EU Biofuels Sustainability Standards and Certification Systems – How to Seek WTO‐Compatibility

Governments, increasingly, are encouraging the production and consumption of biofuels, as a partial substitute for fossil‐fuel based transport fuels. One reason for this is to contribute to the fight against climate change. Sustainability criteria have been introduced recently by some countries to help ensure biofuels have lower greenhouse gas emissions than fossil fuels. Concerns have been expressed from various quarters that such criteria could represent World Trade Organisation (WTO)‐incompatible barriers to trade. We, first, question recent contributions to the (mainly legal) academic literature which have sought to find ways of allowing biofuels to be treated differently in trade policy terms, based on whether or not they have been derived from feedstocks produced sustainably. We then draw on the Technical Barriers to Trade Agreement (TBTA) to offer guidance as to how to establish WTO‐compatible sustainability criteria. There is little direct case law to draw on at the design stage, but we argue that if TBTA guidance is followed, a long‐term absence of case law could be taken as an indication that the sustainability criteria established are indeed WTO‐compatible.     

The Impact of an EU–US Transatlantic Trade and Investment Partnership Agreement on Biofuel and Feedstock Markets

We assess the impact of a potential TTIP bilateral free trade agreement on the EU and US bio‐economies (feedstock, biofuels, by‐products, and related competing crops) and major trade partners in these markets. The analysis develops a multi‐market model that incorporates bilateral trade flows (US to EU, EU to US, and similarly with third countries) and is calibrated to the OECD‐FAO baseline for 2013–2022 to account for recent policy decisions. The major policy reforms from a TTIP involve tariff and TRQ liberalisation and their direct contractionary impact on US sugar supply, EU biofuel production, and indirect negative effect on US high fructose corn syrup (HFCS) production. EU sugar and isoglucose production expand along with US ethanol and biodiesel and oilseed crushing. EU sugar would flow to the US, US biofuels and vegetable oil to the EU. We further quantify non‐tariff measures (NTM) affecting these trade flows between the EU and the US. EU oilseed production contracts, and EU crushing expands with improving crushing margins following reduced NTM frictions. Our analysis reveals limited net welfare gains with most net benefits reaped by Brazil and not the two trading partners of the TTIP.     

The impact of OECD biofuels policies on developing countries

OECD countries’ biofuels policies, derived from energy and environmental legislation and activated by high oil prices, were the primary cause of not only the sudden spike in grain and oilseed prices in 2007–2008 but also of the ensuing price volatility. Even though developing countries have a comparative advantage in biofuels production, they were shut out of rich countries’ biofuel markets by trade discriminating biofuels policies. Developing countries would not have been able to take full advantage of the price spike in the short run anyway given the low supply elasticities and the long time required for biofuel production to come online, unlike for corn‐ethanol. The controversy over the right price of food is misplaced and policy makers should instead focus on improving biofuels policies, which like their counterpart agricultural policies in previous decades, have damaged the welfare of developing countries.     

Biofuels and ecoagriculture: can bioenergy production enhance landscape-scale ecosystem conservation and rural livelihoods?

Global development of the biofuel sector is proceeding rapidly, driven by national policy mandates, government subsidies, and profit opportunities for farmers, agribusiness and energy companies. To date, most investment in—and dialogue on—biofuels has focused on large-scale production of liquid transport fuels. A smaller set of efforts has explored the potential of biofuels to promote rural development by reducing energy poverty among the world's two billion poorest people. Here, we consider the potential of these diverse approaches to promote the goals of ecoagriculture: namely, sustainable agricultural production (including biofuel feedstocks), conservation of biodiversity and ecosystem services and viable rural livelihoods. Using a landscape planning framework, we review empirical evidence and identify criteria for designing biofuel production systems that promote this trio of goals. Biofuel development has the greatest potential when biomass production is an ‘interstitial’ activity and when processing and use occurs at the local level. Larger scale production for regional or global liquid fuel markets may be beneficial under some circumstances, but a stronger policy framework is needed to guide this approach. To advance biofuels for sustainable development, while avoiding serious risks, investment must shift to include a variety of ecoagriculture-compatible pathways. Supportive public policies and market incentives must be developed before the biofuel sector develops strong path-dependence toward unsustainable outcomes.     

