Newsletter 6.2019

Dear reader,

Welcome to the sixth EUROFUEL newsletter of 2019. In this edition, we look at the ongoing institutional reshuffle, the Commission’s ambitious plans in the area of climate action and the developments linked to the revision of the EU’s energy taxation framework.

The EU’s institutional transition is revealing more complicated than initially predicted, leading to a late start of the new European Commission’s mandate. Despite this delay, the recent period has once again showed what the priorities of the next European Commission will be. Climate action will undoubtedly be one of them, with the incoming Commission set to put forward in the first period of office ambitious and comprehensive policies under the framework of the European Green Deal. While the Green Deal will set out the main directions for the next legislative term, further initiatives will develop a more detailed framework. These include a European Climate Law, enshrining the 2050 climate neutrality objective and higher 2030 reduction targets into law as well as a zero pollution strategy, looking among others at air quality. Another relevant issue coming up will be the revision of the energy taxation.

In view of these developments and ambitious plans, it is crucial to ensure that the heating oil industry presents itself as a constructive partner bringing solutions into the ongoing debate. Early engagement with policy makers during the first phase of the new institutional cycle is therefore essential to showcase the heating oil’s efforts to develop innovative and cleaner fuels fit for the future energy mix.

Yours,

Dr Ernst-Moritz Bellingen

Slow start for the new European Commission

The formation of the new European Commission is taking more time than initially expected, as the election of the new College of Commissioners is being delayed after some candidates did not pass the screening of the European Parliament. While the majority of candidates were approved after intense hearings in front of the European Parliament, the French Sylvie Goulard (candidate for Internal Market and Industry), the Hungarian László Trócsányi (candidate for neighbourhood and enlargement) and the Romanian Rovana Plumb (candidate for transport) were rejected by MEPs on the ground of conflicts of interest. After the decision by the European Parliament, these Member States had to nominate new candidates, who in the next weeks will have to go through the same process as their predecessors. While France and Hungary have presented new candidates to incoming President Ursula von der Leyen, Romania’s government has recently fallen, and it is unclear when a new government will be able to appoint a new candidate. Hopes are that this could be in the new weeks.

The problems related to the appointment of the incoming Commission are not simply of procedural nature but entail a delay in the start of the new mandate. Set to take office as of 1 November, Ursula von der Leyen’s College of Commissioners is now expected to start not before December, and potentially even January. While this postponement might be of help for the new Commission to take more time to work on its new priorities, it is also detrimental as it adds uncertainty to the new institutional cycle. Brexit is another element bound to influence the first period of the mandate. With an additional extension of the exit date until January 2020 almost certain, the day to day business of the EU will inevitably be impacted as a lot of the attention risks to be devoted again to Brexit, before the real talks for the future relationship can even begin.

An ambitious European Green Deal

Despite this situation, some of the priorities of the incoming EU Commission are already well known. It is clear is that climate action will be one of the key priorities for the years to come. Through the European Green Deal, a comprehensive policy initiative aimed at streamlining climate action across different sectors, the European Commission will pursue ambitious energy and climate policies. This is what has clearly emerged from hearing in front of the European Parliament. The Dutch politician, who will hold the position of European Commission’s Executive Vice President in charge of the European Green Deal and will be heading DG CLIMA, has already presented to MEPs his plans for the next years. In the framework of the European Green Deal, several measures will be launched by the European Commission.

One of the first action will be the proposal for a European Climate Law within the first 100 days of office. The latter will enshrine into law the EU’s long-term decarbonisation objective, that is the achievement of climate neutrality by 2050. The proposal will also indicate how this goal should be reached listing the necessary steps to make it possible. Before adopting the European Climate Law, the Commission will however have to wait a political mandate by Member States. While the majority of national governments have endorsed the 2050 decarbonisation objective, few Member States – namely Poland, Hungary and Czech Republic – haven’t agreed yet on the goal. Despite the current stalemate, a consensus on this matter is expected to come during the December European Council.

