Implementing a Biofuel Economy in the EU: Lessons from the SUSTOIL Project and Future Perspective for Next Generation Biofuels

The aim of this article is to illustrate main economic and environmental (GHG emission reductions) effects of implementing a biofuel economy and to discuss the potential of establishing advanced biofuels in the European Union. The study is based on the recently completed EU FP7 SUSTOIL research project. The main question addressed is the EU policy objective of achieving 20% GHG emission reductions using 20% of renewables by the year 2020. To contribute to the achievement of this policy we run and execute, through a Computable General Equilibrium model, a simulation experiment of implementing a bio-based economy using biorefineries in the production process. Main results suggest that: a. Biorefineries working from oil seeds and their by-products will lead to a large increase in the amount of this crop (grown particularly in Eastern Europe); b. This increase will be accompanied by a decrease in sectoral GDP in several other areas; c. Oil and electricity prices will generally fall in across the EU with a particularly notable trend in Eastern Europe; and d. A reduction in carbon emissions is achieved but this will be insufficient to meet the EU 20% target. This latter result would suggest to speed the technological process towards the use of next generation biofuels in the EU. Furthermore, these results advocate for a leading role expected to play by Eastern EU countries over the next years. The expected increase in the cultivation of energy crops could conflict with the availability of land for food crops. The potential for establishing next generation biofuels in the EU with adequate support policies would be essential for guaranteeing energy and food security in the long-run.