Friendly Reminders

Leticia Phillips — posted 18/06/2014

Sometimes, we all need friendly reminders. Our favorite World Cup soccer players get reminded on the field to play by the rules, and we often get reminded about our commitments. Commitments to our family, commitments to our friends, and commitments to our international trading partners.

The United States has commitments as a member of the World Trade Organization (WTO). WTO member countries have trade obligations, such as commitments to nondiscrimination in terms of product origin.

So consider this blog post a friendly reminder to Rep. James Lankford (R-OK) who last week introduced a bill in the U.S. House of Representatives to repeal the current conventional ethanol requirements under the U.S. Renewable Fuel Standard (RFS) and limit the biomass-based diesel, advanced biofuel and cellulosic biofuel volumes to domestic production only.

By discriminating against foreign biofuel manufacturers, this legislation would violate important American commitments to the WTO.

The bill would also limit America’s access to clean renewable fuels that reduce greenhouse gas emissions by 50 percent or more. One such advanced renewable fuel is made from Brazilian sugarcane – an affordable and low-carbon biofuel that brings consumers cleaner air, reduced greenhouse gas emissions, better performance and a lower dependence on oil.

The United States and Brazil are the world’s top two biofuel exporters, and both nations enjoy the economic and environmental benefits of global trade in renewable fuels. But not everyone is aware of this long-lasting and mutually beneficial trading history. So consider it another friendly reminder that the U.S. and Brazil should lead by example in creating a free market for clean, renewable energy.

Legislation that restricts access to advanced biofuels from other countries harms global efforts to develop clean and renewable energy. It also backslides on American commitments to open markets.

Council position on ILUC finally adopted by EU Energy Ministers

Géraldine Kutas — posted 13/06/2014

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.

A Technical Detail with Big Implications

Leticia Phillips — posted 30/05/2014

The debate over American biofuels policy has centered on the Renewable Fuels Standard (RFS), but there’s another issue unfolding under the radar with significant implications for renewable fuels – the Reid vapor pressure (RVP) volatility waiver.

RVP may be a technical issue, but inconsistent application of the volatility waiver by the U.S. Environmental Protection Agency (EPA) is limiting widespread introduction of E15 ethanol-blended gasoline, threatening compliance with the RFS, and creating an arbitrary barrier to ethanol use in America.

That’s why UNICA has written to EPA urging consistent treatment of RVP requirements for both E10 and E15 – action that would reduce the potential for “boutique fuels,” maximize flexibility for refiners and gasoline marketers, and pave the way to greater ethanol use in the U.S. as mandated by the RFS.

Lower RVP, Lower Emissions – Brazil’s Experience

First, a little background on what RVP is and why it matters. The RVP is a common measure of gasoline’s volatility, defined as the absolute vapor pressure exerted by liquids at 100 degrees Fahrenheit. EPA regulates vapor pressure of fuel sold at retail stations during the summer ozone season to diminish health risks by reducing evaporative emissions of gasoline that contribute to ground-level ozone.

EPA currently allows E10 a one pound-per-square-inch (psi) RVP volatility tolerance, enabling ethanol to be blended into conventional gasoline year-round without requiring marketers to secure specially tailored gasoline blendstock. EPA currently does not extend this same one-psi waiver to E15, making sales extremely difficult for gasoline marketers, as they have to incur the added costs and logistics of obtaining appropriate blendstocks.

A higher percentage of renewable ethanol, as opposed to fossil fuel-based gasoline, makes environmental and climate sense: Less fossil fuel equals fewer harmful emissions. In Brazil, ethanol has been blended well above 10 percent in gasoline (up to 25 percent for all light-duty vehicles) while lowering emissions like carbon monoxide, sulfur oxides, and other particulate emissions without any degradation in general air quality.

Brazil has accepted RVP ranges between 6.5–10 psi for gasoline depending on ethanol blend levels for years as a reasonable compromise between refinery flexibility, gasoline quality, and environmental requirements.

In fact, Brazil’s experience over the past 30 years shows if high RVP becomes a concern for any given gasoline stock, then increasing the ethanol blend is a simple and cost-effective solution to lower RVP.

EPA Findings Extend From E10 To E15

Ample scientific justification exists for EPA to extend the RVP volatility waiver to E15, and recent analyses show the vapor pressure of E15 is slightly lower than E10 while creating greater reductions in carbon monoxide and exhaust hydrocarbon emissions.

EPA’s initial decision to grant the one-psi waiver to E10 was based on its findings that increased volatility associated with the waiver was offset by reduced emissions if low-RVP gasoline was available for E10 blending. Unfortunately, insufficient supply of low-RVP gasoline blendstock exists in the U.S. to accommodate broad E15 blending without the one-psi waiver.

Using the same reasoning EPA used to issue the one-psi waiver to E10, the waiver should also apply to E15. As long as the waiver applies to E10, there’s no logical reason it shouldn’t also extend to E10.

Another Market-Based Alternative

But even if EPA doesn’t follow this logic, another alternative exists. Instead of extending the one-psi waiver to E15, EPA could instead discontinue the E10 waiver; effectively ensuring “standard” gasoline blendstock would have an RVP low enough to facilitate both E10 and E15 blending.

Either way, EPA should treat both E10 and E15 consistently in the marketplace with regard to RVP. This issue is critical not only from an economic perspective, but from an environmental perspective, as E15 is attempting to enter the U.S. market and RFS-obligated parties are increasingly interested in higher-level ethanol blends.

Environmental And Economic Imperatives

Given both the Obama Administration’s efforts to combat climate change, and the unique role of U.S. regulations on global acceptance of alternative fuels, we encourage the EPA to act quickly by either extending the one-psi waiver to E15 or removing the waiver entirely for E10.

Our association has played an active role in smart fuels policy formation, and looks forward to the opportunity to continue working with EPA on this important issue – not only to help reduce U.S. dependence on fossil fuels while creating economic benefits for American drivers, but to help mitigate climate change.

EU Member States miss another opportunity to lead on advanced biofuels

Géraldine Kutas — posted 28/05/2014

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 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

Géraldine Kutas — posted 08/05/2014

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? 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.