The role of a renewable energy target for the transport sector beyond 2020: Lessons learned from eu biofuel policy

Abstract

To date, biofuels remain the main option for addressing the European Union Renewable Energy Directive’s 10% transport sector target for renewable energy sources. At EU level and at the level of the member states, political support for biofuels has been motivated by expected contributions to the aims of greenhouse gas (GHG) mitigation, security of energy supply, rural development and employment creation. However, the diffusion of mainly agricultural crop-based biofuels has been accompanied by a critical debate on a range of sustainability issues such as land use change impacts or impacts on resource competition. Moreover, biofuels’ costeffectiveness as a GHG mitigation option has been called into question. Between the two poles of high expectations and multi-faceted criticism, EU biofuel policy has proven a very dynamic policy field, with no small amount of policy uncertainty for market actors. Against the background of negotiations on a recast Renewable Energy Directive, this contribution discusses from an economic theory perspective whether there is a case for continuing a target which supports the use of biofuels and other low-carbon options in the transport sector; and if so, what lessons can be derived from EU biofuel policy so far for its design.