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Council position on ILUC finally adopted by EU Energy Ministers

By Géraldine Kutas posted Jun 13, 2014
Today, European Energy Ministers finally adopted the Council’s position on ILUC. I have expressed already my disappointment for the lack of ambition showed by Member States. This deal doesn’t lead to a better framework for investments in the biofuels sector, especially in advanced biofuels, and the future discussions with the European Parliament do not let envisage any positive developments.

Today, European Energy Ministers finally adopted the Council’s position on ILUC, after EU ambassadors passed the Greek compromise last week. Key elements of the positions are a cap for conventional biofuels at 7% and a non-binding sub-target for advanced biofuels at 0.5% with three grounds for Member States to divert from it.

I have expressed already my disappointment for the lack of ambition showed by Member States. This deal doesn’t lead to a better framework for investments in the biofuels sector, especially in advanced biofuels, and the future discussions with the European Parliament do not let envisage any positive developments.

Ahead of the Council today, some delegations (Spain, Czech Republic, Slovakia, France, Estonia, Poland and Hungary) submitted a joint declaration where they made clear that they wouldn’t accept any agreement which proposes a lower cap for conventional biofuels than the one of 7% included in the deal adopted today. Although I reiterate that a cap is not a good way to move from high-ILUC to low-ILUC biofuels, this is a positive development which makes me understand that Member States are increasingly aware that the 7% cap is really the red line and that a certain level of predictability should be guaranteed for industry’s investments.

All the delegations which took the floor at this morning Council expressed their support for what they consider a reasonable and balanced compromise (only Belgium and Portugal couldn’t accept the deal), but the signatories of the declaration on the 7% cap reiterated that this element should be kept during negotiations with the Parliament and additionally, Spain and Slovakia made clear that also the non-binding nature of the sub-target for advanced biofuels is not negotiable.

Under these circumstances, the next Presidency (Italian) will have the very difficult task of reaching a compromise with the Parliament knowing already that the two key elements on the table are almost impossible to change.  

Yesterday I thought: if the 7% cap is not negotiable, what will the key element of the negotiation be? Probably the sub-target for advanced biofuels, but we are all aware on how difficult it was to accept such a low sub-target at 0.5% and now we know that some Member States consider this element non-negotiable as well. Can we realistically expect a compromise to be built on this basis?

With these open questions in mind, let the second reading start!

I look forward to the appointment of the next Rapporteur for the file in the European Parliament – considering that Ms Lepage was not re-elected at the last EU elections – and the beginning of trilateral negotiations. It remains to be seen which group will have the rapporteurship and what will be the overall political balance in the ENVI Committee.

But to know more about all this we’ll have to wait the end of June when the Committees will be formed and later in July when pending reports will be assigned by the groups’ coordinators.

One sure thing will be the time limitations foreseen for the second reading. In fact, the Parliament will have 3 months to adopt, reject or propose amendments to the Council’s position and the Council will have 3 months too to accept or reject the amendments. This means that in the more positive scenario there will be a final decision in October and in the worst case in January 2015. 

EU Member States miss another opportunity to lead on advanced biofuels

By Géraldine Kutas posted May 28, 2014
After the stalemate at the December Council where a blocking minority of Member States prevented the adoption of a Council common position on ILUC, Member States’ Permanent Representatives finally agreed today on a compromise text proposed by the Greek Presidency after two Ad Hoc Working Party meetings took place in April and May. The Council position will still need to be officially endorsed by EU Energy Ministers on 13 June.

After the stalemate at the December Council where a blocking minority of Member States prevented the adoption of a Council common position on ILUC, Member States’ Permanent Representatives finally agreed today on a compromise text proposed by the Greek Presidency after two Ad Hoc Working Party meetings took place in April and May. The compromise text was discussed already last week by the COREPER but there were still some concerns on the legal nature of the advanced biofuels targets and the text could not be agreed. The Council position will still need to be officially endorsed by EU Energy Ministers on 13 June.

The compromise text – which didn’t really introduce any ground breaking changes compared to the text proposed by the Lithuanians in December 2013 – proposes a non-binding 0.5% reference number for the use of advanced biofuels (with plenty of options for Member States to actually adopt an even lower target) and keeps a cap for conventional biofuels at 7%.

In the spirit of traditional European compromises, this low number bridges the gap between the more ambitious Member States wishing to develop advanced biofuels and those who don’t want to be bound by a commitment. Bottom line for the biofuel sector is that the compromise doesn’t offer any incentives to invest in second and third generation biofuels. Worse still, in its attempt to square the circle on the topic the Council is even likely to block any substantial investments.   

