Showing posts with label biofuels. Show all posts
Showing posts with label biofuels. Show all posts

Tuesday, October 15, 2013

Subisdising oil seed rape

The threatened reduction of oil seed rape subsidies for biofuel from 10 per cent to 5 per cent is concerning some farmers who say that it will no longer make economic sense to grow the crop. Of course, one might ask whether such a market distorting subsidy was sensible in the first place which is why the UK and other member states such as the Netherlands would like to see it reduced.

However, for farmers on heavy land in particular oil seed rape has great advantages as a break crop. There aren't that many alternatives. Peas are very sensitive to weather conditions, particularly rain, and the returns on sugar beet are not that good.

Oil seed rape is also favoured by beekeepers as it flowers early in the season and produces plenty of pollen.

Monday, October 22, 2012

Oil seed rape loses its glow

Fewer oil seed rape fields may be seen in Britain following adjustments to EU policy. It's quite a complex story, but there are two big lessons to be learnt from it. First, individual planting decisions on farms are directly affected by the EU policy (although there are agronomic advantage to oil seed rape - known as canola in North America - as a break crop). Second, well-intended environmental interventions may have unforeseen consequences that cancel out the advantages it was hoped that would be gained (although we are in contested territory here).

Back in 2008 it was agreed by the EU that as part of the effort to combat global warming, each member state should derive at least 10 per cent of their transport fuels from renewable sources by 2020. However, since then there has been renewed concern about global food shortages. Biodiesels are only one and by no means the most important factor in such shortages: but their use can be influenced by policy decisions. Environmental groups have also argued that the EU policy encourages farmers in countries such as Indonesia to cut down forests that act as carbon sinks to grow crops for use as fuel in Europe, thus making global warming worse.

The canary yellow fields are a major feature of the summer landscape in Britain and have even become a niche attraction for Japanese tourists. They also contribute to biodiversity as the flowers are favoured by pollinating bees and birds nest in the stems.

UK rapeseed production rose 70 per cent in the decade to 2011, amounting to roughly 40 per cent of the land planted with wheat. Roughly one-fifth of British rapeseed oil production goes into biodiesel. Farmers are now likely to switch into wheat which, of course, is in a sense the intention of the policy modification.

There is, however, fierce resistance from the biodiesel industry to the draft proposals who are crying foul. They invested heavily in refining capacity based on the 2008 rule change.

The Commission has, in fact, watered down its original proposals, but has only succeeded in upsetting both camps. Environmentalists claim that the proposals do not go far enough, the industry that they go too far.

Some of this is very technical, but food crop-based biofuels are still to be banned from contributing more than 5 per cent of transport fuel consumed in the EU. 'We are sending a clear signal that future increases in biofuels must come from advanced biofuels. Everything else will be unsustainable,' said EU Climate Commissioner Connie Hedegaard when unveiling the proposal in Brussels.'

Rob Vierhout, secretary general of advanced biofuel producers ePure went as far as to claim the Commission is 'NGO-driven' but there was little evidence that there was a great deal of satisfaction from that side either. 'If this proposal becomes law, biofuels more damaging to the climate than crude oil will still be used to meet green transport targets,' Greenpeace’s EU transport policy director Franziska Achterberg claimed.

Anti-poverty charity ActionAid called the proposed 5 per cent biofuels limit on food-based biofuels an 'important symbolic first step,' but called for a total ban on food and land-based fuels and fired back at the biofuels sector by accusing the Commission of buckling to industry pressure by taking the 'heart out of the proposal'. The Institute for European Environmental Policy was similarly scathing about what it saw as a Commission climbdown on in the face of industry pressure while welcoming the biofuel cap

Perhaps what one can say is that government interventions of this kind, however well intentioned, are always fraught with the risk of going wrong and end up displeasing everyone. One of the commentators on the industry side said that if the Commission pursued their line they might as well scrap the CAP. Be careful what you wish for.

Sunday, June 26, 2011

Sarko's regulation crusade makes modest progress

President Sarkozy of France has been on a crusade to regulate agricultural commodity markets and he made modest progress at a two-day G20 conference in Paris last week. France made food security and commodity regulation a centrepiece of its G20 presidency after the 2007-8 food crisis and the rise of more than a third in global food prices over the last year.

France was able to secure a diluted deal to recommend that G20 finance ministers tackle the regulation of financial commodities markets. The communiqué agreed at the end of the Paris summit echoes an earlier deal by finance ministers to study limiting the number of contracts speculators can hold.

However, some argue that commodity markets bring a much needed liquidity to the farm sector. Last week the World Bank took the rare step of encouraging developing countries to buy insurance in the derivatives market against sudden changes in food prices with a deal that would allow the nations to hedge some $4bn worth of commodities.

The World Bank has struck a deal with investment bank JPMorgan who would offer simplified hedging instruments to the private sectors of developing nations, including farming co-operatives and food processing companies. The World Bank would underwrte $200m in credit risks while JPMorgan will take on a similar amount. It is anticipated that other banks will join later. Some critics would, of course, just see this as evidence that the World Bank is hand in glove with global capitalism.

The real problem with the G20 summit is that it backed away from action on biofuels and export bans. The subsidised encouragement of biofuels has boosted food prices. Marie Brill of ActionAid said it was a shame that the G20 had ignored a clear recommendation in a commissioned report from international groups to remove subsidies and mandates for biofuels. There are, of course, powerful interests in the US in particular linked to biofuels which are seen as a means of underpinning American energy security.

On exports, a report from the World Bank and the UN's Food and Agriculture Organisation said that 'export subsidies by major food exporters had strong destabilising effects on international markets' and recommended that the G20 use them as a last resort.