The Path Not Yet Taken: Bilateral Trade Agreements to Promote Sustainable Biofuels Under the EU Renewable Energy Directive
| Date | 01 July 2014 |
| Author |
7-2014 NEWS & ANALYSIS 44 ELR 10607
The Path Not Yet
Taken: Bilateral
Trade Agreements
to Promote
Sustainable
Biofuels Under the
EU Renewable
Energy Directive
by C. Johan Westberg and
Francis X. Johnson
C. Johan Westberg is Visiting Scholar, and
Francis X. Johnson is Senior Research Fellow,
at the Stockholm Environment Institute.
Summary
In order for biofuels to count as renewable energy
for transport under the European Union Renewable
Energy Directive, most applicants have relied on cer-
tication by the European Commission. But bilateral
agreements can also be used to meet the sustainabil-
ity criteria. is Article examines the bilateral agree-
ment option, particularly whether such agreements
might provide more exibility in developing coun-
tries that export to the EU, while also addressing
more general land use policies and cross-sector link-
ages in natural resource management.
The European Union Renewable Energy Directive
(EU-RED) established sustainability criteria for
biofuels counted u nder t he target of 10% renew-
able energy for transport. e main approach thus far to
certify compliance with the susta inability criteria has been
voluntary schemes that are submitted for approval to the
European C ommission. Scant attention has been paid to
the potential role of bilatera l agreements in fullling the
sustainability criteria, which could oer a more strategic
approach. is Article examines the role and potential
applicability and eectiveness of the bilateral option based
on Article 18(4) of the EU-RED. Of special interest is the
question of how bilateral agreements might provide a more
exible governance mechanism for meeting sustainability
criteria in developing countries that export to the EU while
also addressing more genera l la nd use policies and cross-
sector linkages in natura l resource management.
I. Introduction
e Renewable Energy Directive of the European Union
(EU-RED) established a target for 2020 of 10% renewable
energy in the transport sector, with only liquid biofuels
qualifying toward the sustainability criteria given in the
EU-RED for fulllment of the targets of t he EU Mem-
ber States.1 e criteria are aimed especially at addressing
1. Directive 2009/28/EC, of the European Parliament and of the Council of
23 April 2009 on the Promotion of the Use of Energy From Renewable
Sources and Amending and Subsequently Repealing Directives 2001/77/
ropa.eu /LexUriSe rv/Lex UriServ.do? uri=Oj: L:2009: 140:001 6:0062: en:
PDF.
innovative studies bridging the gap between science and policy.
Copyright © 2014 Environmental Law Institute®, Washington, DC. Reprinted with permission from ELR®, http://www.eli.org, 1-800-433-5120.
44 ELR 10608 ENVIRONMENTAL LAW REPORTER 7-2014
land use, biodiversity, a nd greenhouse gas (GHG) emis-
sions. Of particular concern is the possibility that forested
land might be cleared to produce biofuels, which not only
would lead to additional GHG emissions, but more gener-
ally would defeat the sustainability objectives that underlie
renewable energy market development.
A number of mechanisms a re permissible for prov-
ing compliance with the sustainability criteria, including
national systems in Member States, voluntary schemes,
and bilateral or multilateral agreements. A mong these
mechanisms, the emphasis thus far has been on voluntary
schemes, a wide variety of which have emerged in recent
years in response to the g lobal expa nsion of biofuels and
bioenergy markets, with some designed specically in
response to the EU-RED requirements. e proliferation
and variety of the schemes has complicated t he work of
policymakers, investors, and other market actors a nd has
illustrated the need for harmonization and coordination.2
e European Commission approved seven voluntary
schemes in July 2011 and has added several additional
schemes since that time.3 However, several concerns have
arisen with voluntary schemes with respect to international
trade and in terms of their relation to broader land use and
development policy issues. e complexity, proliferation,
and costs associated with such schemes c an also be prob-
lematic for small-scale producers, particularly those located
in the least developed countries (LDCs).4
Exploring other mechanisms for implementation of the
sustainability criteria is thus important, but so far, they
have received much less attention. Of particular interest
in this Article is t he option of concluding bilateral agree-
ments, as provided in Article 18(4) of the EU-RED, to
facilitate a more exible fulllment of the biofuels sustain-
ability criteria that are attached to t he current EU renew-
able energ y transportation target. e bilateral approach
could oer greater exibility to interact constructively with
countries’ specic circumstances, particularly in t he con-
text of a “meta-standard” such as the biofuels sustainability
criteria of the EU-RED. At the same time, since bilateral
agreements are typically less problematic within the inter-
national trade regime, this approach might help avoid
erecting non-tari trade barriers toward third countries.
