An eventful year for renewables and climate change draws to a close

Géraldine Kutas — posted 17/01/2019

As we wind down towards the end-of-year holiday period, it’s time to take pause for our traditional reflection on the challenges and successes of the past year, and to take stock of opportunities and objectives for the year to come.

One of the major European legislative achievements of 2018 from was the final agreement on a new Renewable Energy Directive. Imperfect though it is, a positive outcome of REDII was maintaining and not compromising the 7% cap for first-generation biofuels, increasing the mandatory renewable energy share in transport, and establishing a target for the incorporation of second-generation biofuels, in the transport mix. An important win is that these targets can only be reviewed upwards and cannot be reduced. However we need to wait and see how the practical application of REDII will unfold, as implementation has been effectively put into the hands of member states.

The result of unstable regulations that has been the norm up to now (subsidies for solar panels, biofuels regulation, etc) has been a delay in implementing real mitigation measures. Important signals were sent with the publication of the EU’s bio-economy strategy and the long-term (2050) vision for a cleaner planet. But this talk needs to translate into action if we are to limit temperature increases to 1.5 degrees, and unfortunately the strategy and vision are shockingly short on ambition in terms of the concrete measures needed to achieve that. There is a vision, but no clear roadmap on how to get there.

Why? Partly, this is because it is difficult to reliably predict the technologies that will prevail, and therefore to invest in the right instruments. This makes is all the more difficult to engage those stakeholders who want greater clarity and certainty in order to invest in a future that is by definition uncertain. But clear incentives are required. It will be extremely hard to mobilise stakeholders to action without these predictable incentives.

These future uncertainties are also reflected at the political level. No-one knows what future elections will bring in a society that seems increasingly polarised, which could provoke drastic changes in approaches to climate change at the national and sub-national levels. We need to engage the whole society as much as we can to guarantee broad support for measures adopted and ensure that they are not reverted. But we also need to motivate, mobilise and encourage society at large to adopt the fundamental changes in habit that are required to help ensure a smooth transition toward a low-carbon economy. I personally believe that there is a groundswell of support from ordinary citizens for such measures – we only have to look at how innovative and vibrant many initiatives at the local level are as a testament to that fact. But such local initiatives won’t gain a critical mass and the necessary traction without the right and lasting policy framework.

It is really encouraging that, in 2018, bioenergy finally began to receive the recognition it deserves, and I look forward to that recognition increasing next year. As the International Energy Agency (IEA) has said, bioenergy makes up 50% of global renewable energy, so it’s high time that its potential, effectiveness and ready availability are harnessed. There’s no time to lose, the climate clock is ticking inexorably, and we need to promote the widespread use of bioenergy solutions, especially in heating and transportation.

Rather than decreasing, global emissions from the transport sector are growing fast. There is no one silver bullet for transport, and we certainly cannot afford to run down the clock and wait passively for one. The simple truth is that we need to use all the mitigating solutions that we already have at our disposal, of which biofuels is already playing a critical role in many jurisdictions. Brazil – a country that, according to the IEA, has the greenest energy matrix – has long led the way in successfully integrating renewable biofuels in its transport energy mix.

As a further significant step on that journey, Brazil recently adopted its Renovabio programme. This carbon-trading mechanism will not only help further reduce emissions from the whole transport sector, but is destined to keep the sector innovating in sustainable solutions. Last week production was launched of the first hybrid-flex-fuel vehicles (that run on electricity and ethanol), combining two of the best green-transport technologies for the climate, and we expect to see more transformative innovations like this coming on stream in the near future.

Innovation will be key. And the economics of any innovative solution need to make sense. Smart policy-making recognises the economic imperatives of stimulating innovation, and we hope to see much more of it in 2019.

I wish you all a very happy, peaceful and restful holiday season.

On the road to Katowice (COP24)

Géraldine Kutas — posted 26/11/2018

As COP24 approaches it is clear that we are nowhere near to being on track to meet the commitments made at Paris. Much more needs to be done just to meet those obligations, and even if we did, this still wouldn’t be sufficient to contain the rise in average temperatures to 1.5 degrees. There is therefore an urgent need in Katowice not only to adopt the robust package of decisions that will ensure the full implementation of Paris pledges, but also the additional measures that will be needed to keep the rise in temperatures within the target limit.

One of the stated objectives of the summit is to attain a balance in GHG emissions management, between cutting emissions and enhanced sequestration.

