– Preliminary Version – 

BÖRMEMO 04 | 9.7.2015

Bioenergy policy in Germany and social challenges Preliminary Remarks Effective climate protection as part of a transformation to a sustainable economy can only be achieved permanently if it is possible to switch the global economy from a fossil to a renewable energy supply. With its pioneering energy tran-

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© Andrei Merkulov/Fotolia.com

Definition & importance of bioenergy Bioenergy is described as energy obtained from biomass and it includes different forms of energy, such as heat, electricity, fuels or even biomass, in which energy is stored chemically. •

In 2013, 12.3% of Germany's total final energy consump-

Three goals of sustainable bioenergy policy: Climate and nature

tion was covered from renewable sources. 62% of this

conservation, resolution of conflicting aims, unique technological features

was attributed to bioenergy.[5] •

Using biomass as a renewable energy source saved around 64.7 million metric tons of CO2 equivalents. This equates to 44% of the total savings from renewable energy.[6]

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In 2014, biomass accounted for an 8% share in gross electricity generation in Germany (renewables 25.8% overall).[7] Based on the kilowatt hour generated, electricity generation from biomass as a primary raw material is deemed to be relatively expensive compared to wind or solar energy.[8]

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In 2013, biofuels accounted for 5.3% (3.4 million metric tons) of the total fuel consumption in Germany. 2.2 mil-

sition project, Germany is a key player enjoying worldwide acclaim. In theory at least, there is no shortage of energy in the world thanks to ample sunlight. There are also numerous ways to save energy. In addition to solar and wind power, it is also important to define the role of bioenergy carefully. Back in 2012, the Bioeconomy Council made recommendations for the "Sustainable use of bioenergy"[1] Under the changed framework conditions – energy transition, amendment of the Renewable Energy Sources Act, a currently low oil price and increasing observation of competitive relationships regarding food security – the Council is taking up the topic of bioenergy once more.

lion metric tons of this was biogenic diesel fuel. The use of biofuels saved approximately 5 million metric tons of greenhouse gases. •

[9]

In 2013, bioenergy dominated the regenerative heat sector with a share of 88%. 75% of this was made up of mainly solid fuels (predominantly wood) with the addition of liquid (5%) and gaseous (8%) energy sources.[12] The latter particularly due to using waste heat from biogas plants. Heat accounts for around 40% of Germany's total final energy consumption. This corresponds to a third of Germany's CO2 emissions per year.

As part of the energy transition, it is necessary to ensure that the renewable energy supply is sustainable for its part and that the benefits of biotechnology, wind and solar energy are used in the system in the best way possible.[2] There are numerous complex interactions within the energy system. A prudent conversion of the energy supply requires understanding of the system[3]. Bioenergy should be consistently geared to areas of use in which it can demonstrate its advantages. They are constant availability, storage capacity and the ability to partially compensate for the high volatility of wind

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BÖRMEMO 04 | 9.7.2015 Bioenergy policy and social challenges

and solar power in the generation of electricity and heat. Sustainability, the potential to prevent greenhouse gases or economic benefits must be checked accurately since the use of bioenergy has a significant impact on the "bioeconomy system". Conflicting aims regarding the food supply or material use as well as possible impacts on biodiversity and indirect land use effects must be minimized. Given the scarcity of agricultural land and a rising global demand for food, stricter limits will be set for the use of agricultural primary raw materials for energy production than for wind or solar energy. One advantage of bioenergy, however, is that it functions as part of cost-effective and environmentally-friendly concepts for using residual materials. Bioenergy is therefore an important part of the circular economy. The economic conditions for the use of renewable energies have changed several times in the recent past. After prices for fossil energy had risen sharply over the past decade, they have now sunk so low in part that there appears to be a renaissance of fossil energy sources on the way. This gives rise to new challenges for a proper policy to promote renewable energies. The organization of a bioenergy strategy for Germany should be sustainable and beneficial to the economy as a whole[4], and should therefore be geared to the following three objectives: 1. Climate protection and sustainability 2. Avoiding aims that conflict with food security 3. System stability and technology leadership. Amendment to the Renewable Energy Sources Act 2014 With the amendment of the Renewable Energy Sources Act of 1 August 2014, the following corrections were made: • The allowance for the provision of renewable raw materials and residual materials with significant recovery and pre-treatment costs (straw, landscape management material, etc.) was dropped. With the exception of the fermentation of organic waste and manure, in future only the basic allowance will be paid for electricity from biomass. Likewise, the allowance for upgrading biogas to biomethane was dropped. • The extension of biogas plants was limited to 100 megawatts (gross) per year, half of which must be provided as flexible output. • The German government's renewable energy target envisages that it will account for an 80% share of the electricity sector from 2050 onwards.

