The review of the EU's Fuel Quality Directive
Petrol and diesel specifications are being reviewed in order to lower their environmental and health impact as well as to take into account new EU-wide targets on biofuels and greenhouse gas emissions reduction.
The 1998 Fuel Quality Directive sets EU-wide specifications for petrol, diesel and gas-oil used in cars, trucks and other vehicles - including inland waterway barges, tractor locomotives and machinery - in order to protect human health and the environment.
In January 2007, the Commission proposed revising the standards so as to:
- Reflect developments in fuel and engine technology;
- help combat climate change by promoting the development of lower carbon fuels, including biofuels; and;
- meet air-quality objectives set out in a 2005 Clean Air Strategy, inter alia, by reducing emissions of sulphur and PAHs (Poly Aromatic Hydrocarbons) from diesel.
If approved, the amendments would permit higher volumes of biofuels such as ethanol to be used in petrol.
The Commission is also proposing mandatory monitoring and reporting of "lifecycle greenhouse emissions" from fuels as of 2009, and an obligation for fuel suppliers to ensure that greenhouse gases produced by their fuels throughout their life-cycle (i.e. production, transport and use) are cut by 1% per year between 2011 and 2020 (Article 7a).
According to the EU executive, the revision of the Fuel Quality Directive should prevent some 500 million tonnes of CO2 from being released into the atmosphere, thanks to the obligation it will contain for fuel suppliers to reduce their fuels' lifecycle greenhouse gases by 10% by 2020. However, disagreement is rife over key elements of the proposed text, notably due to certain inter-linkages it presents with existing or planned legislation aimed at slashing CO2 emissions or encouraging the use of biofuels and other renewables.
- An achievable target?
A number of questions surround the 10% target (the so-called article 7a target), including:
- How firms' efforts before 2011 should be accounted for;
- whether the annual 1% reduction target is overly "rigid", with the Portuguese Presidency proposing that the 10% target should instead be met in two five-year stages, with an interim 5% goal by 2015. Parliament's environment committee has suggested that emissions be reduced by "at least 2% every two years" (EurActiv 28/11/07);
- whether the lifecycle approach is feasible, or even desirable, seeing as 85% of fuel emissions in fact come from fuel use rather than production. What's more, oil producers and refineries already fall under the EU Emissions Trading Scheme (EU ETS) – and they claim that this provides a sufficient guarantee that they will strive to reduce carbon dioxide emissions, without the need for binding legislation.
Nevertheless, there are also those that heartily defend the target as an alternative to the EU's '10% biofuels target by 2020', which they claim gives too much weight to an as yet unproven and potentially inefficient technology. They say that such a volume-based target would distort competition between biofuels and other potentially beneficial energy sources or technologies, such as green electricity, hybrids or hydrogen, and that a CO2-based target would be more technologically-neutral.
- Quality standards
A number of MEPs and member states are reluctant to commit to a target before defining some basic sustainability criteria for the production of biofuels, fearing that quantitative targets alone could encourage fuel suppliers to invest in cheaper but environmentally harmful biofuels that provoke food price hikes, deforestation and water shortages.
Similar criteria have been drawn up by the Commission in a separate directive on renewable energy, presented in January 2008, and the EU executive insists that this is their correct place.
But Dutch Socialist MEP Dorette Corbey, who is in charge of steering the proposal through Parliament, says those rules will not be adopted early enough.
She wants legally-binding criteria included in the Fuel Quality directive, which is at a much more advanced stage of the EU's complex decision-making procedure.
In February, member states, agreed to set up an ad hoc working group to draft "core criteria" for biofuels, which would be included both directives. The group is expected to put forward recommendations in March. "Ideally, these would be 'copy-pasted' into the main renewables directive afterwards," said a spokesman for the Slovenian Presidency.
The definition of sustainability criteria is nevertheless highly controversial. MEPs are already pushing for stricter terms than those put forward by the Commission. In a Parliament environment committee vote in November, on top of a number of basic biodiversity and social criteria, they further called for biofuels to deliver life-cycle CO2 savings of at least 50% compared to conventional fuels – much more than the 35% cut the Commission has proposed.
According to early signals, a "two-step approach" could be introduced, with an initial requirement for biofuels to emit at least 35% less CO2 than fossil fuels. This would then be scaled up - likely to 50%.
- Which pollutants and for which vehicles?
The Commission's proposal suggests a maximum limit of 10mg/kg of sulphur in all diesel fuels, from 2009 for road transport and from 2011 for non-road vehicles and inland waterway vessels, and proposes cutting the permitted content of polyaromatic hydrocarbons (PAHs) in diesel from 11% to 8%.
However, MEPs said all vehicles should be subject to the strict sulphur limits as of 2009 and want PAHs reduced to 6% content. There is also disagreement on the list of greenhouse gas emissions that should be covered by the reduction targets, notably due to the trade-off that can exist between cutting pollutants such as sulphur and polyaromatic hydrocarbons and reducing CO2 emissions.
