Is Setting Environmental Standards at a High Level a Sophisticated Type of Procrastination?

All experts, from IPCC or from any concerned scientific body, tell us we are in the last decade to take serious and effective action against global warming, serious in the sense that it may have some result with regards to our capacity to adapt to climate change. Whether this statement is true or exaggerated is beyond the point.

The fact is that we do have an energy transition on the move, renewable power generation or biofuels in our vehicles having been with us for quite some time now. And, as in any human endeavor, success may not be guaranteed for all innovations, but any emerging solution making some inroads will have to continuously get more efficient, if only to improve its profitability (as in: the benefits of today provide the investments of tomorrow), of course, if it makes it to the initial success level.

The best way to discourage innovation is to set standards at an impossible level, especially for solutions closing to industrial or commercial technological level of readiness, TRL in jargon, which cannot prove ex ante that they can meet the standard as their first-of-a-kind plant is supposed to prove the concept that underwent the long arduous research and development path. To illustrate this, let us compare between the US and EU approaches for biofuels.

The US has had for a long time, in regulation terms, a quite successful Renewable Fuel Standard, asking the bulk of the commercialized biofuels, corn-based ethanol, to demonstrate, for the full production pathway, at least 20% greenhouse gas (GHG) emission reduction compared to fossil fuels. This threshold was consistent with a life cycle analysis (LCA) conducted by the Environmental Protection Agency (EPA) in 2010, showing corn ethanol could reduce GHG emissions by 21%. Today, nearly one million barrels of corn-based ethanol are produced every day in the US.

On a ten million barrels per day gasoline market, a small half of the world consumption, 10% ethanol, even with such a low threshold for minimum GHG emission reduction, have had quite an impact on road transport GHG emissions over the last 14 years, estimated at more than half a billion tons of CO2 not ending in the atmosphere. And, in parallel, demand in California for ever-increasing low-carbon intensity fuels, with significant financial reward for alternative fuels with a serious performance in terms of GHG emission reduction, has been a strong incentive for US ethanol manufacturing to improve its carbon intensity.

The industry has done this on average more than 40% and up to 70% GHG emission reduction compared to fossil gasoline, thanks for instance to switching from coal to biomass for energy usage in plants and CO2 capture. This capable of matching the environmental performance of Brazilian ethanol, relying on productive sugar cane and bagasse energy. And capable to export as well to Europe. A low environmental objective has not prevented progress to take place.

Meanwhile, in the EU, we have had moving and ambitious targets for biofuels production pathways GHG emission reduction targets, 50% before 2015, then 60% after 2015, then 65% after 2021, even 70% if your feedstock is of non-biological origin. A way to discourage what some stakeholders saw as greenwashing technologies to perpetuate our wasteful way of life? Still, with a lot of efforts, the European ethanol industry has responded to the challenge. European ethanol, produced from sugar beets and cereal starch, now reduces GHG emissions by 70%. But we still do not have 10% ethanol in our gasoline, half of that actually, when cars are not that different on both sides of the Atlantic Ocean.

Still, one wonders why standards have been set so differently in the US and in the EU. Setting standards is no easy task but an effective and honest dialogue between industry, academia and regulators is essential there to make sure ambition meets feasibility, allowing as many as possible to contribute. Not forgetting to take a holistic approach, in other terms consider the other aspects, be it the reduction of other pollutants or economic and social impacts.

Another problem with mandates lies in the lack of incentive to work better than the standard, once you make it to the standard. If success is too limited, action will be delayed or alternative magic solutions will be sought, in any case, some procrastination is likely to take place. Whereas, when incentives are given to reward performance, or when the end-result is the metric, like in California where the carbon intensity of the commercialized fuels has to improve every year, innovation will be spurred and efficiency, of raw materials production and use, of energy use, or in terms of end-result (GHG emission reduction), will materialize and help progress growth. What was observed in the US ethanol industry over the last decade.

During the early 19^th century, technology and the availability of local resources limited the possibilities of further progress of industrialization in Europe, in the UK most particularly, a growth deemed essential by the new capitalist and “bourgeois” elites. The solution was in colonial expansion, that provided the “ghost acreage” for growth. We do not have this possibility any more and only have scientific and technological innovation to rely upon if we want to prevent, at least limit to a level of social acceptance, the dramatic de-growth promised by the consequences of climate change and the growing scarcity of the cheap materials that have helped improve our way of life up to this early part of the 21^st century. We should incentivize innovation by both promoting attainable standards at the beginning and incentivizing performance over and above these standards once there is an established market.

Philippe Marchand is a Bioenergy Steering Committee Member of the European Technology and Innovation Platform (ETIP).