Gamborg, C., Anker, H.T. & Sandøe, P. 2014. Ethical and legal challenges in bioenergy governance: coping with value disagreement and regulatory complexity. Energy Policy 69: 326-333

This is a pre-copy-editing, author-produced PDF of an article published in Energy Policy following peer review. The definitive publisher-authenticated version is available online at: http://dx.doi.org/10.1016/j.enpol.2014.02.013.

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Ethical and Legal Challenges in Bioenergy Governance: Coping with Value Disagreement and Regulatory Complexity Christian Gamborg1*, Helle Tegner Anker1 & Peter Sandøe1 1 University of Copenhagen, Department of Food and Resource Economics *Corresponding author: chg@ifro.ku.dk, Rolighedsvej 23, 1958 Frederiksberg C, Denmark; telephone +45 35331735 Abstract The article focuses on the interplay between two factors giving rise to friction in bioenergy governance: profound value disagreements (e.g. the prioritizing of carbon concerns like worries over GHG emissions savings over non-carbon related concerns) and regulatory complexity (in terms of regulatory measures and options). We present ethical and legal analyses of the current stalemate on bioenergy governance in the EU using two illustrative cases: liquid biofuels for transport and solid biomass-based bioenergy. The two cases disclose some similarities between these two factors, but the remaining differences may partly explain, or justify, contrasting forms of governance. While there seems to be no easy way in which the EU and national governments can deal with the multiple sustainability issues raised by bioenergy, it is argued that failure to deal explicitly with the underlying value disagreements, or to make apparent the regulatory complexity, clouds the issue of how to move forward with governance of bioenergy. We suggest that governance should be shaped with greater focus on the role of value disagreements and regulatory complexity. There is a need for more openness and transparency about such factors, and about the inherent trade-offs in bioenergy governance. Keywords: Biomass, ethics, EU, law, regulation, sustainability

Gamborg, C., Anker, H.T. & Sandøe, P. 2014. Ethical and legal challenges in bioenergy governance: coping with value disagreement and regulatory complexity. Energy Policy 69: 326-333

This is a pre-copy-editing, author-produced PDF of an article published in Energy Policy following peer review. The definitive publisher-authenticated version is available online at: http://dx.doi.org/10.1016/j.enpol.2014.02.013.

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1. Introduction Bioenergy, especially its sustainability, is the subject of intense political, public and academic debate across Europe (Mohr & Raman, 2013).1 Unquestionably, the successful delivery of bioenergy will require good governance: the sector needs to be steered and regulated in a way that maximizes claimed benefits, such as climate change mitigation, and minimizes any negative impacts, including unconstructive competition with food production, and all this must be done in an efficient, fair and transparent manner (Swinbank & Daugbjerg, 2013). But is this wishful thinking? And what role do value disagreement and regulatory complexity have in attempts to ensure that we have a sustainable energy system? As a general concept, governance can be defined as the steering of social systems by state and non-state actors. This may involve the imposition of a variety of regulatory instruments by the state as well as new modes of governance (Kjaer, 2004). From an ethical and legal perspective it is argued in this paper that two key issues should be considered carefully in any effort to improve bioenergy governance. The first is that there may be disagreement about what values and concerns are at stake in bioenergy. Some concerns can be viewed as drivers of bioenergy development (e.g. anxieties about climate mitigation and energy security), whereas others relate to potentially negative side-effects like threats to biodiversity and global food security (Thompson & Meyer, 2013). These potentially conflicting concerns are often lumped together under the single heading of ‘sustainability’. This can make it more difficult to see how the underlying values are to be balanced, and may also lead to conflict over the goals of governance. Again, on occasion, people and groups with differing values may emphasize rather different scientific findings (Marelli, 2013).2 Secondly, today’s problems in bioenergy governance are compounded by a highly complex legal and regulatory framework which involves different regulatory levels (international, EU, national), different regulatory regimes (e.g. climate, environment and trade regimes) as well as different regulatory or perhaps non-regulatory measures (e.g. direct vs. indirect regulation, state vs. private regulation). The main purpose of the present paper is to examine the extent to which this mix of value disagreement and legal complexity shapes the approach to bioenergy governance; we also wish to highlight how very important it is to acknowledge the relevant issues and the inherent trade-offs in the search for better governance. We claim that as long as there is disagreement over what the critical issues are – in relation to deciding how to achieve a higher degree of sustainability, and indeed what sustainability actually is – it will remain difficult to separate ‘good’ from ‘bad’ bioenergy, and consequently there will be no easy way to separate the ‘right’ method of steering from the ‘wrong’. However, we also claim that under such circumstances what any kind of bioenergy governance solution could, and should, strive towards, is greater openness about the underlying values and trade-offs in regulation. Often regulators will be faced with a classic ‘wicked problem’ (Thompson, 2010). That is, they will be dealing with a situation which lacks clear problem definition, creates potential conflict between stakeholders over what counts as a ‘solution’, spans a large number of subject matters, and involves value-based issues (Rittel and Webber (1973). It may even be a problem, or situation, which is transforming law and governance (Ross, 2010). When the different concerns are not dealt with in a balanced and transparent manner,

Gamborg, C., Anker, H.T. & Sandøe, P. 2014. Ethical and legal challenges in bioenergy governance: coping with value disagreement and regulatory complexity. Energy Policy 69: 326-333

This is a pre-copy-editing, author-produced PDF of an article published in Energy Policy following peer review. The definitive publisher-authenticated version is available online at: http://dx.doi.org/10.1016/j.enpol.2014.02.013.

