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The EU 2030 Strategy for Climate Change and Energy: A Missed Opportunity to Decarbonize Transport?
Géraldine Kutas — posted 16/01/2014
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.
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?
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…
Previewing Our Testimony to EPA Supporting Advanced Biofuels
Leticia Phillips — posted 23/12/2013
The Environmental Protection Agency is hosting a public hearing on December 5 to hear from industry leaders on the agency’s proposed renewable fuel standards for 2014. I will be testifying on behalf of Brazilian sugarcane producers, and here’s an advance look at what I will say:
Good morning. My name is Leticia Phillips, and I am the North American Representative for the Brazilian Sugarcane Industry Association (UNICA). UNICA is the leading trade association for the sugarcane industry in Brazil, representing 60 percent of the country’s sugarcane production and processing.
Sugarcane ethanol production uses only 1.5 percent of Brazil’s arable land, reduces greenhouse gas emissions by 90 percent on average, compared to conventional gasoline, and helps move beyond fossil fuels.
For over six years, the Brazilian sugarcane industry has worked collaboratively with EPA and the U.S. renewable fuel industry. Since the beginning of the RFS program, EPA had been a strong supporter of the modest but important role Brazilian sugarcane ethanol plays supplying Americans with sustainable fuel.
In 2010, the agency certified that Brazilian sugarcane ethanol cuts carbon dioxide emissions by more than 60 percent and designated it as an advanced renewable fuel. Following congressional intent, EPA has encouraged advanced biofuels because they are the category of renewable fuel with the greatest greenhouse gas reductions. So it came as an extraordinary shock and is deeply concerning that EPA has proposed to drastically reduce the volumes of advanced fuels for the 2014 RFS.
Slashing next year’s target for advanced biofuels is a huge step backwards from the Obama administration’s goal of decreasing greenhouse gases and improving energy security. Advanced biofuels, including Brazilian sugarcane ethanol, reduce carbon dioxide emissions by over 50 percent compared to gasoline and are a proven solution for addressing climate change. Yet, EPA’s proposed formula for setting advanced biofuel targets blatantly ignores its own estimates that 650-800 million gallons of sugarcane ethanol can be supplied to the United States in 2014.
As my colleagues on this and other panels will testify, EPA’s proposal pulls the rug from under the advanced biofuels industry, not just Brazilian sugarcane producers. EPA is proposing to cut advanced biofuel volumes next year by more than 40 percent compared to the requirements written into the RFS statute. Ironically, EPA is proposing a less than 10 percent reduction to volume requirements for conventional biofuels, which include a number of grandfather facilities that may well not meet the minimum requirement of 20 percent reduction.
EPA should set renewable fuel standards that encourage production and consumption of all available advanced biofuels. Because the domestic market for American biofuels is growing rapidly. EPA originally projected that the U.S. would need to import around 660 million gallons of Brazilian sugarcane ethanol to meet the 2013 advanced biofuel standard. However, total sugarcane ethanol imports will end this year at only 450-500 million gallons – not because Brazil has exhausted its capacity for exports – but because American production of advanced biofuels is expanding quicker than EPA forecast.
Congress clearly intended to encourage greater use of advanced biofuels year over year, in order to achieve the largest GHG reductions possible. That’s why UNICA supports EPA’s Option 1, which would set the advanced biofuel volume requirements based on the availability of advanced biofuels plus carryover RINs.
We also encourage EPA to consider implementation of California’s low carbon fuel standard when setting the RFS targets. The Golden State considers Brazilian sugarcane biofuels the low-carbon fuel with the best performance today and the only fuel available at commercial scale to contribute to meeting its low-carbon fuel standard. Similarly, we urge the Administration to consider the repercussions for trade policy. Europe has already assessed dumping charges on some U.S. biofuels, and the last thing the global biofuels market needs is policy reversals that flood other countries with unwanted product.
Our association looks forward to commenting further on this proposal and will continue to play an active role in the RFS rulemaking process, serving as a source of credible information about the efficiency and sustainability of sugarcane ethanol. Likewise, Brazil will continue to be a strong, dependable partner helping America meet its clean energy goals. Thank you.
Our Holiday Wish List
Leticia Phillips — posted 19/12/2013
‘Tis the season for family, friends and holiday wishes. December is also a nice time to reflect back and think ahead to the New Year.
Heading into the New Year, it’s clear the decisions confronting lawmakers and EPA regulators on the RFS will have a great impact on our world’s journey towards decreasing greenhouse gases and improving energy security. So in the spirit of the season, here’s our wish list naming the top three presents we’d either like to see under the tree or delivered in 2014.
