This is our last post of the year. 2016 will definitely go down in history as an eventful year, both on the political and policy levels. I hope you will all get to disconnect from work, rest, and enjoy the Winter Holidays with families and friends.
The Commission had promised us a ‘year of delivery’, and it did deliver indeed. We hadn’t seen such an amount of proposals in years – this is likely to keep us busy through 2017 and beyond. It’s not all perfect, but we know what we have to work with now.
We often hear in Brussels that the Juncker Commission is very ‘political’. But the downside of being ‘political’ is that you can be tempted to shut an eye on the facts and give in to pure political considerations instead, regardless of the actual consequences. This is precisely what happened with biofuels in the proposed legislation on renewable energy, and the decision to significantly reduce the use of all first generation biofuels, regardless of their GHG emission performance.
So, in 2017 our job is going to be to try and put back some nuance into the proposed legislation for 2030. In particular, we are going to try and convince policymakers that a black and white approach to conventional biofuels, while easier to understand, will not solve the problem of transport emissions and might actually make it worse. The problem is that many policymakers are still ‘traumatized’ by the never-ending discussions around indirect land-use change and do not want to reopen the debate. NGOs on the other hand are trying to convince everyone that only e-mobility can reduce emissions in transport, and that biofuels consist in taking people’s food and running your car with it.
Reality is a bit different. Yes, there are some conventional biofuels whose sustainability is uncertain, but not all of them. You just need to have a look at the latest studies to see it (hint: one of these, known as ‘GLOBIOM’ was commissioned by… the Commission). And guess what: sugarcane ethanol is one of the most sustainable biofuels even when ILUC is considered. The problem is that the Commission felt under so much pressure from public opinion that it did not fight it and adopted instead this simplistic narrative. Now we have to go and explain to people that the most common misconceptions on biofuels are not always true, especially when it comes to sugarcane ethanol, and why the proposed policies have a big chance of backfiring.
Despite the task at hand, we are really looking forward to 2017. We will be hearing more about Mercosur too, with a first civil society meeting scheduled for mid-January and another round of negotiations in March. We’re hopeful that progress can be made on the deal over the next few months and will follow closely the debate.
Thanks again for reading us and have a nice holiday!
Are we not losing sight of the main objective: reduce GHG emissions from transport?
My feeling after having read and digested the new proposal on the Renewable Energy Directive is that by 2030 there will probably not be a massive change in how much we emit from our transportation activities.
These are my doubts:
Trajectory is not realistic – I doubt that the trajectory proposed for the phase out of conventional biofuels will be actually feasible. Don’t take me wrong, I am very much in favour of advanced biofuels – some of UNICA’s members produce them – and I think it is good to have a specific sub-target for fuel suppliers. But, my question is: will advanced biofuels be able to replace the conventional biofuels at the rhythm foreseen by the Commission? I don’t think so! Advanced biofuels production often relies on conventional biofuels existing investment, infrastructures, biomass. This basis will not be there, after years of legislative instability and yet another change proposed last week, the situation is already looking gloomy. As a biofuel producer I would probably not dare to invest again in the sector under such premises.
Risk of more fossil fuels – In fact, I see the risk of more use of fossil fuels when conventional biofuels cannot be replaced with advanced!!! Certainly, it will not be electricity to come to the rescue. Also here, don’t get me wrong, I don’t think electric vehicles are in competition with biofuels. At least not in the foreseeable future! The Commission did not even go for a big push for electrification of transport as its recent narrative suggested. As I see it, we will end up, in perhaps other 20 years, with hybrid cars which can run with electricity and biofuels. Nor will come to the rescue other alternative fuels. Member States showed already during the negotiations on the Alternative Fuels infrastructure deployment directive, that they do not want to be told how to promote alternative fuels. So, no mandatory targets and national plans were to be submitted to the Commission on 18 November this year. We will have to wait until the end of the year to see how much countries are committed on this front.
GHG emission reduction target – I am very much in favour of the blending mandate. I think it is the right approach which keeps the focus on the main goal of reducing emission. But what about leaving fuel suppliers free to simply choose the less emitting fuels to meet their 6.8% target? This would have finally recognised and given a role to bioethanol, which is conventional but actually reduces GHG emissions and has a low ILUC impact, as assessed by the Commission itself. I think this would have been feasible from a scientific perspective, but unfortunately not so much on a political one, based on public misconceptions (see my blog on ‘Why science matters’ here).
