New Study: ILUC is a Poor Basis for Regulation

New Study: ILUC is a Poor Basis for Regulation

April 13, 2015

Copenhagen Economics has conducted a study on the challenges associated with regulating indirect land use change (ILUC). The study was commissioned by the Malaysian Palm Oil Council.


EU policy makers are currently considering adopting regulation addressing the so called Indirect Land Use Change (ILUC) associated with e.g. biofuel demand. In this study, Copenhagen Economics advises against using ILUC as basis for regulation of specific products such as biofuels, as such regulation in many ways is a flawed and inconsistent approach:

  • The magnitude of ILUC is estimated based on complex modelling and uncertain assumption, and the margin of uncertainty is too large to form a reasonable basis for regulation.
  • The European Commission has been selective in their choice of academic studies to set the ILUC factors. In fact, only one study – which results do not seem consistent with several other studies – has been used.
  • ILUC estimates and the consequent regulation will change over time, implying that whether or not a biofuel type is assessed to be sustainable is likely to change over time. This will create a highly uncertain environment for investors.

Download the full report

For further information please contact Partner Sigurd Næss-Schmidt