Developing advanced biofuels requires considerable R&D efforts and their market uptake is necessarily slow before they reach commercial scale. Greater clarity on the policy environment is an essential parameter for such investments to take place. It is no wonder why “the need for regulatory certainty” have become such buzzwords in Brussels in the past few years.

I repeat: biofuels, despite all the discussion on ILUC, currently represent the only economically viable way to decarbonise transport, provided that the EU manages to find a way to guarantee they are produced in a sustainable way.

Despite this, EU decision-makers continue to overlook the economic parameters within which the biofuels industry operates. First of all, there is no legislative clarity and there will not be any until the whole legislative process is finalised, which isn’t likely to happen before 2015. Second, the current measures on the table would harm the conventional biofuels industry even though it is precisely from this part of the industry that investments in more sustainable production are likely to come from. Third, the EU is not providing any truly interesting incentive for the development of advanced biofuels. On which premises is the biofuels industry supposed to invest in more sustainable production solutions?

Outside Europe, the Brazilian Sugarcane Ethanol (BSCE) industry demonstrates that conventional biofuels can be produced sustainably, alongside advanced biofuels. UNICA member companies produce second generation biofuels from waste and residues (i.e. bagasse and straw) as well as bio-electricity (by 2020 bioelectricity produced from BSCE can cover 18% of Brazil’s electricity needs).

As a matter of fact, by 2015 Brazil will have four commercial plants producing cellulosic ethanol (GranBio, Raizen, Odebrecht Agroindustrial e Petrobras) with a production for the first year foreseen at 168 million liters according to BNDES. The EU would be an interesting market for Brazil, if only the legislative framework was a bit clearer.

But the game isn’t over yet. The second reading in the European Parliament is just around the corner. One can only hope that the new MEPs adopt a more balanced approach to the file once they reopen it in the second half of the year. 

EU political groups are apathetic on transport issues

By Géraldine Kutas posted May 08, 2014
Having looked at the recently published manifestos of the European political groups, I realized surprisingly that the main groups, EPP and PES, do not even mention transport issues in their priorities for the next five years. Isn’t it odd?

Having looked at the recently published manifestos of the European political groups, I realized surprisingly that the main groups, EPP and PES, do not even mention transport issues in their priorities for the next five years.

Isn’t it odd? Transport is still one of the main sources of emissions in Europe, and in the world really. According to the European Commission, transport is the only sector where GHG emissions are still rising, and yet this seems not to be a major concern for the European political groups. Only the Greens and the Liberals mention transport and only the Greens have priorities on greener and sustainable transport.

To be honest, this doesn’t appear to be in the top-10 issues for the European Commission either, which in January proposed to remove transport specific targets from the 2030 Policy Framework. And, now that I think about it, only very few Member States raised concerns over the lack of transport targets and the proposed end of the Fuel Quality Directive (FQD) during the Energy and Environment Council meetings in March.

In my blog on “Full U-Turn on Decarbonizing European Transport”, ahead of the publication of the 2030 Package, I ironically said that it is good to know that the Commission thinks we can stop worrying about carbon emission in transport. Clearly, this isn’t true and the scientific body of the Commission, the JRC, just released a study which concludes that in every scenario considered the existing targets for 2020 (10% RED and 6% FQD) cannot be sustainably met without blending in more advanced biofuels, assuming they are available.

If the solution doesn’t come from the energy policy, it will come from the transport side, I thought! Maybe the Commission is going to issue another Communication on Transport – equivalent to the 2030 Climate and Energy Package – revamping the objective of the White Paper of 2011, or assessing the results achieved so far and raising awareness of what still needs to be done in the road to 2050. However, the White Paper was published only 3 years ago and I learned that a mid-term review will most likely only happen between 2015 and 2016. The highest levels of DG MOVE are not even thinking about a new White Paper yet.

Well, I guess the uncertainty over the biofuels policy cannot be cleared from the transport side either!

Meanwhile, biofuels still remain the most promising way to reduce transport emissions in the short and medium term. However, the ILUC discussion stopped in the last couple of years the developments (and the investments) of the biofuel industry and so far the EU hasn’t managed to provide legal certainty on how sustainable biofuels should be counted against the 2020 targets. Not only did a legal certainty not come from the energy policy, but the proposal put on the table in 2012 by DG CLIMA and DG Energy even risked (and still does) damaging also those sustainable biofuels with a very low-ILUC impact, only because they are food-based, such as Brazilian sugarcane ethanol.