In that context, UNICA is proud to be able to present Brazil’s Renovabio initiative during COP24. As part of its commitments made under the Paris accord, Brazil’s Renovabio is a key strategic initiative for alternative fuels that aims at reducing Brazil’s total GHG emissions in the transport sector by 10% by 2028 on 2017 levels. Kicking off in 2020, it includes all biofuels (biodiesel, biogas, bio-kerosene), not just ethanol. Indeed, Renovabio establishes long-term guidelines based on a technology neutral approach, without applying any additional taxes or offering subsidies. As Renovabio is a state policy rather than a government programme it provides stability and predictability. It is a new performance indicator for biofuels producers that will improve processes and increase efficiency. It provides long-term guidelines for investments, and recognition of biofuel’s positive environmental externalities. Greater controls on production activities are required by its certification process. Under a double control system, producers’ production methods will be subject to official inspection as they apply for certification (required to participate in the programme). Fuel distributors will face financial sanctions for non-compliance with their obligations in terms of carbon intensity (CI) reduction. Obligations are therefore shared across the value chain -by producers, to ensure they produce sustainably, and by distributors, to ensure they achieve targets in terms of CI reduction.

The Renovabio initiative is expected to significantly enhance future perspectives for the industry, and stimulate healthier margins, leading to significant investments. According to the Brazilian Ministry of Mines and Energy, Renovabio is expected to save 847m tonnes of CO₂-equivalent emissions, cut transport fossil fuel imports by some 300bn litres, and create 1.4m jobs on the back of an investment of some €323bn (US$368bn). Renovabio will promote new know-hows by rewarding efficiency gains in a technologically-neutral way. This will induce new investments in emissions reduction techniques, for example in biogas production, or the use of new cane varieties for sugarcane ethanol.

Sugarcane ethanol is an enabling technology that helps countries meet their climate commitments and cut transport emissions – 90% less GHG emissions than petrol. Sugarcane ethanol is widely deployed in Brazil, where more than 200  flex-fuel vehicle (FFV) models are available, 76% of the national feet and 95% of all new-car sales are FFVs. New E-Flex vehicles (running on electricity and ethanol) are now coming on line in Brazil, with tests on the Toyota Prius E-FLEX being concluded. VW Trucks and Buses Brazil said it will start test on an E-FLEX bus in six months.

Brazil is the world’s second largest ethanol producer, producing just under 30bn litres of ethanol annually. Domestic consumption accounts for 90% of that production, and exports amount to only 1.4bn litres a year. Brazil’s ethanol production is set to increase significantly over the next 10 years, rising to a projected 47.2bn litres by 2028. With sugarcane produced on only 0.5% of the national territory, Brazil can easily ramp up its production of sustainable ethanol, which neither competes with food or compromises native vegetation or forests – expanded ethanol production is projected for degraded pasturelands, which are being recovered for this purpose. This will help stabilise the soils of these degraded lands, capture more CO₂in the carbon sink, and provide plentiful GHG-cutting sugarcane ethanol for transportation for other countries around the globe in our joint fight against transportation emissions.

It’s time to speed up on cutting transport emissions! Brazilian sugarcane ethanol can help fuel this global drive.

REDII the final act – crisis adverted

Géraldine Kutas — posted 13/11/2018

With today’s European Parliament (EP) approval of REDII (495 in favour, 68 against, 61 abstentions) a major milestone on the EU’s biofuels journey has been reached. It’s been a rocky road, and lawmakers have finally agreed a text in the Renewables Directive that gives biofuels a future in Europe – albeit an uncertain one.

For some considerable time there was a very real risk of European policymakers sounding the death knell of the conventional biofuels industry in Europe. But common sense prevailed and the EP and the Council have agreed:

– a target to achieve 14% renewable energy in transport by 2030;

– to keep the limit of 7% of gross final consumption in road and rail transport for first-generation biofuels;

– allowing member states adopt a lower threshold, taking into account best available evidence on the impact of indirect land-use change (ILUC), and

– to set a target of a 3.5% share of advanced biofuels by 2030.

In view of the slow progress in decarbonising transport, the increased renewables transport target is welcome and long overdue. But the question remains what this will mean for the biofuels industry in general and particularly how it will influence the role of biofuels in reducing carbon emissions in transport.

Maintaining the 7% threshold for first-generation biofuels was agreed after a long and tortuous process – with key priorities not to increase deforestation and to safeguard existing investments in the biofuels industry. It seems that the warnings that undermining first-generation biofuels would kill the very industry that is supposed to develop second-generation biofuels were heeded. However, the fact remains that allowing member states to individually lower this threshold undermines the future of the biofuels industry in Europe and these very investments the compromise sought to protect.

It is also highly questionable whether limiting the threshold for biofuels in Europe will achieve its stated objective of reducing rainforest deforestation. Determining what kinds of biofuels lead to a high risk of land-use change or deforestation has proven to be extremely difficult, and it’s an open question whether the European Commission will be successful in setting effective criteria for high-ILUC-risk biofuels through delegated acts.

