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G8 Under Pressure To Rethink Biofuel Mandates
Published 08 May 2013 EXCLUSIVE / Leaders of the EU and their partners in the G8 nations are under mounting pressure to reconsider their support for biofuel targets amid concern that plant oil production competes with food output in poor countries. Britain, which chairs the G8 this year, is holding a global meeting on nutrition and food on 8 June, a week before the regular G8 summit in Northern Ireland. Prime Minister David Cameron has pledged to make trade, tax enforcement and transparency priorities for the summit. These points are expected to be noted on Wednesday (8 May) in the Queen’s Speech, which outlines the government’s parliamentary agenda for the year. But concerns are already emerging about whether the G8 – which includes two major biofuel champions, the United States and the EU – should agree to reconsider fuel policies as part of their commitments to fight world hunger. Among those questioning the policies are a British parliamentary select committee and the Enough Food for Everyone, or IF campaign, which includes some 200 British and international groups lobbying to reduce world hunger. Barry Johnston, the UK political advisor for Christian Aid, which is part of the IF campaign, said he was hopeful the G8 would acknowledge biofuel production “as a significant issue” and agree to shed more light on large land transactions in developing countries that are increasingly the leading source of plant oils. “One of the structural issues that underlies the fact that one in eight people go to be bed hungry every night is that land is being bought up, whole strips of it, in ways that aren’t very transparent, deals that don’t show a benefit for local populations and in some cases, they are directly taking food out of the mouths of people and putting into cars in the EU,” he said in a telephone interview on Tuesday (7 May). “So there’s a moral imperative to act there. Consumption that happens in the West in richer countries has a direct impact on the ability of individuals to feed themselves in poorer countries, and that can’t continue at current rates.” IF campaigners are also urging G8 leaders to build on recent momentum in Europe and the United States to combat tax evasion, which the campaigners estimate costs developing nations some €122 billion per year – more than total development aid. Besides Britain, the G8 members are Canada, France, Germany, Italy, Japan, Russia and the United States. The EU is represented at the summits by the presidents of the EU Council and Commission, Herman Van Rompuy and José Manuel Barroso. Only Japan and Russia have not set biofuel targets for transport. Concerns about food security A British Parliament select committee is preparing to wrap up its enquiry into world hunger and food security ahead the summit. At recent hearings, Westminster lawmakers questioned the impact of EU-driven policies on biofuel, especially on developing nations. Malcolm Bruce, chairman of the House of Commons’ International Development Committee, grilled the undersecretary of state of transport, Norman Baker, about the EU policies. “What we have heard in the evidence so far is a pretty overwhelming view that the existing [biofuel] mandate should be scrapped,” Bruce said at hearing on 18 April. “The people who have given evidence to us say it is distorting, dysfunctional and it should be scrapped,” Bruce said, according to a Commons transcript. “That seems to be all the evidence. Everybody we have had has said it should be scrapped, so why is it not being scrapped, or at least radically changed?” Baker and other government representatives were asked whether Cameron would be addressing the potential impact of biofuel demand on food output, and foreign purchases of land in sub-Saharan Africa for agri-oil production. The undersecretary for international development, Lynne Featherstone, said the British government supported development of biofuel that did not compete with food crops or production. In testimony before the committee, she also said the government would seek greater transparency in land deals in developing nations. “Our aim is to secure agreement from major G8 investors to commit to publish data on land acquisitions, and make that accessible to local communities, whether it is biofuels, commercial investments or China buying some land with an eye to in future feeding the Chinese rather than the Africans, which is always the fear that has arisen,” Featherstone said. Defending biofuel mandates Farm groups and the biofuel industry have hit back at their critics, saying plant-based fuels give farmers new markets while helping to reduce carbon emissions. They also deny any direct links to food price volatility, noting that the two main transport fuels produced from plant oil – ethanol and biodiesel – did not exist during the wild food price fluctuations of the 1970s. The industry is pressured the EU not to back away from its longtime support for alternative fuels after the European Commission last year called for halving its target of 10% biofuel use in transport by 2020 in response to a spike in food costs and concern about the environmental impact of plant-oil cultivation in developing nations. One of Europe’s leading biofuel industry groups, ePure, points out that ethanol uses post-food residues for fuel production. The industry also says it is moving ahead with development of advanced biofuels that do not compete with food crops. European farm groups, including the influential Copa-Cogeca, have denounced moves to reverse the EU’s biofuel commitments, saying they hurt farmers and jeopardise investments in oil production. But acknowledging potential impacts on developing nations, Copa-Cogeca has