As pointed out several times in my blogs, the Commission should work on a more balanced approach to the biofuels policy and the targets for sustainable transport should not be taken out from of the picture. For the first time, the candidates for the Commission Presidency from the main pan-European parties are debating publically on their priorities ahead of the elections, as a result of the changes introduced by the Lisbon Treaty, and this could have had the potential of raising the awareness of a wider audience than the usual ‘Brussels bubble’ on topics such as sustainable transport and biofuels. However, the candidates for the next Parliament – which is usually the institution that most promotes high standards of sustainability – missed the opportunity to be carriers of sustainable transport ideas and makes me wonder what will be the level of interest on these issues in the next 5 years. 

IPCC adopts a more nuanced approach and recognize benefits of biofuels

By Géraldine Kutas posted Apr 17, 2014
It’s good to see that a highly regarded institution, like the United Nations, has just released a new report that has the courage ‎to simply follow the empirical evidence about the benefits of responsibly produced biofuels.

It’s good to see that a highly regarded institution, like the United Nations, has just released a new report that has the courage ‎to simply follow the empirical evidence about the benefits of responsibly produced biofuels. 

The Intergovernmental Panel on Climate Change (IPCC) has taken an empirically sensible-based approach this time towards biofuels and recognizes that they can contribute to climate change mitigation, provided that some good practices are put in place. It adopts a much more nuanced approach to biofuels – an approach that I have been defending since the beginning of the discussion on ILUC – arguing that biofuels may have from 30 to 90% GHG emission reduction than fossil fuels (per kilometre travelled, Chapter 8), but acknowledging that public policies need to be determined on a case by case basis to take into account the specificities of different biofuels and possible direct and indirect LUC effects.

In fact, some biofuels (conventional and advanced) can be more or less well-performing in terms of GHG emission reduction and this needs to be evaluated in a more balanced way than the black and white approach proposed by the Commission with the cap on conventional biofuels. As I said in several other occasions, Brazilian sugarcane ethanol records excellent performances even though it is a so-called first-generation biofuels.

Additionally, the use of biofuels in transport, as a climate change mitigation measure, is mentioned in the report as a mean to reduce oil dependence and thus increasing energy security, which is definitely a key concern at the moment for the European Union.

Quite interestingly, the IPCC's report makes two important points. First, it refers to the European Union policies on biofuels, claiming that the much contested Fuel Quality Directive is actually a “durable framework” and provides “flexibility to industry in determining how best to reduce fuel carbon intensity” (Chapter 8), just right now that the EU Commission proposed to get rid of it! Secondly, it expresses some doubts on the measurement of direct and indirect effects on land-use change.

Now, I wonder the impact of these considerations on the current debate on the 2030 Climate and Energy Package. The Package was mainly criticised for the lack of specific renewables targets for Member States as well as of specific transport targets. Without these elements, it is very difficult to expect the Member States to increase the amount of renewables and biofuels in their energy mix and meet the general objective of decarbonising transport. From its side, the IPCC is giving some credit to the FQD and proposes a conscious and balanced approach to biofuels. 

I am also pleased to see the IPCC's contextualized arguments on Brazil, which is mentioned several times in the report for some good examples in the sugarcane industry as well as for employment conditions and deforestation control policy. Notably, the Brazilian Action Plan for the Prevention and Control of Deforestation is brought as an example on how the cooperation between several level of government and the “combination of economic and regulatory approaches significantly increased the protected areas” (Chapter 11). Further, IPCC recognizes that “Brazilian sugar cane ethanol production provides six times more jobs than the Brazilian petroleum sector and spreads income benefits across numerous municipalities” and rightly mentions the development of the bio-refineries in Brazil, where 10% of ethanol goes into bio-products (Chapter 11).

The IPCC should be credited for finally amending past inaccuracies as regards biofuels, by delivering a balanced approach in a report that carries significant weight with policymakers around the world. ‎Unfortunately, various lawmakers in Brussels have too often let the erroneous and emotion-based arguments of NGOs to guide policy around biofuels. Let's hope that policy makers will give this IPCC report a considered examination to inform policy intentions going forward around responsibly produced biofuels.

Message to IPCC on Climate Change: More Attention to Detail on Brazilian Sugarcane

By Géraldine Kutas posted Apr 04, 2014
This week the United Nations scientific panel on climate change (IPCC) published its latest report on climate change. The report, echoing its past findings about a clear link between climate change and human factors driving that change, argues that immediate action is required on the matter to reduce the variety of risks in the future that come from climate change.

