The Green Deal and the bioeconomy

The Green Deal, the Commission’s proposal for the measures needed to achieve carbon neutrality by 2050, was recently published. European Bioplastics has endorsed the Green Deal and claimed that bioplastics will play a crucial role in helping to achieve its aims. Parts of the Commission’s proposal do indeed fit with this assertion. In particular, there is a recommendation for funding to help rural areas benefit from the bioeconomy, as part of a long-term vision for the countryside. Measures to boost forests, ecosystems and sustainable farming are given prominence. These are all good ideas, not only for the environment, but also for rural communities whose populations are shrinking due to lack of opportunities. There are areas in the EU where spare agricultural land could be used to grow crops sustainably for more biofuels and bio-based chemicals. With investment, wastes and residues from existing operations could also be turned into feedstock for the bioeconomy.

But, however well thought out the final policies will be, they will not be effective if crops, biofuels and bio-based chemicals produced in Europe can’t compete effectively with imports, many of which are produced unsustainably. The EU has already recognised that imports of agricultural products, particulary palm oil, soy, beef, cocoa, maize, rubber and timber encourages burning of primary forests to clear land for production. The destruction of forests creates substantial emissions of greenhouse gases in addition to habitat destruction.  So the importation of products grown on cleared land, to replace those sustainably produced in Europe, is a form of carbon leakage. 

The problem of carbon leakage is now recognised in the Green Deal.  Europe has acknowledged that its efforts to reduce greenhouse gas emission are being thwarted by the migration of carbon intensive industries to other countries, which are not doing enough to tackle climate change. The products are then imported back into Europe, to compete with domestic industry that is trying to decarbonise. Although the chemicals and metals sectors are often identified as being most susceptible to carbon leakage, agricultural and forestry products are also affected. The Commission proposes that trade policy should be used to combat carbon leakage. A ‘carbon border adjustment mechanism’ (a carbon border tax), is proposed to ensure that the ‘price of imports reflect more accurately their carbon content’. With a realistic price set for carbon emissions, such a tax could remove at least some of the financial incentives for the importation of food products, containing embedded carbon from deforestation. Ideally, a comprehensive border tax should also take into account other forms of environmental destruction.

The Commission indicates that the measures will be designed to comply with World Trade Organisation rules. Perhaps there is small print that allows environmental factors to be taken into consideration when setting trade policy, but this will not stop objections to any such measures. The backlash from producer countries against the recent ban on most palm oil derived biofuel, shows how contentious these measures are likely to be. But this is a problem that will have to be solved to ensure a level global playing field in the fight against climate change. Now that Europe is grasping the nettle of carbon leakage, The Green Deal may just succeed in its aims to boost the bioeconomy.

Published: 16 December 19

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