1 – EPA reconsiders the agency’s current proposal and sets renewable fuel standards that encourage production and consumption of all available advanced biofuels. Slashing 2014’s target for advanced biofuels is a leap backwards on the path to reach the Obama Administration’s energy and environmental goals. Advanced biofuels, including Brazilian sugarcane ethanol, reduce carbon dioxide emissions by over 50 percent compared to gasoline and are a proven solution for addressing climate change. We hope EPA won’t finalize a proposal that ignores the 650-800 million gallons of sugarcane ethanol that are available to supply the United States with more advanced biofuel in 2014.
2 – No unnecessary, burdensome requirements on foreign biofuel producers.
Under a separate EPA proposal, sugarcane producers would be subject to a host of onerous new requirements when exporting to America. Requirements like physically segregating exported ethanol from the production plant all the way to port arrival in the U.S. and spending considerable amounts on third-party auditors would cost roughly $1 million for every 5 million gallons exported by our estimates. EPA’s intentions are laudable, and we support the agency’s goal of ensuring the regulatory system that tracks U.S. biofuel consumption is accurate. But as currently written we are concerned the regulatory process is being used to impose burdensome, anti-competitive requirements on foreign biofuels.
3 – Global free trade in biofuels continues to flourish. In 2013, the U.S. domestic market for biofuels grew rapidly. EPA originally projected that the U.S. would need to import around 660 million gallons of Brazilian sugarcane ethanol to meet the 2013 advanced biofuel standard. However, total sugarcane ethanol imports will end in 2013 at around 450-500 million gallons. The reduction in imports is because American production of advanced biofuels is expanding quicker than the EPA forecasted – NOT because Brazil has exhausted its capacity for exports. As I’ve said all along, Brazil and the U.S. have a responsibility to work together to build a global biofuels market that provides clean, affordable and sustainable solutions to the planet’s growing energy needs. We’re making progress that should continue in 2014.
Brazilian sugarcane producers look forward to continuing to play an active role in the RFS rulemaking process and tackling the challenges that lay before us in the next year. Happy Holidays and best wishes for a happy, healthy and prosperous New Year!
Biofuels in Europe to Remain in Policy Limbo after EU Member States Reject ILUC Compromise
Géraldine Kutas — posted 12/12/2013
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.
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.
Fact Checking the Petroleum Refiners
Leticia Phillips — posted 11/12/2013
The U.S. Senate is holding an oversight hearing today examining the Renewable Fuel Standard. The head of the American Fuel and Petrochemical Manufacturers (AFPM) is scheduled to testify before the Environment and Public Works Committee, and according to prepared remarks, will make an exaggerated claim that deserves further scrutiny.
Among a litany of grievances and complaints, AFPM president Charles Drevna includes the following statement: “The prevalence of imports and failure of the RFS to develop domestic second and third generation biofuels ensures that RFS will continue to rely on imported ethanol to satisfy its advanced biofuel volumes. This situation belies the argument that the law is enhancing energy independence.” (Emphasis added)
Well, as the old saying goes, everyone is entitled to their own opinion, but only one set of facts. A little fact checking finds Mr. Drevna’s assertion deficient on three counts.
1 – First, a little context. The U.S. Environmental Protection Agency has designated Brazilian sugarcane ethanol as an advanced renewable fuel after determining it reduces greenhouse gas emissions by over 60% compared to gasoline. And advanced biofuels are a category of fuel that Congress hopes to grow significantly during the next decade.
However, the fact is imports are not prevalent. Instead, sugarcane ethanol plays a modest but important role supplying the United States with advanced renewable fuel. Last year, Brazilian sugarcane ethanol comprised only 3% of all renewable fuel consumed by Americans, but provided nearly one-quarter of the U.S. supply of advanced biofuels. The final numbers for 2013 are still coming in, but the proportions should go down a little this year with sugarcane ethanol providing less than 3% of all U.S. renewable fuel and less than 20% of advanced biofuels consumed by Americans.
2 – Far from a failure, the RFS is helping the domestic market for American biofuels to grow rapidly. For evidence, let’s look at EPA’s forecast for 2013. The agency originally projected that the U.S. would need to import around 660 million gallons of Brazilian sugarcane ethanol to meet the 2013 advanced biofuel standard. However, total sugarcane ethanol imports will end this year at only 450-500 million gallons – not because Brazil has exhausted its capacity for exports – but because American production of advanced biofuels is expanding quicker than EPA predicted.
3 – Finally, EPA’s proposed formula for setting the 2014 advanced biofuel standard ignores – rather than relies on – Brazilian sugarcane ethanol. It’s a change we oppose, and one we hope EPA will correct following the public comment period. But for now, EPA has proposed a methodology that excludes any available volumes of advanced ethanol from the formula that sets the 2014 RFS targets for advanced biofuels.
The current debate over the renewable fuels standard is an important one with far-reaching implications for America’s energy security and environmental goals. Many different opinions are involved, but Brazilian sugarcane producers hope we can all agree to stick to the facts.
Our Authors
Eduardo LeãoExecutive Director
Emily ReesRepresentative for Europe
Leticia PhillipsRepresentative, North America
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