Dorr: U.S. will ‘stay in the market’ with biofuels
On March 23, 2007, the German Marshall Fund hosted "Biofuels Policies in the U.S. and EU," the fourth of a series of luncheons on "Transatlantic Approaches to Biofuels."
The two panelists presenting EU and U.S. biofuels policies were Angelo Pangratis, Deputy Head of Mission of the EU Commission Delegation to the United States, and Tom Dorr, Undersecretary of Rural Development at the United States Department of Agriculture. It was the first time the two of them presented on a panel together. The discussion was moderated by Suzanne Hunt, Biofuels Project Manager at Worldwatch Institute.
Pangratis emphasized that one of the main drivers behind EU biofuels policies is the fight against global warming. He argued that there was broad agreement in Europe that climate change necessitated a dramatic shift in the political landscape. He mentioned several policies introduced by the European Union and its Member States to set and fulfill goals of reducing carbon emissions, fighting global warming, and investing in alternative energy, which Pangraits insisted is, "the kind of leadership that the 21st century needs."
On the Member State level, Pangratis specifically mentioned Sweden and Germany. Both countries have exceeded the EU's renewable energy targets. He credits them with using an amalgamation of policy tools including tax incentives, rural development and land protection measures, car emission limits, and funding for alternative energy. Many of these policies are also being used on the EU level. However, Pangratis emphasized that much of the agricultural production related to biofuels was not supported by EU funding but fueled entirely by market incentive. In addition, Pangratis warned that biofuels could and should not be the only solution in fighting climate change. He mentioned that, depending on the feedstock, the net environmental balance could even be negative for some biofuels - especially when their production required deforestation or the drying of wetlands.
Pangratis said EU biofuels policies will be mostly import-driven and that this will give developing countries a chance to benefit from increased global biofuels demand - going so far as to call European biofuels policies, "instruments of international development policy." He also described this as a way for developing nations to become energy independent and protected from fluctuations in the global oil industry. Sustainability of biofuels production has become and will continue to be an important issue for policymakers in Brussels. He explained that biofuels produced in Malaysia, for example, go through a certification process to make sure that they are not coming from fragile ecosystems and that the production facilities used to make biofuels are not being fueled by environmentally unsound energy sources such as coal. He mentioned that some member states had implemented rules for sustainable production but that these rules had not been adopted at the EU level yet. Pangratis stated that sustainability and fuel quality standards, as well as a fast introduction of 2nd-generation biofuel technologies, were the next set of goals for the European Union.
Tom Dorr followed this presentation with a comprehensive review of U.S. biofuels policies, stating that the fundamental difference between EU and U.S. approaches was setting policy incentives, as is happening in the European Union, and allowing market drivers to direct the evolution of the biofuels industry in the United States. He argued that the three main policy goals of U.S. biofuel production and consumption were national security, energy security, and a growing realization of the rural economic development potential that biofuels represent. Dorr listed a series of successes that the U.S. market had achieved: From 2001 to 2006, the country had become the second largest producer of wind energy and biodiesel and the world's largest ethanol producer. Dorr emphasized that this had not been achieved by targets but by "allowing the markets to function."
Dorr argued that, personally, he was against sustainability rules for biofuels production practices. He admitted, though, that the production of ethanol corn has a more adverse effect on the environment than the use of perennial grasses and expects that neutral effect 2nd-generation technologies will be available within the next five to ten years.
"The United States will stay in the market," Dorr said, and stressed the need for the market to be the dominating force for the promotion of biofuels, as opposed to regulatory and other governmental policies. He said several recent economic and agricultural developments support this point, such as the value rise in traditionally agricultural land in the United States. Additionally, Dorr predicts that ethanol production efficiency per acre will soon double. Even if oil prices dropped substantially, he argued, the United States should continue the development of biofuels technology and usage, unlike the brief start and quick death of a similar movement 30 years ago.
For further reading, please view Andeas Kramer's paper on EU Biofuels policies:
European Union Policy on Bioenergy