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Globally, it is necessary to discuss measures as to how the primacy of food security can be implemented in the face of interwoven bioeconomic added value chains. Holistic considerations that include external effects and extend beyond a narrowly defined bioenergy policy must be used to assess these competitions and synergies in addition to resolve conflicting aims. The research requirement for shaping bioenergy in a sustainable system is correspondingly complex. Food security It is a core concern of the bioeconomy to enable all people on earth to have sufficient food and a healthy diet.[15, 16] A bioeconomy policy with a global perspective must always keep this in mind and take this goal into account. In this case, local and global price effects play an important role. They put pressure particularly on consumers with low purchasing power.[17] The reasons for this are as follows: (i) Worsening of the general shortage situation for agricultural raw materials, (ii) the increasing linking of energy and food prices, and (iii) the effects of government subsidies and quotas for bioenergy products on food availability and prices.[18] For some time now there has been global discussion of measures on how to implement the primacy of food security. External effects The competitive relationships surrounding the use of biomass for energy versus food and animal feedstuff are reflected not only in the percentage areas for bioenergy products but also in the impact on international trade. Although at around 2% the percentage area is low worldwide, competition for land, environmental damage and a decrease in biodiversity have increasingly given rise to criticism of the concept of bioenergy. New evaluations of respected international models show that 25% to 50% of the use diverted from wheat and corn production via bioenergy is not replaced by increased production as a whole, but comes at the expense of food and animal feedstuff production.[19] In Germany, the cultivation of energy crops has increased by more than 20% to around 2 million hectares in the last five years.[20] Critics point out that the increased use of acreage in Europe results in rainforest being cleared elsewhere and biodiversity being destroyed. [21] This leads not only to a reduction in the area covered by rainforest and a change in land use but also to the breaking up of soils. This is associated in turn with an additional release of greenhouse gases. Farming systems should be designed as sustainably as possible and include biological principles. These include phytomedical defense systems,

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BÖRMEMO 04 | 9.7.2015 Bioenergy policy and social challenges

with which domestic and invasive biotic stress factors can be effectively countered. For future use of non-native plant species and their varieties in energy-oriented crop rotation, attention must be paid to adequate protection against the tracking of harmful organisms. Natural biodiversity must be preserved. Its forecast decline is associated with economic losses amounting to USD 4.5 billion by 2050.[22] The aim should be to use a uniform evaluation framework for different sources of energy that covers all the alternatives to bioenergy. External costs should be considered in the process. The effects of linking energy and food markets and related volatility and price increases are being discussed globally.[23] Here social effects which are brought about by subsidies and tariffs, for example, also play a role. They often unilaterally favor producers in developed countries. Land, raw materials, dual-purpose use If the focus is aimed at the segment covering agricultural primary raw materials (e.g. maize, rape) produced from German agricultural land for energy production, which is the subject of particularly intensive political debate, then estimates show that this land now covers approximately 2.5% of Germany's total final energy consumption.[24] About 17% of Germany's arable land is used for this. Even taking into account the fact that high-protein feeds also occur as a byproduct on a (smaller) portion of this land, these figures indicate how limited the potential is in Germany for producing energy from agricultural primary raw materials. On a global scale, bioenergy's share in total final energy consumption is 12.7%. Wood is by far the most important bioenergy source. Bioenergy from arable crops currently only covers around 0.7% of global total final energy consumption.[25] Estimates show that, from a global viewpoint the production potential of bioenergy from arable land will remain within strict limits even in the future.[26] In the more recent concepts for bioenergy, "networked" viewpoints are increasingly gaining recognition in view of the perceptions described above. This is also reflected in the realigned strategy on bioenergy in the Renewable Energy Sources Act. Instead of using biomass directly, the measures adopted are aimed at utilizing mainly secondary raw materials from residues or wastes for energy production. With the changeover in blending quotas from volume specifications to GHG reduction targets, the new orientation of German climate policy is clearly focused on the prevention of greenhouse gases. The linked provision of energy sources and products for material use is being tested in second generation biorefinery design concepts. In most cases, the

