A realistic fuel mix for post-2020

Géraldine Kutas — posted 29/06/2015

Here we are! The ILUC file is finally over and now it seems that no one wants to hear more about biofuels, especially the Commission.

However, biofuels are alive and kicking and there has been evidence of their presence in the past few weeks!

During his opening speech at the EU Sustainable Energy Week, Commissioner Cañete focused on energy efficiency and didn’t even mention biofuels, but he emphasized that the transport sector should be prioritized, particularly through the adoption of ever stricter CO2 emissions standards for vehicles.

In addition, the Commission released the RES progress report showing that the penetration of renewables in transport has been very slow so far, reaching 5,7% in 2014 and concluding that introduction of higher blends of biofuels will be necessary to put biofuels back on track. After all, Cañete declared that “achieving our 10% target of renewable energy in transport [by 2020] will certainly be challenging, yet feasible.”

At the conference on decarbonisation of road transport, on 18 June, biofuels were not on the agenda, but the biofuels industry – and not only them luckily! – made it loud and clear that a post-2020 energy framework should include targets for renewables in transport. I was actually pleased to see that after the conference Commissioner Cañete used again the #biofuels hashtag for the first time in some weeks in one of his tweets. To get clarity of the post-2020 biofuel policy we would however need a bit more than a hashtag, Mister Commissioner!

These are all little hints that we shouldn’t lose hope and still find the energy to advocate for balanced policies on biofuels and decarbonisation of transport post-2020.

UNICA is fully committed to engaging in the next months for a ‘decarbonisation of transport’ policy that includes all options available on the market. If we want to reduce our transport emissions, we will need a diverse mix of fuels and technologies. We can’t just rely on electric vehicles only – just like we cannot rely only on biofuels. Let’s aim for a realistic, greener fuel mix for 2030.

As you can see from the pic below, I had the chance to meet Mr Cañete at EXPO during his visit to the Brazilian Pavilion and hopefully my message came across!

Commissioner Arias Cañete, Dr. Roberto Rodrigues and Géraldine Kutas discussing in front of the sugarcane at the Brazilian Pavilion (Expo Milan).

UNICA Statement on Changes to Brazil Tax Policy on Imported Ethanol

Leticia Phillips — posted 23/06/2015

The Brazilian Sugarcane Industry Association (known by the acronym “UNICA”) issued the following statement regarding changes to Brazil’s tax policy on imported ethanol. It should be attributed to Elizabeth Farina, UNICA President.

Brazilian President Dilma Rousseff yesterday signed a decree creating tax parity between domestic and imported products, including ethanol.

Ethanol produced in Brazil is subject to a range of federal taxes with revenue allocated to social security, including the social participation program (PIS) and social security financing contribution (COFINS) on domestic production.  Today’s action by President Rousseff will level the playing field between Brazilian sugarcane ethanol and imported biofuels by subjecting foreign renewable fuels to comparable taxation and should not be confused with an importation tariff.

Today’s decree raises the PIS and COFINS on a number of imported products, including ethanol. These taxes will increase from the current 9.25 percent to 11.75 percent (2.1 percent PIS and 9.65 percent COFINS).  Imported ethanol was exempted from the same level of taxation as domestic products in 2013, but this action resulted in accumulated costs for domestic producers with no commensurate costs for foreign producers.

It is important to note the PIS and COFINS paid on ethanol imports will turn into a credit for the importer, which may then be used to pay other tax debts or be reimbursed by the Brazilian government, having the effect of anticipated taxes that would already be collected.

Brazilian sugarcane producers have long been strong advocates of removing trade barriers and creating tax parity for renewable fuels.  Today’s action continues that tradition.  Working together, the United States and Brazil have built a thriving global biofuels trade benefiting both countries, and we look forward to continued progress toward shared environmental and economic goals.

Environmental Goods Agreement – how green are the EGA negotiations?

Géraldine Kutas — posted 09/06/2015

I recently attended a conference in Brussels on the negotiations of the Environmental Goods Agreement (EGA). The negotiations, which were mandated by the 2001 Doha Declaration, were launched on a plurilateral basis in July last year by a group of WTO countries (accounting for around 86% of the world trade in green goods) including the European Union. It aims to remove tariff and non-tariff barriers to trade for “green goods and services”.

What are we talking about when referring to environmental goods? There is no clear definition yet. In effect, everything that helps us ‘green’ our economies, from wind turbines, water treatment filters to recycling equipment and air quality monitors could be considered an environmental good. It is estimated that global trade in environmental goods amounts to nearly $1 trillion annually.

