We receive and publish with pleasure this comment by James Cogan. He is a technology, industry and policy analyst collaborating with PNO Innovation in Brussels and with a number of public and private organisations with stakes in the future of biofuels and transport energy. In the run up to the climate emergency conference in Paris he has been considering the options open to the designers of the new European governance system for climate and energy and to the 28 teams charged with creating member state climate and energy plans for publication by 2018. We are glad to promote the debate.
“At a time when carbon emissions should be dropping by 40%-80% EU transport emissions will actually increase by that amount, becoming the number one EU contributor to catastrophic global warming.
Transport emissions can only be reduced in the 2030 timeframe by traffic efficiencies, biofuels and lower tailpipe emissions. To date the EU has not taken bold measures to pursue such avenues and any gains have been offset many times over by traffic growth. Electric vehicles comprise only a miniscule fraction of the EU vehicle fleet, sales are under 1% and even the most optimistic forecasts for sales growth would not lead to an impact until well after 2040.
After a good start in 2009 biofuels uptake was halted by unsubstantiated concerns that the environmental benefits over fossil fuels were not great enough. In 2014 the European Commission quenched all progress by ratcheting down the targets for them in renewable energy legislation. Low blend E10/B7 biofuels currently available for use in the EU have only penetrated about half the market and are stalled there because there simply isn’t any incentive for fuels distributors to do more. And even if the current market was fully exploited there could be no further growth as the EU is not making real moves to eliminate regulatory barriers to higher blend biofuels. So in the extremely unlikely scenario that some company manages to produce advanced biofuels able to compete on cost they would find no demand for them.
Something needs to change. Between now and 2018 the 28 member states will be designing disruptive climate and energy plans and their planners will be desperately seeking measures for reducing transport pollution. After a lost decade EU stakeholder leaders will be handing over to members state planners a toolbox consisting of a biofuels sector they created but then stiffled, an energy tax directive which favours the dirtiest fuels, a broken tailpipe emissions system and little or nothing where traffic efficiencies are concerned.
For advanced biofuels to be part of the climate solution they must acquire a decent share of the EU transport fuels market by 2030. A 10% share equates to 30 million tons or the output of about 300 medium size fuel factories, which is about one for each EU region representing an excellent opportunity for rural development. That adds up to ten billion euros of investment inside the factory gates and lots more for regional feedstock supply chains. Ten billion is tiny compared to the hundreds of billions going into wind and solar generation around the world but it is huge compared to the current level of investment in biofuels which is zero. The kind of incentives needed will be the kind that guarantee industrialists, rural economies and regional development planners a 15-25 year competitive advantage over fossil fuels. That advantage will have to be sharp enough to attract in 10 or 20 billion euros immediately. Incentives leaning on Juncker funding or lobbying to prevent reversal of incentives every 36 months will fail. In the current climate there simply aren’t any industrialist mad enough to even consider investing in biofuels, advanced or otherwise. Policy makers take note.
Looking to waste, algae and woody crops for biofuels is enlightened. But it’s also an unproven route to climate change mitigation for 2030. There are other resource efficiency measures that planners will have to exploit and these are crop yield increases, acceleration of the trend away from land intensive red meat, rebalancing of agricultural output as a consequence of reduced food waste and use of underused carbon poor land in and around the EU. These measures will allow planners exploit proven conventional biofuels as well as emerging advanced biofuels. Member states could even combine their biofuels growth with common sense mitigation actions such as rewilding in the EU and cutting imports of agricultural products known to be unsustainable and linked with deforestation. They will exploit to the maximum the fact that making bioethanol results in a ton of home grown animal feed for every ton of fuel and that this is a direct and measurable way of actually reducing deforestation in developing countries brought about by EU demand for imported animal feed and beef. And all the while parallel efforts will move ahead with the ultimate aim of taking hydrocarbons fuels – fossil or bio – off the road altogether by 2050 or as soon as electric vehicles can be phased in.
With the onus of climate and energy planning squarely on the shoulders of the member states and with the first sets of plans due in 2018 there will be a generation of new people entering the planning business sorely in need of solutions and uninterested in why so little progress was made to date. They will note that technology advances and process efficiencies in conventional biofuels have come a very long way since the debate began 15 years ago and that European bioethanol GHG savings now exceed 60%. In contrast to EU planning in the past, they will learn to distinguish between healthy homegrown biofuels and those, such as palm oil diesel, that rely on the brutal burning of virgin forests in Sumatra and other developing regions.
So what are the incentives? The Commission recently proposed a revised energy tax directive designed to overturn the original version which actually taxes fuels in reverse order of their climate benefits. Right now bioethanol – the EU biofuel which is best for the climate – gets taxed the most. The proposal was shot down by the Council and Parliament. They need to pass it. Taxes can and should be used as an instrument for delivering climate and energy policy. Back in 2003 the tax directive was used to get poisonous lead out of fuels by taxing them 17% more than unleaded. The revised directive should keep the 17% but this time use it to support low GHG fuels such as EU bioethanol.
The fuel quality and renewable energy directives have a 2020 sell-by date. Rather than letting them expire, leaving a vacuum to be filled entirely by the member states, the Commission should use what credibility it can muster and present bold fresh extensions ambitiously mandating biofuels. Neither of these directives were ambitious in the first place and both were fumbled in the implementation, but letting them sink without trace is a lost opportunity.
Euro emissions standards are under scrutiny for their leniency with diesel pollution. This is good for low GHG biofuels because a shift to cleaner petrol engines also means a shift to more home grown low GHG bioethanol, amplifying the effect of E20.
Current standards and regulations are a major disincentive. Basic regulatory ground work has to be done so that higher blend biofuels can be routinely supplied at the pumps and used in normal engines well before 2030. And even before that we should awaken the fuel distribution industry to its responsibility in climate change mitigation by making E10 and B7 the standard at all pumps right now. Advanced biofuels investments simply will not take place if distribution and application infrastructures are not adapted. Governments can play an added role in this by shifting captive vehicle fleets to the lowest GHG fuels and engines.
If EU directives are left as they are, promoting and mandating low GHG biofuels will mostly be a job for individual member states. Each will devise its own package based on techniques similar to the old tax, energy and fuel directives but very much bigger and bolder. Critically, they will also have to reinforce their legislative efforts by putting biofuels at the centre of rural development strategies, and by directing structural, innovation and economic development funding at the sector. Agricultural ministries and industrial development agencies will need to make it part of their missions. Farmers and rural communities will thrive as dozens of EU regions get major foreign direct investment in biomass production and processing.
The Commission will still have a role, providing a common language for the process, accelerating standards development, clearing blend wall barriers and assuring real-time exchange between the member states of their policies and plans. The Commission will be more about removing disincentives than creating incentives. If there is one thing the Commission will be obliged to do well and soon it is the provision of a practical system for annualised scoring of biofuels suppliers – advanced or otherwise – according to their real GHG benefits.
Despite seemingly limited progress Europe has come a long way in ten years. It has the breadth and depth of skills it needs to make biofuels a major part of the transition to a low carbon economy. United by these and by a shared sense of real urgency, putting in place a package of high impact incentives to attract tens of billions of investment euros soon is well within our reach”.