Targets and Mandates: Lessons Learned from EU and US Biofuels Policy Mechanisms

The differing paths taken by EU and US biofuels policies are in part driven by differing policy priorities and in part by differing institutional settings. In the European Union, policy was driven by a need to meet commitments made under the Kyoto Protocol and pressure from the EU population to address environmental issues. The policy is implemented by the Energy Directorate with little regard for the impact on EU farmers, as it was understood from the beginning that the majority of either the fuel or the feedstock to produce it would be imported. In the United States, policy was motivated by numerous interests, including the desire to reduce dependence on fossil fuels, to reduce greenhouse gas (GHG) emissions, and to increase demand for farm commodities, and the US policy relied primarily on domestic sources of raw material. It is primarily implemented by the Environmental Protection Agency (EPA), and the role of environment and climate change goals in the policy direction has increased with time. In the European Union, renewable fuel policy has stated fuel security ambitions, but also aims to facilitate environmental protection, meet the challenges of climate change, and support infrastructure for bioenergy and renewable energy. As a result of the policy, the renewable energy sector is one of the fastest growing sectors in the European Union (European Commission [EC], 2006a, 2006b). The production and consumption of biodiesel and ethanol have both risen dramatically over the past decade. The production of biodiesel has grown from 1.42 billion gallons (5.37 billion liters) in 2006 to 2.47 billion gallons (9.35 billion liters) in 2009 (an increase of 74%), while ethanol production has increased from 0.43 billion gallons (1.63 million liters) in 2006 to 0.80 billion gallons (3.03 billion liters) in 2009 (an increase of 86%; Food and Agricultural Policy Research Institute [FAPRI], 2010b). From the background of the growing production and consumption of biodiesel and ethanol, the effectiveness of EU biofuels policies in terms of target achievement needs to be evaluated. The US biofuels industry has also been growing rapidly since 2005, first due to the replacement of methyl tertiary butyl ether (MTBE) as an oxygenate for motor fuel in urban areas, then due to government policy incentives and rising petroleum prices in the years that followed. Ethanol production has grown from 3.9 billion gallons (14.8 billion liters) in 2005 to 10.7 billion gallons (40.5 billion liters) in 2009 (increased 1.7 times), and biodiesel production has grown from 0.107 billion gallons (0.4 billion liters) to 0.578 billion gallons (2.2 billion liters) in the same period (increased 4.4 times; US Department of Energy, Energy Information Agency [DOE EIA], 2010). Also, in early 2010 the EPA announced a new Renewable Fuel Standard (RFS2) that Jadwiga Ziolkowska University of California at Berkeley