According to Dutch Socialist MEP Dorette Corbey, Parliament rapporteur on the issue, the Fuel Quality Directive must include criteria ensuring that the biomass used to produce biofuels is "at least partly traceable", has not been planted near nature areas or protected sites and does not lead to deforestation or water shortages.
While she acknowledges the current Commission moves to draw up sustainability criteria as part of the future Biofuels Directive, she stresses that these do not yet exist and that separate criteria are needed in the meantime to prevent the lifecycle reduction obligation causing unsustainable production of biofuels.
"This directive will provide a massive incentive for biofuels. But because the Commission has not yet put its own sustainability criteria on the table, the European Parliament has no other choice than to give its own guidelines," she told EurActiv, adding: "It would have been better if the Commission had first of all drawn up sustainability criteria and then the carbon dioxide target."
As regards claims that lifecycle reduction is incompatible with the EU ETS, she stressed: "The ETS only provides an incentive to reduce carbon dioxide and does not impose any absolute obligation. Oil companies can, after all, decide to purchase emission rights on the commercial market. Both the ETS and the directive now under consideration provide incentives: neither of them actually imposes a requirement to improve efficiency at refineries. In other words, they reinforce each other and at least do not conflict."
EPP-ED MEP María del Pilar Ayuso, however, replied to Corbey's report by saying: "We are not in favour or against [sustainability criteria] but this is not the right place. We should stick to the subject of the proposal."
The European Petroleum Industry Association Europia stressed the inconsistency between promoting higher quality fuels and biofuels on the one hand and the introduction of a lifecycle approach on the other, saying that such an approach would put highly-upgraded refineries, capable of more complex conversion techniques, at a disadvantage because they are often more energy-intensive, and that this would ultimately create a "perverse incentive" for the incomplete and inefficient conversion of crude oil.
It added that the target of achieving an annual 1% reduction of fuels' lifecycle emissions was "premature" and called for it to be deferred until an appropriate methodology for calculating full-cycle greenhouse gas emissions, which "resolves the potential overlap with the ETS and assesses the feasibility of a reduction target in line with the upcoming Renewables Directive as well as business, economic and social impacts", is established.
The European Bioethanol Fuel Association (eBIO) said that the proposals were "well-meaning" but warned that they risked creating "a policy barrier to the development of second-generation biofuels as well as a host of other problems". It explained: "Focusing solely on the greenhouse gas savings of biofuels leaves other sustainability concerns out of the equation. Biofuels with relatively high greenhouse gas savings, such as Brazilian bioethanol, are not necessarily produced in an environmentally sustainable manner." In order to address this situation, eBIO believes the solution is to subject only fossil fuels, and not renewable fuels, to the 10% lifecycle greenhouse gas reduction goal.
eBIO adds that both the directives on fuel quality and renewables should also be accompanied by rules aimed at raising the automobile industry's minimum capacity for biofuel consumption.
Car manufacturers, on the other hand, welcomed the lifecycle approach. "The focus of the Commission is still far too much on vehicle technology," the European Automobile Manufacturers Association's (ACEA) Communications Director Sigrid de Vries said, adding that it is "important that the fuel industry takes part" in reducing transport emissions.
Inland Navigation Europe (INE), an association that aims to promote freight traffic on the inland waterway network, says sulphur levels for barges should be cut to 10 mg/kg as soon as 2010. According to INE, delaying the introduction of stricter sulphur limits until 2012 would only serve to "significantly delay the replacement of older engines by more energy-efficient ones, because these newer engines cannot run on 300ppm fuel".
The Commission's two-phased approach would also be detrimental to shipowners that have already replaced their engines because no ultra-low sulphur fuel would be made commonly available on the market, says INE.
It adds: "Last but not least, the Commission proposes 300ppm fuel only for inland waterways, while road transport and non-road machinery will use 10ppm fuel. The additional costs of producing and supplying a separate type of fuel only for inland waterway transport will undoubtedly be passed on to the users, while most inland ship engines can run without major complications on 10ppm fuel."
Green transport NGO T&E has termed the proposal an "ingenious climate measure" and said its measures could "make a big contribution to reducing demand for bad oil".
- 27 Nov. 2007: EP's Environment Committee adopts first-reading report on the Commission's proposal to review the Fuel Quality Directive (EurActiv 28/11/07).
- 23 Jan. 2008: Commission presented draft sustainability criteria for biofuels as part of a package on promoting renewable energies.
- Feb. 2008: An ad hoc working group of member state representatives is set up to put forward recommendations on "core criteria" for sustainable biofuels(EurActiv 26/02/08), which would be included in the revised Fuel Quality Directive, as well as in the Biofuels Directive.
- 17 Jun. 2008: Parliament expected to hold first reading vote on the report - although the deadline could be extended in view of achieving a first reading deal with member states.