 

(2) 

(3) 

(4) 

(5) 

option E avoids any additional ILUC-impacts to happen for the period up to 
2020 as it limits the use of conventional biofuels to current production levels, 
while  at  the  same  time  the  targets  for  renewable  energy  of  the  Renewable 
Energy Directive remain achievable; 

it protects existing investments, while giving a clear message that after 2020 
only advanced biofuels will be supported. This provides the needed certainty 
for  new  investments  in  the  sector  as  no  further  changes  would  occur  up  to 
2020; 

it distinguishes between feedstocks according to their estimated indirect land-
use  change  impacts  which  would  be  reported,  thereby  providing  more 
transparency; 

sustainability  of  biofuels  remains  a  question  of  verifiable  and  measureable 
direct emissions; 

the enhanced incentives and accounting for advanced non-land using biofuels 
to four times the contribution of conventional biofuels will spur development 
of  such  biofuels  with  zero  risk  of  indirect  land-use  change  emissions,  as  no 
land is used for their production.  

Although  it  has  not  been  possible  to  assess  the  effectiveness  of  this  package  of  measures 
under  the  current  methodology,  it  is  expected  to  reduce  indirect  land-use  change  emissions 

5 

Around  2-3  %  of  the  10%  target  of  double  counted  advanced  biofuels  would  be  needed.  This  is 
equivalent  to  6  to  9  Mtoe,  For  comparison,  the  US  RFS2  is  requiring  36  billion  gallons  by  2022,  of 
which  at  least  16  billion  gallons  have  to  be  advanced  biofuels  from  cellulosic  material.  16  billion 
gallons of ethanol is equivalent to around 30 Mtoe, i.e. an energy quantity similar to what is required to 
reach the 10% transport target of the Renewable Energy Directive.  

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significantly.  As  a  minimum,  the  package  of  measures  will  reduce  indirect  land  use  change 
emissions as option E in isolation (55% by 2020). However, it is expected that the additional 
incentives  for  advanced  biofuels  will  lead  to  a  further  shift  away  from  biofuels  with  high 
estimated indirect land-use change emissions.  

In  conclusion  this  combination  would  minimise  the  risks  of  indirect  land-use  change 
emissions,  while  protecting  existing  investments  and,  at  the  same  time,  acknowledging  and 
taking into account in the policy design the limits of the modelling.  

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