We may not have seen the last of the carbon import tax controversy mentioned in the last post, but a more traditional trade/environment conflict is also brewing. The Independent reports:
The [UK] Government has claimed that World Trade Organisation (WTO) rules prevent it from banning the controversial use of biofuels that do more harm to the environment than good.
Later this month, officials from the Department for Transport (DoT) will start a consultation on new rules being introduced next year requiring petrol stations to sell petrol and diesel that have been blended with oil from crops such as corn, sugar or palm.
Under this DoT scheme, most stations will have to sell only biofuels, rather than conventional petrol or diesel, by 2010. Because crops can be regrown and absorb carbon, unlike fossil fuels, governments are increasingly turning to biofuels as a way of reducing emissions from cars.
But The Independent on Sunday has learnt that despite protests from environmental groups, fuel suppliers will not have to prove that the biofuels they have bought are from "sustainable" sources.
There is mounting concern in particular over the harmful effects of the cheapest source of biofuel, and one of the most plentiful, palm oil. Huge tracts of rainforest in Indonesia have been cleared and burnt to make way for palm plantations. A recent report blamed the burgeoning demand for biofuels and the resulting deforestation for making Indonesia the third-biggest producer of greenhouse gases.
D1 Oils, the company that makes biofuel using the inedible plant jatropha curcus, said the DoT scheme should reward sustainable biofuels that are made using land which is already in agricultural use.
A DoT spokeswoman said: "There is currently no internationally agreed definition of a 'sustainable biofuel'. If the UK were to invent one, it would be vulnerable to challenge under WTO rules."
It sounds like the government agency is saying that it cannot ban some kinds of biofuels based on the harm they cause to the environment, because by doing so they would be discriminating against some like products in favor of others.
I've always been skeptical of this strict interpretation of the National Treatment principle. To me, drawing such a distinction between biofuels would not necessarily lead to a violation, depending on how the measure was written and also the particular facts related to the distribution of imports and domestic production over the range of products. Also, there is still the Article XX defense.
