Biofuels, the missing link

Géraldine Kutas — posted 23/10/2014

After two intense weeks of confirmation hearings in the Parliament, highly political discussions in Brussels, Strasbourg and EU capitals and after a mini re-shuffle of portfolios, the Junker Commission has been confirmed by the Parliament.

It was described by Mr Juncker himself as the “last-chance Commission”.

I can only agree with him. To regain trust, the EU needs to demonstrate its commitment to ‘Better Regulation’, as well as consistency and ambition in the policy proposed.

When it comes to climate and energy policy however, Mr Juncker’s team failed to go down that ambitious route by omitting an important contributor to future emission reductions in transport: biofuels.

I can only express concerns and regrets about this oversight.

At the hearings, discussions largely focused on the 2030 Climate and Energy targets and the ETS reform, but there was no meaningful debate over the role that transport can and should play in meeting these overall emission reduction targets. Remember that transport represents as much as 30% of EU greenhouse gas emissions!

We now have no fewer than three relevant Commissioners for biofuels: Maroš Šefčovič (Vice-President for Energy Union), Miguel Arias Cañete (Energy and Climate Commissioner) and Violeta Bulc (Transport Commissioner). However, none of them stressed the role of biofuels in helping the EU deliver on its 2030 climate and energy agenda.

Comments on the absence of transport-specific targets in the 2030 Climate and Energy package were voiced a few times by MEPs but received no concrete answers from Commissioners-designate.

Mr Šefčovič, who becomes Vice-President for the Energy Union, underlined his reluctance towards first generation biofuels, due to concerns around their GHG emission reduction performance and on their impact on food prices.  On the other hand he supported second-generation biofuels and stressed the need to quickly reach a compromise on the ILUC proposal. As said before, biofuels urgently need regulatory certainty. But it doesn’t mean that policymakers should hastily close a deal. The second reading should provide opportunities for a more nuanced approach.

As for Mr Cañete, our new Energy and Climate Commissioner, he did not even mention biofuels during his hearing and carefully avoided questions on a new target for renewable energy in transport post-2020.

Ms Bulc, the new Transport Commissioner, did quickly stress her commitment to introduce a fair share of alternative fuels and renewables in the transport sector, without further details on how she would make this possible.

As the second reading of the ILUC file is soon to start in the Parliament and the Council, it is critical for the Commission to play a strong role in driving the dossier to a satisfactory close.

In the Parliament, the rapporteur Nils Torvalds wants discussions to resume quickly. But the Council is now only scheduled to communicate its common position in January, which means the second reading examination will be delayed in the Parliament.

In the Council, strong divergences amongst Member States led to a rather weak agreement. The Italian Presidency gave low priority to the issue and the dossier will likely be handed over to Latvia in January.

Once again, I ask policymakers to give a new impulse to the policy debate on biofuels and work together for a solution which takes into account the role of transport in reducing emissions and the environmental contribution of biofuels such as sugarcane ethanol. A more comprehensive analysis on the unbalance between diesel and gasoline in Europe is needed and low-ILUC biofuels should be incentivized in a decisive way. Disruptive measures affecting first generation biofuels will only harm the entire biofuels sector, making it difficult to invest in advanced biofuel technologies.

I hope this argument will be raised at the European Council this week and form part of discussions on the 2030 framework for climate and energy.

A policy framework for biofuels post-2020 is needed, or we will lose a major instrument to reduce emissions in transport. It is the missing link of the new Commission’s agenda.

Biofuels: The Clock is Ticking

Géraldine Kutas — posted 08/09/2014

After an intense summer break, which saw Brussels far from quiet but rather busy speculating about the nominations to top EU posts, business has resumed in the institutions.

In the Parliament, the Environment committee has already met to vote on the questionnaire to be addressed to the Commissioner-Designates for Environment and Climate in upcoming hearings. The committee will soon reopen discussions on the ILUC proposal in second reading, under the leadership of the new rapporteur, Nils Torvalds, and newly designated shadow rapporteurs such as Christopher Fjellner for the EPP. As I mentioned already in previous posts, in second reading only the leading committee is involved in developing the Parliament position and the associated Committee (ITRE) is only entitled to propose amendments ahead of the plenary vote.

Member States, which agreed on a Council position on 13 June, have not yet transmitted their common position to the Parliament. We hear that this will only happen in November. All this tells me that Member States are not particularly eager to resume what they see as a controversial debate.  With such a sluggish approach, the file is unlikely to see a conclusion before mid-2015.

Once more: delay, delay, delay! Despite the ticking clock in the background, EU policymakers fail to realise the urgency of the situation.

