By Dr. Norbert Schmitz
As production volumes and quota mandates for biofuels increase, sustainability risks increase as well. The recent unfavourable press reports which have nearly stopped biofuels development in its tracks serve as an important reminder that if biofuels are to succeed as an alternative to fossil fuels, they need to be produced in a sustainable manner. Moreover, it’s more important than ever to reliably demonstrate that the advantages of biofuels exceed the cost of potential environmental damage caused by their production.
Sustainability has proven itself to be a critical aspect of the biofuels debate now underway in the political arena. Currently, biofuels markets are more or less artificial, as demand is created by regulatory measures such as tax incentives or blending quotas for the fuel industry. Therefore, market development very much depends on political support. However, the external effects of biofuels production are not currently covered by any existing market mechanism. Therefore, an instrument is required which addresses the most pressing sustainability issues of biofuels production.
Legislation is in preparation requiring the use of sustainable biofuels, both on European level (Renewable Energy Directive, Fuel Quality Directive) and on national level (e.g. Biomass Sustainability Order in Germany). But so far, there is no system in place allowing users to distinguish between “good” and “bad” biofuels. Germany’s biofuels quota law, for example, states that “Energy products are to be recognised as biofuels only if the biomass production achieves specific requirements of sustainable agricultural management, or if it fulfils certain requirements for the protection of natural areas or if the energy production offers a certain potential avoidance of CO2.” The European Union (EU), which wants to introduce a sustainability certification system, has similar ideas. Areas which contain large amounts of stored carbon or with high levels of biodiversity should not be transformed into areas for agricultural biomass production for biofuels. Moreover, the EU wants to minimize the use of conversion processes with low net energy yields, while at the same time doing more to promote second generation biofuels with better greenhouse emissions balances. While several sustainability and certification initiatives are currently underway, such systems will only be effective if there is widespread international coordination. Otherwise, there is a risk of creating a complex web of certification processes which could require producers to go through multiple certifications and registrations. The ultimate outcome may be a lack of confidence – and perhaps compliance – with the various systems in place, as well as charges of international trade discrimination.
By instead relying on a coordinated, multi- stakeholder approach, which includes companies and organisations from Europe, the Americas, and Asia, it may be possible to ensure sustainability along the biofuels production chain without hampering free trade. In this context, the German Federal Ministry of Food, Agriculture and Consumer Protection, through its Agency for Renewable Resources (Fachagentur Nachwachsende Rohstoffe – FNR) is supporting the development and testing of an implementable certification scheme for sustainable biomass and bioenergy production. Known as the International Sustainability and Carbon Certification (ISCC) Project, the project is currently undergoing testing in a processoriented pilot phase to explore how to create a workable, international sustainability certification system for biofuels. Managed by Meó Corporate Development GmbH, the certification project is a multi-stakeholder process. It involves stakeholders from all market participants along the value chain, including NGOs and research institutes from different countries. They participate in discussing and developing the sustainability criteria, standards, rules and procedures for certification. Finally, once the pilot phase is finished, the hope is that ISCC will evolve into an international and independent organisation in order to ensure confidence in sustainable biofuels. The proposed certification system will focus on the most pressing sustainability issues, such as conversion of high carbon density and high nature value land. In addition, “major-” and “minor must”-criteria have been developed to more broadly assess sustainability. Plans are to ensure the bioenergy no 2 OCT 2008 creation of a voluntary, cost-effective certification system which would also guarantee transparency, participation, democracy, and equity. Basing the system on internationally agreed standards and practices, as well as making it applicable for biomass irrespective of further use for fuel, feedstock or food will also be keys to its success. The proposal also includes the incorporation of already existing standards and the issuance of two separate certificates: one for sustainability of biomass production; and one for greenhouse gas emissions.
Implementing the ISCC project is challenging due to high complexity and conflicting interests. Therefore, the project is designed as a continuous learning process. Nevertheless, ISCC wants to offer a solution to the need for reliable certificates as soon as possible, as customers are already requesting a supply of sustainable biofuels despite the fact that the regulatory framework conditions are not in place yet. While having an accepted and widely applied biofuels certification system is important, it is no substitute for good governance and regulation at the company and national level. Moreover, a certification system isn’t likely to solve environmental problems such as conflicts over resource availability, nor will it protect from discrimination against smallholders. However, certification systems can provide the operational framework for verifying whether biomass and biofuels are cultivated and processed in a sustainable manner, which is an important step to the industry’s continued development In the end, the ISCC project will translate sustainability requirements set by politics into standards and guidelines for certification. The ISCC scheme will be used by producers along the value chain as proof of fulfilment of the sustainability requirements. These requirements will be first used for pilot certifications, which will in turn serve as the basis for recognised certificates. The certificates will be linked with the certified land as well and both will be recorded in a central registry, thus avoiding double or triple use of already certified areas. Thus, certification is a sensible approach to assuaging public doubts about sustainability in biofuels production and for encouraging best practices in this fast growing and increasingly important sector. Dr. Norbert Schmitz is a consultant with the meó Consulting Team and Project Director for the ISCC.