Leveling the field for biofuels: comparing the economic and environmental impacts of biofuel and other export crops in Malawi

Biofuels often raise the specter of food insecurity, water resource depletion, and greenhouse gas emissions from land clearing. These concerns underpin the “sustainability criteria” governing access to European biofuel markets. However, it is unclear if producing biofuels in low‐income countries does exacerbate poverty and food insecurity, and moreover, whether the sustainability criteria should apply to all agricultural exports entering European markets. We develop an integrated modeling framework to simultaneously assess the economic and environmental impacts of producing biofuels in Malawi. We incorporate the effects of land use change on crop water use, and the opportunity costs of using scarce resources for biofuels instead of other crops. We find that biofuel production reduces poverty and food insecurity by raising household incomes. Irrigated outgrower schemes, rather than estate farms, lead to better economic outcomes, fewer emissions, and similar water requirements. Nevertheless, to gain access to European markets, Malawi would need to reduce emissions from ethanol plants. We find that biofuels’ economic and emissions outcomes are generally preferable to tobacco or soybeans. We conclude that the sustainability criteria encourage more sustainable biofuel production in countries like Malawi, but are perhaps overly biased against biofuels since other export crops raise similar concerns about food security and environmental impacts.     

Implications of biofuels mandates for the global livestock industry: a computable general equilibrium analysis

The rapid growth of biofuels production, particularly in the United States, the EU, and Brazil, has had important implications for the global livestock industry—both by raising the cost of feed grains and oilseeds and by forcing onto the market a large supply of biofuel by‐products, most of which end up in livestock feed rations. This article investigates the impact of an expanding biofuels industry on the mix and location of global livestock production. Surprisingly, we find that growth in the U.S. and EU biofuels industries results in larger absolute reductions in livestock production overseas than in those regions, due to the international transmission of grains prices which is offset locally by the lower cost of by‐products. We also find that nonruminant production is cut more than ruminant livestock, because it is less able to use biofuel by‐products in its feed rations. Implementing biofuel mandates increases cropland area, a large portion of which is estimated to come from reduced grazing lands. The biofuel producing regions are expected to reduce their coarse grains exports and increase imports of oilseeds and vegetable oils, while they increase their exports of processed feed materials. In sum, biofuel mandates have important consequences for livestock as well as crops, with net effects influenced by the important role of by‐products in substituting for feedstuffs.     

Competition for land in the global bioeconomy

The global land use implications of biofuel expansion have received considerable attention in the literature over the past decade. Model‐based estimates of the emissions from cropland expansion have been used to assess the environmental impacts of biofuel policies. And integrated assessment models have estimated the potential for biofuels to contribute to greenhouse gas (GHG) abatement over the coming century. All of these studies feature, explicitly or implicitly, competition between biofuel feed stocks and other land uses. However, the economic mechanisms governing this competition, as well as the contribution of biofuels to global land use change, have not received the close scrutiny that they deserve. The purpose of this article is to offer a deeper look at these factors. We begin with a comparative static analysis which assesses the impact of exogenously specified forecasts of biofuel expansion over the period: 2006–2035. Global land use change is decomposed according to the three key margins of economic response: extensive supply, intensive supply, and demand. Under the International Energy Agency's “New Policies” scenario, biofuels account for nearly one‐fifth of global land use change over the 2006–2035 period. The article also offers a comparative dynamic analysis which determines the optimal path for first and second generation biofuels over the course of the entire 21st century. In the absence of GHG regulation, the welfare‐maximizing path for global land use, in the face of 3% annual growth in oil prices, allocates 225 Mha to biofuel feed stocks by 2100, with the associated biofuels accounting for about 30% of global liquid fuel consumption. This area expansion is somewhat diminished by expected climate change impacts on agriculture, while it is significantly increased by an aggressive GHG emissions target and by advances in conversion efficiency of second generation biofuels.     

A causal analysis framework for land-use change and the potential role of bioenergy policy

We propose a causal analysis framework to increase understanding of land-use change (LUC) and the reliability of LUC models. This health-sciences-inspired framework can be applied to determine probable causes of LUC in the context of bioenergy. Calculations of net greenhouse gas (GHG) emissions for LUC associated with biofuel production are critical in determining whether a fuel qualifies as a biofuel or advanced biofuel category under regional (EU), national (US, UK), and state (California) regulations. Biofuel policymakers and scientists continue to discuss to what extent presumed indirect land-use change (ILUC) estimates should be included in GHG accounting for biofuel pathways. Current estimates of ILUC for bioenergy rely largely on economic simulation models that focus on causal pathways involving global commodity trade and use coarse land-cover data with simple land classification systems. This paper challenges the application of such models to estimate global areas of LUC in the absence of causal analysis. The proposed causal analysis framework begins with a definition of the change that has occurred and proceeds to a strength-of-evidence approach that includes plausibility of relationship, completeness of causal pathway, spatial co-occurrence, time order, analogous agents, simulation model results, and quantitative agent–response relationships. We discuss how LUC may be allocated among probable causes for policy purposes and how the application of the framework has the potential to increase the validity of LUC models and resolve controversies about ILUC, such as deforestation, and biofuels.     