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Biofuels • The Commission of the European Union and the German government promote the use of new types of biofuels on a non-food basis. It focuses particularly on greenhouse gas reduction targets which have gained in impor tance due to the switch to the GHG quota model in Germany in January 2015. Blending quotas for diesel and gasoline fuels are dropped. According to the coalition agreement, the German government will develop a separate strategy for biofuels and will integrate it into the higher-level mobility and fuel strategy.[10] • C onsiderable capacit y surpluses have built up in the European biofuel market. Capaci ty utilization on average in the EU is around 40%. [11] Electromobility offers an alternative in the automotive sector. Climate-friendly mobility structures can be developed in combination with conversion options for sun and wind. • Biofuels are currently the only alternative to fossil fuels for aviation and heavy goods vehicle traffic. After obtaining the assent of the European Parliament on 28 April 2015, it was agreed to cap 1st generation biofuels at 7% of the fuel market. In addition, the EU institutions agreed on a reporting obligation on indirect land use changes (iLUC) by the biofuels industry.

production of energy is the final step in the cascade.[27] Studies confirm the environmental and economic benefits of such an approach.[28] Thus the external costs for producing electricity from biomass drop significantly and then amount to only a quarter of those for converting lignite into electricity. [29] In Europe too, the bioeconomy is increasingly seen in the context of a circular economy.[30] In addition, the food versus fuel debate has recently been more discriminating. In some cases, the use of biomass in other countries differs considerably from this concept. Recommendations: Further development of the bioenergy policy For the production, provision and processing of biomass, the three dimensions of the sustainability concept must be considered on an equal footing. The primary use of biomass should always be a combination of material and energy use and should take into account systemic embedding in cas-

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BÖRMEMO 04 | 9.7.2015 Bioenergy policy and social challenges

cade utilization. The direct energy-related use of biomass can only be justified in developed countries in exceptional cases – for example, in areas where solar energy does not presently represent an alternative (shipping and aviation) or where byproducts arise that can be used in other industries (e.g. glycerol). In many developing and emerging countries, however, the traditional use of biomass for energy (wood and charcoal, etc.) still exceeds primary energy. From an ecological perspective, what matters is preserving the limited resources of soil and water as well as nutrients and the diversity of plants, animals and microorganisms. As a result of further developing certificates and standards, consideration should also be given to social criteria along the process chain. Further development of the bioenergy market should be based on long-term goals and should aim for a fair distribution of the added value. The previous promotion of bioenergy achieved unique technological features that are linked to market opportunities. It is important to protect them and to expand them in terms of added value potential. The design of a bioenergy strategy for Germany should be ecologically sustainable and beneficial to the economy as a whole, and should be geared to the three objectives referred to above: Climate protection and sustainability, avoiding aims that conflict with food security, system stability and technology leadership. From these it is possible to derive the following approaches for developing national and global policy: • Prevention of greenhouse gases: Concepts for power generation promoted so far, which go beyond the direct combustion of biomass (biomass gasification), should be given a clear perspective. From an environmental policy point of view, the Council welcomes the introduction of GHG-based crediting of biofuels and the priority use of waste and residual materials. However, this represents only one component of a comprehensive biofuels strategy which needs to be developed. Likewise, the position on research into new types of fuel in Germany should be stepped up in view of the overarching objectives of sustainably transforming economic systems, while respecting global interdependencies. • System stability: In the future electricity market supplied to a greater extent by renewables, the production of electricity from biomass should be examined mainly to see whether it can provide system-stabilizing contributions in an economically efficient way. The Council referred to this in its report on bioenergy in 2012 and welcomes the initiatives for increasingly flexible provi-