A report published at the end of August highlights the consequences of these inconsistent and delayed policies – in the EU and elsewhere. In its 2014 medium-term forecast on Renewable Energy, the IEA notes that “biofuels for transport face a slower growth and persistent policy challenges”. The lack of clarity in how the EU aims to address the sustainability of biofuels and the difficulty in foreseeing a rapid epilogue to the ILUC proposal have a clear detrimental impact on the biofuels industry, which is in no condition to plan long-term investments.

Even the Commission, which initially put forward the legislative proposal to fix the ILUC issue, now seems to be turning its back to the whole debate. It appears that the line of the new Transport Commissioner for the next five years will be to focus more on alternative fuels (EVs, LNG, CNG, etc) than on biofuels, given the legislative uncertainty on ILUC.

Bottom line, the climate around biofuels seems even more complicated than before the summer. Policy makers are taking time and industry is struggling. The EU should decide a line of action and implement it if it wants the biofuels industry to be able to help in the decarbonisation of transport and in the development of advanced biofuels. A more balanced approach is necessary to allow good biofuels (whether conventional or advanced) to contribute to the fuel mix and align Europe with other countries where gasoline is preferred to diesel and higher blends of ethanol are in use.

Until a more balanced approach is adopted, the clock will continue to tick – worryingly so

Let the second reading start!

Géraldine Kutas — posted 15/07/2014

After a short break occasioned by the European elections in May, it will soon be time for new and returning Members of the European Parliament to embark on second reading discussions on ILUC. Member States adopted their common position on 13 June and, as soon the text is presented to MEPs in Plenary, the second reading phase will start. In this important new step of the process, UNICA would like to send a few words to the members of the recently formed Environment Committee, who will have a special role to play on the dossier in the second half of the year.

Dear Members of the Environment Committee,

As you are aware (or soon will be), the ILUC proposal, described by the Commission as a tool “to limit global land conversion for biofuel production, and raise the climate benefits of biofuels”, has been subject to discussions for already 18 months. The proposal has triggered heated debates and to date the positions of the three institutions still diverge. After a first reading position was adopted in the Parliament last September, Member States’ Energy Ministers reached a common position on 13 June, driven by the Hellenic Presidency. Where have discussions led to? Member States proposed a cap on conventional biofuels at 7% and a non-mandatory sub target for advanced biofuels at 0.5%, while the Parliament favoured a 6% cap on conventional biofuels and a 2.5% sub-target for advanced biofuels in 2020.

As if the gap between Parliament and Council was not clear enough, a group of 8 countries (Czech Republic, Estonia, France, Spain, Hungary, Poland, Romania and Slovakia) sent a declaration to the Greek Presidency right before the June Council meeting stressing that the 7% cap was an absolute red line and that any tripartite agreement on a lower cap would not be acceptable.

We were glad to see Member States realise how important it is to provide certainty for investments by keeping a cap at least at 7%. However, we still think the cap is not the best way to tackle the ILUC issue and that a more balanced and nuanced approach is to be found. The Council’s common position will now be subject to your amendments and eventually to tripartite negotiations. You probably remember how tight the vote was last year – the position could only be adopted in plenary by a slim margin of 29 votes, with a majority composed by ALDE, S&D, Greens and GUE/NGL. In this Parliament more than half of members are newly elected and a new majority will need to be formed to reach an agreement in second reading. UNICA counts on the new rapporteur, still to be appointed, to bring negotiations to a close as quickly as possible, in cooperation with the Italian Presidency. If the EU is serious about reducing transport emissions, agreement must be found shortly to provide sustainable biofuels with the certainty they need on EU markets.

From our side, we will use this occasion to reiterate once more that a biofuels policy based on a cap on all conventional biofuels doesn’t provide the necessary instruments to really identify and encourage biofuels that are performing better in terms of CO₂ emission reductions. With its black and white approach, the Council’s common position does not acknowledge the sound environmental performance and sustainability of certain conventional biofuels, like Brazilian sugarcane ethanol, and fails to promote their use even when they have superior environmental credentials when all emissions and environmental factors are taken into account.

Of note, a dedicated 7.5% sub-target for renewable energy in European petrol, as adopted by the previous Parliament in September 2013, is essential because it will help the EU to reach more cost-effectively its GHG emission savings target and in a more environmentally responsible manner.

We also strongly support the development of new and innovative biofuels technologies and we suggest a better incentive system than double-counting and a modest 0.5% sub-target.  For stimulating the production and consumption of advanced biofuels, we will advocate for a sub-target for advanced biofuels of at least 2% by 2020.

We hope that the result of upcoming negotiations will bring us to a more nuanced outcome for biofuels policy and we hope that MEPs will bring to the debate on the 2030 framework the important topic of a specific target for renewables in transport post-2020, as we believe it would trigger innovation in the advanced biofuels sector.

Yours sincerely,

Géraldine Kutas

Head of International Affairs, UNICA

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.