Why RED III will fail just as three Renewable Energy Directives have already

The EU transport sector had just 6.3% renewables in real terms in 2019, a substantial portion of which was palm oil in various forms.  With a 2010 starting point of around 4%, this 6.3% is a pitiful result, writes Eric Sievers.

Eric Sievers is Investment and Regulatory Director at Pannonia Bio. He wrote this op-ed ahead of the REDIII second stakeholder workshop for the revision of the Renewable Energy Directive, on 22 March. The views expressed here are those of the author.

The only worthwhile contributor, at scale, to renewables in transport to date is European crop biofuels, and that is despite DG Energy doing its utmost to expunge them. DG Energy declared war on crop biofuels in 2012 and hasn’t let up.  It is an appallingly misguided and damaging anti-climate campaign, and it lacks any grounding in science.

Just as RED 1 was a failure, DG Energy failed again with RED 1.5 (also known as the ILUC Directive). None of DG Energy’s goals for it have been realised. The only beneficiaries of RED 1.5 were fossil fuels and palm oil. DG Energy has failed yet again with RED 2; otherwise we wouldn’t be here today.

Yet the cohort of DG Energy functionaries and consultants who devised those failed policies is now working on RED 3 - the very same people - and this boggles the mind.  Where in heaven’s name is accountability?

To refresh everyone’s memory, in 2008 DG Energy proudly predicted that the Renewable Energy Directive would result in billions of euros of investment - in hundreds of new biofuels plants.

They got precisely two: Beta Renewables and Pannonia Bio. Beta shut down, producing fewer litres of biofuel in its brief lifetime than the Commission handed it Euros. Pannonia Bio, on the other hand, received no grants but has to date produced billions of litres of crop ethanol and advanced biofuels, created thousands of jobs, secured the livelihoods of thousands of farmers and abated millions of tonnes of greenhouse gases, with no downsides whatsoever.

Pannonia Bio has issued hundreds of invitations by the way, to Commission officials since 2012, to visit what is the world's largest and most technologically advanced and sustainable biorefinery.  No invitation has ever been taken up.

Whether RED 1, RED 1.5 or RED 2, the number of investment decisions taken in the EU since 2010, leading to commercial scale biofuels production, can be counted on just one hand, over an entire decade.

This is not the hundreds of billions of Euros predicted, but closer to one billion Euros. Quite simply, more biofuels plants closed in the last decade than opened. More advanced biofuels plants closed in the last decade than opened. Hundreds of projects were launched, then cancelled, as DG Energy recklessly flip-flopped. We know that, because we ourselves cancelled two projects in the wake DG Energy statements, one a crop ethanol plant and one that would have been the world's largest cellulosic ethanol plant.

It's worth taking a closer look at the ILUC Directive: It was designed by DG Energy expressly to address their belief that crop biofuels would unquestionably lead to increased feedstock prices, leading in turn to indirect land use change, in the form of deforestation.  The data is in now for everyone to observe.

What happened was the opposite to what they expected: feedstock prices have actually fallen, and the ILUC effects they imagined have not materialised, nullifying the entire basis of the legislation. Real world biofuels are not bringing ILUC. The cornerstone of Europe’s transport climate policy was wrong. But DG Energy and its community of consultants it don’t see this. No need to look at the real world, they say, the models are always right.

The same obstinate refusal to look out the window explains the immense pathways for palm oil fraud that DG Energy has created, but refuses to acknowledge or address.

They avert their eyes from the enormous amounts of PFAD and Southeast Asian used cooking oil that today enjoy privileged access in EU markets. Indeed, DG Energy is wilfully withholding data on the countries of origin of used cooking oil that would make this situation clear.

While there has always been a big gap between industrial, commodity and agricultural realities, and the assumptions held by DG Energy and its privileged consultants, today that gap yawns grotesquely wide. I wouldn't want my comments to be dismissed for lack of specificity, but we are pressed for time today.

Let me, however, give you a feel for the disparity by way of one simple example: DG Energy’s model for how Europe’s transport energy system works assumes a production cost of €1 per litre for a major EU biofuel which actually sells on the market for half that. Their work is riddled with such gross inaccuracy.

You ask how this could be. Well, besides spending billions on failed biofuels projects (and no biofuels investor in the world has a worse investment record than the European Commission), the Commission also spends tens of millions funding fake trade associations. It pays for a constellation of "stakeholders" who are in reality supplicants, occupying an echo chamber that tells the Commission that its ideological fantasies have stakeholder support.

All of this needs to change and change now. The very industry that DG Energy declared war on in 2012 is now the source of most of Europe's advanced biofuels and virtually all of the real renewables progress to date in transport, while DG Energy's darlings have gone bankrupt one after another over the course of the decade.  Indeed, my own company has brought more advanced biofuels production capacity on line in the last 12 months than all of the Commission's grant programmes combined.

It's time for accountability. Companies which produce no biofuel do not represent industry.  NGOs whose track record is falsehood and platitude instead of diligent analysis and description have betrayed civil society.

Worst of all, the dozens of self-proclaimed experts whose publicly funded advice and conclusions have proven so shamefully wrong need to be excised from the process.  It’s time for a policy discussion based on facts and reality in which expert status is earned and not simply claimed.

Paris Agreement commitments for transport will not be met if the Commission brings to the table the same mediocrity and confused ideology it brought to the last three transport Renewable Energy Directives.

Ever rising climate ambition expressed by leaders in Brussels is welcome but climate progress will not be brought by legislation which is based on ideology and pronouncements while treating investment protections, industrial realities, commodity markets and regulatory enforcement as bothersome afterthoughts. That kind of legislation – the DG Energy kind - belies ambition.