This week the United Nations scientific panel on climate change (IPCC) published its latest report on climate change. The report, echoing its past findings about a clear link between climate change and human factors driving that change, argues that immediate action is required on the matter to reduce the variety of risks in the future that come from climate change.

On the issue of biofuels, the IPCC -- while it doesn’t repudiate them completely -- is more critical than in the past and for the first time argues they may have negative impacts on land use, food prices and water usage.

While I agree on the fact that some biofuels are more sustainable than others -- and Brazilian Sugarcane Ethanol (BSCE) is one good example -- some clarifications are needed to clean up some otherwise sloppy thinking about BSCE.

Let’s start with ILUC first: the report argues that expansion of biofuel crops in Brazil might cause rangeland (land where natural vegetation grows without human intervention) to move further into the Amazonian forest with negative effects on biodiversity, potentially offsetting carbon savings from biofuels production.

Brazil has substantially reduced deforestation in the Amazon over the past many years while expanding sugarcane production. In fact, that reality is one among others that has been trumpeting the undisciplined speculative tone the IPCC takes on this matter.

According to the Brazilian National Institute for Space Research (INPE), more than 60% of new sugarcane production takes place on pastures, mostly degraded, which are released every year for other uses with the progressive intensification of cattle ranching activities (sugarcane actually captures larger amounts of carbon that previous land uses).

Further, Brazil’s 2009 Agro-ecological Zoning for Sugarcane policy prevents sugarcane expansion in sensitive ecosystems, like the Amazon, as well as in areas with native plants and of high conservation-value, in order to protect biodiversity.

The IPCC report falls down on the BSCE issue because it uses as a reference point a dated 2010 study (Lapola et al, 2010), yet it neglects some of its own conclusions such as the finding that increasing the livestock density throughout the country could avoid the ILUC caused by biofuels while still fulfilling all food and bioenergy demand. That is exactly how Brazil expands most of the sugarcane area.

Turning now to food prices: the report maintains that increasing demand for biofuels shifts land from food to fuel production, which may increase food prices disproportionately affecting the poor.

Well, the fact is that in the last 20 years the production of both food and biofuels has increased significantly in Brazil. The volume of sugarcane harvested and processed almost tripled with no drop in food production. Quite the opposite: Brazil’s grain production doubled during the past ten years. According to the World Bank, recent price hikes in agricultural commodities can be explained by a list of other factors such as rapidly rising oil prices, adverse weather conditions, devaluation of the dollar, speculation in agricultural markets, and increased food demand due to population and economic growth, particularly in Asia. Other studies also put the “food vs fuel” debate into perspective.

My last point is on the claim that water usage for biofuels cultivation “is projected to increase from 0.5% of global renewable water resources in 2005 to 5.5% in 2030” (according to the IEA).

Here, I believe I should specify that this is not the case in South-Central Brazil where most of the crop is grown and where sugarcane is usually not irrigated thanks to abundant and reliable rainfall. Water accounts for more than two-thirds of sugarcane’s weight, so a significant amount of water actually comes to the mill inside the cane itself. At the mills, water usage in cane processing in Brazil was reduced by more than 70% (to 1.4 m³ per ton) in the past two decades and technological advancements will soon allow this number to further drop to 0.5 m³ per ton. The mills have also eliminated water discharge by recycling nearly 95% of the water consumed in the industrial process.

On a positive note, the IPCC report rightly mentions the benefits of biofuels in Brazil, where the development of advanced technologies (such as hydrolysis) mitigates the alleged social and environmental impact of sugarcane cultivation while increasing its economic potential, and points to the use of bagasse for the production of bioelectricity.

So what conclusions should we draw from the IPCC report? While I understand the necessary generalization that this type of study has to make in order to be comprehensive, a number of clarifications were needed to grasp the correct picture of what actually happens in Brazil.

To avoid misleading the public policy, real and country-specific facts should be more at the basis of studies and reports of this kind to serve as a good policymaking foundation for lawmakers. 

European Heads of government set to discuss 2030 Climate and Energy Package

By Géraldine Kutas posted Mar 19, 2014
Later this week, European heads of government will meet in Brussels to discuss, among other issues, the European Union’s 2030 Climate and Energy Package which – as I mentioned in my previous blog – effectively called for an end to the Fuel Quality Directive after 2020 and for a phasing out of public support for first generation biofuels in transport.

