The study charts proposed carbon certification rules for biofuels by government, illustrating that under current proposals, governments disagree as to which fuels qualify for carbon certification. For instance, bioethanol from US corn (maize) offers a carbon saving of 43%, according to Germany. However, the US rates it at a 22% saving, while the UK figures it is 27% carbon negative. This disagreement, argues SRI Consulting, could create confusion in biofuel markets and cynicism among the public.

As of April 2008, three European countries (Germany, the Netherlands, and the United Kingdom) are planning to grant tax relief for biofuels according to their carbon footprints. The European Union has picked up the idea as well; its proposed Renewable Energy Directive, if passed, would apply to all 27 member states. And the US federal government is working on a plan as well under its Renewable Fuel Standard.

The study points out that to qualify for tax relief, any biofuel must demonstrate a certified footprint 20-40% lower than a 'reference' petrofuel, either gasoline or petrodiesel. Europe aims to start at 30% in 2009, with an increase to 40% in 2011. The US is going for 20%. So, for instance, bioethanol must show that its cradle-to-grave carbon emissions are 20-40% lower than gasoline, biodiesel mush show a 20-40% smaller footprint than petrodiesel - if they cannot, then they lose their tax breaks.

At stake are very serious subsidies, which are essential to biofuel producers' profitability. In 2007, the US granted biofuel tax relief of some $4 billion, while the European Union granted breaks of nearly $5 billion. As a recent Organisation for Economic Co-Operation and Development (OECD) study points out: "Few, if any, biofuels are currently produced without direct or indirect government support."

Carbon certification will not only shake up the subsidy scene, says the SRI Consulting study, but also it will:

- Create new markets in biofuel carbon certificates,

- Possibly give perverse incentives to farmers, by encouraging them to plant land converted from forest with food crops and plant existing cropland with biofuels,

- Spur undesirable growth in farm certification that could look something like forestry certification for 'sustainable' wood products,

- Stimulate lobbying and legal challenges. Biofuels suppliers are likely to challenge or shape carbon certification. Surely there soon will be (or already is) a scramble of lobbyists to countries that have yet to define their carbon certification rules.

Related Links
SRI Consulting (SRIC)
Powering The World in the 21st Century at Energy-Daily.com

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