The European Union is contemplating on making changes in its bio-fuel policies. It is planning to reduce the amount of food crops used in making bio-fuels.
The European Commission believes that switching to alternate sources for the production of bio-fuels will reduce competition between the food industry and the bio-fuel industry. Currently, corn, soy and sugar cane are the major food crops used in the production of first generation bio-fuels. Since droughts in the major food-growing regions of the world including Midwestern U.S. and the Black Sea grain region have put a dent in the supply of food crops, other non-edible crops are being sought out.
Moreover, the impact of bio-fuels based on food crops on the environment is being questioned.
"We must invest in bio-fuels that achieve real emission cuts and do not compete with food," Connie Hedegaard, EU Climate Commissioner said in a statement, according to Bloomberg. "We are of course not closing down first-generation bio-fuels, but we are sending a clear signal that future increases in bio-fuels must come from advanced bio-fuels. Everything else will be unsustainable."
The European Commission has decided that only 10 percent of the bio-fuels will be food crop-based. The rest will be produced with non-food crops, after ensuring that it does not affect the environment in any way. Further, the EC has also warned that food-based bio-fuel producers will stop receiving subsidies after 2020, in an effort to force them to take a step towards producing advanced bio-fuels and to show evidence of substantial greenhouse gas savings, reports the Wall Street Journal.
"Today's news is still a negative for biofuel producers [because it is] reducing the outlook for agricultural commodity demand in the EU biofuels industry," said Erin Fitzpatrick, grains and oilseeds analyst at Rabobank in London, WSJ reports.
This proposition is also likely to affect the bio-fuel industry adversely.
It is believed that the EC's plan "would destroy the biofuels industries and related sectors such as crushing and sugar facilities," and "will jeopardize investments, jobs in rural areas and prevent development of advanced biofuels," said a statement signed by a coalition of the bio-fuel industry, WSJ reports.
