RED II: A New Challenge for the EU Biofuels Industry
Less than two years after the European Commission (COM) published its proposal on boosting renewable energy use for the time frame 2021-2030 the negotiations between European Parliament (EP) and Member States (MS) via the Council have entered into a decisive phase to hammer out a Renewable Energy Directive (RED) II. Whatever the outcome of the negotiations will be, the future is set to be very challenging for the biofuel industry.
A Not So Ambitious Proposal
When the COM proposed its reworked version of the RED I in November 2016 it was a well-known fact that the transport sector was still the biggest source of greenhouse gas (GHG) emissions. Equally well known was that many Member States were still far away from the 10% cal. renewable energy (RE) target in transport to be achieved by 2020.
It would seem logical to raise ambition with regards to biofuel blending. But that did not happen: the RED II proposal introduced a renewable energy target for 2030 to be met by the entire EU. In terms of transport, MS had to make sure that fuel suppliers would put at least 6.8% of non-fossil fuels, crop-based biofuels excluded, in the transport fuels supplied to the market.
For many the proposal was disappointing and not the proposal needed to deliver a substantial increase in renewable energy in transport fuels.
The biggest blow was handed to biofuels from agricultural crop-based feedstock. Their share had to be reduced to no more than 3.8% in 2030. This share could even drop to zero if MS would decide to apply an indirect land use change (ILUC) factor.
The proposal was more generous to biofuel from waste material. Fuel companies had to blend in at least 6.8% of waste-based fuels and/or renewable electricity by 2030 that could not be counted double and for which target the use of used cooking oils (UCO) and animal fat was limited to no more than 1.7%. The list of feedstock for producing waste based or advanced biofuels was identical to the list in RED I. A modest multiplier of 1.2 was proposed for aviation and maritime transport. And finally, the EU – not individual MS - had to achieve 27% of renewables in the entire energy mix by 2030.
ePURE published an infographic that made instantly clear that the dominant fuel in transport would remain fossil. It makes also crystal clear that by 2030 not more renewables would be used than in 2020 but very likely less.
Making it More Complex
Biofuels have always been controversial in the EP. The food versus fuel problem, in particular the use of palm oil has kept opinions divided. This division was also reflected in what parliamentary committee should lead the RE file. During the discussion on ILUC it was the Committee on Environment (ENVI) but this time the lead went to the Industry and Energy Committee. Still, the ENVI Committee was able to obtain exclusive competence on all provisions related to biofuels, bioenergy and sustainability standards, which was a pre-warning for the conventional biofuel producers.
The ENVI opinion, drafted by a Green MEP, was predictable: reduce crop-based biofuel use to zero, make palm oil for biofuels illegal, limit certain feedstock for the production of advanced biofuels by introducing another set of ILUC factors.
This approach divided the Parliament to a level that any majority that could be achieved, would be so slim that the EP would lose weight in its discussions with the Council. What happened eventually, after over 3,000 amendments were tabled, was clever from the point of view of institutional power play but did not make the COM's proposal more ambitious.
The EP’s biggest political group - EPP - outflanked the Green rapporteur by making a deal with the Social Democrats, Conservatives and Liberals. As a result, amendments that had been very favourable for crop-based biofuels such as maintaining the 7% limit and allowing low-ILUC biofuels even a market share beyond 7%, were sacrificed to please Social Democrats and part of the Liberals. However the renewables in transport target (REST) was set at 12%, substantially more than what the Commission had proposed.
Crop-based biofuels could still be used to achieve the REST 12% target but could not be used for the mandate of 10% that was put on fuel suppliers. This would leave only 2% for crop-based biofuels unless a MS would want to achieve a higher REST goal.
Certain waste-based feedstock was kicked out - like municipal solid waste (MSW) and molasses – and electro mobility was given a multiplier.
Probably, the most controversial element to MS is going to be the increase of the overall RE target from 27 to 35% combined with an obligation for MS to set a national trajectory how to achieve the 35%.
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