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bioenergy has the potential to turn into a threat instead of becoming the hoped-for vehicle of green development. The paper is structured as follows. We begin by sketching the conceptual framework we shall employ: the interplay between governance, ethics and law, including the way values as well as regulatory questions of who should regulate, at what level, and how, may be seen as influencing the approach to governance. Secondly, two cases of bioenergy – bioethanol, representing liquid biofuels, and wood pellets, as an example of bioenergy based on solid biomass – are presented. In both of these cases, problems appear to hamper efforts to govern sustainably, and there are noticeable differences in governance within the EU. A comparative ethical and legal analysis of the two cases is carried out. The paper critically discusses the ways in which the two types of bioenergy governance play out in relation to carbon-related and non-carbon related concerns and in terms of regulatory approach. Recognizing that there is no easy way of dealing with bioenergy governance, we make suggestions as to how to address the ethical and legal challenges in bioenergy governance. A key message is that it is essential to be aware of, and open about, the regulatory complexity and profound value disagreements involved. 2. Conceptual framework: the interplay of governance, ethics and law in governance The interplay between governance, ethics and law takes many forms – and of course we must note that other issues, notably economics and politics, affect governance. To us, it seems fair to assume that values mediated by public perception are indeed main drivers of policy and governance, and that public perceptions of bioenergy are highly dependent on the way scientific findings and ethical debates are received (Cacciatore et al., 2012). At the same time the legal and institutional framework places constraints on, and provides opportunities for, different approaches to governance; and in itself it may also cause new controversies and value debates. For the purpose of this article the term ‘governance’ is used in a broad sense to cover a continuum of activities ranging from the traditional state-based law (i.e. legislation and the common law as interpreted by the courts), to regulation (still requiring the state as a central player, but including also broader, more flexible forms of social control over governments, markets, businesses and third parties), to new modes of governance (where the state is not privileged, and power and responsibility are diffused) (Gunningham, 2009). However, it should be acknowledged that there is not always a clear distinction between the different elements involved in governance. Generally, what emerges is a complex mix of governance patterns (Armstrong, 2011), and rather than being “radically new or different, in practice new governance comes together with old” (Layard, 2010). In relation to bioenergy it has been argued that “… authority over policy decisions and associated regulatory rule-making is dispersed among many different actors operating at different levels … [thus the] biofuel sector is a textbook example of multi-level governance in operation” (de Beer & Smyth, 2012: 132-133). It might even be accurate to say it is an example of “experimentalist governance” (Sabel & Zeitlin, 2012). Until recently relatively little explicit attention has been given to the normative dimension of discussions of bioenergy governance. Early political handling – or governance – of bioenergy focused on finding answers to some of the most important

Gamborg, C., Anker, H.T. & Sandøe, P. 2014. Ethical and legal challenges in bioenergy governance: coping with value disagreement and regulatory complexity. Energy Policy 69: 326-333

This is a pre-copy-editing, author-produced PDF of an article published in Energy Policy following peer review. The definitive publisher-authenticated version is available online at: http://dx.doi.org/10.1016/j.enpol.2014.02.013.

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energy challenges; it was preoccupied with ways to improve energy security and reduce our dependence on fossil fuels like oil and coal. Today, the production and use of bioenergy finds itself in a difficult position: it has been promoted as part of a sustainable energy future, and yet first-generation liquid biofuels, at any rate, appear to give rise to one of the major controversies associated with climate change within the agricultural and environmental sectors (Hansen, 2013). In more detail, first-generation fuels are now heavily criticized on the grounds that they promote food shortages and promote deforestation in developing countries, thereby indirectly contributing to greenhouse gas emissions (Havlik et al., 2011).3 The public discourse in which these biofuels are discussed is somewhat akin to previous debates about the industrialization of agriculture (Thompson, 2012) and the GMO debate of the late 1990s (Mol, 2007). The bioenergy debate – and related governance issues – may seem to hinge on the resolution of factual disagreements such as whether or not, in actual fact, biofuels do promote food shortage. Here, if there is an accepted authority or scientific consensus on the evidence such issues ought to be capable of being settled – yet clearly they are often not so capable. However, there are also arguments in the bioenergy debate that appeal to values, by which we mean fundamental criteria of evaluation, such as the reduction of poverty, the protection of nature and the promotion of autonomy. And since these criteria may come into conflict there may be room for disagreements: an example would be disagreement over the conversion of natural forests into energy plantations, where concerns about nature protection are at risk of coming in conflict with the goal of curbing poverty. There is at the same time a growing awareness that models of governance (e.g. ‘command and control’ or market-based approaches) may be inadequate because they are not in line with new or evolving values (Groenfeldt & Schmidt, 2013). Hence the governance of bioenergy is likely to face problems connected with conflicts between different, and sometimes fundamental, values, or with differences over the relative importance of particular values. The problem is, however, that the ensuing arguments are not easily recognized as value disagreements, partly because they are entangled with factual disagreements. A first step in advancing these issues, therefore, is to identify the underlying value assumptions; and failure to consider values openly may lead to unclear orientation in governance, or even conflict. Moreover, when responses to problems of governance are being sought, one cross-cutting issue is clearly whether the chosen measures are in fact able to reflect, or balance, the underlying values appropriately. It is an issue complicated by the plain fact that bioenergy issues cut across regulatory levels (from the global to local level), across regulatory regimes (from trade law through to energy and climate-change law, and environmental law) and regulatory or even non-regulatory measures (from hard law to soft law and private initiatives). While the institutional framework comprises different types of formal and informal laws, regulations, norms and institutions, the legal framework can be defined more narrowly as those laws, regulations and norms which can be assigned a legal effect. Three foundational normative questions need to be taken into account in the development of bioenergy governance. Who should regulate, if at all? At what level should regulation take place? And what measures should be applied?