urged the EU to “encourage the introduction of effective environmental legislation in third countries in order to prevent the phenomenon of land use change.” POSITIONS: The United Nations’ special rapporteur on food rights, Olivier De Schutter, wants the EU to scrap its binding targets for fuel, saying the policies drive up food prices and push production to developing nations because of insufficient land within the EU. “The impacts on these countries are overwhelmingly negative and are alleged to infringe on the realisation of the human right to adequate food,” the Belgian lawyer said in a statement on 23 April. He has also linked biofuel demand to food price spikes and urged the EU to rethink its Common Agricultural Policy, saying its subsidies and support for European growers undermine farmers in less-developed regions. Citing the estimated €122 billion believed to be lost every year through tax avoidance and tax evasion in developing nations, Barry Johnston, the UK political advisor for Christian Aid, a charity group, said: “That is more than the global flow of aid into the developing world. Just through tax dodging alone, we see poor countries are net contributors to the rich world. The G8 has taken action on this before, it’s looked at the issue and made recommendations but this year we want to see concrete outcomes. So we’re pushing for measures there that will benefit developing countries and what that does it releases significant amounts of resources for investment in agriculture and nutrition.” NEXT STEPS: 28 May: World Hunger Day 8 June: British government hosting meeting on growth and nutrition ahead of the G8 summit 17-18 June: G8 Summit at Fermanagh, Northern Ireland Continue reading
E.U.’s Carbon Trading System Remains In Peril, But A Rescue Attempt Is Launched
Jeremy Lovell, E&E Europe correspondent ClimateWire: Wednesday, May 8, 2013 LONDON — The European Union’s carbon emissions trading system has literally been brought low by a combination of politics and economics, but with some controversial alterations it can remain a major tool in the bloc’s battle against climate change, analysts believe. Yesterday, E.U. politicians announced a rescue attempt, but it will be a difficult process due to a mixture of poor initial design, Europe’s lingering recession and electoral politics. The market’s problem began with an oversupply of emissions allowances due to high emission caps and the recession that slashed industrial activity to the point where earlier this year the carbon dropped to a record low of €2.8 ($3.66) per metric ton. Last month the European Parliament rejected a proposed cure: to delay for five years the issuance of 900 million metric tons of carbon permits initially supposed to come to market between 2013 and 2015. The Parliament’s wafer-thin majority decision to send the so-called backloading proposal back for further consideration prompted a renewed price decline and much speculation that it was the death knell of the trading system that has been at the heart of the European Union’s climate policy since it came into effect in 2005. Experts say that for it to attract major investment in low-carbon technologies, the price of carbon must be at least €30 a metric ton — around 10 times the current level. “The implications of the vote are quite significant. It won’t kill the scheme altogether, but it will make it completely inefficient and useless, which is more or less the same thing,” said Benny Peiser of the climate skeptic Global Warming Policy Foundation. Others have less funereal, but not terribly sanguine, views. “While there remains the possibility that the proposal may come back to plenary for a new vote before summer, it remains unlikely that backloading will ever be implemented,” said analyst Haege Fjellheim at Thomson Reuters Point Carbon, which cut its 2013 carbon price forecast by 45 percent to an average of €3 a metric ton. Help is on the way, E.U. ministers say Yesterday, the European Parliament’s environment committee announced that it would vote again next month on backloading and that the full Parliament would vote again in July. At the same time, energy and environment ministers from nine of the European Union’s 27 members — including France, Germany and the United Kingdom — declared a timetable for action to rescue the trading system. They called for E.U. member states — deeply divided on the issue — to make up their minds and for the E.U. Parliament to take a new vote by July at the latest. They also urged the European Commission to come up with legal proposals for a structural reform of the system by the end of the year. “We are firmly committed to the E.U. Emissions Trading System as being at the heart of the E.U.’s climate change and low carbon investment policies up to and well beyond 2020,” the joint statement said. “Although we are clear that market interference should be kept to a minimum, a one-off and targeted intervention now would minimise market uncertainty and distortions and also promote investment in low carbon technologies,” it added. Many parliamentarians who voted against the proposal said they did so out of fear a higher carbon price would damage their domestic industries that were already struggling, while others said they did so out of the principle of free markets. For Tom Burke of influential think tank E3G, the vote was a serious setback to attempts to mend the flawed system, but not a fatal one. “This is not the death of carbon trading. That is just wishful thinking by the skeptics. It delayed action, but it is not yet defeat. There was an attempt to try to make an in-course adjustment — backloading. The reason for that is they designed a learning device with no opportunity to change when they learned,” he said. “There are deeper problems which were