Now, my question remains: how are we going to reduce emissions from transport in the next decade?
I look forward to the beginning of negotiations in the institutions and I will be happy to bring the positive example of Brazil, where sugarcane ethanol, one of the best performing conventional biofuels, is actually reducing transport emissions, improving the agricultural sector and creating the conditions for the next generation of biofuels to develop and become commercially viable.
Like most people with an interest in European energy issues, we are impatiently waiting for the release of the European Commission’s ‘Winter Package’. In this package, the Commission will amongst other things present its much awaited and certainly controversial new plan for renewable energy sources for 2030.
Biofuels policy has been quite sensitive in the EU as you know. Earlier this year, the Commission released what we know as the ‘Globiom study’, a report which looked at the GHG emissions of various biofuels taking into account Indirect Land Use Change. The purpose of this study was to put a definitive end to speculations around the ILUC impact of conventional biofuels (food crop based) and determine which ones actually reduce emissions and which ones do not.
The results could not have been any simpler: compared to fossil fuels, ethanol reduces, on average, emissions by one third (33%), much more than other conventional biofuels. Guess which ethanol in particular emits even less? No surprise for us: sugarcane ethanol! The same study, based on the very conservative default values of the Commission, found that sugarcane ethanol reduces emissions by 56%. As for advanced biofuels (waste-based) their emissions are close to zero. The problem is they’re not commercially viable yet.
Now think of yourself as a policymaker for a second, one whose job it is to find a way to reduce emissions in the transport sector, preferably at the lowest possible cost for society. You have these facts in your hands. Logic dictates that you put together a policy framework which encourages the use of those biofuels which actually reduce emissions, right?
Well, it seems it’s not always the case. In its Strategy to decarbonize the transport sector, published right before the summer, the Commission made the decision to focus on advanced biofuels only and phase out all conventional biofuels by 2030, regardless of their emission performance. To put it simply, the Commission has decided that it will phase out the only type of biofuel that can actually reduce emissions today because it’s clean and affordable enough to do so.
If like us you like to think you are a logical person, right now, you’re thinking ‘why’? Why would the Commission not differentiate between two clearly different biofuels even though their emission performance is so different? Why would the Commission go as far as to ignore the findings of a study it paid for itself? And why do this while knowing that the EU is lagging behind its transport emissions target?
Believe it or not, the answer is… public opinion. The Commission explicitly admitted that its decision was based on the public’s feelings towards conventional biofuels (the fuel vs. food myth which has been debunked, including by the European Commission itself, a number of times), despite what the scientific data showed. It even went as far as discrediting the calculations of the study it had paid for itself.
According to the Commission, the public is worried that the production of all conventional biofuels uses land which would otherwise be used to grow food. The truth is that in countries like Brazil, food production actually increased as a result of the push to produce more ethanol. In a recent statement, the European Farmers’ Association even recognizes that the production of biofuels has even helped stabilize the food market and made it more resilient to price shocks.
By ignoring these facts, the Commission is doing what too many politicians are doing today – giving in to people’s fears while ignoring the consequences of its decisions. With a little bit of courage and common sense, it might actually save the jobs of thousands of people who work to produce sustainable biofuels used on the European market, and reduce GHG emissions. Isn’t that the point in the end?
The publication of the Communication on low emission mobility by the European Commission in late July and the announcement of the upcoming new Renewable Energy Directive put biofuels, once again, in the front stage.
And this inevitably made it irresistible for stakeholders to push forward as many reports, blogs and opinions as possible to convey their arguments with the Commission. Many of these publications have a common point: to criticize the whole conventional biofuels world. This is not the first time I express my regrets and frustration with this black and white approach. As I have repeated over and over, not all biofuels are created equal and each of them should be evaluated based on its true environmental impact.
The fact is that none of the recent publications addressed founded criticism to sugarcane ethanol, which despite being a conventional biofuels has among the highest emissions saving performances. Even Laszlo Varro, chief economist of the International Energy Agency (IEA), who recently strongly criticized biofuels alleging “ugly questions about sustainability” said that “if I had to write a list with the world’s best designed schemes for investment in renewables, countries such as Mexico and Brazil would be there”. With 45% of energy coming from renewables, Brazil has one of the world’s cleanest energy mix and sugarcane is the #1 source of renewable energy. Sugarcane is mainly used to produce ethanol that reduces emission by 90% on average, in addition to bioelectricity. For me, the words of Mr. Varro are a clear proof that some conventional biofuels are better than others!