So far, already six rounds of negotiations have taken place, with the next round scheduled for next week, from 15-19 June. Quite disappointingly, ethanol is not part of the list of green products falling under the scope of the agreement. The biggest challenge of the negotiations is indeed about deciding on the list of products and, by now, already 650 tariff lines and more than 2,000 products are under consideration. Every country promoted a list of products, but ethanol was not part of any of the lists suggested, despite its proven environmental benefits.

Brazilian sugarcane ethanol reduces GHG emissions by 90% on average compared to gasoline and it achieves among the highest GHG emission savings compared to fossil fuels even when land use change factors are accounted for.

My doubts of course are on the credibility that such project will have if products like ethanol are not included in the list and if new countries do not joint. Countries in EGA are in fact already part of lower tariff schemes. So further reducing tariffs may not have a huge impact on GHG emissions reduction, I’m afraid! In the case of ethanol, tariffs are generally very high (0.19€/liter) in the EU. Tariff reductions, then, would have the potential to yield extraordinary environmental benefits.

During the conference, both Trade Commissioner Cecilia Malmström and Climate & Energy Commissioner Miguel Arias Cañete emphasized the positive impact that EGA could and should have in the fight against climate change and made reference to Europe’s role “as major exporter of clean technologies”.

However, contrary to the Commissioners’ words, it seems to me that, as it stands, the EGA will lead to a list of products selected in a somewhat arbitrary manner, rather than on the basis of their environmental benefits. The EGA looks more, for the time being, like a platform for the negotiating parties to advance their exporting interests when it comes to green technologies than a tool to fight climate change.

Trade is not a zero-sum game. If the EGA negotiating parties are serious about making legitimate progress towards addressing global warming, then they would have to widen the list of liberalized products to include all goods that deliver environmental advantages, such as ethanol.

We’ll certainly monitor with great interest the next two rounds of negotiations next week and in July, when the negotiation parties should narrow down the list of products.

UNICA comment on EPA proposed mandates under RFS

Leticia Phillips — posted 29/05/2015

The Brazilian Sugarcane Industry Association (known by the acronym “UNICA”) issued the following statement in response to the U.S. Environmental Protection Agency’s rules proposal for the 2014, 2015, and 2016 Renewable Fuels Standard. It should be attributed to Elizabeth Farina, UNICA President.

While UNICA is disappointed that today’s Renewable Fuels Standard proposal from the U.S. EPA significantly reduces target volumes for advanced biofuels below Congressionally mandated levels, we are pleased to see growing requirements for advanced biofuels in 2015 and 2016. This leaves the door open for continued American access to sugarcane ethanol, one of the cleanest and most commercially ready advanced biofuels available today.

EPA identifies Brazilian sugarcane ethanol as an advanced biofuel because it reduces greenhouse gases by more than 60 percent compared to gasoline.  This advanced biofuel from an American ally plays a modest but important role supplying the United States with clean renewable fuel. For the past three years, more than one billion gallons of sugarcane biofuel imported from Brazil flowed into American vehicles. During this time, sugarcane ethanol has comprised only 2 percent of all renewable fuel consumed by Americans, but has provided nearly 15 percent of the U.S. advanced biofuel supply.

Our association looks forward to commenting 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.

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The Brazilian Sugarcane Industry Association is the leading trade association for the sugarcane industry in Brazil, representing 60 percent of the country’s sugarcane production and processing.  More information on sugarcane ethanol and its role as an advanced biofuel is available at www.sugarcane.org/rfs

Fancy a visit to Brazil? Brazil comes to you… Come and see us at the Brazilian Pavillon, EXPO Milano 2015

Géraldine Kutas — posted 12/05/2015

This year’s theme of the Universal Exposition EXPO Milano 2015 “Feeding the planet. Energy for life” couldn’t be more spot on for us!

I’m very excited to present Brazil’s success story with renewable fuels and to organise a conference on “Producing food and energy for a healthier planet: the case of the Brazilian Sugarcane Ethanol”, on Tuesday 2 June in the Brazilian Pavillon, Milan of course!

As I mentioned a few times already in my blogs, Brazilian sugarcane industry typically supplies both food and energy, with a minimal use of land. Only 0.5% of Brazil’s territory is used for bioethanol, with which Brazil managed to replace 40% of gasoline.

We’ll have a number of speakers , experts in sugarcane, including  former Minister José Goldemberg, Sven Sielhorst from Solidaridad and Simon Usher Chief Executive Officer at Bonsucro, ready to walk you through the Brazilian experience and we hope this may serve as an inspiration for Europe, which is struggling to make a good use of biofuels.

More information on the event are available here! Come and see us in Milan…as an anticipation I can already tell you that the event will be followed by a cocktail with Brazilian food and drinks, where Chef Diego Lozano will talk about the history of Brazilian pastries to interested participants!!!