Later this week, European heads of government will meet in Brussels to discuss, among other issues, the European Union’s 2030 Climate and Energy Package which – as I mentioned in my previous blog – effectively called for an end to the Fuel Quality Directive after 2020 and for a phasing out of public support for first generation biofuels in transport.

European environment and energy ministers, earlier this month, had their first debate on the Package, which essentially represents the EU’s climate abatement plan to 2030 after the current one technically expires in 2020.

In general, various environment and energy ministers welcomed the European Commission’s proposal and agreed that regulatory predictability and strong signals are needed for businesses and investment as well as increased efforts in infrastructures and interconnections. However, as usual the devil is in the detail and a divide amongst member states was already clear on the transport issue.

Despite opposition from various Member States, a number of countries (Belgium, Finland, Italy, Luxembourg, Netherlands and Slovenia) mentioned the importance of having a dedicated renewables-in-transport target after 2020. In addition, Belgium, the Netherlands and the UK specifically argued that the Fuel Quality Directive should continue beyond 2020 and called on the Commission (which initiates EU policy proposals) to put forward a legislative proposal.

The Commission had hoped that member states could agree on targets, such as a new carbon reduction goal, ahead of the heads of government meeting Thursday and Friday.

The biggest obstacle to such an agreement would be that the more coal-dependent EU member states from Central and Eastern European region (CEE) are likely to “hold out” on agreeing to a 40% carbon reduction target for as long as possible in order to “get a better deal” on how compliance targets will be divided up among EU member states.

So, while the large member states such as the UK, France and Germany are keen for a clear decision at the meeting at the end of this week, member states from the CEE region are unlikely to have any problem with everyone else having to wait for a deal until say 2015. It remains to be seen if the heads of governments will build on the comments in favour of a renewables-in-transport target made by some member states earlier in the month and whether this will be actually used as a bargaining tool later on during negotiations.

This uncertainty raises our doubts on a number of issues.

First of all, without the necessary pressure from the Commission to reduce transport emissions, and especially without a target for renewables-in-transport, how can the Commission expects significant progress in the decarbonisation of transport which still remains one of the most polluting sectors in Europe?

Secondly, should, as expected, member states not agree on a position this week, the next possible Council meeting of heads of government would be in June. However, the June Council will be dedicated to, among other issues, immigration; meaning that any agreement on 2030 targets would probably be pushed into autumn.

Such delay makes the future of the biofuel policy in Europe even more uncertain. The 2030 Package, as currently written by the Commission, got rid of transport targets and the FQD. If member states do not reintroduce those targets during coming negotiations, what interests would the Commission and the Council (where Member States are represented at the EU level) have to push for discussing the unresolved issue of Indirect Land Use Change (ILUC) in biofuels?

Greece, which currently holds the EU’s 6-month rotating Presidency, may schedule a meeting of member states which periodically meet on ILUC by the end of March if the Greeks feel that member states are willing to adjust their positions on the ILUC issue. However, as of yet, nothing has been scheduled.

A number of conditions need to materialise for any final agreement on the ILUC issue to have a positive long term impact. Member states should ideally manage to agree on a more nuanced common position on ILUC, which takes into account the environmental performance of biofuels, and a political statement should come from the European Council in favour of a renewables-in-transport target which at that point would have more chances to be introduced in a future Commission’s proposal. Otherwise, if FQD and RED end after 2020, any efforts to make industry account for indirect emissions from their biofuel production (so-called ILUC factors) would be in vain. Europe would once again miss the opportunity to promote sustainable biofuels such as Brazilian Sugarcane Ethanol.

 

Another EU-Brazil Summit on the way, but Can Leaders do What’s Right to liberalize trade on renewable energy?

By Géraldine Kutas posted Feb 21, 2014
The annual EU-Brazil summit will take place next week here in the European Union capital, Brussels. There will be plenty of bonhomie as these summits go. We can reasonably expect trade to be one of the most important items of the political agenda, alongside other global challenges such as economic growth and climate change. That includes the EU-Mercosur trade agreement negotiations, since the EU is Brazil’s biggest trading partner and Brazil is the most important market for the EU in the Latin American region.

The annual EU-Brazil summit will take place next week here in the European Union capital, Brussels. There will be plenty of bonhomie as these summits go. We can reasonably expect trade to be one of the most important items of the political agenda, alongside other global challenges such as economic growth and climate change. That includes the EU-Mercosur trade agreement negotiations, since the EU is Brazil’s biggest trading partner and Brazil is the most important market for the EU in the Latin American region.

