Sustainability of bioenergy – trade and market issues


Biomass (solid, liquid and gaseous) is considered to play a key role in the reduction of greenhouse gas emissions, and increasing the energy supply diversity and security. In terms of biofuels for transport, several countries and regions have introduced mandates and targets for biofuels uptake in the transport fuel system. Production, international trade and investment have increased rapidly in the past few years. This has triggered a high debate: environmental, social and economic concerns arose about the production of biomass feedstocks for biofuels. The sustainability of biofuels, food versus fuel, and land use change discussions overshadow the positive effects including CO2-reduction and the potential to replace fossil fuels. As an answer to these concerns the European Commission introduced sustainability criteria in the Renewable Energy Directive (2009/28/EC), imposing sustainability requirements to biofuels for transport and bioliquids (for stationary bioenergy) marketed in the European Union.

The discussion of using solid biomass for bioenergy (mainly for stationary energy like electricity and heat) follows with some delay the discussions around biofuels for transport. While the discussion for biofuels focused on food versus fuel and land use change, the discussion for solid biomass focuses on risks for biodiversity and carbon stock loss in forests. Sustainability criteria and schemes are being developed for solid biomass for energy, but implementation in legislation is less developed than for biofuels. Mind that sustainable forestry management schemes like FSC or PEFC are applied in forests, albeit that they remain voluntary and not specifically dedicated to energy use of the biomass.

The development of sustainability criteria and certification schemes for biomass and biofuels has brought a lot of discussion on their drawbacks, limitations and impact on the bioenergy deployment and trade. Within the network of IEA Bioenergy Task 40 (Sustainable Bioenergy Trade), a prospective study was carried out to look at the implementation of mandatory sustainability requirements for biomass (liquid, solid and gaseous) in energy legislation, and discuss the market issues seen or expected for commercial and administrative actors.

The study entitled “Implementation of sustainability requirements for biofuels and bioenergy and related issues for markets and trade” was performed in the period 2011 – early 2012.

The study was partly based on public information, partly on input provided by Task 40 members, and resulted in a number of main barriers and concerns related to the implementation of sustainability requirements in energy legislation, as described below.


Variety and proliferation of sustainability criteria and schemes

In 2010 IEA Bioenergy Task 40 provided an overview of existing initiatives related to biomass/bioenergy sustainability. A study by J. van Dam [1 ] found 67 initiatives, with 27 of them specifically covering sustainability criteria for biofuels or bioenergy. This indicates that a lot of work has been done across the globe in taking actions and measures to ensure and secure sustainable biomass and bioenergy production in the future.

Existing certification systems are developed for specific sectors (e.g. forestry, agriculture, specific biofuel feedstock, bioenergy production) with different purposes (e.g. sustainable management of forest, health and safety of products, energy security, climate change) and so the sustainability criteria and requirements are developed differently. The biofuels/bioenergy certification schemes require additional sustainability criteria compared to the certification schemes for agriculture and forestry, such as carbon stock, GHG emissions, land use changes and socio-economic demands, which were not considered relevant for sustainable agriculture of forestry. So requirements depend on the purpose of the scheme.

While sustainability criteria for biofuels (for transport) and bioliquids (for stationary energy) in the EU are directly related to the Renewable Energy Directive requirements and valid on EU-wide level, in terms of solid biomass there are no obligated criteria. The main importing countries of solid biomass have started (or are planning) to develop their own national sustainability requirements. At the same time industrial and market business-to-business schemes are being developed. This has led and will lead to certification schemes (voluntary and mandatory) which are not necessarily complementary or compatible. This variety of sustainability initiatives and requirements, lack of coherence and considerable overlaps between standards is leading to confusion and reduces acceptance among the stakeholders which may limit the effectiveness, lead to loss of meaningful participation and distortion of the market. The exact impact remains to be seen in the future.

