A View From Europe: Europe’s biofuels debate

In May, more than 60 European and Latin American leaders met in Lima, Peru. Their mission: Combat poverty and global warming.

Before the meeting, the EU commissioners for Trade and for External Relations, Peter Mandelson and Benita

Ferrero-Waldner, announced that they were going to the Peruvian capital with a plan to curb greenhouse gas emissions in Latin America that they hoped would get the enthusiastic support of countries like Brazil, Argentina and Mexico.

But the meeting started to drift shortly after it began. Poverty was linked to global warming, but also to the latest trade developments between the EU and Latin America. That led to a discussion about surging food prices, which in turn became a debate about biofuels.

Are biofuels contributing to rising food prices, worsening the conditions of the poor? Or are they an answer to global warming fears, a way to wean to world off of fossil fuels? Perhaps both?

Peruvian President Alan Garcia — who opened the conference — focused on hunger. He stated that hundreds of millions of people would be threatened by starvation if the current regional food crisis deepens into a global problem.

Bolivian President Evo Morales agreed. He described his fear that the poor could suffer as his regional counterparts rush to sign free trade deals with Europe.

The tie-in lies in part with ethanol. Many Latin American countries blame Brazil, the world’s top ethanol exporter (made from sugarcane, not corn, as it is in the United States), and the EU’s thirst for alternative fuels for pushing up food prices, in particular for rice, corn and wheat. That has raised hunger rates in Latin America, where a third of the population lives in poverty, critics contend.

The EU has set a goal that 10 percent of road transport fuels would come from renewable sources by 2020.

Opponents say the policy will contribute to environmental damage around the world.

Supporters counter that biofuels will help reduce reliance on oil, which in turn may reduce greenhouse gases, which has its own positive environmental impacts.

The EU is currently negotiating association agreements for political dialogue, cooperation and free trade with the Andean Community of Nations and with Central America.

The idea is that opening up those borders could lower food prices by removing tariffs, even as more biofuels enter the fuel mix to combat global warming.

But just as in the United States, the political pressure on the EU regarding biofuels policy is increasing. If the loose collection of oil companies, livestock producers and grocers that are now working to block the Renewable Fuels Standard (RFS) will get support in the EU, the risk of putting the intended agreements on hold is very probable.

But the latest statements of EU politicians should serve to reassure biofuels proponents. For instance, Spanish Prime Minister J.L. Rodriguez Zapatero just stated that biofuels were not a significant factor in food prices.

Lobbying in Brussels, as in Washington, has been heavy from both sides. Biofuels, global warming and food prices are all complicated, interrelated political issues that aren’t going away anytime soon.

Geiger is founder and managing partner of Alber & Geiger, a leading EU government relations law firm with offices in Brussels and Berlin. Before that, Geiger was head of the EU Law Center of Ernst & Young, and president and CEO of Cassidy & Associates Europe. He has written a handbook on lobbying the EU.