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Heat • Emission reductions can be achieved by means of building renovations and the modernization of oil and gas heating systems. There is a potentially high GHG saving to be made, particularly by replacing obsolete oil heaters.[13] • The demand for heat generation using wood products – especially residual materials from forest maintenance and byproducts such as sawdust – could increase due to the recent results of the National Forest Inventory. According to this, the sustainable management of recent years has led to the timber stocks of German forests exceeding demand.[14]

sion of electricity from biomass. Here it is important to examine how best to achieve and implement the provision of electricity in line with demand for balancing energy and residual load with increasingly competitive incentive systems. • External effects: The Council generally recommends measuring completely the external effects of using biomass and in this way obtaining comprehensive footprint records. This includes the entire process chain in addition to different forms of use (food, material, energy). The possibility of introducing certificates must be checked out. Only in this way it is possible to evaluate biobased products and processes and to illustrate their advantages compared with other forms. These principles should be used in further work to develop an economically optimized development path for renewable energies. It is necessary from the outset to give significant consideration to the question of how best to divide the work up globally in this energy economy of the future. • Plant research: Crop plants and their agricultural cultivation systems need to be adapted and improved in terms of energy use and dual-use through research and development. Breeding research and plant breeding should be aimed at the production of nutrient-efficient, climate-adapted, stress-tolerant new varieties. As a system science, plant cultivation research must drive forward sustainable intensification in diversified crop rotation. In crop rotation systems, crops should alternate between those used for energy production and those used for the purpose of food. Short-rotation plantations, particularly when combined with agroforestry systems, can be a solution at regional level.

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BÖRMEMO 04 | 9.7.2015 Bioenergy policy and social challenges

• Timber industry: In the timber industry, checks must be made to ascertain the impacts of switching bioenergy promotion in the electricity and fuel sectors. There is a need for further development of new cascaded used between material and energy use. • According to the global perspective of a German bioeconomy and bioenergy policy with the objective of food security and alleviating poverty, the Bioeconomy Council recommends the following set of measures: • Conflicting aims: Measures to promote bioenergy should be designed on principle so that they do not compromise global nutrition. Under this premise, the measures should be designed so that the objectives (e.g. climate protection) pursued by promoting bioenergy are achieved as efficiently as possible. The specific implementation of these two guidelines would probably lead to a marketoriented pricing system for biofuels which does not require rigid quotas for individual bioenergy sources.[31] Current subsidies often lead to local producers being unilaterally favored. This happens to the detriment of poor countries and the international division of labor, and in this respect would need critical reconsideration. In terms of food security, it would also be necessary to consider designing the bioenergy policy countercyclically, by suspending subsidies and quotas for example, when there are particular shortages on the food markets. There are still many unanswered questions regarding the actual design of such adapted incentives. More research is needed here.[32] • Dealing with losses: To improve food security, losses would have to be reduced with the help of innovative and integrated production systems along the added value chain: This applies to both the production side – high pre- and post-harvest losses exist in developing countries – and also to the high levels of food wastage in industrialized countries. Innovative integrated production systems must facilitate efficient food production. The dual and cascaded use of residues arising should be designed so that it comprehensively promotes both the reduction of losses and also the establishment of integrated production systems. Optimal approaches and possible incentives for reducing losses and wastage should be explored more extensively, both with regard to food production and to recovering material and energy. • Certificates: The certification of bioenergy is already at an advanced stage. Globally coordinated biomass

