EU risks losing competitive edge in low-carbon fuels, warn industry and NGOs

The European Parliament backs the Paris Agreement on climate change last week. But without a robust policy framework, the EU could lose its competitive edge in innovative, green advanced biofuels. [European Parliament/Flickr]

EXCLUSIVE / The European Union risks losing its hard-won advantage on new low-carbon fuels to international competitors such as the US, a group of NGOs, leading companies, and think tanks has warned.

Investment in advanced biofuels has stalled due to the lack of strong market signals from policymakers such as the European Commission, they said.

Plant openings have raced ahead in the US and in Brazil, while projects in the UK and Finland have been scrapped since 2014. Before 2014, facilities were opened in Italy, Finland, and Denmark.

Advanced biofuels are made from non-food materials such as residues from agriculture and forestry or biogenic municipal waste. Unlike some earlier biofuels, they do not incentivise the growing of food crops for fuel, which is controversial.

“Europe risks losing its competitive position on innovating low-carbon transport fuels,” said Chris Malins of the International Council on Clean Transportation.

“After several promising commercial-scale projects were kicked off in recent years, investment has slowed to a halt in Europe due to policy uncertainty.”

That could be addressed with binding targets for advanced alternative fuels in forthcoming EU climate regulation for 2020-2030, according to the group, which overcame traditional differences to work together for the past year.

The Commission plans to propose legislation reviewing its Renewable Energy Directive on 7 December, as part of a suite of policies under its flagship Energy Union strategy to fight climate change and reduce the bloc’s dependence on imported energy.

“Long term confidence is required to stimulate investment,” said Jonathan Murray of the Low Carbon Vehicle Partnership.

The companies, representing the majority of the European industry, campaigners, associations and academics will later today (11 October) publish a report on the technical, economic and environmental benefits of being at the forefront of the development of the next generation of low-carbon fuels.

Missed opportunities

As the world moves to a low carbon, sustainable future, advanced biofuels have the potential to grow as an industry. But failure to deliver strong enough signals to convince investors to back projects will see Europe fall behind and miss out on the potential economic benefits, the group said.

Europe is credited with having done much of the heavy lifting on solar technology innovation, only to see China successfully roll it out at scale.

Retroactive policy changes in government support for wind and other renewable projects in the UK and Spain has damaged investor confidence.

“There is now a compelling case to provide investment security via incentives for those projects that are proved to have a low impact on the climate, the environment and land use,” said Mallins.

Rewarding fuels that have the greatest greenhouse gas savings through a performance-based targets system would boost the impact of sustainable biofuels in the market, the group said.

“The commercialisation of sustainable advanced biofuels should be a priority for meeting 2030 climate goals, and mobilising investment is critical to the prospects of achieving this,” added Murray.

Paris Agreement

The EU last week ratified the landmark Paris Agreement, a global commitment to fight climate change, triggering its entry into force. It aims to cap global warming to below two degrees above pre-industrial levels.

“We are within five years of reaching a 1.5 degree temperature rise,” said Jennifer Holmgren, CEO of LanzaTech, an advanced biofuels company. “It is urgent that we implement measures to reduce our global carbon footprint.”

Paris climate accord to take effect on 4 November

A global agreement to combat climate change will take force after support from European nations sent the accord across an important threshold on Wednesday (5 October), prompting US President Barack Obama to hail it as a “historic day” for protecting the planet.

The EU has pledged to cut its greenhouse gas emissions by at least 40% by 2030. Transport is the EU’s largest source of CO2 emissions and is overwhelmingly based on oil, a polluting fossil fuel. It is the only sector in the EU where greenhouse gas emissions continue to rise.

Angel Alberdi, secretary general of the European Waste to Advanced Biofuels Association said the industry was ready to provide “a key contribution” to the decarbonisation of the EU transport sector.

“Innovation is advancing rapidly,” the Biofrontiers report says. “However it is unlikely the energy solutions society needs will make the transition from the laboratory to commercialisation without a strong policy framework in place, allowing them to compete against fossil fuels.”

Support for advanced alternative fuels should be prioritised in the reviews of the Renewable Energy Directive and Fuel Quality Directive, the report adds. The current versions of the directives govern biofuels support for the period up to 2020.

The report, backed by The European Climate Foundation and green NGO Transport and Environment (T&E), recommends;

  • realistic and responsible binding targets for fuel suppliers for advanced alternative fuels in 2025, with a higher target range set for 2030;
  • accurate performance based targets evaluated on full lifecycle direct and indirect emissions which reward fuels delivering the greatest net greenhouse gas savings;
  • energy and climate policy for 2030 ensures deep cuts to lifecycle emissions while safeguarding food, soil, water and biodiversity.

Crop-based biofuels

Current legislation requires EU member states to ensure that renewable sources account for at least 10% of energy in transport by 2020.

But following intense controversy over biofuel’s environmental impact, the EU capped how much crop-based biofuels, such as maize or palm oil, could contribute to that target.

Apart from driving up food prices, using farmland to produce biofuels adds to pressure to free up land through deforestation, which can result in increased greenhouse gas emissions.

Ethanol producers, for their part, say the Commission has been misled in its analysis by putting all biofuels in the same bag. They point out to studies showing ethanol contributes far less to those issues than biodiesel and have criticised the retroactive cap for damaging their investments.

Jos Dings, executive director of T&E, said, “If we are to learn from past mistakes, Europe should only promote alternative liquid fuels on the basis of their environmental perfomance.”

Green transport target will be scrapped post-2020, EU confirms

EU laws requiring member states to use “at least 10%” renewable energy in transport will be scrapped after 2020, the European Commission confirmed, hoping to set aside a protracted controversy surrounding the environmental damage caused by biofuels.

The EU has a target of 10% renewable energy in transport fuel by the year 2020, contained within the renewable energy directive (RED).

Meanwhile, the fuel quality directive (FQD) requires a 6% reduction in the carbon footprint of transport fuels by the same year.

  • 7 Dec: EU to propose 2030 climate and energy policies.

European Climate Foundation

Road transport

In July, the European Commission presented a strategy for low-emission mobility that could mean dramatic changes for the transport sector. looks at the implications for industry, with a focus on road freight.

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