Making two parallel land-use sector debates meet: Carbon leakage and indirect land-use change

Several land-based policy options are discussed within the current quest for feasible climate change mitigation options, among them the creation and conservation of forest carbon sinks through mechanisms such as Reducing Emissions from Deforestation and Forest Degradation also called REDD+ and the substitution of fossil fuels through biofuels, as legislated in the EU Renewable Energy Directive. While those two policy processes face several methodological challenges, there is one issue that both processes encounter: the displacement of land use and the related emissions, which is referred to as carbon leakage in the context of emissions accounting, and indirect land-use change also called ILUC within the bioenergy realm. The debates surrounding carbon leakage and indirect land-use change issues run in parallel but are rather isolated from each other, without much interaction. This paper analyzes the similarities and differences as well as common challenges within these parallel debates by the use of peer-reviewed articles and reports, with a focus on approaches to address and methods to quantify emissions at national and international scale. The aim is to assess the potential to use synergies and learn from the two debates to optimize climate benefits. The results show that the similarities are many, while the differences between carbon leakage and ILUC are found in the actual commodity at stake and to some degree in the policy forum in which the debate is taken. The geographical scale, actors and parties involved also play a role. Both processes operate under the same theoretical assumption and face the same problem of lacking methods to quantify the emissions caused by international displacement. The approach to international displacement is one of the main differences; while US and EU biofuel policymakers acknowledge uncertainties in ILUC accounting but strive to reduce them, the United Nations Framework Convention on Climate Change excludes accounting for international carbon leakage. Potential explanations behind these differences lie in the liability issue and the underlying accounting principles of producer responsibility for carbon leakage and consumer responsibility for ILUC. This is also reflected on the level of lobby activities, where ILUC has reached greater public and policy interest than carbon leakage. Finally, a possible way forward for international leakage accounting in future climate treaties could be the adoption of accounting methods taking a consumer perspective, to be used alongside the existing set-up, which could improve climate integrity of land-based policies.     

Comparative Advantage in Demand: Experimental Evidence of Preferences for Genetically Modified Food in the United States and European Union

The United States (US) exports more than US$6 billion in agricultural commodities to the European Union(EU) each year, but one issue carries the potential to diminish this trade: use of biotechnology in food production. The EU has adopted more stringent policies towards biotechnology than the US. Understanding differences in European and American policies towards genetically modified (GM) foods requires a greater understanding of consumers’ attitudes and preferences. This paper reports results from the first large‐scale, cross‐Atlantic study to analyse consumer demand for genetically modified food in a non‐hypothetical market environment. We strongly reject the frequent if convenient assumption in trade theory that consumer preferences are identical across countries: the median level of compensation demanded by English and French consumers to consume a GM food is found to be more than twice that in any of the US locations. Results have important implications for trade theory, which typically focuses on differences in specialization, comparative advantage and factor endowments across countries, and for on‐going trade disputes at the World Trade Organization.     

Directions in Rural Development Policy – Lessons from Both Sides of the AtlanticRichtlinien für die ländliche Entwicklungspolitik – Beispiele von diesseits und jenseits des AtlantiksLes orientations de la politique de développement rural – Enseignements en provenance des deux côtés de l’Atlantique

Directions in Rural Development Policy – Lessons from Both Sides of the Atlantic A workshop comparing rural development policies in Europe and the US found differences in the social values that shape them. These include different attachments to place, concerns with lagging regions, and interests in the assessment of public interventions. There is also a difference in coverage. In the EU environmental and landscape issues form part of the CAP’s Rural Development Pillar, using agriculture as an instrument, whereas in the US these are handled by other policies, some of which can claim deeper historical roots. In the context of rural development policy, the EU attaches intrinsic value to the environment, while in the US the focus is more on economic spin-offs from environmental quality. There are also differences in governance; a complete US view requires taking in Federal, State and local initiatives whereas in the EU a more organised framework is apparent. Nevertheless, when policy is viewed from a bottom-up perspective many common features are found. Improving human and social capital and infrastructure are key factors to stimulating economic development on both sides of the Atlantic, though only some of these drivers form part of the CAP’s Pillar II. While in the EU the role of rural development is set to expand, this is far less certain in the US where the emphasis on agricultural support is likely to continue to dominate the political agenda.     