Gamborg, C., Anker, H.T. & Sandøe, P. 2014. Ethical and legal challenges in bioenergy governance: coping with value disagreement and regulatory complexity. Energy Policy 69: 326-333

This is a pre-copy-editing, author-produced PDF of an article published in Energy Policy following peer review. The definitive publisher-authenticated version is available online at: http://dx.doi.org/10.1016/j.enpol.2014.02.013.

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The first question raises the basic issue of whether to regulate at all or leave initiatives entirely to non-government actors. The international trade law regime, i.e. WTO law, places certain constraints on the right of states and state actors, including the EU, to regulate products to meet concerns about sustainability (Swinbank & Daugbjerg, 2013). It is quite clear that various types of direct regulation – e.g. import prohibitions or restrictions of biofuels and biomass products based on criteria relating to process and production methods (PPMs) – would be problematic vis-à-vis the WTO (Regan, 2009, Swinbank, 2009, Akrill & Kay, 2011, Switzer & McMahon, 2011).4 Whether other, more indirect approaches to regulation, such as voluntary certification or labelling schemes, are acceptable within the WTO framework is somewhat more uncertain (Echols, 2009; Cheyne, 2009). Thus, in the context of WTO, a preferred solution might be not to regulate at all, but rather to leave the matter entirely to private actors and the market. Alternatively, governments could opt for an international agreement, or possibly hybrid forms of regulation that cut across state-based regulation and market-based controls (Gunningham, 2009; Abbott and Snidal, 2009). In this connection, it is worth noting that the EU sustainability criteria for biofuels have been characterized as a hybrid regulatory model combining state-based criteria with private certification schemes (Lin, 2012, see further below). The second question, involving the identification of the relevant level of regulation depends on the jurisdiction, or power, to regulate, as well as on the nature of the issues at stake – issues which might naturally be cast in local, national, regional or global terms. In the case of bioenergy, global aspects have been predominant, primarily as the result of the global trade in bioenergy products (Romppanen, 2012). However, at international level few institutions appear to be both able and willing to address the issue of sustainable bioenergy governance (Gunningham, 2012). International initiatives addressing sustainability concerns are primarily non-state initiatives. An example would be the criteria developed by the Roundtable on Sustainable Biofuels (RSB). Some attempts, however, have also been made (e.g. on biofuel sustainability) under alternative international regimes, including the Convention on Biological Diversity. Of course, bioenergy production also has local effects, including environmental and social effects, and these are normally dealt with in national regulation. As a consequence, new modes of governance have emerged that cut across the different regulatory levels. The EU sustainability criteria are a case of transnational regulation. This transcends the national (and EU) jurisdiction by promoting EU standards at a global level (Lin, 2012). Such transnational regulation may be controversial when the EU is in reality seeking to regulate potentially negative effects of biomass production not only within its own jurisdiction but also in other countries (Lin & Scott, 2012). The third regulatory question concerns how to regulate. What types of regulatory measure or instrument are appropriate – traditional, direct measures or indirect or soft forms of regulation? Indirect and soft forms deploy incentives or disincentives in various ways – e.g. via subsidy schemes, and taxes, and labelling and certification schemes. The legal framework may limit regulatory options: the direct prohibition of “unsustainable” biofuels at national or EU level would infringe WTO law. As a consequence, alternative forms of indirect or soft regulation may be the preferred option in situations where the aim is to prevent or minimize the entry of undesired products to the market. Accordingly, EU sustainability criteria are linked to the fulfilment of the 10% renewable energy share and not directly to market access. Furthermore, the

Gamborg, C., Anker, H.T. & Sandøe, P. 2014. Ethical and legal challenges in bioenergy governance: coping with value disagreement and regulatory complexity. Energy Policy 69: 326-333

This is a pre-copy-editing, author-produced PDF of an article published in Energy Policy following peer review. The definitive publisher-authenticated version is available online at: http://dx.doi.org/10.1016/j.enpol.2014.02.013.

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preferred control mechanism is based on private certifications under a voluntary control scheme. Depending, then, on the legal and institutional framework, the development and application of regulatory measures in bioenergy governance may face various challenges. These challenges will be analysed in what follows in relation to two bioenergy cases. 3. Case studies: bioethanol and wood pellets Two bioenergy cases – bioethanol, representing liquid biofuels, and wood pellets, as an example of bioenergy based on solid biomass – are used to illustrate the impact of value disagreements and regulatory complexity in bioenergy governance. The cases represent different segments of the bioenergy market: transport and heating. Both have growing market shares (see the following sections), and each is the subject of growing concern, particularly about sustainability (EC, 2010). The cases illustrate the difficulties involved in governance, given sustainability concerns about biofuels as well as of solid biomass, and also the noticeable differences in governance approach within the EU. Although the sustainability issues raised by bioethanol and wood pellets are in many ways similar, they have so far been handled with rather different governance responses, at least within the EU. The explanation of this divergence is likely to be multifaceted. However, we wish to focus mainly on the role of underlying value disagreements and regulatory complexity. 3.1 Case presentations 3.1.1 Liquid biofuels for transport: Bioethanol About 70% of ethanol produced in Europe is used as a transport fuel for consumption on the European market. At present, biofuel use in the EU is 4% of overall fuel use in the road transport sector. Relative to the USA and Brazil, the EU fuel ethanol sector is rather small. It is also small in comparison with the European biodiesel sector, which has 75% of the market for liquid biofuels for transport in the EU. However, in recent years, following the EU biofuels policy framed in the Renewable Energy Directive (see below), EU ethanol production capacity has significantly increased to 7 billion litres. This development has been driven to a large extent by policies for growth in the European economy, along with environmental protection and energy security policies, e.g. as reflected in the 2008 EU Energy and Climate Change Package.5 Some ethanol is imported into the EU, the main supplier being Brazil, where its origin is presumably sugar cane. However, by some distance the largest proportion of the ethanol imported by EU member states during 2010 was supplied within the EU boundary – and thus through inter-member-state imports and exports (Hewitt, 2011). The core of European biofuels policy is set out in Directive 2009/28/EC (Renewable Energy Directive - RED). RED introduced a mandatory share of 10% for renewable energy in the EU transport sector. In addition, the Directive on Fuel Quality Standards (FQD) regulates biofuels by setting a 6% reduction target for the greenhouse gas intensity of fuels used in road transport and non-road mobile machinery. The previous directive, the Biofuels Directive (2003/30/EC), set only indicative targets, of 2% renewable fuels in transport in 2005 and 5.75 % in 2010, which were not legally enforceable. RED (along with FQD) is seen as the basis of a much stronger legal framework, not only because it incorporates legally binding targets, but also because it