If forced externally, there is the risk that countries will choose the model that requires the least change or efforts. There might be a tendency also from the industry side to use the commercial cheapest system with the least demanding auditing system, much to the disappointment of several NGOs. Poor performers could potentially hide in this confusing context and/or biomass crops will flow to markets that do not require certification.

A strong and common approach, building upon existing governance and certification practises, may help to reduce concerns. This would also reduce transaction costs, as rather uniform information is required and thereby facilitate trade.

Discrimination in the use of biomass

Biomass for energy can be produced from various crops, which can also be used for food, feed or materials. Currently only the use for biofuels needs to fulfil sustainability requirements on EU level. Other, similar commodities with similar environmental, social and GHG impact do not require this.

Stakeholders producing biomass for biofuels on the one hand, for stationary energy on the other hand, or for other applications (food, materials) are thus currently facing discrimination in conditions for being allowed to deliver their biomass. Farmers delivering their corn to a transport biofuel installation need to be in line with the obligated sustainability criteria. The same farmer providing his corn to a biogas installation (combined with electricity production) doesn’t need to fulfil these criteria, nor when he delivers his product to the food and feed markets.

An important issue is the willingness and cooperation of the biomass producers, especially from agriculture (for biofuels) and forestry (for solid biomass). If additional auditing is needed for agricultural products going to biofuels (as compared to other agricultural markets), or for solid biomass used for energy (as compared to the wood material market), this may diminish the willingness of the agricultural and forestry sector to deliver feedstock for biofuel markets, unless there is an higher price paid for these certified products (which is hardly the case currently). On the other hand if products with guaranteed sustainability are diverted to energy markets, this may lead to indirect displacement effects as non-sustainable products will be directed to markets which do not require proof of sustainability.

Criteria for sustainable production of liquid, solid and gaseous biomass should ideally be based on the same concepts, and should be meant for all uses of biomass since producers of raw materials do not necessarily know about their end users.

These sustainability criteria have to be implemented in a very careful and practical way, bearing in mind two key purposes: to ensure the sustainable production of biomass and an acceptable greenhouse gas balance for biomass utilized for energy production. They should be based on clear and measurable indicators, taking into account the widely different environmental and technical issues in different countries and climatic zones.

Issues for administrations

One of the main issues for administrations is to come to a level playing field and an efficient European/global market. Establishing a common “one-stop-shop” approach would allow for more efficient structures, save costs due to better management practices, ease administration tasks involved and make it unnecessary for industries to create new standards. However there is still the ongoing debate on how to solve some methodological issues related to the sustainability of bioenergy, such as the role of indirect land use, the competition of food versus fuel, or the concept of carbon debt.

A key point for administrations is the control of the criteria and requirements. There is some risk that global sustainability criteria will not be interpreted the same way and will be applied differently at national level. Also the quality of institutional frameworks may vary among the different countries. Some developing countries lack a proper legal framework related to agriculture and forest management. Poor law enforcement may lead to reduced effectiveness.

Clear auditing processes and accreditation of auditors will avoid fraud and give trust to the system. To ensure proper auditing and compliance, the requirements will have to be based on precise and strong criteria that can actually be monitored by specifying quantitative or clear qualitative indicators.

Voluntary systems have become an important element in the mix of public policies and corporate strategies to promote the sustainable production of biomass due to the lack of proper regulations. However voluntary systems still allow room for non-sustainable biomass, which may be damaging for the credibility. Voluntary initiatives are a necessary, but probably not a sufficient element in the mix of policy instruments to move towards the objective of sustainable bioenergy. The voluntary versus mandatory debate rather implies to find of a balance between regulation and voluntary schemes. Voluntary systems can be an effective tool in complementing regulations to improve the awareness, facilitate the discussion on the implications of certification and provide a forum for information sharing among various stakeholders.

Issues for commercial actors

On the producer side there is the risk that different markets have different requirements on the biomass production side, which leads to confusion (see previous discussion). Stakeholders of solid and liquid biofuel markets have indicated a preference for governmental involvement regarding sustainability issues (van Doren, 2010)[2].