But will Brazilian President Dilma Rousseff, European Commission President José Manuel Barroso and European Council President Herman Van Rompuy dare to take one step further towards trade liberalization on renewable energy?

This could, for example, take the form of a renewed political commitment to exchange offers and conclude the EU-Mercosur trade agreement negotiations, with a view to substantially reduce tariffs on goods and services from both sides, and, more specifically, increase market access for sustainable biofuels. This may be wishful thinking, but both sides, who will meet on Feb. 24, have flirted with moving closer to promoting real free trade for sustainably and responsibly produced biofuels since 2010, when the EU-Mercosur trade talks were relaunched.

At the EU-Brazil Summit in 2013 in Brasilia, both parties reiterated the importance of sustainable biofuels as a viable alternative to fossil fuels, to reduce greenhouse gases emissions in the transportation sector. Accordingly, they agreed to promote sustainable production and use of bioenergy. However, words and actions still do not match. Brazilian sugarcane ethanol, which has the best environmental credentials among commercial-scale biofuels, still faces unjustifiably high tariffs and other trade restrictions in the EU market. Such policy is not only contrary to the pledge taken by Brazil and the EU but it also prevents EU consumers and industry to have access to sustainable biofuels and raw materials at competitive prices. Ultimately, it distances the UE from its own goal to reduce carbon emissions and move towards a bio-based economy.

We were happy to see some progress in the last EU-Brazil Summit, with the commitment to discuss the possibility of the establishment of an agreement recognizing the compatibility of Brazilian legislation and European sustainability requirements for biofuels. Now leaders have the opportunity to take a step forward and make a strong political statement to take this pledge to the next level.

Of course, such developments matters for Brazil, but it would also have important positive implications for Europe. Increased market access for Brazilian sugarcane ethanol would foster competition in the EU market, pushing down energy prices and promoting competitiveness and innovation for the EU industry while preserving the environment. The benefits would then translate into economic growth and more jobs.

Free trade is not a zero-sum game. Let’s hope that President Dilma and European Commission President Barroso will spread this message to the world at the VII EU-Brazil Summit and make meaningful commitments to liberalize trade on renewable energy.

The European Commission now does Full U-Turn on Decarbonizing European Transport

By Géraldine Kutas posted Jan 22, 2014
Apparently, the current European Commission’s long term strategy is now formally not to have one. On Wednesday, this Commission formally mapped out, in the first step in a long legislative process ahead, its much awaited perspective on what it thinks the European Union’s longer term climate abatement goals should be to 2030. This perspective is dubbed the ‘2030 Framework on Climate and Energy’.

Apparently, the current European Commission’s long term strategy is now formally not to have one.

On Wednesday, this Commission formally mapped out, in the first step in a long legislative process ahead, its much awaited perspective on what it thinks the European Union’s longer term climate abatement goals should be to 2030. This perspective is dubbed the ‘2030 Framework on Climate and Energy’.

The Commission proposed, as expected, no longer term extension or increase to the 10% renewables-in-transport target set for 2020 (that target will be achieved almost entirely by sustainably produced biofuels.) But it went one step further today and dropped an EU goal for reducing the greenhouse gas intensity of fuels used in road transport.

Currently, under the EU’s Fuel Quality Directive, EU Member States are required to oversee a 6% carbon intensity reduction of  fuels by  2020 versus a 2010 baseline; the law applies to suppliers of gasoline, diesel and biofuels used in road transport, and  to gasoil used in non-road-mobile machinery.

So after 2020, the Commission thinks we can quit worrying about carbon emissions in transport. Great, I’m relieved to know.

But seriously, you’d expect the Commission, which is supposed to look out for the interests of all Europeans, not to play the shrinking violet in the face of pressure on such important transport and environmental issues.

Transport emissions account for 25% of the EU’s total greenhouse gas emissions; and by 2020, transport will be the largest source of carbon emissions in the EU, according to the EU’s own forecasts.

The Commission has been feeling the heat in past months from certain Member States on high energy costs (which the region has had for years but which have become a political problem only recently because of Europe’s depressed economy) and from Big oil companies, many of which -- though certainly not all -- hate and moan about alternatives to oil.

By not proposing any renewables-in-transport target nor any new extension to reduce the greenhouse gas intensity of road transport fuels in Europe, this Commission is effectively throwing up its hands on important environmental issues as it counts down its term, which ends later this year. Moreover, it is choosing to ignore recommendations in several reports, including some  from the Commission itself, according to which, sustainable biofuels, like Brazilian Sugarcane ethanol, are still the one solution to curb carbon emissions in EU transport cost effectively, at scale, and doing so in an environmentally responsible way.