Gamborg, C., Anker, H.T. & Sandøe, P. 2014. Ethical and legal challenges in bioenergy governance: coping with value disagreement and regulatory complexity. Energy Policy 69: 326-333

This is a pre-copy-editing, author-produced PDF of an article published in Energy Policy following peer review. The definitive publisher-authenticated version is available online at: http://dx.doi.org/10.1016/j.enpol.2014.02.013.

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contains an unprecedented list of sustainability requirements to be complied with when fulfilling the 10% target. RED sets out sustainability criteria for biofuels in articles 17, 18 and 19. Compliance with the criteria is also a prerequisite of eligibility for financial support for the consumption of biofuels and acceptance of national subsidy schemes for biofuels within the EU state aid rules.6 The EU sustainability criteria are as follows. First, emission savings: biofuels must provide a 35% GHG emissions savings compared with fossil fuels (this figure will rise to 50% in 2017), including direct land-use effects. Second, no raw material must come from land with high biodiversity value or high carbon stock. Third, EU-produced biofuels must meet cross-compliance environmental rules, which are part of the Common Agricultural Policy (CAP). In addition the European Commission shall report on social criteria, i.e. on food availability, and on compliance with land-use rights and with international labour conventions. Compliance is not monitored directly by the Commission or the member states; it relies mainly on a number of approved voluntary certification schemes. 3.1.2 Solid biomass for heating and electricity: Wood pellets Another now widespread form of bioenergy uses woody biomass in the form of wood pellets – a uniform, energy-dense product which is relatively cheap to transport and easy to use as a substitute (in the short run) for coal. Wood pellets are used for domestic purposes (where they are a substitute for oil) as well as industrial purposes – for heat and power production. The pellets are seen as essential in attaining the 2020 target of obtaining 20% of EU’s energy from renewable sources. Currently, wood pellets are made mainly from industrial waste wood; but this may soon change to freshly cut wood which has been dried, ground, and compressed to keep up with demand (Mantau et al., 2010). Annual demand for wood pellets in the EU has grown strongly over the last ten years to 13 million tonnes (International Wood Markets Group 2013). This growth, which is primarily market-driven, is expected to continue. The EU is projected to remain the largest wood pellet consumer in the world, accounting for approximately two thirds of global consumption, and could be consuming 20–50 million tonnes annually by 2020 (Pöyry, 2011). In a high import scenario feedstock will be based on new plantations in South America (Brazil, Uruguay), in Sub‐Sahara (e.g. Liberia, Ghana and Mozambique), and on standing forests in Russia (Cocchi et al., 2011). With a shift to greater use of whole logs or forest residues (Verhoest & Ryckmans, 2012), and with greater reliance on imports, sustainability concerns similar to those associated with biofuels are now being raised in the EU. So far, however, the EU has not agreed an appropriate governance response as regards solid biomass sustainability. In an EU report (adopted 25 February 2010) on sustainability requirements for the use of solid biomass in electricity, heating and cooling, the Commission stopped short of proposing binding criteria at EU level in view of the wide variety of biomass feedstocks and the difficulties of putting forward a harmonized scheme at that stage. Yet the report made recommendations on voluntary sustainability criteria closely mirroring the biofuels criteria to be used by member states wishing to introduce a scheme at national level.7 The official rationale was to “avoid obstacles for the functioning of the internal market for biomass”. So far, when it comes to solid biomass in the form of wood pellets, only a few importing EU countries, including The Netherlands, the UK and Germany, have developed such national sustainability and quality requirements, partly

Gamborg, C., Anker, H.T. & Sandøe, P. 2014. Ethical and legal challenges in bioenergy governance: coping with value disagreement and regulatory complexity. Energy Policy 69: 326-333

This is a pre-copy-editing, author-produced PDF of an article published in Energy Policy following peer review. The definitive publisher-authenticated version is available online at: http://dx.doi.org/10.1016/j.enpol.2014.02.013.

