EURACTIV (28/01/2019) - The European Commission is set to offer Washington a way out from current trade tensions with Chinese authorising imports of soybeans from the US to produce biofuels. However, the new imports to help ease trade relations are not helping the environment.
On 7 January, the EU Executive hailed the US as the new leading soybean supplier in Europe, as part of the implementation of the Joint Statement where Jean-Claude Juncker and Donald Trump had agreed to increase trade in several areas in July.
The Commission also said that imports of US soya are to increase if the use of the commodity for producing biofuels will be authorised in the EU by recognising the “U.S. Soybean Sustainability Assurance Protocol”, managed and audited by US Department for Agriculture (USDA).
This scheme needs to be proved in compliance with the EU environmental sustainability criteria set in 2009 renewable energy directive (RED), which are lighter than the environmental requirements in the recently revised RED II.
The Commission’s decision on the US scheme will be valid only until the first RED is repealed on 1 July 2021, which coincides with the transposition deadline of the new directive, a Commission source told EURACTIV.com.
Four pieces of feedback on the US scheme were filed to the Commission during the public consultation stage, ended on 16 January.
Now a decision is to be taken in the coming weeks, the Commission source said.
Helping out the US
The EU came to the US’s rescue after trade tensions with China, where soybean exports from the US were dropped to zero in November.
A 90-day trade truce was agreed between the US and China in early December, but exports of soybeans are still far below the historical level just when the US is facing an excess of supply due to a record-large domestic harvest.
The US used to export about 60% of their soybeans to China, worth about $12 billion (€10.60 billion) but after tariffs on soybeans, steel and other American exports, they have had to look for new buyers.
Talks between Trump and Juncker increased EU acquirement of US soybeans by 112% in the last six months and Europe has imported 5.2 million tons, up from 2.4 million tons at the same time last year, the Commission said.
The EU’s increase in soybean imports only makes a small drop in the bucket but at this point, the US has to rely on any sales they can get as soybean exports are 40% below last year to date.
“Why would the Commission with one hand limit first-generation biofuels from EU producers and with the other open the gate for imported first-generation crop as soy? Just to do a favour for the Trump administration?” wondered Emmanuel Desplechin, secretary-general of ethanol association ePURE.
He deemed the operation as another trade move counterproductive in terms of EU objectives on the environment, energy and agriculture and another blow to domestic EU production of biofuel feedstock.
New palm oil?
Crude palm oil price and soybeans compete with each other on stock and future markets. Trade tensions between China and the US have had so far an impact not only on soybean prices but on the wider vegetable seeds and oilseeds markets.
The scenario where soybeans replace palm oil while the latter is slowly phasing out the EU market is one of the most feared by palm oil export countries such as Malaysia and Indonesia.
For Luc Vernet, Secretary General of Farm Europe – a think-tank specialised in agricultural issues, the economics of producing biodiesel from imported soybeans are not comparable to those of importing cheap palm oil from South-East Asia.
But according to ePURE’s Emmanuel Desplechin, it is possible that soy could become the new palm oil, sneaking in through the back door.
In 2017, the EU produced crop biodiesel mix was composed of 55% rapeseed, 35% palm oil, 6% soy oil and 4% sunflower, while in 2018, Belgium saw a tenfold increase in soy biodiesel use on its domestic market compared to 2017, said Laura Buffet, clean fuels manager at Transport & Environment.
“To avoid any potential replacement effect between oils used for biofuels, soy should be classified as a high iLUC risk crop and member states need to adjust downwards their maximum national share of food-based biofuels,” she added.
With bad environmental impact, the EU should replace palm oil with a comparably bad source. According to the Globiom study for the European Commission published in 2016, soy biodiesel is two times worse for the climate than fossil diesel and according to the most recent available evidence, as a crop, soy is associated with significant expansion into forests and savannahs, carbon-rich areas.
The commission has yet to decide on a RED II delegated act that will set up the certification process for assessing iLUC risks, making in a few words a distinction between feedstock for which a significant expansion of the production area into land with high carbon stock is observed.
Granting soybeans the states of low-iLUC would enable it to escape the freeze and progressive phase-out that fall to the high-iLUC risk crops.
The recognition of the “US Soybean Sustainability Assurance Protocol” and the discussion with the US administration does not affect the preparation of the delegated act on high and low iLUC risk biofuel, said a Commission source to EURACTIV, adding that the delegated act and the report will be based on objective criteria and best available scientific evidence.
Read more at https://www.euractiv.com/section/agriculture-food/news/us-soy-for-producing-biofuels-an-unsustainable-giveaway-to-trump/