Overly complex EU climate package will curb investment in green fuels, warns industry

European Commission executive vice president for the European Green Deal, Frans Timmermans, speaks during a news conference on the Commisssion's 'Zero Pollution Action' plan, in Brussels, Belgium. [EPA-EFE/JOHANNA GERON / POOL]

The advanced biofuels industry has criticised the complexity of the EU’s climate legislation package, arguing that the slew of new rules will hinder investor confidence.

The EU executive unveiled its climate package on Wednesday (14 July), which aims to reduce emissions by 55% by 2030 compared to 1990 levels. It comprises over a dozen pieces of legislation to set Europe on the path to carbon neutrality by 2050.

But industry critics say the myriad measures, spread across an assortment of regulations and directives, are complicating the EU’s business environment.

“By going too far in revising all possible acts, the Commission is not providing the industry what is needed for making investment decisions now,” said Marko Janhunen of UPM Biofuels, a Finnish company providing wood-based alternative to petrochemicals. “And we need those investment decisions soon if we want to create green growth,” he told EURACTIV.

Janhunen is vice chair of the Advanced Biofuels Coalition, a group of industry leaders making biofuels out of agricultural residues and waste materials, which are considered the most sustainable.

The group argues that interpreting the new rules and regulations will lead to uncertainty, which risks alarming investors.

“While earlier it was relatively easy for the advanced biofuels industry to judge the investment potential, the Commission is definitely increasing complexity and making it more difficult to calculate the business case for investments,” said Robert Vierhout of Enerkem, a Montreal-based company which specialises in transforming municipal solid waste into transportation fuels and chemicals.

According to Vierhout, the industry now needs to assess a whole new set of variables, which weren’t included in EU legislation before. “What now needs to be considered is the role of the Emission Trading System in the transport sector, the impact of the Energy Taxation Directive on fuel prices and the competitiveness of various fuel varieties with different greenhouse gas reductions, the impact of a sustainable aviation fuel and maritime mandate,” he said.

“All of the above increases complexity for those considering investments in the advanced biofuels industry, or any industry after all,” he told EURACTIV.

Delegated and implementing acts

The Advanced Biofuels Coalition also took aim at the EU’s use of delegated and implementing acts to define detailed criteria that will shape the future of the industry.

Delegated and implemented acts are adopted by the European Commission to update existing legislation in line with scientific advice. A delegated act is used, for example, to amend the list of advanced biofuels feedstocks considered sustainable under EU law based on the latest scientific findings.

Implementing acts of importance to the biofuels industry are still under preparation. But despite their links to the legislation unveiled in the package, they have yet to be released.

“Those acts are critically important for industry to know the ‘big picture’, and especially details like those, for example, on calculating emissions on certain renewable fuels and the famous list of feedstocks allowed to make advanced biofuels,” said Vierhout.

According to him, this lack of clarity creates uncertainty for investors and has a chilling effect on the industry.

But while it pours through proposed new EU legislation, the biofuels industry must also face more immediate demands.

As of the beginning of this month, the industry must apply the current renewable energy directive rules, despite no EU country having yet fully embedded the directive into national law, a situation which one source described as “Kafkaesque”.

Advanced biofuels feedstock list should be enlarged to meet EU target: industry

The list of EU-approved sustainable fuel sources should be expanded to meet the higher targets for second-generation biofuels under the updated renewable energy directive, according to the advanced biofuels industry.

A balanced approach

Frans Timmermans, the EU climate policy chief, defended the Commission’s proposal, saying the ‘Fit for 55’ package takes a “holistic approach” to ensuring Europe meets its climate commitments.

Speaking to reporters on the day of the launch, he said: “I’m sure that parts of the European Parliament and parts of the member states will not like elements in the package, but we have tried to make a balanced package… But you can’t dispute the goal which still has to be minus 55% because that is set in law,” he added.

Greens MEP Ciarán Cuffe also defended the legislative package.

“We should always aim to make legislation as simple and implementable as possible, but we cannot reject legislation that is clearly in the public interest on the grounds that it is too complex,” the Irish MEP told EURACTIV.

“The longer we delay action, the worse the impact on SMEs will be. It is in the interests of all in the world of business to be as ambitious as possible now – this will reduce further complexity down the line,” he added.

[Edited by Frédéric Simon]


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Advanced Biofuels Coalition

LSB is a coalition of leading advanced biofuel technology developers and producers committed to making a significant contribution to meeting the EU ambitions of decarbonizing the transport sector. Sustainable advanced biofuels are a fast track solution for decarbonizing transport. Advanced biofuels bring multiple benefits in terms of CO2 reduction, investments, revenues for the agricultural and forestry sector, improved waste management practices, job creation and an increase in energy security.

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