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in response to the fear, indicated earlier, that expanding imports may introduce sustainability problems (EC, 2011). 3.2. Comparative ethical and legal analysis The aim of the analysis to which we now turn, then, is to explain how bioenergy governance has played out in the case of bioethanol and wood pellets. We pay particular attention to value disagreements and regulatory complexity, and we focus on carbon-related and non-carbon related sustainability concerns. Carbon concerns are basically about limiting GHG emissions. Non-carbon concerns can be divided into those that are social (e.g. food safety), those connected with basic development needs, and those of a broadly environmental character (e.g. biodiversity protection) (Mol, 2010). As all bioenergy is based on biomass, which has to be grown somewhere, these concerns give rise to a difficult discussion about what constitutes responsible land-use – and here, very clearly, there is no consensus (Gamborg et al., 2012). One of the foundational issues here is whether increased use of liquid biofuels (and, more generally, biomass in a bio-based economy) will intensify competition over land use (Croezen et al., 2010). The underlying value issues raised by this revolve around the need to balance, on the one hand, greater energy efficiency and economic growth in poor countries, and on the other hand, the desire to prevent climate change and preserve biodiversity. Another serious value disagreement over the use of biomass for energy purposes seems to arise from the question of who should bear the costs and burdens of mitigating global warming, and who should enjoy its benefits. Note, that these questions can be framed in both intra- and inter-generational perspectives (ibid.). 3.2.1 Carbon concerns The most prominent carbon issue is whether bioenergy will actually deliver lower GHG emissions than fossil fuels – a question turning largely on the issue of direct or indirect land-use change (Bailis & Baka, 2011). Carbon-related climate change concerns have been a strong driver in the development of various kinds of bioenergy offering an alternative to fossil fuels. The question of how strongly certain values influence governance can be seen in the way the climate agenda, and thus the desirability of GHG emission reduction, have for a long time been very influential in shaping regulatory measures promoting certain forms of bioenergy, particularly first-generation liquid biofuels for transport. But as environmental and social values changed, or at least were voiced more fervently, the steering has changed to some extent. The legal and institutional framework is challenged by such changes in values; at the same time it faces increasing complexity in dealing with the cross-cutting nature of bioenergy issues. For those who have climate change mitigation as a core value, the point at issue is whether this or that type of bioenergy actually leads to GHG savings (as compared with the costs associated with fossil fuels). A 2012 study asserts that the GHG-emission saving values of rapeseed biodiesel stated by the EU were more than questionable; the authors suggest that the EU has been led here by political pressures more than scientifically tested fact (Pehnelt & Vietze, 2012). A related question concerns indirect land-use changes, because there is a scientific dispute over the correct way to calculate effects (Di Lucia et al., 2012; Searchinger, 2008). Furthermore, strong industry interests lobby to protect investments (Kretschmer & Baldock, 2013). In 2010 the European Commission acknowledged that indirect land-use change can reduce the GHG emissions savings associated with

Gamborg, C., Anker, H.T. & Sandøe, P. 2014. Ethical and legal challenges in bioenergy governance: coping with value disagreement and regulatory complexity. Energy Policy 69: 326-333

This is a pre-copy-editing, author-produced PDF of an article published in Energy Policy following peer review. The definitive publisher-authenticated version is available online at: http://dx.doi.org/10.1016/j.enpol.2014.02.013.

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biofuels, but a number of uncertainties associated with the calculation models employed were also identified (COM(2010)811). On 17 October 2012 the Commission published a proposal to amend RED and FQD. The aim was to address indirect land-use effects, and thereby to limit global land conversion to biofuel production, as well as to improve the climate benefits of biofuels used in the EU.8 It has, however, not yet been possible to reach agreement on the proposal within the EU. In relation to carbon concerns, wood pellets have now begun to raise similar issues (Cocchi et al., 2011). According to a review conducted by the EU’s Joint Research Centre, the use of trees from forests for bioenergy purposes in the form of roundwood could increase GHG emissions relative to fossil fuel use (Marelli, 2013) – which would infringe the common assumption of wood energy’s carbon neutrality. Thus when the raw material is wood, the time needed to re-absorb the CO2 emitted into the atmosphere can be quite long, depending on the source of wood, thus creating a so-called upfront carbon debt (Zanchi et al., 2010). According to the Scientific Committee of the European Environment Agency, the GHG calculations for bioenergy that do not take into account the carbon released by burning, but only the carbon that is emitted during the production of bioenergy, are problematic. Hence, it is argued, bioenergy only delivers reduced CO2 emissions if its production increases the total proportion of plant growth (i.e. adds biomass), or if so-called biomass ‘waste’ that is not from wood from thinning is used. This is echoed in the European Parliament rapporteur’s response to the 2012 Commission proposal for amendments to RED and FQD, which calls for special attention to be paid to the issue of forest biomass. The rapporteur notes that in “the absence of sustainability criteria for solid biomass, it is out of the question to support the conversion of land into energy plantations”.9 At present, there are no reliable calculations of the length of time for which the member states in the EU will have a carbon deficit as the result of using forest biomass for energy. This uncertainty may make it even more difficult to calculate – and thus regulate – GHG reductions in a reliable way. So, where carbon control is at issue, the underlying value aspects and regulatory complexity associated with bioethanol and wood pellets appear to be quite similar – despite a certain time lag in between them. There seems therefore to be a good case for holding that GHG-reducing requirements should also apply to wood pellets as well, and that they should be calculated in ways that include a possible carbon debt. 3.2.2 Non-carbon concerns Bioenergy has other consequences – for land use, natural resources, and other land-based services. As Allen et al. (2013) argue, non-carbon related concerns of these kinds can easily be overlooked. Alternatively, rather different priorities may be assigned to them. One reason for this might be that, in contrast with the global nature of carbon concerns, non-carbon concerns are generally local. To date, non-carbon concerns have not featured as prominently in the debate about solid biomass as they do in discussions of bioethanol. There might be several reasons for this. One is that wood pellets are still based largely on secondary material – that is, on so-called waste from industrial production. However, this is likely to change, as increasing global demand is projected to be accompanied by a switch to pellets from freshly produced wood, which would ensure that environmental questions reflecting concerns about nature become more prominent. Another reason is perhaps again that most countries producing wood pellets have been developed countries. However, this also

Gamborg, C., Anker, H.T. & Sandøe, P. 2014. Ethical and legal challenges in bioenergy governance: coping with value disagreement and regulatory complexity. Energy Policy 69: 326-333

This is a pre-copy-editing, author-produced PDF of an article published in Energy Policy following peer review. The definitive publisher-authenticated version is available online at: http://dx.doi.org/10.1016/j.enpol.2014.02.013.