The European Climate Law is not the only policy measure in the pipeline. A more controversial issue is the plan of the next Commission to raise the 2030 greenhouse gas emission reduction targets from 40% to at least 50%. Since its announcement in July by President-elect Ursula von der Leyen, this proposal has been at the centre of discussions in Brussels triggering debates and initial divisions on the feasibility of this objective. Compared to the European Climate Law, raising the 2030 greenhouse gas emission reduction targets is even more complicated as it would entail a revision of already adopted legislation. While the Commission – and especially Timmermans – has already announced the need to revise the targets potentially even up to 55%, scepticism remains amongst Member States and certain section of the European Parliament. Questions have indeed arisen both on the feasibility of the target and the lack of concrete indications by the European Commission on how to achieve it.

Energy Taxation – EU set to review the regulatory framework

Another topic which is expected to be addressed during the next institutional cycle is energy taxation. Indicated as important issue by the incoming Energy Commissioner Kadri Simson (Estonia), the existing regulatory framework of energy taxation is likely to be revised in the next years.

As indicated in the evaluation of the European Commission published in September, the Energy Taxation Directive does not deliver the same positive contribution as when it came into force in 2003, as technology, national tax rates and energy markets have all evolved considerably over the past 15 years. The evaluation concludes that the Directive is not fit to address the new EU’s climate objectives, as in the current legislation, for example, there is no link between the minimum tax rates of fuels and their energy content and CO2 emissions.

Moreover, the Directive as it is now does not reflect the current mix of energy products on the market in the EU. While a clear timeline for the revision of the legislation is not defined yet, discussions are now ongoing within the Council. Economic Ministers are indeed expected to adopt conclusions on the EU’s energy taxation framework in early December 2019. This is likely to be followed by the start of a revision process of the legislation by the European Commission. Given the sensitivity of the issue, the procedure is not expected to progress quickly, and a proposal from the European Commission of a revised Energy Taxation Directive is not expected before 2021. Despite the relatively slow process, it remains crucial to monitor the developments of the legislation, as it will impact directly heating fuels.

Eurofuel on board to the future

What will the future of heating with liquid fuel be like? Our members are committed to bringing replies at a time when everybody is looking at solutions to fight climate change while maintaining a sustainable way of living for Europeans.

 

ReFuel the future

On 26 September, Informazout, the Belgian association, hold its annual congress intitled “ReFuel the future”. The event was the opportunity to review the worldwide energy transition, the European policies and the solutions which the heating oil sector brings to the table. Energy efficiency and future fuels are part of the solution.

 

FutureFuelsCamp visits INERATEC and KIT

The German Institute for Heat and Oil Technology (IWO) and Eurofuel invited delegates to the FutureFuelsCamp in Karlsruhe/Germany, where research is being conducted on greenhouse gas-neutral, liquid fuels and combustibles. The new fuels are already being produced there in pilot plants, and the event provided an opportunity to see at first hand the daily work of the scientists and engineers.

There are various "paths" for the production of alternative fuels from renewable sources. Currently, biomass-based products in particular are available on the market that already show greenhouse gas reductions. In the future, the selection of raw materials for the production of liquid hydrocarbons should deliberately avoid competition with agricultural land or food. Due to the foreseeable large demand, in the long-term electricity-based, synthetic energy sources from renewably-produced hydrogen and CO2 separated from the air would be required as carbon sources - the so-called e-fuels.

At the start-up company INERATEC, winner of the German Founders Award, and the Karlsruhe Institute of Technology (KIT), guests from all over Europe were informed about the options and opportunities of the new, almost CO2-neutral fuels. 

The participants discussed what role liquid, renewable fuels will play in the future in the joint Future Forum of IWO and the European fuel oil association Eurofuel, the two organisers of the FutureFuelsCamp. Ideas were presented on how climate targets can be achieved with greenhouse gas-neutral, liquid fuels. In particular, the advantages of the drop-in capability of the new products play a major role: "Gradually, renewable fuels can be added to conventional fuels and thus increasingly replace fossil oil and fuels," says Dr. Ernst-Moritz Bellingen, President of Eurofuel. Everyone agreed on one thing: greenhouse gas-neutral liquid fuels and combustibles can be a practicable solution for more climate protection.