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Biofuels in the Renewable Energy Directive – the final call

By Géraldine Kutas posted May 16, 2018
On 17 May representatives of the European Parliament, member states and the European Commission will meet to negotiate the provisions on biofuels in REDII. This might be the last chance to find a compromise that ensures the future of a technology that is critical to reduce carbon emissions in transport.

On 17 May representatives of the European Parliament, member states and the European Commission will meet to negotiate the provisions on biofuels in the Renewables Directive (RED II).

This might be the last chance to find a compromise that ensures the future of a technology that is critical to reduce carbon emissions in transport. The European Parliament and member states have improved on the initial proposal by the European Commission, but more needs to be done.

Let’s start with the good news. The Parliament and Council have included a renewables target for transport.  Transport accounts for about 25% of total EU greenhouse gas (GHG) emissions and is one of the few sectors that has increased emissions over the last 25 years. An ambitious target is therefore necessary to seriously tackle emissions in this sector. The respective 12% and 14% targets proposed by Parliament and Council might not be ambitious enough but are steps in the right direction.

The attempt by the European Commission to cut the cap of crop-based biofuels to 3.8% would have provoked the end of a technology in Europe that until now is the only one that has had some real impact on limiting GHG emissions in road transport. By effectively killing the industry, the 3.8% target would also have destroyed any hope of ever scaling up production of next-generation biofuels. That cap needs to be maintained at 7%.

But the Council’s proposal of allowing member states to reduce their renewable targets in transport and individually set lower caps on plant-based biofuels is wrongheaded. It will fragment the market and fundamentally undermine the decarbonisation of transport in Europe. In addition, the proposal for multiple counting for certain alternative fuels is also a very bad idea. This is just an accounting ruse that would drastically reduce the ambitions and effectiveness of REDII. A better way to incentivise alternative fuels that need extra support would be through appropriate targets.

The Bulgarian presidency’s attempt to bridge the gulf between the European Parliament and Council is to be commended, but unfortunately the wording will satisfy no-one, as it is extremely vague and creates massive uncertainty. Suggesting that member states be allowed to set lower limits for biofuels that lead to deforestation or use of land with high carbon stock if they also set lower limits for biofuels that can be considered close substitutes is vague in the extreme. Without a clear definition of what is meant by close substitute, this will create uncertainty for investors and importers.

In the proposed compromise, biofuels with a low ILUC risk would be excluded from the lower limits EU members would be allowed to set. But no clear definition and criteria of what is a low ILUC risk biofuel exit and developing such definition proves extremely difficult. It would require reliable and transparent ILUC assessments that until now have been absent. According to the GLOBIOM study which is based on data that are 8 years old, Brazilian sugarcane, for example, is among the crop-based feedstocks with the lowest ILUC emissions, but there are no clear criteria to understand whether this would be considered a low-ILUC feedstock. Clearly, carbon saving potential is the only reasonable criteria for the sustainability of biofuels.

The idea of basing the lower limits for biofuels on European Commission bioenergy sustainability reports is simply wrong. What is the legitimacy of the EU to assess foreign nation’s fight against deforestation? Such an approach would represent a dangerous infringement upon the governance and sovereignty of independent nations by the EU. Any such an assessment should be based on one of the many existing certification schemes that are respected by industry and third countries alike, and recognized by the European Commission.

Brazilian sugarcane ethanol has proven unambiguously the massive contribution that certain biofuels can make in the fight against climate change. In 13 years Brazil reduced its carbon emissions  in the transport sector by more than 400 million tonnes thanks to bioethanol, that’s almost five times the performance of the EU.

Thursday 17 May will be a tough day for the negotiators who still have a lot of work to do to achieve a workable solution. This is their last chance to get it right.

* Article originally published in the online version of The Parliament Magazine

Free, fair and open trade – only if it suits?

By Géraldine Kutas posted May 03, 2018
The EU has the opportunity to close two major trade deals in 2018: with Mexico and with the Mercosur trading block. But if it fails, the EU’s credibility of promoting free and fair trade would be seriously undermined, as it would be clear that its appetite for free and fair trade goes only so far as its vested interests are not impacted.

The EU has the opportunity to close two major trade deals in 2018: with Mexico, on which it just reached political agreement; and with the Mercosur trading block, where an agreement lies tantalizingly within reach. The EU’s recent success in closing major trade agreements, such as with Canada and Japan, has been seen as a clear indication of its commitment to free, fair and open trade.

An agreement with Mexico and Mercosur would certainly be a good outcome for Europe, but whether this makes the EU an advocate of “fair and free” trade is moot. As always, it is in the politically-sensitive issue of Europe’s agriculture sector where the EU often comes undone in its mantra of fair and free trade, faced with the reality of actually opening its agricultural market up to competition. 

Sugar and ethanol are a case in point: with Mexico, the EU has agreed a quota on ethanol of 25,000 tonnes phased in over five years, equaling around 33m litres. This is just 0.5% of the EU’s production of 6.5bn litres in 2016.  The EU has offered Mexico a quota of 30,000 tonnes of unrefined sugar, with a tariff of €49 per tonne phased in over three years. Again, this is only a fraction of the EU’s sugar production, estimated at 20m tonnes in 2017-18, and a tariff of €49/tonne will make it impossible for Mexican sugar to compete with the European sweetener in the EU market. So in reality the deal actually provides no market access at all for Mexican sugar. 

In the EU-Mercosur negotiations a similar picture is emerging. The EU’s offers so far have been far from acceptable for Mercosur. The EU has offered a €98/tonnetariff within a quota of 100,000 tonnes. Only if the tariff were reduced to level the competitive field (another EU mantra) would the offer be fair.  

It was clear from the outset that getting a reasonable deal on sugar and ethanol was among the key issues for Mercosur. As the Brazilian chief negotiator has said, he cannot come home without an offer on these two products on the table. The Mercosur agricultural sector has always supported the deal but this support cannot be taken for granted if the deal does not provide for real market access. 

The deal will provide long-term benefits for Mercosur such as the better integration into global supply chains and improved efficiency and competitiveness. However, in order to sell the deal at home the bloc needs short-term gains in sectors that generate jobs. That is why access to the EU agricultural market would be so important. 

An EU-Mercosur deal will greatly improve market access for European added-value products and services, and will give European businesses a first-mover advantage in a market of some 250m consumers. It will protect geographic indication for hundreds of European agricultural products and ensure high sustainability standards. These are major achievements.

For Mercosur the main economic interest lies in agricultural exports. If the EU is not prepared to allow a level playing field in this, Mercosur could well walk away from a deal. In that case it’s not only European businesses that would lose. The EU’s credibility of promoting free and fair trade would be seriously undermined, as it would be clear that its appetite for free and fair trade goes only so far as its vested interests are not impacted.

Our Authors

 

Géraldine Kutas, Head of International Affairs & Senior International Adviser to the President of UNICA Géraldine Kutas
Head of International Affairs & Senior International Adviser to the President

 

Leticia Phillips, Representative-North AmericaLeticia Phillips
Representative, North America

 

Sugarcane Solutions Blog

Biofuels in the Renewable Energy Directive – the final call

On 17 May representatives of the European Parliament, member states and the European Commission will meet to negotiate the provisions on biofuels in REDII. This might be the last chance to find a compromise that ensures the future of a technology that is critical to reduce carbon emissions in transport.

Read on

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