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seems likely to change in the near future, and various ramifications and reactions can be expected. An important value disagreement can be discerned here in attitudes to the expansion of international trade in biomass, including feedstock from developing countries. It concerns the extent to which solid biomass production is seen as harming the natural environment and as having negative social consequences (e.g. Greenpeace (2011) where the term ‘biomess’ is used). Lastly, many of the current producers here – and in forestry in general – are covered by the private forest certification schemes mentioned below, which do address social as well as environmental concerns. Hence, the question is how highly these schemes are valued by different stakeholders. While mandatory EU sustainability criteria for liquid biofuels have a fairly strong environmental focus, at least as regards biodiversity, social concerns are subject merely to a soft reporting requirement. Yet, several voluntary schemes have addressed social concerns as a significant component of the requirements put forward for achieving certification (German & Schoneveld, 2012). Non-carbon, social concerns have been associated particularly with the production of biofuel in developing countries (Ribeiro, 2013). While the EU’s response, in terms of governance, to concerns of this kind has so far been weak, it ought to be mentioned that the Draft Report of the European Parliament rapporteur also addresses social concerns when it stresses that “the use of land for growing biofuel feedstocks should not result in the displacement of local and indigenous communities. Special land protection measures therefore need to be introduced in the Union” (new recital 11c). Willingness to introduce more substantive forms of governance is, however, likely to be constrained by the complexities of transnational regulation in a global trade context. So far as regulation is concerned, there is an important distinction to be made between bioenergy produced from feedstock within the EU and feedstock produced outside the EU – and correspondingly between the environmental effects of the two types of bioenergy. While the EU sustainability criteria for biofuels, including bioethanol, primarily address biodiversity, identifying so-called no-go areas, they do not address other environmental concerns outside the EU. Within the EU, other environmental concerns are safeguarded primarily via the CAP requirements on good agricultural practice as well as cross-compliance. The reason the concerns are not addressed outside the EU may be connected with the difficulty establishing this type of transnational regulation, which indirectly imposes environmental requirements upon non-EU countries. It may also, however, be the upshot of too little attention being paid to such matters in the past (Allen et al., 2013). In relation to wood pellets, the Commission has argued so far that within the EU existing European and national legislation gives sufficient protection to valuable areas of nature. However, there has been a certain amount of anxiety that increased demand from the EU market will lead to unsustainable levels of production of wood pellets beyond the EU’s borders. Against this it can be argued that there are two main contrasts here, so far as the potential external environmental effects of liquid biofuels are concerned: first, the current exporting countries are mainly developed countries, and they can therefore be expected to have a certain level of environmental regulation; and second, sustainable forestry is generally governed through private, yet international, certification schemes such as PEFC (Programme for the Endorsement of Forest Certification, which is the largest forest certification system in the world, and is the certification system of choice for small forest owners) and FSC (Forest Stewardship Council, which applies to all tropical,

Gamborg, C., Anker, H.T. & Sandøe, P. 2014. Ethical and legal challenges in bioenergy governance: coping with value disagreement and regulatory complexity. Energy Policy 69: 326-333

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temperate and boreal forests and plantations). In addition a Pan-European Forest Convention is currently being negotiated. Given these factors, and their transnational implications, and given also the potential difficulty defining environmentally sustainable wood pellet production, it may be concluded that it is less urgent to address environmental concerns at EU level. 4. Discussion So far, at least, the governance response to sustainability concerns has been quite different in the two cases we have examined, and the question is to what extent such differences can be justified by differences over values and/or regulatory complexity. Bioethanol and other biofuels for transport have been subjected to specific sustainability regulation by RED and FQD. To date, wood pellets and other solid biomass products have not. It appears the EU has been somewhat reluctant to adopt a harmonized approach for solid biomass, even though there is real concern about the potential trade barriers associated with a national approach within the EU. In particular, as regards wood pellets, the EU may to some extent rely on existing environmental legislation within the EU to protect and safeguard forests within its jurisdiction. In addition, where forest products are concerned, there is a strong tradition of international governance through voluntary certification schemes verifying responsible practice such as FSC. True, FSC is mainly designed for forest management connected with timber products, but it is also relevant to non-timber products and environmental services such as carbon sequestration. It appears that there is ongoing discussion, within the EU, of the possibility of adopting sustainability criteria for solid biomass despite the somewhat mixed experience with biofuels. As is stated in the public consultation of the Commission on sustainability criteria, exclusively national approaches may be problematic in so far as they are uncoordinated or perhaps even conflicting (EC, 2011). One of the interesting outcomes of the 2011 consultation was the finding that stakeholders held divergent, and sometimes opposed, views on the key values underlying sustainability (e.g. protecting nature and reducing emissions). According to van Dam & Junginger (2011), a large majority (81%) of stakeholders from 25 EU member countries and 9 non-European countries indicated that a harmonized certification system for biomass and bioenergy is needed. One of the main arguments for such harmonization is the risk of setting up de facto intra-EU barriers which jeopardize bioenergy developments. Moreover, from a more straightforwardly market-oriented perspective, it could be argued that the harmonization of schemes will create a more level playing field across the energy sector. If sustainability criteria for solid biomass are adopted, they are likely to be similar to the biofuels criteria. An important distinction between biofuels and solid biomass is, however, that, within the EU, biofuels for transport are subject to virtually direct promotion through the legally binding obligation upon member states to ensure a minimum 10% share of renewable energy in the transport sector. Solid biomass products like wood pellets have not been promoted quite as directly, although the overall target of 20% renewable energy by 2020 may lead to national policies promoting solid biomass. The increasing use of, and demand for, wood pellets is primarily market-driven, as the pellets are a readily available and are a feasible alternative to coal, whereas until now liquid biofuels have been directly promoted by the EU and heavily subsidized. It could be argued that the direct promotion of biofuels

Gamborg, C., Anker, H.T. & Sandøe, P. 2014. Ethical and legal challenges in bioenergy governance: coping with value disagreement and regulatory complexity. Energy Policy 69: 326-333

This is a pre-copy-editing, author-produced PDF of an article published in Energy Policy following peer review. The definitive publisher-authenticated version is available online at: http://dx.doi.org/10.1016/j.enpol.2014.02.013.