Clearly different biofuels have very different sustainability credentials and cannot be treated the same. Brazilian sugarcane ethanol is among the biofuels achieving most greenhouse gas savings while having an excellent sustainability performance. It would therefore have been more effective to further improve and enforce existing certifications schemes and support their implementation in other regions. The review has missed this opportunity.

The 3.5%-by-2030 share for advanced biofuels is also extremely ambitious. Achieving this target will require the construction and operation of more than 50 second-generation production units in Europe by that date. Our experience in Brazil demonstrates that a key element for success is by co-locating second-generation plants with a well-functioning first-generation production unit.  So attempting to curtail first-generation biofuels will not be conducive to developing a robust second-generation industry.

Europe is at risk of being left behind in the development of biofuels and it is questionable whether the long hoped for breakthrough in advanced biofuels will happen here. The latest IEA report on renewables shows that further efforts are necessary to decarbonise transport. Currently it is expected that renewables in transport will grow from 3.4% in 2017 to just 3.8% by 2023. Considering that biofuels make up 90% of this share, it is clear that without increasing biofuels the transport sector will continue to emit GHGs for a long time.

Ahead of COP24, and bearing in mind the need to reduce global warming to less than 2 degrees Celsius, the transport sector must contribute its share, and for that we need a sound biofuels policy as the example of Brazil shows. Transport emissions only account for 10% in Brazil (21% in Europe) but the country is committed to further reduce its carbon footprint and with the new RenovaBio policy framework it is on track to drive the growth of the alternative fuels industry.

Indian sugarcane – setting the right course

Géraldine Kutas — posted 26/09/2018

Credit: Joe Woodruff, Bonsucro

In the week of 4 to 8 of September I was invited to the Kingsman Annual Sugar Conference in New Delhi (India) to speak about how sugarcane ethanol can contribute to decarbonizing transport and improving air quality.

During that week I also had the opportunity to visit a sugarcane farm and a sugar mill in my capacity as Chair of the Board of Bonsucro. I was amazed by the entrepreneurial spirit in the Indian sugarcane sector, its determination to tackle challenges and its willingness to innovate and adopt new technologies. It became very clear to me that India and Brazil, as the two largest sugarcane producers in the world, can learn a lot from each to further improve the sector.

Credit: Joe Woodruff, Bonsucro

The emission challenge

The sheer size and speed of development in India are impressive. It is one of the fastest growing economies in the world, with a GDP growth of 8,2%. Today it is the third largest consumer of energy and this is where India faces challenges. India’s dependency on coal is still at 38%, of which it imports 60%, and its dependency on oil is at 28%, of which it imports 80%. Its transport sector is booming, which is one of the main contributors to local pollution and CO₂emissions.  Today, India is already the 4^thlargest emitter of CO₂: emissions grew by 4,6% in 2017. Air pollution is even worse. 14 out of the 15 most polluted cities are in India. Most of all, small particulate matter (pm2.5) is a major health concern.

Can sugarcane make a difference?

India is the 2^ndlargest sugarcane producer in the world, with a productivity per hectare that is similar to that of Brazil. The good news is that India is set to make full use of its sugarcane cultivation to the benefit of its emission and its economy.

Today India cultivates sugarcane almost solely to produce sugar. While this provides an important source of income for farmers and sugar mills, it has led to volatility on the national and global sugar markets. Due to the Indian swing production cycles of sugarcane and the guaranteed price for farmers, India periodically produced a sugar oversupply. Fueled through export subsidies this oversupply floods and distorts the global market. In addition to infringing WTO rules this practice is also unsustainable and expensive for the Indian economy.

Ethanol programme

The Indian Government has understood this problem and during my days in India I was amazed how resolutely the country is tackling the issue: India is rolling out a strong ethanol programme with a mandatory ethanol blend of 10% by 2022. The Government has also authorized the production of ethanol from b-heavy molasses and from cane juice – the components that were reserved for sugar production only. Moreover, the Government is working on internal taxes on ethanol products, it has increased the price of ethanol and promotes the expansion of production capacity and 2^ndgeneration ethanol. These are all sensitive measures to support the market uptake of ethanol.

This programme will not only decrease the sugar surplus and lead to a more sustainable and flexible income for farmers but also has social and environmental benefits. The use of ethanol in transport will help reduce the emission of particulate matter, it will create jobs in rural areas and help electrification as is happening successfully in Brazil. Thanks to ethanol, India can reduce its import dependence on oil and finally reduce GHG emissions. Brazil stands witness – the country avoided 480 million tonnes of GHG emissions thanks to ethanol in the last 15 years. It’s not the first time India intends to apply an ethanol mandate. Let’s hope that this time it will succeed in applying it rigorously.

