Rising demand for biofuels and surging export trade have contributed to the rise in food prices, threatening food security worldwide. Photo courtesy of P. Casier (CGIAR).

BOGOR, Indonesia (19 October, 2011)_ The voluntary certification schemes recently approved by the European Commission to verify compliance with the sustainability requirements of the EU’s renewable energy policy have serious shortcomings for safeguarding rural livelihoods in developing countries. This places critical social sustainability issues such as land ownership and access, labor rights and food security at risk, says a recent report by the Center for International Forestry Research.

“Emphasis of the EU Renewable Energy Directive on environmental sustainability has seriously undermined the interests of developing countries in the potential rural livelihood benefits of the emerging biofuel industry by enabling fuel lacking any social sustainability to qualify for renewable energy targets,” said Laura German, CIFOR scientist and lead author of Social sustainability of EU-approved voluntary schemes for biofuels: implications for rural livelihoods.

In recent years, fluctuating oil prices and concerns about climate change have led to a renewed commitment to renewable energy, particularly among industrialized countries. The European Union’s Renewable Energy Directive (EU RED) was adopted in 2009, mandating each member state to ensure that at least 10 percent of fuel consumed in the transport sector is derived from renewable sources (including biofuels) by 2020.

While this has been heralded as an important step towards environmental sustainability, recent research by CIFOR and others suggests that the expansion of biofuel crops – particularly in developing countries – often leads to deforestation, high carbon emissions from land use change and negative social impacts for customary land users such as loss of land and labor rights and threats to food security.

To combat this, the European Commission established a set of sustainability criteria with which biofuel producers must comply for biofuels to contribute towards the 2020 target. In July this year they approved the first 7 “voluntary schemes”, which may be used by biofuel feedstock producers and processors to certify that their operations are in compliance with the EU RED sustainability criteria.

While the mandated sustainability criteria of the EU RED have an exclusively environmental focus, a number of the voluntary schemes also have social sustainability as a significant component of their requirements for achieving certification. However, several factors undermine the likelihood that social sustainability will be ensured through these schemes.

First, and most importantly, two of the seven schemes lack any social sustainability requirements at all. As these schemes collectively cover all geographical regions and biofuel crops or feedstock, this poses very real risks to rural livelihoods in producer countries.

Research has also shown that schemes which incorporate social sustainability requirements tend to be weakened by the limited scope of these requirements, and weak procedural rules that are likely to lead to compliance loopholes. This will likely undermine the advancement of social sustainability by these schemes.

A few of the approved voluntary schemes, most notably those developed through multi-stakeholder processes, have relatively broad coverage of key social sustainability issues and stronger procedural rules to strengthen compliance.  However, several factors undermine the contribution of schemes with relatively strong social safeguards to rural livelihoods in biofuel producing countries.

First, the more rigorous schemes have a higher cost for biofuel producers and processors given the costs associated with supporting rural livelihood reconstruction for displaced households, engaging smallholder producers or delivering much-needed services to rural communities.

Since companies are free to choose between schemes, this leads to a situation where there are no market barriers for socially-unsustainable biofuels. The costs associated with compliance with more stringent schemes is also likely to attract greater numbers of operators to those schemes that set the bar at the lowest possible level to guarantee market entry (e.g., focusing on environmental issues alone).  These biofuels can therefore be fully certified and their use legitimized, by the EU RED’s current disregard of social sustainability issues.

Different from many industrialized countries, weak governance and social and environmental safeguards in developing countries are likely to undermine the ability to ensure that the gaps in these voluntary schemes are effectively dealt with through national regulations.

Thus, the key rationale put forward by developing countries to rationalize the generous fiscal and non-fiscal incentives provided to the fledgling biofuel industry – namely, the economic stimulus it promises to inject into rural economies, is largely in jeopardy.

The rapid positioning of industry and multi-stakeholder processes to comply with EU RED sustainability criteria, and the efforts by some voluntary schemes to water down their original standards in line with the Directive, suggests that policies within consumer markets hold great potential to shape sector performance globally.

Yet the low bar set by EU RED for social sustainability and the variability in its treatment among approved voluntary schemes point to the urgent need to expand its scope to safeguard rural livelihoods in the global South.