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places greater pressure on the EU to deal with the adverse effects of such a policy by applying sustainability criteria or other regulatory measures. At present, the potential negative effects of solid biomass are handled only through the market, private certification schemes, and a few national sustainability schemes. Here it is worth mentioning that regulatory sustainability criteria are likely to be restricted by political disagreements between EU member states, whereas this would not necessarily happen with private certification schemes. From the point of view of sustainability, both approaches to governance seem controversial in as much as they take certain concerns into account while leaving out others. What is important here is to recognize that the value disagreements and regulatory complexity underlying governance can be dealt with when governance solutions are being developed and adopted. 5. Conclusions The governance of bioenergy, in the form of liquid biofuel and in solid form, faces several challenges today – some of which are connected with disagreement over values and regulatory complexity. Several values guide modern thinking about sustainable bioenergy. This axiological complexity is in itself difficult to cope with, and it has been argued that the EU sustainability criteria are in fact ill-suited to reflect the intricacies at play here accurately (Ekardt & von Bredow, 2012). While one may contend that there are some differences between bioethanol and wood pellets in respect of the underlying values (as reflected in particular in non-carbon related concerns), and that these may justify different approaches to governance, it could also be argued that it is perhaps only a matter of time before solid biomass forms of bioenergy, such as wood pellets, become more controversial in the public eye and the political arena. Developments here will depend in part, of course, on the way the issues are framed in public debate. Although wood is widely believed to be the fuel of the future in Europe, serious consideration of the underlying value issues here seems only now to be picking up. This makes it necessary to review questions about how to tackle environmental concerns (when fresh woody biomass is used as the basis of the fuel) and address social concerns (when imports rise). Moreover, legal debate over solid biomass bioenergy is lagging behind. It is presently unclear how a continuing, nationally regulated, non-binding approach will play out. While it is to be expected that there will be a regulatory response from the EU, the question is how, and to what extent, it will be possible to reconcile differences in underlying values which, on top of regulatory complexity, make it even harder to govern. On the surface, there might seem to be agreement on certain goals, such as reducing GHG emissions. But the weight of these agreed goals relative to other concerns, such as safeguarding the livelihoods of people in developing countries, may only emerge fully when it comes to prioritizing of the sort reflected in the specific governance approach. Thus while, evidently, there is no easy way in which the EU and national governments can deal with the extensive range of issues raised by bioenergy, in its many forms, failing to be open about underlying value disagreements, or make apparent the regulatory complexity, will serve only to cloud discussion of how to move forward on the correct, or best, governance of bioenergy. Clearly, it will not be possible to please everyone with one approach to governance. But instead of creating disgruntlement among all stakeholders, and pretending that there is agreement on the underlying values and implied priorities, the ethical and legal

Gamborg, C., Anker, H.T. & Sandøe, P. 2014. Ethical and legal challenges in bioenergy governance: coping with value disagreement and regulatory complexity. Energy Policy 69: 326-333

This is a pre-copy-editing, author-produced PDF of an article published in Energy Policy following peer review. The definitive publisher-authenticated version is available online at: http://dx.doi.org/10.1016/j.enpol.2014.02.013.

