Biodiesel is widely promoted as a lower-carbon alternative to fossil diesel, and on the face of it, the logic is compelling: crops absorb carbon dioxide as they grow, offsetting much of what is released when the fuel is burned. Yet the true climate credentials of any biodiesel pathway depend on a far thornier question than simple tailpipe arithmetic. They depend on what happens to land, sometimes thousands of miles away, when global agricultural markets adjust to rising biofuel demand. This is the problem of indirect land use change, commonly abbreviated to ILUC, and it has become one of the most contentious variables in the lifecycle assessment of biodiesel fuels. For energy professionals tasked with evaluating biofuel sustainability claims, understanding the ILUC debate is not optional. It is essential.

Understanding Lifecycle Assessment and Why Land Use Matters

What a Biodiesel LCA Actually Measures

A lifecycle assessment, or LCA, attempts to capture the total greenhouse gas emissions associated with a fuel from cradle to grave. For biodiesel, this means accounting for every stage: the cultivation of the feedstock crop (including fertiliser use and agricultural machinery), the extraction and processing of vegetable oil into fuel, transport and distribution, and finally combustion in the vehicle engine. The resulting figure, typically expressed in grams of CO2 equivalent per megajoule of energy, is then compared against a fossil diesel baseline to determine the percentage saving.

This methodology is not merely academic. It underpins the regulatory frameworks that govern biofuel markets across Europe and the UK. The EU’s Renewable Energy Directive (RED) and the UK’s Renewable Transport Fuel Obligation (RTFO) both rely on LCA-derived GHG intensity values to determine which fuels qualify for support and which do not. The stakes, therefore, are considerable: a change in the assumptions feeding into an LCA can shift a fuel from being classified as sustainable to being classified as worse than the fossil fuel it was meant to replace.

Direct vs. Indirect Land Use Change

Land use change enters the picture because growing energy crops requires land, and land conversion can release very large quantities of stored carbon. Direct land use change (dLUC) is relatively straightforward to identify. If a palm oil company clears a section of tropical forest to establish a new plantation specifically for biodiesel feedstock, the carbon released from that forest can be attributed directly to the fuel.

Indirect land use change is far more elusive. It occurs when demand for a biofuel feedstock displaces existing agricultural activity, pushing it onto new land elsewhere. Consider a simplified but instructive example: increased European demand for rapeseed biodiesel tightens the global vegetable oil market. This incentivises the expansion of soy cultivation in South America, which in turn drives conversion of native Cerrado grassland or even Amazon-adjacent forest. The carbon released by that distant land conversion is an indirect consequence of the original biodiesel demand, yet it may never appear in the supply chain records of the European fuel producer.

The Scientific and Methodological Controversy

The Modelling Challenge

Because ILUC cannot be directly observed or measured at source, it must be estimated through economic modelling. Researchers use complex tools, principally computable general equilibrium (CGE) models and partial equilibrium (PE) models, that attempt to simulate how global agricultural markets respond to an incremental increase in biofuel feedstock demand. These models must make assumptions about a wide range of variables: how farmers respond to price signals, how quickly crop yields improve, how trade patterns shift, and crucially, which types of land are converted and how much carbon those lands store.

The difficulty is that reasonable variations in these assumptions produce dramatically different results. A model that assumes rapid yield improvements on existing cropland will estimate lower ILUC emissions, because less new land needs to be brought into production. A model that assumes high trade elasticities and slow yield growth will estimate considerably higher emissions. The result is a range of ILUC values for any given feedstock that can span from negligible to catastrophic, sometimes differing by a factor of three or more for the same crop.

Where Researchers Disagree

Several specific fault lines have defined the debate over the past decade. The first concerns magnitude: just how large are ILUC emissions for major feedstocks such as palm oil, soybean oil, and rapeseed oil? Studies commissioned by the International Council on Clean Transportation (ICCT) have tended to produce higher ILUC values, while work supported by industry groups has often arrived at lower figures. The EU’s own GLOBIOM study, conducted by the International Institute for Applied Systems Analysis (IIASA), attempted to provide a definitive set of estimates but itself drew criticism from both sides.

