COSTS AND CARBON EMISSIONS
166. Biofuels have been controversial as some
of them appear to have little impact on reducing carbon emissionsthe
key aim of all renewable energy. The Royal Academy of Engineering
explained that in theory biofuels should be zero carbon. As with
other plants, energy cropswhich are used to make biofuelsabsorb
CO2 as they grow. When the energy crop is burned or
processed the CO2 that has been absorbed during the
plant's growth is then released. In theory, the amount of CO2
released should be the same as the amount absorbed during the
plant's growth making the process carbon neutral. But in practice
there will often be more CO2 emissions from fertiliser
production and as biofuels are processed, so that they do not
provide zero carbon energy. In some cases these emissions can
"render the biofuel almost pointless in terms of carbon savings"
(Royal Academy of Engineering p 445). Furthermore, soil degradation
can occur where single energy crops, such as oil palms, replace
rain forest. This is "ultimately unsustainable", according
to the Royal Academy of Engineering, and results in the loss of
crucial carbon sinksareas of soil which can store large
amounts of carbon that have previously been absorbed by the rain
forest (Royal Academy of Engineering p 445).
167. Today's commercially produced biofuels are
made from the parts of plants that could otherwise have a food
use, such as wheat grain, beet or cane sugar, or vegetable oil.
In the production of bioethanol or biodiesel, very little of the
plant is actually converted into the fuel with most of the plant
discarded (Royal Academy of Engineering p 445).
168. The Gallagher Review commissioned by the
Government expressed concerns about the impact on people in developing
countries from agricultural land and food crops being used for
biofuels. It concluded
that: "The introduction of biofuels should be significantly
slowed until adequate controls to address displacement effects
are implemented and are demonstrated to be effective. A slowdown
will also reduce the impact of biofuels on food commodity prices,
notably oil seeds, which have a detrimental effect upon the poorest
169. Second generation biofuels are manufactured
from waste, residues such as straw and whole plants not suitable
for food. So they should offer greater benefits, using about one
third of the land and lower other inputs. But they are still emerging
and not yet available on a commercial scale (Scientists for Global
Responsibility p 459).
170. Others argued that many of the first generation
of biofuels lead to sharp reductions in greenhouse gas emissions
compared to fossil fuels. The Renewable Energy Association argued:
"Many current generation biofuels produced in the UK can
deliver significant greenhouse gas savings entirely sustainably.
For example, British Sugar has announced that its sugar beet-to-ethanol
plant in Norfolk delivers a 71% saving against fossil petrol,
and Argent Energy delivers an 83% saving against fossil diesel
at its tallow-to-biodiesel plant in Motherwell" (Renewable
Energy Association p 424).
171. Yet the cost of obtaining reductions in
carbon emissions from biofuels was far higher than for renewable
sources of electricity and heat. A study by Pöyry for the
Government modelled the most likely mix of renewables in electricity,
heat and transport sectors to meet the EU's proposed targets that
15% of all of Britain's energy and 10% of transport fuels come
from renewables in 2020. The study also estimated the costs and
the reduction in carbon emissions in the electricity, heat and
transport sectors over the lifetime of the renewable projects.
From these figures, Pöyry calculated the cost of reducing
each tonne of carbon dioxide emissions over the lifetimes of the
renewable projects in each sectorknown as the lifetime
abatement costsas shown in Table 5. This differs from earlier
cost tables in the report which show the cost per unit of energy.
The estimated cost of reducing carbon dioxide emissions by one
tonne using biofuels for transport was £189more than
5 times the average cost of using renewable sources of electricity
Cost estimates of carbon reduction using renewable energy sources
||£/tonne of CO2 abated 
|Electricity and Heat ||36
Source: Pöyry Energy Consulting, Compliance costs for meeting
the 20% renewable energy target in 2020
172. In transport there are few renewable options
other than biofuels. Electric and hydrogen powered vehicles, described
in paragraph 164, both use electricity. They can only count as
renewables if they use renewable sources, and, as we have seen,
renewables still only account for around 5% of total electricity.
But if, for example, wind farms generate a larger share of electricity
in future, electricity generated during periods of low demand,
such as the early hours of the morning, could be stored in the
batteries of electric cars (Q 223).
173. We share the concerns raised in the Gallagher
Review about existing biofuels. We consider that steps should
be taken towards developing second generation bio-fuels as soon
as possible. Until the costs of carbon emissions reduction through
biofuels come down we recommend that the Government should not
seek to increase further the use of biofuels.