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challenge is to make the governance of bioenergy more transparent by revealing salient value-related and regulation-related conflicts over governance, and by clearly showing the goals as well as the constraints of bioenergy governance, and not least by keeping the inherent trade-offs in the open. While decision makers may be painstakingly aware that compromises are always made at some stage in any process in which governance is shaped, greater focus on value disagreements and regulatory complexity may serve to guide the approach to governance and make it more legitimate, as we have tried to show through the discussion of the carbon and non-carbon concerns aroused by liquid biofuels and solid biomass. Acknowledgements Financial support through the Subproject ‘‘International and national governance of bioenergy: trade, environment and integration of energy systems’’ under the Research Alliance ‘‘Enabling and Governing Transitions to a Low Carbon Society’’ funded by the Danish Council for Strategic Research (Grant no. 09-067275/DSF) is gratefully acknowledged. Special thanks are due to Morten Gylling and Paul Robinson. We would like to thank two anonymous referees for helpful comments. References Abbott, K. W., Snidal, D. 2009. Strengthening international regulation through transnational new governance: Overcoming the orchestration deficit. Vanderbilt J. Transnat. Law 42, 501. Akrill, R., Kay, A. 2011. EU biofuels sustainability standards and certification systems – how to seek WTO compatibility. J. Agric Econ. 62(3), 551–564. Allen, B.R., Kegan, D., Elbersen, B. 2013. Biomass and bioenergy in the wider land-use context of the European Union. Biofuels, Bioprod. Bioref. 7(2), 207–216. Armstrong, K.A. 2011. The character of EU Law and governance: From “community method” to new modes of governance. Curr. Leg. Probl. 64, 179-214. Bailis, R., Baka, J. 2011. Constructing sustainable biofuels: Governance of the emerging biofuel economy. Ann. Ass. Amer. Geograph. 101, 827-838. Buyx, A.M.., Tait, J. 2011. Ethical framework for biofuels. Sci. 332(6029), 540-541. Cacciatore, M., Scheufele, D., Shaw, B. R. 2012. Labeling renewable energies: How the language surrounding biofuels can influence its public acceptance. Energy Policy 51, 673–682. Charles, C. et.al., 2013. Biofuels—At what cost? A review of costs and benefits of EU biofuel policies, International Institute for Sustainable Development (IISD). Cheyne, I. 2009. Proportionality, proximity and environmental labelling in WTO law. J. Int. Econ. Law 12, 927–952. Cocchi, M. et al. 2011. Global wood pellet industry. Market and trade study. IEA Bioenergy. Task 40: Sustainable International Bioenergy Trade. International Energy Agency (IEA). Croezen, H. J., Bergsma, G. C., Otten, M. B. J., van Valkengoed, M. P. J. 2010. Biofuels: Indirect land use change and climate impact. Delflt: CE Delft. Dam, J.M.C., van Junginger, H.M. 2011. Striving to further harmonization of sustainability criteria for bioenergy in Europe: recommendations from a stakeholder questionnaire. Energy Policy 39, 4051-4066. De Beer, J., Smyth, S. J. 2012. International trade in biofuels: Legal and regulatory issues. The Estey Centre J. Int. Law Trade Policy 13(1), 131-149. Di Lucia, L. 2012. Lost decade of transport biofuels in the EU? An exploratory assessment of biofuels governability. Conference proceedings COBREN, Copenhagen, 19-20 November, 2012. Di Lucia, L., Ahlgren, S., Ericsson, K. 2012. The dilemma of indirect land-use changes in EU biofuel policy – decision-making in the context of scientific uncertainty. Environ. Sci. Policy 16, 9-19. EC 2011. Results of the public consultation on additional sustainability measures at EU level for solid and gaseous biomass used in electricity, heating and cooling. EC 2010. Report from the Commission to the Council and the European Parliament on sustainability requirements for the use of solid and gaseous biomass sources in electricity, heating and cooling. Echols, M., 2009. Biofuels Certification and the law of the WTO, International Centre for Trade and Sustainable Development (ICTSD)

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Swinbank, A. 2009. EU policies on bioenergy and their potential clash with the WTO'. J. Agric. Econ. 60(3), 485-503. Switzer, S., McMahon, J. 2011. EU biofuels policy—raising the question of WTO compatibility. Int. & Comp. Law Quart. 60, 713–736. Thompson, P. B. 2012. The agricultural ethics of biofuels: climate ethics and mitigation arguments. Poiesis Prax 8(4), 69–189. Thompson, P.B. 2010. The agrarian vision: Sustainability and environmental ethics. (Culture of the land). University Press of Kentucky, Lexington, KY. 336 pp. Thompson, W., Meyer ,S. 2013. Second generation biofuels and food crops: Co-products or competitors? Global Food Sec. 2(2), 89-96. Verhoest, C. & Ryckmans, Y. 2012. Industrial Wood Pellets Report. Laborelec. Pellcert. Report 22 March 2012. 29 pp. Available at: http://www.enplus-pellets.eu/wp-content/uploads/2012/04/Industrial-pellets-report_PellCert_2012_secured.pdf Zanchi, G., Pena, N. & Bird, N. 2010. The upfront carbon debt of bioenergy. Joanneum Research. Available at: http://www.birdlife.org/europe/pdfs/Bioenergy_Joanneum_Research.pdf                                                             1 Our usage of key terms in this paper follows “An EU Strategy for Biofuels” [COM (2006) 34 final - Official Journal C 67 of 18 March 2006]. 2 It includes what could be seen as contested ‘facts’ (Pehnelt & Vietze, 2012; Ekardt & von Bredow, 2012). We do not address the issue of how scientific uncertainty may directly affect bioenergy governance (e.g. see di Lucia, 2012). 3 Second-generation cellulosic ethanol is seen by some as preferable, in part because it is (only) indirectly in competition with other uses of the land (Buyx and Tait, 2011). 4 Complaints about European biofuel policies have been raised in the WTO by Argentina – against Spain (DS443, August 2012) and the EU (DS459, May 2013). 5 COM (2008) 30 final and Council conclusions 17215/08. 6 It has been estimated that the EU subsidies to primarily first-generation biofuels through market price support and tax exemptions for biofuels were approx. EUR 7 billion (Charles et.al, 2013). The Commission has, however, suggested that first-generation biofuels should no longer be eligible for public support after 2020: see the 2013 “Clean Power for Transport: A European alternative fuels strategy” (COM (2013)17). 7 The recommended sustainability criteria were: (i) a general prohibition on the use of biomass deriving from land converted from forest, other high-carbon stock areas and highly biodiverse areas; (ii) a common GHG calculation methodology which could be used to ensure that the minimum GHG savings from biomass are at least 35% (rising to 50% in 2017 and 60% in 2018 for new installations) compared to the EU's fossil energy mix; (iii) the differentiation of national support schemes in favour of installations that achieve high energy conversion efficiencies; and (iv) monitoring of the origin of biomass. The Commission also recommended that sustainability criteria should not be applied to waste (which forms the basis of much of the current wood pellet production), as this must already fulfil environmental requirements laid down in waste legislation at national and European level. 8 A leaked draft of the Commission proposal included mandatory ILUC factors in GHG-saving calculations, but the mandatory requirement was later abolished. 9 European Parliament Committee on the Environment, Public Health and Food Safety, DRAFT REPORT on the proposal for a directive of the European Parliament and of the Council amending Directive 98/70/EC relating to the quality of petrol and diesel fuels and amending Directive 2009/28/EC on the promotion of the use of energy from renewable sources (COM (2012) 0595 – C7-0337/2012 – 2012/0288(COD)).