The Commission tried to explain itself, in a rather hollow way, by saying: “The focus of policy development should be on improving the efficiency of the transport system, further development and deployment of electric vehicles, second and third generation biofuels and other alternative, sustainable fuels …”. Nevertheless, we already know that electric cars  can be as pollutant as fossil fuel based vehicles. And the incentives for advanced biofuels are simply not there.

It also claimed, again unsuccessfully, that “it is clear that first generation biofuels have a limited role in decarbonizing the transport sector.” That’s bunk.

The biofuels industry has proven through all sorts of sustainability efforts, as required by EU law, that sustainably produced biofuels are a better environmental alternative to gasoline and diesel. Brazilian sugar cane-based ethanol can achieve over 70% greenhouse gas emissions reductions versus fossil fuel– and that’s certified by independent authorities; it also causes minimal direct and indirect environmental impacts.

This Commission had an opportunity to lay out a necessary plan to address Europe’s longer term transport and environmental challenges by including such things as a longer term target for sustainable biofuels to give industry investment confidence. Judging by today’s proposal, it is still unclear how the Commission expects the EU to reach its goal to reduce GHG emission from transport by 20% in 2030, when it’s effectively pulling the policy incentive-rug out from underneath producers. 

Fortunately there is much debate ahead on this matter.

This formal opening salvo from the Commission today is the start of a process that probably won’t reach a final conclusion until 2015. New Members of the European Parliament (MEPs) and new European Commissioners (the heads of all the various EU departments, like energy) will takeover by the third quarter and all of this new blood will have, hopefully, fresh and informed perspectives on this matter.

A flavor of what is to come is scheduled for March 20-21 when the EU’s Environment ministers will meet to discuss the Commission’s plan announced today. Stay tuned.

The EU 2030 Strategy for Climate Change and Energy: A Missed Opportunity to Decarbonize Transport?

By Géraldine Kutas posted Jan 16, 2014
With the European Commission days away from releasing its policy proposal on so-called 2030 climate and energy targets, it’s worth taking stock of how this position will negatively impact the decarbonization of the transport sector and how once again this Commission is failing to recognize the role of sustainable biofuels, no matter their potential to reduce GHG emissions.

With the European Commission days away from releasing its policy proposal on so-called 2030 climate and energy targets, it’s worth taking stock of how this position will negatively impact the decarbonization of the transport sector and how once again this Commission is failing to recognize the role of sustainable biofuels, no matter their potential to reduce GHG emissions.

The Commission, the EU’s executive which initiates all policy proposals at the EU level, is expected to release its 2030 Climate and Energy Package on 22 January. The Package will include a Policy Communication on 2030, looking at 5-6 scenarios and accompanied by an impact assessment, 2) a Proposal on ETS structural reform (introducing the principle of flexible reserve mechanism), 3) a Proposal on shale gas (it still remains to be confirmed whether this proposal, prepared by DG Environment, will be part of the Package or issued separately later on), 4) a Communication on Industrial Policy prepared by DG Entreprise.

So, a full proposal on targets will not be put forward at this stage. The Commission is, in fact, only issuing a non-binding Communication that will effectively trial-balloon its proposal to see how it floats with Member States.

It appears, based on media reports, that the Communication will suggest a carbon  emissions reduction target of around 40% and will downgrade the target for the use of renewables to a non-binding target of perhaps 30% in 2030. It will not include any specific sub-target for the transport sector, despite the fact it is the sector that has experienced the fastest GHG emissions growth in recent years in Europe.

The reason seems to be that the Commission with the Communication only wants to trigger the debate and test the waters with the Head of States, ahead of their Summit in March before putting out a full proposal. Realistically, a proposal on targets cannot be expected earlier than 2015 and it seems fairly difficult to get all the 28 Member States to agree to common binding standards once again.

Yet, based on all the discussions and debate held in Brussels the past several months on this topic, biofuels will essentially be left out of the new 2030-targets. Therefore, even though the new mantra out of the Commission is all around advanced biofuels, the Commission somehow thinks advanced biofuel production will just happen -- and happen at meaningful scale -- without any kind of policy support that incentivize investors to risk their capital on new advanced biofuel technologies.

