F&C calls for biofuels sustainability standards

As concerns about the sustainability implications of biofuels reach fever pitch, responsible investor F&C has entered the political fray with a submission to the UK Government’s consultation on its proposed new biofuels policy, which closes today.

According to Karina Litvack, Head of the Governance and Sustainable Investment team at F&C, governments around the world had been enthusiastically promoting biofuels in the belief that they were helping to reduce imports of oil from volatile regions, and constraining fast-growing greenhouse gas emissions from the transport sector. But biofuels are bringing problems of their own.

“The diversion of food crops into fuel has pushed up the cost of basic foodstuffs, contributing to “tortilla riots” in Mexico.

Moreover, the expansion in the amount of land used for biofuels crops may lead to deforestation and habitat destruction and for some biofuels, the emissions from the production process may wipe out the greenhouse gas savings,” said Litvack.

Concerns about the sustainability implications of biofuels are now reaching fever pitch. UK NGOs have launched a high-profile media campaign to warn of the dangers that palm oil – an important source of biofuels – could pose to the already endangered orang-utan. At the same time, the UN in a major report has given a stark warning of the potential dangers.

“This is an issue that has worried F&C for some time,” said Litvack. “We have held private discussions with 15 of the world’s leading companies involved in biofuels, in which we have pressed them to explain how their biofuels bring genuine carbon savings and whether they are sourcing feedstock sustainably,” she added.

Companies F&C has spoken to include specialist biofuels producers Verbio, Brasil Eco-Diesel and D1 Oils; oil companies Petrobras and BP; and retailers such as Tesco and Marks & Spencer. According to Litvack, F&C’s findings are that whilst some companies are certainly aware of the carbon and sustainability issues, worryingly others are less aware and across the board there is little consensus on what best practice means. In addition, the systems and infrastructure to monitor and enforce standards are often lacking. Initiatives such as the Roundtable on Sustainable Palm Oil are helping, by developing common industry standards but governments, particularly in the EU, want more. F&C has submitted a response to the UK Government’s consultation on its proposed new biofuels policy, which closes today (Thursday), calling for mandatory, minimum sustainability standards for biofuels, as well as a link between the level of biofuels subsidy and the greenhouse gas savings achieved.

"First-generation biofuels present some thorny problems. Firstly, on the political/economic front because growing demand for oilseeds and corn pushes up food prices for consumers, and second, and arguably most worryingly, on the environmental front because cultivation of these crops destroys the very forests that serve as vital carbon sinks and provide other irreplaceable ecosystem services,” said Litvack. “Government support is vital to kickstart the industry – but care must be taken to ensure that these measures stimulate a move to sustainably-farmed feedstock, otherwise the industry will be undermined by political backlash and fail to solve the climate problem anyway,” she concluded.