A second area of disagreement involves the time horizon over which land conversion emissions are amortised. Clearing a forest releases a large pulse of carbon upfront, but the biofuel produced from that land delivers GHG savings year after year. Whether you spread the conversion emissions over 20 years or 30 years materially affects the per-megajoule ILUC factor. A third persistent dispute concerns the treatment of co-products. Rapeseed crushing, for instance, produces both oil (for biodiesel) and meal (for animal feed). How the land use burden is allocated between these co-products can significantly alter the ILUC estimate attributed to the fuel.

Policy Implications and the Regulatory Landscape

How ILUC Has Shaped EU and UK Biofuel Policy

The ILUC debate has had tangible policy consequences. When the EU first adopted the Renewable Energy Directive in 2009 (RED I), ILUC factors were acknowledged as a concern but were not incorporated into the GHG calculation methodology. Following years of scientific and political wrangling, the 2015 ILUC Directive introduced reporting requirements and placed a cap on the contribution of conventional crop-based biofuels toward renewable energy targets.

The recast directive, RED II, went further. It introduced the concept of “high ILUC-risk” feedstocks, defined as those associated with significant expansion onto land with high carbon stock, and mandated that fuels derived from such feedstocks be phased down to zero by 2030. Palm oil was the primary feedstock caught by this provision. The UK, following its departure from the EU, has adopted a broadly parallel approach under the RTFO, maintaining the distinction between high and low ILUC-risk feedstocks and setting its own trajectory for phasing out high-risk crop biofuels.

The Divide Between Industry and Environmental Advocacy

Unsurprisingly, the policy debate mirrors a deeper divide between stakeholders. The biofuels industry, particularly producers reliant on conventional crop feedstocks, has argued that ILUC models overstate the problem. Industry representatives point to sustainability certification, improving agricultural practices, and the limitations of the models themselves as reasons to treat ILUC estimates with caution. Some have argued that assigning speculative ILUC penalties unfairly disadvantages producers who can demonstrate responsible sourcing.

Environmental organisations, conversely, contend that ignoring or underweighting ILUC conceals the real climate cost of crop-based biodiesel and risks locking in perverse outcomes where biofuel mandates accelerate tropical deforestation. Groups such as Transport & Environment have been influential in pressing for stricter ILUC accounting within European policy. Certification schemes like the International Sustainability and Carbon Certification (ISCC) and the Roundtable on Sustainable Biomaterials (RSB) represent an attempt to bridge this divide, though their ability to fully capture indirect effects remains a subject of debate.

Looking Ahead: Can the Debate Be Resolved?

Advances in Data and Modelling

There is cautious optimism that the uncertainty range around ILUC estimates can be narrowed, even if a single consensus figure remains unlikely. Satellite-based monitoring of land use change, now available at increasingly fine spatial and temporal resolution, offers the prospect of better empirical grounding for model assumptions about where and how fast agricultural land is expanding. Improved supply chain traceability, including blockchain-enabled tracking of feedstock origins, could help link specific biofuel demand more precisely to observed land use outcomes. Hybrid modelling approaches that combine the strengths of different model architectures are also under active development.

The Shift Toward Advanced and Waste-Based Biodiesel

In practice, much of the policy response to the ILUC problem has involved sidestepping it. By incentivising biodiesel produced from waste oils, residues, and other non-crop feedstocks, such as used cooking oil (UCO), tallow, and fatty acid distillates, regulators have promoted fuels that carry negligible ILUC risk because they do not require dedicated agricultural land. In the UK, waste-based biodiesel now dominates RTFO supply, and UCO in particular has seen extraordinary growth.

This shift, however, brings its own challenges. Reports of fraudulent UCO certification, particularly involving imports from East and Southeast Asia, have raised concerns about the integrity of waste-based supply chains. Finite waste feedstock availability also raises questions about scalability. Energy professionals should be alert to the fact that the ILUC debate has not so much been resolved as redirected.

Conclusion

The debate over indirect land use change remains one of the defining challenges in biofuel sustainability assessment. It sits at the intersection of complex Earth system science, global economics, and politically charged policy design. For energy consultants and analysts, the practical implication is clear: any LCA presented without transparent treatment of ILUC assumptions deserves scrutiny. As regulatory frameworks in the UK and EU continue to evolve, and as modelling capabilities improve, the ILUC factors embedded in official GHG calculations are likely to be revised. Staying informed about both the science and the politics behind those numbers is not just good practice. It is a professional necessity.