e bilateral option in Article 18(4) is in legal terms a
verication mechanism, but the a rticle is sparsely worded,
leaving ample maneuvering room for the strategic use of
this option, especially when seeking to support the partici-
pation of developing countries and smaller scale producers
2. Nicolae Scarlat & Jean-Francois Dallemand,
, 39 E P’
1630-46 (2011).
3. European Commission, Directorate-General for Energy [hereinafter DG-
Energy], , available at http://ec.europa.eu/
energy/renewables/biofuels/sustainability_schemes_en.htm (last visited
Aug. 20, 2012).
4. F X. J ., C. I’ F R. (CIFOR),
T EU B M U R E-
D I L U, T, F-
78 (2012), available at http://www.cifor.org/online-library/browse/
view-publication/publication/3775.html.
in the EU biofuels market. is Article is thus particu-
larly concerned with how the bilateral option might help
improve access to the EU biofuels market for developing
countries while at the same time pushing developing coun-
try producers toward more economically viable and envi-
ronmentally sustainable pathways. As there are currently
no Article 18(4) bilateral agreements in place, we also
examine political and practical obstacles to this option.
Our purpose is to outline one approach that seems to oer
a constructive path forwa rd for EU biofuels market gover-
nance during a rather precarious period characterized by
signicant uncerta inties about the future trajectory of EU
biofuels policy.
II. Policy Context
e use of bilateral agreements to fu lll the EU biofuels
sustainability criteria is a largely unexplored governance
option. ough it features prominently in the legislation,
and formally holds equal status to other forms of verica-
tion, it has been sidelined by the almost exclusive reliance
on voluntary schemes for sustainability certication. is
section provides some context on the policy and legal ratio-
nale for the inclusion of this option in the EU-RED.5 ere
is a dearth of published information on this topic, so much
of the material in t his section is based on interviews with
relevant actors and policymakers.
In order to understand the potential role for bilateral
agreements, it is necessary to rst consider t he evolution
of this option in the EU-RED by exa mining the lawmak-
ers’ original intentions and then comparing these with the
overall policy objectives associated with sustainable biofu-
els in the EU-RED and, to some extent, with the broader
EU policy agendas for energy, climate, development, and
trade. is latter aspect—the strategic EU policy context—
is covered primarily in Part V of this paper.
A. The Trouble With Voluntary Schemes
e diculties with relying ma inly on voluntary schemes
have been discussed at leng th in the literature. For e xam-
ple, Simonetta Zarilli writes: “Certication initiatives ...
raise a number of concerns. Proliferation of individual
sustainability schemes may damage the eciency and
credibility of certication and create market segmentation
and opacity. e principles and criteria on which the dif-
ferent cer tication schemes are based are diversied a nd
often far reaching.”6
Costs of certication schemes for developing countries
have also been criticized. Zarilli notes that t hey will be
“highly dependent on the number, strictness, and inclu-
5. For a history of the EU-RED sustainability criteria themselves, which this
Article does not explore, see Jody M. Endres,
-
ability, 28 V. E. L.J. 73 (2010).
6. Simonetta Zarilli, , in G-
E G: T N R G 93 (Andreas
Goldthau & Jan Martin Witte eds., 2010).
Copyright © 2014 Environmental Law Institute®, Washington, DC. Reprinted with permission from ELR®, http://www.eli.org, 1-800-433-5120.
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