Now, the question is: how is the Commission going to distinguish among conventional biofuels on the basis of their individual environmental performances? This is a difficult political decision to make. However, in practice, this is what the scientific evidences tell us: there are sustainable conventional biofuels even when you scratch the surface!
Today the European Commission published a Communication on low-emission mobility which lays down its vision and strategy for transport over the next few decades. While we acknowledges the Commission’s clear support signal towards advanced biofuels – as they certainly represent one way forward to decarbonize transport – we are also deeply concerned about the gradual phase out of first-generation biofuels. As the Indirect Land Use Change (ILUC) Directive last year, this approach discriminates against all first-generation biofuels regardless of their actual GHG emission reductions. Such a U-turn only creates legislative instability and confusion for investors and does not help the EU in achieving its ambitious climate targets.
By refusing to take into consideration the concrete positive impacts of ethanol produced from sugarcane, the proposal effectively turns a blind eye to one of the cleanest alternatives on the market today.
Unlike other first-generation biofuels, sugarcane ethanol is one of the best performers in terms of GHG emissions reduction, even when indirect land-use change is considered. Moreover, Brazilian sugarcane ethanol does not face the alleged food vs. energy dilemma since, according to recent studies, including by the International Food Policy Research Institute (IFPRI, 2016), it has a negligible impact on food prices. Other countries are also looking at reducing their emissions from transports. Brazil, for instance, has replaced 45% of its gasoline consumption with sugarcane ethanol and the United States classified this specific biofuel as an advanced alternative.
By progressively eliminating first-generation biofuels, the Commission does not solve the problem of emissions from the 94% of energy in transport which will still be coming from liquid fuels in 2030.
We hope that the assessment of the impact of a gradual phasing-out of first-generation biofuels takes into account the investment already made by the industry. The development of advanced biofuels would depend on a healthy conventional biofuel industry, which is going to face great instability and economic losses in the years to come due to the regulatory shift generated by the ILUC Directive first and this strategy now.
The discriminatory approach towards first generation biofuels makes this Communication on low-emission mobility a missed opportunity.
Now, we look forward to the opportunity to maintain a fruitful and constructive dialogue with the Commission in the upcoming phase towards the new Renewable Directive and a new policy for sustainable bioenergy and biofuels for the period post-2020.
What would you think if I told you that I want to have a leading role in climate change policy but that I restrict the access of renewable solutions to my market?
“You’re totally inconsistent” would be the natural answer. But this is exactly what the European Commission just did.
The EU has ambitious climate targets. The Commission is currently engaged in drafting its new renewable energy directive and is discussing its strategy post-2020 to decarbonize transport. The same institution, based on the conclusions of the so-called GLOBIOM study, acknowledges that sugarcane ethanol is the conventional biofuels with the highest greenhouse gas savings. Brazil is also producing second-generation ethanol based on sugarcane wastes and residues. Therefore, it would make sense for the EU to import sugarcane ethanol.
Wrong answer. Domestic vested interests prevailed over the EU public interest and the Commission decided to remove ethanol from the trade offer that was exchanged with Mercosur yesterday! Consequently, the EU will continue to import oil freely and to promote the consumption of inefficient biodiesel.
Read our position paper and you will get a sense of how disappointed and, to some extent, how frustrated I am.
The EU-Mercosur agreement would provide a unique opportunity to strengthen our collaboration in the sugar and ethanol sector – a sector in which a number of European companies (Shell, Tereos, BP, Louis Dreyfus among others) have already heavily invested in Brazil.
The sustainability and competitiveness of Brazilian sugar and ethanol would be a perfect complement to the EU production, increasing consumers’ welfare, boosting innovation in the bioeconomy while helping to preserve the environment.
It’s time to change the way we look at trade negotiations. They don’t take place in isolation of other policies. The Commission will have a second chance to include sizeable TRQs for sugar and ethanol in the next round of negotiations. Let’s hope it won’t be a missed opportunity!
This week UNICA’s President Elizabeth Farina was supposed to attend the Apex-Brazil conference on the EU-Brazil partnership, in the presence of Brazilian Ambassador to the EU Vera Machado.
Of course, the event was cancelled as a consequence of the tragic events in Brussels on Tuesday 22 March. Elizabeth would have shared important messages on sugarcane which represent such a strategic sector for Brazil, as it delivers many products and opportunities, mainly from sugar and ethanol.
