The technology-neutral policy for clean transport fuel is dead. Clean electricity must be put at the heart of EU transport policy, argues Jos Dings.
By Jos Dings, director of Transport & Environment
Clearly something has gone wrong with Europe’s attempts to stimulate cleaner forms of energy in transport. Over the last few months two key laws, initiated eight years ago with Commission proposals, and with a 2020 time horizon, were finally adopted.
The first was an amendment to the Renewable Energy Directive (RED) and the Fuel Quality Directive (FQD) that was supposed to deal with the indirect land-use change emissions (ILUC) of biofuels. The second was the implementing rules for the FQD that was supposed to deal with emissions from different fossil sources such as normal oil, tar sands, or coal to liquid. (For a primer on these laws, please read our takes on them here and here.) Both laws were not about “picking winners” but about assessing our transport fuels carefully on the basis of their climate performance.
Why has something gone wrong then? Because in its desire not to pick winners, Europe ended up picking the wrong ones. The adopted laws make member states mandate and subsidise crop-based biodiesel which likely has a worse climate performance than regular diesel. The laws do not care at all what our petrol and diesel is made of; all fossil fuel sources are treated the same. And they do very little, if anything, to promote clean electricity in transport.
But there might be lessons to learn before the EU defines the policies that will take us up to 2030. That’s why we commissioned a study on the lessons learned from the eight years behind us. It is high-quality work by the Institute for European Environmental Policy, the International Council on Clean Transportation, and Transport and Environmental Policy Research, with lots of technical and political analysis and quite a few proposals for how we could move ahead. Below is a summary of our thinking that the report helped to develop.
One big conclusion is that technology-neutral policy for clean transport fuel is dead. This is significant because the oil industry always says it does not want favours for particular technologies. Somehow it seems especially sensitive about favours for clean electricity. But it has lobbied very hard – and successfully – to favour its own unconventional oil by excluding it from our climate policies. The same for the biofuel industry that lobbied to keep ILUC emissions out of EU law. In short, both industries were set against assessing their products on their true carbon footprint – and member states listened.
Another striking point from the report is that life-cycle analysis (LCA) should be a key element in fuel regulation but should not be the only one. It should be complemented with other elements to ensure that what is being compared is really comparable (fossil fuels and biofuels pathways, for example) and not just be limited to climate concerns.
A third key point the report investigates also seems quite technical, but is still fundamental: the legal instrument. An interesting option is to turn the law into a regulation (binding on fuel suppliers) not a directive (binding on every member state). This would ensure more coherent implementation and more consistent incentives across Europe, just like the cars & CO2 regulation does.
So what does this mean for 2030 clean fuel policy?
First and foremost, the sustainability standards need to be rewritten so that fuels only qualify if they do not give rise to ILUC emissions, and if they satisfy both the waste hierarchy and the cascading principle for the use of biomass. Current targets and policies favour burning the stuff for energy, whereas reuse, recycling and use as a feedstock is often more efficient and keeps the carbon out of the atmosphere. This is not easy but it has to be done in order to ensure that available biomass is used as efficiently as possible. All this should result in a quick phaseout of first-generation and a careful selection of second-generation fuels – for example, from waste or manure.
Second, we should not set a transport target in the new renewable energy directive but instead transform the fuel quality directive into a ‘clean fuel regulation’. We now have two directives which impose a 10% and a 6% target on every member state, which means 2 x 28 = 56 targets in total. We could do with just one, like we have only one 95 g/km CO2 target for the car industry. If such an example of better and simpler lawmaking would not pass the desk of Frans Timmermans, I do not know what could.
All big European fuel suppliers – even utilities – would need a certain amount of clean fuel credits, and all more sustainable fuel options would be awarded a certain number of credits on the basis of LCA and additional considerations mentioned above. For example: a gigajoule (GJ) of a normal clean biofuel gets a credit, a GJ of a super clean one gets more. Normal electricity gets credits too because of its lower average carbon footprint and higher efficiency, and solar and wind electricity get the most because they are the cleanest and most efficient options with the lowest land and resource use.
We need innovation too; when a new fuel arrives on the market, the Joint Research Centre should assess it and award it points in the system, just as it currently assesses ‘eco-innovations’ in cars. And we need flexibility between fuel suppliers – a clean fuel credit trading mechanism, similar to what is already in place in California with the Low Carbon Fuel Standard. It should also build on the reporting requirements already in place for biofuels and fossil fuels on origin and carbon intensity, to ensure full tracking all along the supply chain. Obviously this is only a rough sketch of a new policy; but one I hope can be a basis for further refinement and discussion.
And third, we need to ensure that clean electricity gets put in the place it deserves: at the heart of transport policy. Transport should become part of the clean electricity revolution and accelerate it – for example, by becoming a storage option for intermittent renewable power. Electricity is in the midst of a green revolution that will only get stronger, while oil is becoming dirtier than ever and will keep costing Europe hundreds of billions per year in imports. We need a European transport electrification strategy that goes across vehicles and modes and that ensures Europe leads, not follows, on this issue.
Europe should make choices, draw the curtain on failed energy options, and prepare the stage for good ones. Making mistakes is only human – but so is learning from them.