This is more proof of course about the lop-sided and unhealthy debate around biofuels, which has generally succeeded in painting all biofuels – even the most sustainable ones, like Brazilian sugarcane ethanol – with the same brush.

The EU currently has three climate change abatement targets: one for a 20% carbon emission reduction relative to a 1990 baseline, another for a 20% increase in energy efficiency, and one for a 20% share of renewable as a share of overall EU energy use, all by 2020. And, of course, within the 20% renewable target there is currently a 10% renewables-in-transport target, which will be met mostly by biofuels.

One can argue that the renewables-in-transport target is not only about biofuels, and electric vehicles should also contribute, but let’s be realistic: electric vehicles can be carbon intensive if they rely on coal and other fossil-fuel base load to be fueled. In addition, these vehicles are expected to account for only 2% of the passenger car fleet by 2030, according to a study carried out by E4Tech published in November 2013.

Biofuels are key in the decarbonisation of the EU transport sector – as pointed out by various recent reports.

Nevertheless, there will not be a legislative proposal on targets until 2015, and probably even when a proposal is there, it will not include any specific measures for the transport sector and biofuels will therefore be excluded.

This approach is at odds with all the efforts deployed by the Commission since October 2012 to tackle the indirect effects of biofuels. Why should we bother about the ILUC proposal if biofuels are not intended to be part of the post-2020 EU energy mix?

On top of all this, the Energy and Environment Committees in the Parliament just voted (clearly too late for this to be taken into consideration in the coming Package) on an own-initiative report asking the Commission to extend the existing strategy until 2030 with binding targets in the three areas above mentioned. This shows how much the Commission and Parliament positions are already far away one another before the formal process has even started.

How will the Commission really move forward to decarbonize transport when it’s leaving out the best option available?

How are sustainable biofuels, such as Brazilian sugarcane ethanol, which present high GHG emission savings and little to no environmental impact, to be invested in by industry at scale when there are no policy targets?

These are quite crucial questions for the future of the European climate policy to which the 2030 Package is not answering while the political scenario around the issue has never been more confused and confusing.

 More to come…may be in 2015…

Biofuels in Europe to Remain in Policy Limbo after EU Member States Reject ILUC Compromise

By Géraldine Kutas posted Dec 12, 2013
EU Member States on Thursday confirmed what many European biofuel watchers had assumed for many weeks: the issue of biofuels and their potential indirect effects (so-called Indirect Land Use Change) won’t be addressed until the next European Parliament and the next European Commission takeover in late 2014.

EU Member States on Thursday confirmed what many European biofuel watchers had assumed for many weeks: the issue of biofuels and their potential indirect effects (so-called Indirect Land Use Change) won’t be addressed until the next European Parliament and the next European Commission takeover in late 2014.

 Member States, via their Energy Ministers, failed Thursday to agree on a compromise plan that would have, among other things, put a 7% cap on the use of conventional biofuels in Europe; they also couldn’t agree on what level of incentive is necessary to stimulate the production of more advanced biofuels to help Europe decarbonize its transport system.

 The EP had already voted to slap a 6% cap on first generation biofuels earlier in the autumn; many Member States (like Hungary and Poland) today either thought a compromise 7% cap would hurt the biofuel industry and farmers. 

 Others member states (Netherlands and Belgium) rejected the compromise plan, feeling a 7% threshold wasn’t ambitious enough. They wanted more like a 5% cap and required industry to account for the assumed indirect emissions that environmentalists claim the EU biofuel mandate causes. This mix of more ambitious and less ambitious countries prevented the adoption of the Lithuanian compromise text.

 This no-decision outcome keeps everybody waiting and prolongs final investment decisions for the advanced biofuels industry. EU’s Energy head, Gunther Oettinger, complained at today’s meeting: “Postponing this issue won’t help anyone at the end of the day, certainly not market participants and consumers.”

 However, as I said previously, this could provide with a good occasion to work on a more balanced approach to the biofuels policy in Europe. The discussion on biofuels and ILUC over this last year, since the Commission published its proposal, has jeopardized biofuels policies in EU member states and undermined investments in new technologies.

 What is needed is a more nuanced approach to the issue that takes into account the real environmental credentials of the different types of biofuels, in a technology-neutral way.

 What next then? The Council will have to keep discussing the issue back at working party level and the process is delayed until a political agreement is found in the Council. At that point, probably in the second half of 2014, the Parliament would be able to start with the second reading. Positions will be again quite different and the Commission might have to draft a new proposal. 

 Let’s hope that a more shaded approach to EU biofuel policy materializes in the next round.

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

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