design flaws in the original proposal which the European Union is going to have to address. If you have any recovery in economic growth, guess what, prices will go up,” he added. Georg Zachmann of Brussels-based think tank Bruegel was also confident that the trading system would survive. “The solution is to give the system long-term credibility. We have to make market actors today believe that even in 2030 or 2040 the political framework around the allowances that they buy today doesn’t change,” he said. A German election and the need for French prestige The quest for long-term credibility is not helped by the fact that the German government is deeply divided on backloading and likely to remain so at least until after elections in late September — with the components of the resulting coalition set to determine the issue. Although Chancellor Angela Merkel’s CDU/CSU coalition is likely to again emerge as the dominant force, it is far from clear whether it will form a government with current partner the liberal FDP — which opposes backloading — or the greens who support it. Further complicating the picture is the fact that the current European Parliament is in its last year before elections in 2014, and positions have steadily become entrenched — although the International Emissions Trading Association says newly elected members tend to be enthusiastically pro-European Union initially, which might augur well for the future salvage of the trading system. But the climate and carbon turmoil in the European Union is not just an internal problem; the trading system is by far the biggest and best established in the world and is closely watched by other countries either trying or thinking about establishing one of their own. Against this backdrop, international climate change negotiations are making scant progress despite confirmation from the International Energy Agency that the world’s energy systems have made almost no progress overall in decarbonizing, with average emissions 2.37 metric tons of carbon dioxide per metric ton of oil equivalent in 2010 compared with 2.39 in 1990. This fact prompted IEA chief Maria Van der Hoeven to accuse governments last month of “20 years of listlessness” at the same time that it was reported by the Mauna Loa Observatory in Hawaii that atmospheric concentrations of CO2 were heading rapidly to and past 400 parts per million. But for E3G’s Burke, hope lies in the 2015 deadline set by the international climate negotiations for agreement on a new climate pact, with that crunch meeting to be held in Paris. “France will want Europe to have a 2030 carbon emissions target by then. They will want to make it a platform for [President Francois] Hollande. It is all about French prestige. One reason why the price has fallen so low is the absence of a 2030 target. You need one to drive prices. People buy forward. There is no substitute for a 2030 target,” he said. Continue reading
A Good Investment: Farmland Values Likely To Remain High
By Karen Caffarini More Content Now Posted Apr 26, 2013 @ 03:54 PM Last update Apr 26, 2013 @ 04:02 PM One area of real estate remains unscathed by the burst housing bubble: farmland. Prices continue to increase for property with prime soil, especially in the Midwest where corn is king. Farmland values have doubled in Illinois in the past five years, according to William Bailey, director of Western Illinois University’s School of Agriculture, and he doesn’t foresee any drastic drops in the future. Here are a few reasons why. Investment opportunities After the bottom fell out of housing, stock market investments plummeted and interest rates on traditional bank accounts dropped, some investors began looking to agriculture property as providing a relatively safe return, said Bradford T. Knipe, senior managing director at Integra Realty Resources in Boise, Idaho, which specializes in farm property. Many investors will buy the land and lease it back to the farmer, he said. Growth spurt The reasons that caused the last big bubble in farm values to burst in the 1980s — high interest rates, farmers owing banks large amounts of money and lower commodity prices — aren’t present now, Bailey said. “Farmers have paid off their debt, bought good equipment and are looking for places to put their money. In some cases, their neighbor’s farm might look very attractive to add to the size of their own farm,” he said. Knipe said farmers are buying either because they need more land to do what they do, or want to buy out their competition. Foreign investment Countries like China, India and Saudi Arabia are aggressively purchasing foreign farm land to ensure an ample food supply is available for their own people, Bailey said. Local farmers would still work the land; they would rent the property from the other country, he said. The determining factor in this case, however, is whether a farmer will refuse to sell to a foreign investor for patriotic reasons, Bailey said. High commodity prices Hot commodities like corn are helping boost prices for Midwest farmland higher than in the northwest area of the country, such as Idaho and Washington, Knipe said. Bailey said an ideal location and plenty of uses also help Illinois corn farmers, who can ship the golden kernels down the Mississippi River to the Gulf of Mexico and out to the rest of the world for consumption, to ethanol plants and to other farmers for livestock feed. Back to its roots When the bottom fell out of the residential subdivision market, land that would have been considered for a new housing development reverted back to its agricultural roots. “The real reason for the change was that the market viewed these lands as reverting back to their highest and best use, from development ground to ag ground,” Knipe said. Continue reading
