Newsletter 3.2022
Dear reader,
Welcome to the third EUROFUEL newsletter of this year! This edition continues to look closely at the consequences of the war in Ukraine for the energy and oil sector, and its rippling effects on the EU policy debate.
Much has changed in the last few months, with new western sanctions on the one side, and Russian retaliatory measures on the other, drastically reshaping the EU energy market as a whole. And with the European Union officials currently working to fine-tune a phaseout of Russian oil imports, more disruption is cerainly ahead for our sector, even though it is still unclear how tough the measures will be.
In the meantime, as a result of the struggle and the consequent rise of energy prices, many are now calling for a renewed push to decarbonise the energy system while maintaining a security of supply. A debate that will undoubtedly pick up steam in the face of a prolonged crisis.
In these uncertain times, we are thus pleased to share with you the latest developments through our newsletter, while continuing to advocate for our vision to deliver low carbon and renewable liquid fuels fully compatible with EU’s 2050 climate neutrality objective.
Yours,
Dr Ernst-Moritz Bellingen
EU struggles to find agreement on banning Russian Oil
Calls to Western governments for a complete phase out of Russian fossil fuels have been steadily growing since the beginning of the Russian invasion on Ukraine in February, with more than 450 NGO asking governments to “Stop financing Putin’s war with energy imports”. A decisive step in this direction has been the United States decision to ban the import of Russian oil, liquefied natural gas, and coal on March 8, while energy giants such as Exxon Mobil, Shell and BP also announcing they would withdraw from Russian oil and gas.
On the European side, however, the discussion has proven much more difficult.
Following on the commitment of the Versailles Declaration “to phase out […] dependency on Russian gas, oil and coal imports as soon as possible”, the EU has indeed made steps towards slashing its dependence from Russian gas by two-thirds this year under the RePowerEU plan. Nevertheless, strong opposition remains among Member States, in particular when it comes to banning Russian Oil, with an immediate, full-blown ban still a no-go for Germany and Hungary. EU diplomats are also in disagreement over the proposal to forbid any vessel flying an EU flag from carrying Russian oil, which could significantly impact countries like Greece.
As a result, discussion over a sixth package of sanctions that would ban imports of Russian crude oil and refined fuels are still underway, and it is very much unclear how the EU will move past the deadlock, with options on the table raging from a longer transition period to opt outs for the more vulnerable countries.
Yet, while diplomats are struggling the European Parliament is looking at a different way to break away from Russian fossil fuels, with several MEPs, mainly from Renew Europe and the Socialists and Democrats (S&D), set to propose a new push for renewable energy, with 2030 targets to be increased to 45%.
Rising calls to ban Gas Boilers
In the midst of raising fears about the future of energy supplies, talks about banning gas boilers are also getting louder than ever.
In April 2022, a group of nine environmental organisations sent a letter to European Commission President Ursula von der Leyen calling for an end to sales of new gas boilers. According to the signatories, if coupled with massive uptake of heat pumps, such a ban could completely end the €1bn the EU spends on Russian energy imports every day – not by finding alternatives but by using less energy.
Such recommendations are clearly echoed in the International Energy Agency’s (IEA) call last year for governments to phase out fossil fuel-based heating by 2025, as well as within the EU own plan to speed up the roll-out of heat pumps under RePowerEU.
Significantly, the appeal comes right while the Commission is in the process of revising the ecodesign rules for water and space heaters, which establish the requirements that heating appliances must meet to be allowed in the EU single market. The new requirements, set to be published later ties year, are also expected to change the rules for energy labels on home boilers, downgrading all fossil fuel boilers to the lowest energy categories of F and G.
However, too much optimism could be still premature. Despite all they have going for them, in fact, there are still concerns about heat pumps as well. In particular, there are persisting doubts on whether existing grids may be able to accommodate the drastic increase in electricity needed to run all these heat pumps in winter – especially in European countries where grids are not built for surges.
Alternative low-carbon solutions are therefore still needed to ensure that European homes are heated in the most economically and efficient way, and Eurofuel will follow closely the debate to ensure the upcoming regulatory framework will acknowledge the importance of renewable and low carbon liquid fuels in heating.
EC initiatives for Energy
The commission is launching two new initiatives to support the Energy sector, with a focus on promoting investments as well as boost boosting production and supply of renewable and low-carbon fuels in the aviation and waterborne sectors: the Investors Dialogue on Energy, and the Renewable and Low-Carbon Fuels Value Chain Industrial Alliance.
The Investors Dialogue on Energy, is a newly launched initiative under DG ENER aiming to identify investment barriers and provide solutions to achieve the EU’s energy targets. According to its programme, the work of the Investors Dialogue on Energy will help to:
- assess existing energy financing schemes and propose ways to upgrade and improve them
- develop proposals for pilot financial instruments, programmes or investment products
- steer technical assistance, and prepare suggestions for modifications to financial or other rules affecting investment in energy at the level of the EU and its member countries
The results will spur discussions on energy investments in the broader context of the European Green Deal and the 2050 objective of climate neutrality. This will also feed into the conceptual work on energy in the current and future programmes under the EU multiannual financial framework.
Working Groups (WGs) set up within the initiative will bring together experts from the energy industry and the financial sector:
- WG 1: Energy production
- WG 2: Transmission and distribution
- WG 3: Energy storage
- WG 4: Heating and cooling
- WG 5: Services and prosumers
Eurofuel has applied to WG4.
On the other hand, the Renewable and Low-Carbon Fuels Value Chain Industrial Alliance, which was kicked off on 6 April, focuses on boosting production and supply of renewable and low-carbon fuels in the aviation and waterborne sectors. The focus should be on value chains along key fuel technologies and modes (aviation and waterborne), and key common challenges and horizontal issues, e.g. access to feedstock, priority pathways, access to finance.
The Alliance is a voluntary collaboration of stakeholders from across the transport fuels and other relevant value chains, from sourcing to end-users, as well as technology and finance providers for each step in the value chain. They represent both the fuels supply and demand sides from the aviation and waterborne sectors, as well as civil society organisation, governments and their agencies. The Alliance Secretariat is run by FuelsEurope, together with Hydrogen Europe.
There is currently an open call for membership applications.
Low carbon and renewable liquid fuels: Eurofuel members are ready!
Eurofuel members were warmly welcomed in Italy by two of its Sustaining Members:
The Burners Division of Ariston Thermo Group, composed of Elco, Cuenod, Ecoflam, and SPM Innovation. The Burners Division of Ariston Thermo Group is nowadays a worldwide leader in the development of combustion technologies burners working with any gaseous or liquid fuel.
FIDA, one of the most important European manufacturers in ignition transformers and accessories for oil and gas boilers and burners, domestic/industrial.
The meetings held (Technical Commission, Public Relations Commission and Board meetings) were very fruitful, with members exchanging on their new developments, in particular the upcoming launch of the F30 blend in France; the Future Ready Fuel campaign in the UK; the Green Fuels Ready label in Germany, also being developed in Finland; and many more.
This was also a great opportunity to visit the factories of both Ariston and FIDA. Both companies are working hand in hand, and with other manufacturers, to ensure the full compatibility between their products and low carbon and renewable liquid fuels. Eurofuel members were positively impressed by their commitment and R&D facilities.
