Europe’s addiction to biofuels started back in 2003 when the block first established a series of targets and incentives to steer its energy market. These targets have been progressively increased to, purportedly, set Europe on a course towards climate neutrality by 2050. Yet, while Europe’ biofuels policies have figured prominently as a means to secure a more sustainable energy supply for the continent, they have insufficiently addressed due diligence [which refers to the monitoring and evaluation process of the social and environmental risks associated with a specific product or economic actor], creating perverse incentives in developing countries. Governments, investors and multinationals have consequently sought to take economic advantage of the growing European demand in the biofuel market, with sometimes devastating consequences.
The Chira Valley in Northern Peru is a clear example of how biofuel investments triggered by rising European demand and funding have resulted in serious environmental and social consequences for local populations in the Global South. Maple Ethanol, a sub-company of the multinational energy producer Maple Group, decided to invest in a large-scale sugar cane ethanol operation in the Chira Valley after securing funding from financial institutions. Crucially, Maple Ethanol’s funding sources included BIO, the Belgium investment bank for developing countries, which labeled the business initiative as contributing to renewable and “clean” energy sources. BIO and other development banks such as the Dutch Business Development Bank (FMO), the World Bank Group, the Inter-American Development Bank (IBD), the Development Bank of Latin America (CAF) and Interbank, supported the operation in Northern Peru, despite existing reports of national NGOs and the FAO highlighting issues around governance, land tenure and water availability.
An area the size of Brussels burned to fuel European cars
In 2006, Maple Ethanol acquired a total of 10,684 hectares in the Chira Valley from the Peruvian state at $60 per hectare. According to civil society groups and researchers, the price paid by Maple Ethanol at the time of this massive land acquisition was well below the real market price of the land, which averaged $1000 per hectare, and thus constituted an indirect subsidy of the company by the Peruvian state. Even more concerning was the fact that the huge area granted to Maple Ethanol at the time included entire towns and settlements, as well as large areas that had been traditionally managed as commons by local populations in the Chira Valley.
Once Maple Ethanol took possession of a significant portion of these adjudicated lands, many among the local population lost access to their traditional grazing lands and saw their houses and farmyards suddenly surrounded by vast sugarcane plantations or were even evicted from their own homes. The arrival of Maple Ethanol in the Chira Valley accentuated the power disparities between private ethanol companies and local farmers, as from the very start, the Peruvian state rushed to secure the former’s rights to water and land to the detriment of the latter.
In 2015, following financial backlash and local logistical problems related to water supply, Maple Ethanol went into default and sold its ethanol operation to a Peruvian conglomerate. Under this new governance structure, the already problematic social record of Maple Ethanol became even worse. In recent years, the current operator has been accused by civil society groups of diverting the Chira river by building controversial dirt dams during the dry months of the year, which leave many agricultural producers without access to water.
Similarly, the Peruvian group has been indicted by civil society groups and the Peruvian state’s own environmental regulators of conducting reckless sugarcane field burning activities that have affected the local health, public safety and infrastructural integrity of neighboring towns and settlements. As reported by civil society groups, these recurrent and unchecked practices demonstrate the Peruvian state’s complicity with ethanol producers in the Chira Valley, with a relentless concentration of water and land resources in the hands of these companies that has only been partially resolved.
In this process, the rights to health and social well-being of local populations are ignored as the Peruvian and European governments seek to foster massive ethanol investments to fuel Europe’s energy intensive economy. Today the operation expands over 14.446 hectares. At least six countries in the European continent have been involved as investors, market brokers and consumers, with Peruvian ethanol markets in the last five years, including the UK, Belgium, the Netherlands, France, Germany and Switzerland, despite the ongoing problems in the Chira Valley.
Europe must align green energy policies to principles of sustainability and social justice
The Chira Valley case constitutes an evocative example of the harmful effects of the EU’s biofuel policies in the Global South. Through funding and market incentives, Europe’s quest for greener alternatives to fossil fuels has prompted the development of large-scale bioethanol projects in places like the Chira Valley. The resulting projects have high social and environmental costs for the most vulnerable and impoverished sectors of society. If European policymakers truly aim to align green energy policies to principles of sustainability and social justice, they must take responsibility for these unintended impacts, move away from crop-based biofuels and include strong social sustainability criteria for advanced biofuels. Specifically, the EU must:
- Stop counting the contribution of all land-based biofuels, including from sugar cane, towards the EU’s Renewable Energy Directive (RED) targets by 2030 the latest. Crop biofuels should also be excluded from FuelEU Maritime and Refuel Aviation regulations.
- Include extended and binding social sustainability criteria for land-based fuels, advanced fuels and fossil fuels especially when produced outside the EU; to cover land and water grabbing; land, water and air pollution and degradation; impacts on ecosystem services; impacts on governance; respect of FPIC and full respect of all human rights through the whole value chain, including food sovereignty, health, decent work, child work, women’s rights and indigenous people’s rights.
- Enable the adoption of additional sustainability criteria at national level with its RED directive
- Improve and enforce the monitoring mechanism by including more frequent independent audits and extending the analysis of impacts in the Renewable Energy Reports of Member states to include the producing and intermediary countries.
- Ensure that a target for advanced renewable fuels in transport is based on a robust impact assessment.
- Include a loss and damage mechanism as a part of the just transition fund to compensate for past projects.
- Gear up efforts to reduce energy consumption in the transport sector and support the long-term decarbonization of the transport sector by phasing out new internal combustion engines, through modal shift, reduction in transport demand, and through additional incentives for renewable electricity in the RED.
In the absence of due precautions in European energy policies, and besides current European promises of “leaving no one behind” and “doing no harm”, this scenario has led biofuel investments to become a hazardous ingredient in larger global processes of land and water resource concentration, environmental pollution, and increasing social vulnerability in the face of climate change. The current revision of Europe’s renewable energy directive is a golden opportunity to fully phase out food-based biofuels and include stronger social sustainability criteria for advanced biofuels, and stop this “sustainable disaster”.
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