Learning from each other

Despite different circumstances, both India and Brazil could both learn from each other’s experiences with sugarcane. Brazil successfully created an ethanol sector which provides a diversified income for sugarcane farmers and millers across production cycles. It managed the introduction of an ethanol high blend (E27) and has experience in operating different mandates. Brazil is also very advanced in adopting the Bonsucro standard and I was happy to see how keen India is to follow suit.

India on the other hand shows an incredible entrepreneurial spirit and is quickly adapting to changes. For example, India is taking the cooperation between farmers and sugar mills to the next level. Through an app, farmers can report on their sugarcane cultivation and harvest and in return the mills can give specific advice to each farmer individually. India is also breaking new ground in developing biogas plants based on vinasse (spent wash), a residue of the ethanol production.

Conclusions

During my days in India I got the impression of a country that is determined to set its sugarcane sector on the right course. The ethanol programme is the right tool to ensure that the sugarcane sector is competitive and sustainable and can escape production cycles with the inherent risk of oversupply.

Brazil can share some best practices on how to succeed on that path. At UNICA, we are committed to cooperate more with our Indian peers to make that programme a success. However, public support to export must cease. The announcement of new subsidies a few days ago provoked another fall in international sugar prices. Export aids are an easy solution to get rid of surpluses but they are highly distortive for international trade.  Continuing to support the sector through export subsidies is definitely not an option and will be challenged at the WTO if this policy continues.

Advanced Biofuels Could Play a Larger Role Greening America’s Transportation Sector

Leticia Phillips — posted 17/08/2018

The Renewable Fuel Standard (RFS) celebrates its thirteenth anniversary this month and remains a foundational energy policy that enhances America’s energy security and improves the environment. Brazilian sugarcane biofuel producers are proud of the modest but important role they have played helping make the RFS a success, especially when it comes to supplying the U.S. with clean, advanced biofuels that offer superior environmental benefits.

The Environmental Protection Agency has proposed new RFS volume requirements for 2019, and there are certainly elements of the proposal that deserve broad support. At the top of our list is increasing the advanced biofuel requirements by 12 percent to 4.88 billion gallons in 2019 and recognizing that Brazilian sugarcane ethanol can supply at least 100 million gallons of that amount.

But EPA could also strengthen the proposal in ways that would encourage advanced biofuels to play a greater role greening the U.S. transportation sector. Here are two suggestions that Brazilian sugarcane producers recommend in our official comments submitted to the Agency today.

Expect More from Advanced Biofuels

We think the 2019 volume requirements should be even higher. Because under the right market conditions and with appropriate regulatory incentives, the advanced biofuel industry – including Brazil’s sugarcane industry – could produce more.

EPA designates sugarcane ethanol from Brazil as an advanced biofuel because it reduces greenhouse gases by at least 61 percent compared to gasoline. Brazil currently produces more than seven billion gallons of sugarcane ethanol each year, and typically makes between 400 million and 800 million gallons of its annual production available for other countries to import.

However, Brazil could export considerably greater volumes of sugarcane ethanol to the United States. In the past, Brazil has exported a record of 1.35 billion gallons to the United States in one year (2008) and 164 million gallons in one month (September 2008). At a mere 100 million gallons, EPA is underestimating the volume of sugarcane ethanol that can be made available to the U.S. market under the right conditions.

Create New Incentives for the Cleanest Fuels

One way EPA could help nudge those market conditions into a more favorable posture is by creating an incentive program that would give extra credit to the most climate-friendly biofuels. The RFS statute clearly grants EPA this authority, but to date, the Agency has not exercised it.

As a potential model, EPA need look no further than its program for regulating greenhouse gas emissions from motor vehicles. Under these regulations, vehicle manufacturers are required to meet fleet-wide average emission standards. The fleet-wide average is generally determined by taking the weighted average of the emissions associated with each vehicle produced by a manufacturer. However, EPA regulations create an incentive multiplier for electric and other advanced vehicles, which allows manufacturers to double-count these vehicles for purposes of determining their fleet-wide average.

Even though the Clean Air Act does not specifically contemplate such a multiplier, EPA determined it could create such an incentive to “promote the penetration of certain ‘game changing’ advanced vehicle technologies.”

We encourage EPA to create a similar incentive for game-changing advanced biofuels that exceed minimum RFS requirements.

Continuous Improvement

Over the past six years, nearly 1.3 billion gallons of sugarcane ethanol imported from Brazil flowed into American vehicles. During this time, sugarcane ethanol comprised only one percent of all renewable fuels consumed by Americans but has provided more than six percent of the entire U.S. advanced biofuel supply. Brazilian sugarcane producers take pride in this track record of success and are eager to contribute even more.

The RFS is now a teenager, and EPA must continue to play a thoughtful role guiding the program through unavoidable growing pains. We hope the Agency will stay laser focused on fostering the development of advanced and cellulosic biofuels.