Land use and economic effects of alternative biofuel policies in Brazil and the United States

Being the two largest ethanol producers in the world, biofuel policies in Brazil and the United States affect both their domestic markets and the global food and biofuel economy. In this article we develop a price endogenous mathematical programming model to simulate and analyze the impacts of biofuel mandates and trade distortions on land use, agricultural commodity and transportation fuel markets, and global environment. We find that an 80% increase in total biofuel production from its 103 billion liter baseline level to the mandated 183 billion liter level in 2022 can be achieved with less than 2% increase in total cropland use in both countries. In the United States, this would occur with cellulosic biofuels meeting nearly half of the biofuels consumed and produced largely on cropland pasture and corn ethanol meeting the rest of the mandate and resulting in a 2% increase in corn price. In Brazil, the expansion in sugarcane production would be achieved by reducing land under pasture and a marginal increase in intensification of livestock production. In the aggregate, biofuel policies increase economic surplus in both countries by 1% and redistribute the benefits from agricultural consumers to agricultural producers and the fuel sector. Finally, we also find that full implementation of the mandates in North America, China, and the European Union would reduce the global life‐cycle global greenhouse gas emissions by about 5%.     

Towards Agricultural Policy 3.0 – an agenda for agricultural research

This article reviews the development from market‐based support measures (‘Agricultural Policy 1.0’) towards direct and decoupled payments (‘Agricultural Policy 2.0’) which are increasingly justified by environmentally friendly practices (‘Agricultural Policy 2.1’) to which payments are bound. It describes frequent problems connected with today's agri‐environmental programmes, particularly non‐compliance and a too indirect link between practices paid for and environmental effects. Other programmes have started to pay farmers more directly for environmental outputs on their fields, such as the number of valuable plants on their grassland. Transaction costs for the administration and control of these programmes have been shown to remain at an acceptable level, so that such output‐related policies may be effective and promising options. It is suggested to direct the work of agricultural researchers, including economists, into looking for a stronger link between environmental outputs and public support, something that could be termed Agricultural Policy 3.0. This could lend some more visibility, relevance and attractiveness to our discipline .     

An Analysis of Standards‐based Regulation in the EU Organic Sector, 1991–2007

Against the background of a discussion of recent analyses of capitalist subsumption of agriculture and of neo‐liberalism, the paper uses a ‘liberal governmentality’ framework to trace the development of the EU Regulation on organic agriculture from its adoption in 1991 to its recent repeal and replacement in 2007. The central argument is that regulatory development took the form of a cycle of elaboration, tightening, increasing deviation and finally a ‘return to principles’ in order to reduce deviation. At different stages in this cycle, different groups of ‘stakeholders’, including experts, were influential. Likewise, different forms of expertise became dominant or were sidelined. Meanwhile, ‘capital’ in its different incarnations remained marginal throughout. The paper leaves open the questions of the generalizability of this analysis to regulatory arenas other than the EU, as well as to regulatory objects more central than organic agriculture to capitalist accumulation.     

Contemporary Discourses and Contestations around Pro‐Poor Land Policies and Land Governance

The meaning of land and land policies is diverse and contested across and within local and (inter)national settings. The phrase ‘land policy’, used to refer to all policies that have anything to do with land, may be convenient, but it masks the actual complexity of issues. Meanwhile, concern for ‘pro‐poor’ land policy has coincided with the mainstream promotion of efficient administration of land policies, leading to the concept of ‘land governance’. Such concepts have enriched discussion on land issues, but they also complicate further an already complex terrain. In response, this paper offers possible analytical signposts, rather than an actual in‐depth and elaborated analytical exploration of this terrain. It hopes to be a modest step forward and towards a better understanding of contemporary policy discourses and political contestations around land and land governance.     

Selling Australia as ‘clean and green’*

‘Clean and green’ has been used as a marketing tool by Australian governments to promote agricultural products overseas. But how valid are these claims? Is the ‘clean and green’ image campaign effective? And should government be involved? We conclude that Australia may have had a ‘clean and green’ image in some markets, but in the future, concrete proof of environmental and quality credentials will be required to satisfy increasingly better‐informed and more demanding customers. We argue that governments cannot, and should not, continue to promote Australian products based on an undefined ‘clean and green’ image. Rather, more resources should be directed to the development, promotion and wide adoption of integrated, credible and well‐defined environmental management and quality assurance systems if Australia is to compete effectively in export markets, especially in the longer term.     