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Status and Process of Publication BÖRMEMOS summarize the Council’s appraisal of key aspects of the bioeconomy in a condensed form. They do not claim to provide a comprehensive study of these facts. Rather, they present a focused and generally comprehensible view of each area and its relationship to the bioeconomy. BÖRMEMOS undergo a peer review process. While this process is taking place, they are identified as preliminary. After assessment, they are incorporated in the items of the Council as a whole. They are part of a series of analyses published by the Bioeconomy Council. So far, the council has issued MEMOs on Bioeconomy and Agriculture, the Chemical Industry, Plant Breeding and Bioenergy. certification should take into account social standards and ecological footprints, water consumption and sustainability in the handling of soils which are fundamental to long-term food security. The transferability of existing standards and certification schemes for biofuels to other energy-related and material uses of biomass should be checked out. It should be determined to what extent environmental sustainability standards can be linked to tools that are aimed at social sustainability • Technology exchange: Full access to energy is a global development goal. In developing countries that still produce a large proportion of their primary energy by burning biomass, a different energy transition should be implemented, one in which Germany should participate to a greater extent with research and technology partnerships. One example of this is more efficient household stoves. Local power grids which are partly based on biomass waste can also be used as further steps towards an improved energy supply. Sustainable biomass cultivation and production methods should also be mentioned here. Training and transferring the technology of sustainable methods to the real lives of (small) farmers will play an important role in quickly displacing the adverse impacts of traditional bioenergy use and its harmful health effects. Only a carefully designed bioeconomy can provide opportunities for the energy industry and agriculture in industrialized and developing countries without jeopardizing nature and the environment and food security. This requires technological and institutional innovations and appropriate research investment in the areas mentioned above.

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BÖRMEMO 04 | 9.7.2015 Bioenergy policy and social challenges

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Endnotes

the poor, Rural 21, Vol. 48, No. 3/2014; & Harry de Gorter,

[1] Bioeconomy Council (2012): Nachhaltige Nutzung von Bio-

Dusan Drabik, David R. Just (2015) The Economics of Biofuel

energie [Sustainable use of bioenergy]

Policies - Impacts on Price Volatility in Grain and Oilseed Mar-

[2] Scientific Advisory Board for Agricultural Policy at the BMELV

kets. Palgrave. Publ.

[Ministry of Food, Agriculture and Consumer Protection] (2008):

[19] T. Searching, R. Edwards, D. Mulligan, R. Helmich, R. Plevin

Nutzung von Biomasse für die Energiegewinnung – Empfehlun-

(2015) Do biofuels policies seek to cut emissions by cutting

gen für die Politik [Use of biomass for energy production – policy

food? SCIENCE, Vol. 347, Issue 6229, pp. 1420-1421

recommendations]. Berichte über Landwirtschaft Sonderheft

[20] FNR (2014)

216 [Reports on Agriculture Special Edition 216].

[21] Laborde, D. (2011): Assessing the land use change conse-

[3] Acatech (2014): Auf dem Weg in ein nachhaltiges Energie-

quences of European biofuel policies. International Food Policy

system [En route to a sustainable energy system].

Research Institute. Washington DC. http://www.ifpri.org/sites/

[4] WBGU (2008): Zukunftsfähige Bioenergie und nachhaltige

default/files/publications/biofuelsreportec2011.pdf

Landnutzung [Future-oriented bioenergy and sustainable land

[22] Cf. The Economics of Ecosystems and Biodiversity, 2010

use].