Important issues for investors in installations producing bioenergy are clarity in long term policy objectives and the uncertainty whether their biomass fulfils all current and future sustainability requirements. The European Commission is evaluating the situation on sustainability requirements year by year, but investors are taking investment decisions now with long term contracts for their biomass. It is perceived as a huge problem by investors that methodological issues like the inclusion of indirect land use change, or the discussion on carbon debt remains unclear. The biofuels business has already shown that uncertainties in policies and regulations cause markets to stagnate. Specific requirements should be designed with transparency and with the collaboration of stakeholders along the way.

Apart from the proliferation of certification schemes, principles, criteria and indicators, and the potential overlaps of the sustainability systems for the bioenergy sector with existing systems for agricultural and forestry products, there is also the issue of partial recognition of certification schemes. Partial recognition gives an opportunity for existing schemes, which were not set up for the bioenergy sector or which did not include all legislative sustainability criteria from the beginning, to participate and improve. This applies, for example, to some of the Round Table initiatives (e.g. RSPO, RTRS) and forest certification schemes like FSC and PEFC. A set-back of this partial recognition, however, is that double certification will be needed and that this might lead to increased financial and administrative burdens, especially for smallholders.

A general fear of smallholders is that the administrative burden will grow with certification. For the agricultural sector in the EU the cross-compliance is a step in the right direction to limit the administrative paper work. The European forestry sector is also asking for a similar system instead of certification schemes.

Developments in third countries

The implementation of sustainable systems – as conceived by Northern countries – generally requires a much bigger leap for third countries to reach a certain threshold because of lack of technology and capital. Non-tariff barriers to international trade could result from that. Time, but also share in technology and investment, should be given to these countries to be able to catch up.

Good energy practices

While markets and trade are mostly thinking in terms of commodities, the life cycle thinking for bioenergy (e.g. in terms of GHG impact and energy use) implies that end use of the biomass should also be considered. A sustainable bioenergy system must be a responsibly produced (i.e. complying with ambitious social and environmental standards), energy efficient and resource efficient system that has a high potential for mitigating climate change. Biomass availability is limited and sustainability criteria for biomass and biofuels should therefore also take into account an efficient use of (bio)energy. Input energy must be minimized in all phases of the production system and the use of bioenergy should be as efficient as possible. Of course this should not only be valid for biomass, but also for other resources and energy carriers. If energy use (in general) would keep growing, the development of bioenergy would only chase a receding target.

Further work

Early 2012 a strategic IEA Bioenergy study was started “Monitoring Sustainability Certification of Bioenergy”, also building upon the Task 40 study described above. The study is a collaboration between Task 40 (Sustainable Bioenergy Trade), Task 43 (Biomass Feedstocks for Energy Markets) and Task 38 (Greenhouse Gas Balances of Biomass and Bioenergy Systems).

The idea behind this strategic study is to build further upon on-going efforts in the three Tasks to address the following project objectives: monitor the actual implementation process of sustainability certification of bioenergy, evaluate how stakeholders are affected by certification initiatives, quantify the anticipated impact on worldwide bioenergy trade, and make recommendations on how the different certification schemes could be streamlined and coordinated to remove barriers which may depress markets and reduce sustainable trade.

The study is on-going and in May 2012 a global survey was launched to investigate the operational experiences of people actively involved with bioenergy production systems and sustainability certification.

1) van Dam J, et al. From the global efforts on certification of bioenergy
towards an integrated approach based on sustainable land
use planning. Renew Sustain Energy Rev (2010), doi:10.1016/j.

2) Van Doren D., Developing biofuels markets: the importance of
standardisation in supply chain management, Utrecht University,
the Netherlands, December 2010.


This post is based on an article by Luc Pelkmans, Liesbet Goovaerts, Natahlie Devriendt, VITO and Peter-Paul Schouwenberg, Essent published in june 2012 in BE-Sustainable Magazine.

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