TOWARDS A BROADER UNDERSTANDING OF MEAT DEMAND — PRESIDENTIAL ADDRESS

This paper sets out meat consumption trends in the United Kingdom and within other EU countries over the past 40 years; it shows that whereas in the UK meat consumption has only increased by a small amount, for other EU countries it has almost doubled. In analysing the data in more detail, it is apparent that ‘non-price/income’ factors have been playing a more important part both for the UK and other EU countries. It is true that in recent years there has been much more published empirical work on the effect of different attitude, demographic and structural factors on meat demand; commercial and Governmental organisations have also been collecting a significant amount of relevant unpublished data. However, there has not been much recent progress on integrated approaches which combine the analyses of the consumer behaviourist with those of the economist. The paper concludes by stating that this is an area of growing importance for the food industry and those interested in analysing food demand trends. Agricultural economists should therefore get more involved in it.     

The War on Terroir: Geographical Indications as a Transatlantic Trade Conflict

Terroir, the concept of an essential link between location of production and a specific quality attribute, is emerging as a contentious issue in trade negotiations and disputes. This issue is manifest through disputes and disagreements about appropriate protection of ‘geographical indications’ (GIs). This paper explores the differences in approach taken by the EU and the US towards GI protection, and illustrates the nature of the legal and economic arguments. The transatlantic dispute is spreading to other countries through the inclusion of GI protection in regional and bilateral trade pacts. It also has implications for the eventual conclusion of the WTO Doha Round negotiations, as the terroir issue arises in both the agricultural and the Trade‐Related Intellectual Property (TRIPS) agendas, once again pitting the US and EU as protagonists. But there are signs of change in these positions as the GI system in the EU comes under review and producers in the US reconsider the possible advantages of location‐based identifiers. These issues are important in a number of food sectors, and are likely to be persistent. They deserve more attention from practising applied economists than they have yet received.     

Sequester or substitute—Consequences of increased production of wood based energy on the carbon balance in Finland

Forests play an important role in mitigating climate change. Forests can sequester carbon from the atmosphere and provide biomass, which can be used to substitute for fossil fuels or energy-intensive materials. International climate policies favor the use of wood to substitute for fossil fuels rather than using forests as carbon sink. We examine the trade off between sequestering carbon in forests and substituting wood for fossil fuels in Finland. For Finland to meet its EU targets for the use of renewable energy by 2020, a considerable increase in the use of wood for energy is necessary. We compare scenarios in which the wood energy targets are fully or partially met to a reference case where policies favoring wood based energy production are removed. Three models are used to project fossil fuel substitution and changes in forest carbon sinks in the scenarios through 2035.Finnish forests are a growing carbon sink in all scenarios. However, net greenhouse gas (GHG) emissions will be higher in the medium term if Finland achieves its current wood energy targets than if the use of energy wood stagnates or decreases. The volume of GHG emissions avoided by replacing coal, peat and fossil diesel with wood is outweighed by the loss in carbon sequestered in forests due to increased biomass removals. Therefore, the current wood energy targets seem excessive and harmful to the climate. In particular, biodiesel production has a significant, negative impact on net emissions in the period considered. However, we did not consider risks such as forest fires, wind damage and diseases, which might weaken the sequestration policy. The potential albedo impacts of harvesting the forests were not considered either.     

Human and Social Capital in Rural Development – EU and US PerspectivesHuman- und Sozialkapital in der Entwicklung des ländlichen Raums – Perspektiven aus der EU und den USALe capital social et humain dans le développement rural: Perspectives aux États-Unis et dans l'Union européenne

Human and Social Capital in Rural Development – EU and US Perspectives
Human and social capital play critical roles in rural development, in both the US and Europe. The development of these resources at the individual and community levels is both an ultimate goal of sustainable rural development (RD), and a key means to pursue it. Rural areas face a range of specific issues and challenges for human and social capital. In this article we examine some of these, finding similarity in many issues faced by EU and US rural areas, including the trend toward counter-urbanization in some locations. We also give examples of some apparently useful policy and grass-root approaches in the EU and US used to support farmers and in some cases rural people more generally. We assert that the US lags behind the EU in recognising the value of social capital development, but that it could learn from EU experience in terms of alternative approaches and their successes or failures. Traditionally, policies which promote the enhancement of rural human capital and strengthen social capital in rural areas have failed to attract large-scale RD funding or prominence. They have, however, gained in credibility, and influence within the policy rhetoric, in recent years. We suggest that they deserve a higher profile in RD policies given likely future trends and challenges.