[23] Gardebroek, C. and A. Manuel Hernandez (2012): Do energy

[5] Federal Ministry of Economy and Energy "Erneuerbare Ener-

prices stimulate food price volatility?

gien im Jahr 2013" [Renewable energies in 2013].

& Harry de Gorter, Dusan Drabik, David R. Just (2015) The Eco-

[6] Ibid.

nomics of Biofuel Policies – Impacts on Price Volatility in Grain

[7] Renewable Energy Agency (2015)

and Oilseed Markets. Palgrave. Publ.

[8] Fraunhofer Institute for Solar Energy Systems ISE, (2013),

[24] Isermeyer, F. (2013): Dilemma zwischen Energie- und Nah-

Stromgestehungskosten Erneuerbare Energien [Electricity ge-

rungspflanzen? [Dilemma between energy and food plants?]

neration costs of renewable energies]

Nova Acta Leopoldina NF 118, 223-248

[9] Renewable Energy Agency, (2014), Biofuels

[25] Ibid.

[10] German government (2013): Deutschlands Zukunft gestal-

[26] Scientific Advisory Board for Agricultural Policy at the

ten [Shaping Germany's future]. Coalition agreement of CDU,

BMELV (2008): Nutzung von Biomasse für die Energiegewin-

CSU and SPD, p.44

nung – Empfehlungen für die Politik [Use of biomass for energy

[11] Lamers, P. (2011): Renewable and Sust. Energy Reviews,

production – policy recommendations]. Reports on Agriculture

"International Bioenergy Trade – A review of past develop-

Special Edition 216

ments"

[27] Bioeconomy Council (2012): Nachhaltige Nutzung von

[12] Data of the Federal Ministry of Economy and Energy "Erneu-

Bioenergie [Sustainable use of bioenergy]

erbare Energien im Jahr 2013" [Renewable Energies in 2013].

[28] http://www.umweltbundesamt.de/publikationen/oekologi-

[13] Cf., inter alia, data of the AEE (Agentur für Erneuerbare Ener-

sche-innovationspolitik

gien [Agency for Renewable Energies]) and BDEW (Bundesver-

[29] Ecofys (2014): Subsidies and costs of energy

band der Energie- und Wasserwirtschaft [German Association

[30] EU Commission (2014): Towards a circular economy –

of the Energy and Water Industry])

a zero waste programme for Europe

[14] www.bundeswaldinventur.de

[31] Kimberly, A. E. (2015): Biofuel Policies: Fuel versus Food,

[15] Communiqué of the Global Forum for Food and Agriculture

Forests, and Climate 1/13/15 CGD Policy Papers Washington

(GFFA) 2015. Cf. also Food and Agriculture Organization (FAO)

DC

Initiative Bioenergy and Food Security (BEFS)

[32] von Braun, J. (2015): Bioeconomy: Science and Technolo-

[16] Mirzabaev, A., Guta, D., Goedecke, J., Gaur, V., Börner, J.,

gy Policy to Harmonize Biologization of Economies with Food

Virchow, D., Denich, M. and J. von Braun. 2014. Bioenergy, Food

Security. In: David E. Sahn (ed.) The Fight Against Hunger and

Security and Poverty Reduction: Mitigating tradeoffs and pro-

Malnutrition. The Role of Food, Agriculture, and Targeted Poli-

moting synergies along the Water-Energy-Food Security Nexus.

cies. Oxford University Press

(ZEF Working Papers 135) [17] Gardebroek, C., and Manuel A. Hernandez (2012): Do energy prices stimulate food price volatility? Examining volatility transmission between US oil, ethanol and corn markets. Paper prepared for presentation at the Agricultural & Applied Economics Association's 2012 AAEA Annual Meeting, Seattle, Washington, August 12-14, 2012 [18] von Braun, J. (2014): Rising world food prices - impact on

Bioeconomy Council | Lützowstrasse 33-36 | 10785 Berlin | Tel. 030 467 767-43 | Fax 030 467 767-48 www.bioökonomierat.de