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Sunday, 16 March 2008 12:24 |
The Wall Street Journal
Just like the U.S., the European Union has for years thrown tax breaks and subsidies at its transport biofuels sector. Unlike the U.S., though, EU leaders are rethinking that approach.
Germany, France, and other countries recently eliminated tax breaks after biodiesel companies built too many plants. Now, with crop prices soaring and concerns mounting over the total environmental impacts of biofuels, the EU is ready to do the unthinkable: cut farmers’ subsidies.
In its latest farm package, totaling some $75 billion a year in payouts to European farmers, the EU included a $26 per acre subsidy for biofuel feedstock crops, like canola and sugar beets. Crop prices are now so high, EU officials figure farmers don’t need the extra money. They plan to roll-back the payouts at a meeting in May.
The EU still wants biofuels to play a part in the transport fuel mix, as long as they are cleaner than fossil fuels. A new rule says biofuels must reduce carbon emissions by at least 35% compared to production and use of regular fossil fuels. Another rule mandates increasingly greater blends of biofuels with gasoline and diesel sold at the pump. By 2020, transport fuel must include at least 10% biofuels.
That should be enough to ensure plenty of fields of canola and sugar beets. The EU expects the proportion of arable land dedicated to feedstock will rise from 3% today to 15% in 2020—all without subsidies.
Now the only thing the EU has to sort out is the endless debate over whether biofuels really are better for the environment than dirty old gasoline.
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