On sugar, some of you may already know that a little over ten years ago when the EU and Brazil were negotiating the Mercosur agreement, sugar was excluded from it because the EU sugar market was deemed to be too fragile for competition. Since then, it has gone through a series of reforms – the last of which will take place next year – that will effectively make it mature for competition from abroad. A number of countries have already been granted duty-free sugar export quotas to Europe. It’s time Brazil is given the same treatment through the EU-Mercosur agreement.
On ethanol, we have extensively debated about its sustainability. Let’s talk now about the role it could play if only it was traded freely in Europe. Unfortunately, what currently happens is that ethanol is considered an agricultural product, contrary to what happens for biodiesel which is considered a chemical product, and this means a higher tariff at 19 euro/hectoliter in the EU. This custom classification is effectively preventing Brazil to export to Europe. By removing this tariff barrier, more Brazilian sugarcane ethanol could be traded with Europe. This does not mean that it would replace European production, but only complement it.
In addition, those who think this would only benefit Brazil are missing the point. It’s about much more than just exports really. Firstly, this would benefit European companies as well. Approximately 20% of the sugarcane processing in Brazil is actually done by European groups. For those operating in Europe in the bio-chemical and bio-plastic industry, it would mean access to an affordable and low-carbon feedstock in the shape of sugarcane ethanol.
With minimum 71% GHG emission reduction according to default values in the Renewable Energy Directive, and 55% if ILUC is factored in, its GHG performance is simply unmatched among first generation biofuels. Higher blends in conventional fuels would be a simple step. Add to this the diversification of supply sources, the competition to lower costs, the alleviation of pressure on cereals commodity markets… If this is not a low-hanging fruit to help the EU decarbonize its transport sector, I don’t know what it is!
If the EU wants to decarbonize its transport system, it must address the paradox of trading oil freely while imposing high import taxes on Brazilian sugarcane ethanol. The Mercosur agreement is a good opportunity to do this; let’s not waste it.
A few days ago, I was listening to the speech of Vice-President Šefčovič’s at a high-level event in Brussels on biofuels. This was shortly after the release of the Energy Security package, and so the Commission’s main angle was diversification of supplies, in addition to decarbonisation of transport obviously, given the upcoming Communication in June.
The Vice-President started by setting the scene: transport counts for a third of the EU energy consumption, one fourth of emissions, the instability on the international oil market, etc. The bulk of his intervention was then about the way advanced biofuels can help solve these issues. Needless to say, it was disappointing to hear no mention of sustainable first generation biofuels such as ethanol. This showed that once again the Commission had given up on all first generation biofuels regardless of their differences; and sugarcane ethanol falls victim to this black/white distinction in biofuels. As time goes by and only a few months remain until the publication of the decarbonisation of transport – and later on the review of the Renewable Energy Directive – it is frustrating to see the Commission perpetuate this simplistic approach.
But let’s try and be optimistic. Mr Šefčovič did also say that “all main alternative fuel options must be pursued”. We hope that sugarcane ethanol will be given a chance to prove what it can do.
In the meantime, a few days ago the Commission launched a tender for a study on the ILUC impact of biofuels. The purpose of this study will be to gather the ‘best available scientific ILUC research evidence’ able to influence ILUC modelling results.
I’m sure most of you sadly thought: “OMG…ILUC is back!” (me included!!!). However, this may eventually help the identification of low ILUC risk biofuels ahead of the elaboration of further legislation. This may be a chance for sugarcane ethanol to finally differentiate itself from other first generation biofuels in the upcoming proposals to decarbonize transport!
There are still opportunities out there to get recognition for the potential of ethanol in Europe’s transport system. We’ll keep following these developments as they unfold...read us to know more!
As I mentioned in the first blog of the year, 2016 is the ‘year of implementation’. The year we will have to put together the measures needed not only to achieve the 2030 Framework targets and Energy Union goals, but also the COP21 Agreement. Certainly a Herculean task for all parties involved! I wanted to reflect a bit more on this…
This means producing lots of papers, spending hundreds of hours thinking about what we have done right or wrong so far and – ultimately – finding a compromise that benefits everyone. Not just the EU institutions, but also consumers and the climate. COP21 gave a long-term general direction to everyone: we are officially transitioning towards a low-carbon future and need to phase out fossil fuels. How we will get there is the real question we have to address now.
Commissioner Cañete recently said at an event in Brussels that we have to admit the mistakes of the past and not be afraid of learning from them. I think everyone can agree to that statement. From energy efficiency to renewable, including bioenergy, the Commission is giving everyone the opportunity to contribute to a broad range of issues on which legislative proposals are expected. We have a number of things to say and questions to ask.
