Newsletter 02.2019

Dear reader,

Welcome to the second EUROFUEL newsletter of 2019. In this edition, we look at the ongoing discussions on the long-term decarbonisation strategy, the latest developments on biofuels and EUROFUEL’s publication on synthetic fuels.

Given the imminent termination of the current mandate, the EU agenda for these months will be focused on the preparation of future files and initiatives. The decarbonisation strategy plays a crucial role in this period of transition, with the European Parliament and the Council committed to develop positions before the May elections.

Equally politically contentious are the ongoing discussions on biofuels as the Commission has recently published a draft decision listing which crops will be eligible for public support to produce biofuels from 2021 onwards. Stakeholders and institutions are deeply divided on the issue: the debate is far from over.

Lastly, we look at the recent study commissioned by our German members on synthetic fuels. This very useful piece of research will certainly help us engage in the European debate on the topic and more broadly on the energy transition.

With the May elections approaching, our focus will slowly change from policy to election trends and debates. The election year will provide new opportunities to position EUROFUEL and engage with incoming policy-makers to build industry champions for the next legislative term. We will inform you in due time on the specific engagement activities we will propose and undertake in Brussels.

Yours,
Dr. Ernst-Moritz Bellingen

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Long-term climate strategy – work in progress in Brussels

After the launch of the (non-binding) long-term strategy for emission reductions (Clean Planet for all) by the European Commission in November 2018, the work on the file moved to the European Parliament and the Council to develop their positions.

From its side, the Parliament is struggling to find a unified position on the strategy due to the Parliament’s environment (ENVI) and energy (ITRE) committees who have both taken it upon themselves to open and approve resolutions. Both committees have approved their respective resolutions and their text would be sent to the next plenary sitting of 11-14 March. While the texts are both supportive of the Commission’s preference for a net-zero emissions 2050 target, the two resolutions do differ considerably on other points. The key differences are about the level of ambition: while ENVI’s resolution explicitly demands to raise the 2030 greenhouse gas emissions reductions for 2030 from 40% to 55%, ITRE’s text is more vague in this regard. Moreover, the ENVI’s text emphasizes “the need for investments in zero- and low-carbon technologies and fuels” and stresses the importance “to immediately phase out all European and national fossil fuel subsidies”. On the other side, ITRE puts more attention on the economic costs of the energy transition proposing ambitious “investments in industrial innovation, including digital technologies, and clean technology”.

Although different scenarios are possible, the most reasonable solution would be to find a compromise merging the two texts into a single resolution for the plenary sitting. The Parliament’s position will then feed into the work in response to the Strategy that the Council is expected to adopt in May.

From the Council side, work is ongoing also in the different Council configurations. Last week foreign ministers reaffirmed the EU’s “commitment to the Paris Agreement” agreeing on the “urgency of raising global ambition in climate policies”. The Competitiveness Council is also engaged in the discussions, holding a policy debate on the relationship between a future EU industrial policy strategy for 2030 and the Commission’s long-term strategy for emission reduction. Ministers concluded that secure access to raw materials, sufficient investment, and digitization are crucial aspects for both strategies to mutually reinforce each other. The European Council is scheduled to issue its formal conclusions in response to the Commission’s strategy at the Sibiu Council on 9 May.

 

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The future of biofuels at stake

Over the last weeks and months, we were witnessing an intense political debate on the future of biofuels, causing deep divisions among stakeholders and institutions. This originates from a provision included in the Renewable Energy Directive (agreed in 2018) establishing that crops that over the past ten years have expanded into forests and other “high-carbon stock areas” by more than 10%, will need to be gradually phased out by 2030, and stop being eligible for public support to produce biofuels. However, the text did not mention the specific crops, delegating this power to the Commission, which published its draft decision on 8 February. The text indicates the list of crops to produce biofuels which will be able to contribute to EU’s renewable energy targets after 2021.

In this regard the most contentious issue is about palm oil, a crop causing deforestation in the exporting countries – Malaysia and Indonesia above all. Due to a dramatic grow of 45% between 2008 and 2015 in high carbon stock areas and forests, palm oil has therefore been excluded from the list, with exemptions for palm oil from independent farmers. The decision has caused negative reactions from stakeholders impacted, who will have until 8 March to provide their feedback on the Commission’s draft. The draft was welcomed with scepticism also by the European Parliament, which consider the exceptions too broad and the enforcement impracticable. The Commission, which is seeking the Parliament’s approval, will have an exchange of views with an expert group on 5 March.

These developments show once more how fuels are still very high on EU’s agenda. As this trend is likely to continue in the forthcoming years, it would be crucial for EUROFUEL to strengthen its position in the debate, presenting e-fuels as reliable alternatives in the energy transition.

 

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Synthetic fuels – IWO/MEW study published

Our German EUROFUEL member IWO as well as MEW and UNITI have released a study on “Synthetic energy sources – perspectives for the German economy and international trade”. Realised by Frontier Economics, the research analyses the market potential, investment and employment effects of synthetic energy sources. Among other findings, the study shows that synthetic fuels can create development potential for producer countries and promote international cooperation while contributing to the decarbonisation of the transport sector.