On the planned review of the Renewable Energy Directive for example, we were disappointed to see that no target was considered for renewables in transport. With liquid fuels retaining a crushing majority of the market share until 2030 and even beyond, the Commission needs to promote sustainable biofuels such as sugarcane ethanol to make sure transport can also contribute to reaching the overall 27% target.
Take also the Effort-Sharing Decision, which is about how Member States will reduce emissions in sectors which are not covered by the EU ETS (heating, transport, agriculture). The transport sector is likely to be drawn upon heavily given its potential for lower emissions. This is where higher ethanol blends can help by providing a relatively cheap and easy alternative. By increasing the share of ethanol in the fuels available at the pump (such as E20, E85, etc.), you can achieve significant GHG emission reductions immediately, without having to wait for people to embrace electric cars!
This is the sort of simple yet effective measures which seem to be overlooked at this stage. The communication on the decarbonisation of transport, expected in Q3 of this year, cannot ignore ethanol’s potential if it is to really mean something. Electrification will only get you so far; ethanol can help us take that extra step and tackle emissions in the remaining 90-something percent of liquid fuels on the market.
And that’s if we only look at CO₂ emissions. Sugarcane ethanol fits well in the circular economy agenda – residues from the production of sugarcane are also used to produce electricity.
Our level of ambition requires that we use the potential of all energy sources which are ready to contribute. I already said what I think about the RED review, I will elaborate more on the other initiatives as soon as there is more clarity on where the Commission is heading. In addition, I’m very curious to see what will come out from the consultation on bioenergy which was launched last week and to which UNICA is planning to respond.
One thing is certain: there won’t be a silver bullet for reducing emissions from transport, only a pragmatic approach will succeed. If the Commission is serious about learning from past mistakes in 2016, it should start making the right choices now.
The moment has come for the EU to review one of the main pieces of legislation that influenced the EU biofuels and transport policies in the last few years: the Renewable Energy Directive (RED). A public consultation was launched in November 2015 along with an Inception Impact Assessment, which highlighted the options that the Commission is considering for the review.
The legislation should be adapted to the new EU 27% target for renewables set up by the 2030 Climate and Energy strategy. No national targets were agreed. This means that the European Union as a whole has committed to increase the share of renewables in the energy consumption by 27% compared to 1990 levels, but that Member States will have to negotiate to split the cake.
27% is not such an ambitious target, but the most worrying element in my perspective is the lack of a transport target in the options considered by the Commission for the review. It seems therefore that as of 2020, there will no longer be what I consider the best way to promote renewables in transport. Overall, I am not sure we can draw any conclusions on a legislation which implementation was paralyzed for almost 4 years because of the highly polarized ILUC debate.
In any case, I submitted this morning, on behalf of UNICA, the response to the consultation and my three key messages are:
Liquid fuels will still dominate the market and they need to be decarbonized - By 2030, the share of liquid fuels in the European Union is still expected to account for 93% of all energy in transport. This means that the Commission needs to promote the use of cleaner liquid fuels if it wants to decarbonize transport – electricity alone cannot make it by 2030. Technologies to achieve this goal, such as sustainable biofuels, already exist and should be promoted along electrification.
Sustainable biofuels should be promoted - Mandatory targets, or obligation on fuels suppliers, remain the best way to incentivize RES in transport. In fact, liquid fuels fully depend on traditional fuels suppliers to distribute their products. The market power of these operators is too large for biofuels to compete. A mandatory target, or an obligation on fuels suppliers, is the only way to force them to place clean liquid fuels on the market. In addition, to promote the competitiveness of sustainable biofuels, they should be taxed in a fair way, that is on the basis of their energy content instead of energy volume.
Higher bioethanol blends will have a positive environmental and economic impact - Ethanol high blends, such as E20, E85 and ED 95 for heavy transportation, should be promoted, as alternative fuels. This technology, developed by European companies, already exists and has positive track record in Brazil. Sustainable ethanol high blends reduce emissions by 90%, they are scalable, they need minimal change in infrastructure and they are less costly than other solutions. In addition, they reduce local pollutants compared to diesel.
I hope these points are duly taken into consideration in the evaluation of the consultation responses and further on in the review process. I will certainly continue repeating that we need to be realistic about what the future may look like and give space to the more sustainable resources, without harming the overall competitiveness objective.