Newsletters

Newsletter 6.2022

Dear reader,  

Welcome to the sixth, and last, EUROFUEL newsletter of this year! This edition will look once again at the new emergency measures coming from Brussels to address the energy crisis, while taking stock of the latest developments in the trilogue negotiations of the Fit for 55 proposals. It will also bring you the most recent news concerning the upcoming critical vote in the European Parliament on the revision of the Energy Performance of Building Directive.

The last two months have been once more a roller-coaster for the energy sector, with Brussels tabling new emergency regulations almost every fortnight trying to broker a fragile agreement on capping gas prices. In the midst of all the emergency Council meetings, new sanctions and angry joint letters from EU capitals on gas price caps, Parliament and Member States still managed to continue their parallel negotiations on the Fit for 55 proposals, with the Czech Presidency pushing to find an agreement on most files by the end of its term in December.

Against this background, we must nevertheless focus our attention on what could be the most important vote for the future of the oil heating sector. Following a general agreement in the Council, the Parliament’s ITRE committee is finalising its position on EPBD, with the final vote now scheduled for the end of November. The debate among MEPs is intense and pressure from NGOs is at its maximum, but as Eurofuel we are actively engaging at all levels to ensure adequate recognition for the invaluable role of low-carbon and renewable liquid fuel in the decarbonisation of the EU building stocks.

Our industry, as well as the EU heating sector as a whole, are at a crucial juncture, and we must strive to make certain that every available solution is considered to make our heating truly sustainable, affordable and fit for a low-carbon and resilient energy system.

Yours,  

Dr Ernst-Moritz Bellingen  

EU leaders seem to finally have reached an agreement on a temporary price cap on gas

September and October were once again very intensive months for the EU energy sector, with no less than seven extraordinary, informal or formal meetings of EU leaders and/or energy ministers called to debate and approve Brussel’s continuous stream of emergency measures to address the energy crises.

On 30 September, EU leaders agreed on a first package of measures to mitigate the impacts of the soaring energy prices on the industry and citizens, including

• a 10% voluntary electricity reduction target
• a 5% mandatory power savings target during peak hours,
• a cap on market revenues for electricity generators using renewables, nuclear and lignite,
• a levy to capture surplus corporate profits from the fossil fuel sector.

Following the meeting, however, fifteen Member States, including France, Italy and Spain, wrote to European Commission President Ursula von der Leyen asking for the introduction of a price cap on wholesale natural gas transactions, i.e., the EU27 would jointly agree to only pay a fixed price to international gas suppliers.

Despite resistance from the Commission itself and Germany, Von der Leyen finally yielded, and a new proposal to mitigate the impact of high gas prices, ensure security of supply and tackle energy market price volatility was published on 18 October. This new round of emergency measures includes a mostly voluntary joint gas purchasing, the creation of a new gas trading benchmark for liquefied natural gas, as well as improving the functioning of energy markets to increase transparency and alleviate liquidity issues. As for the highly controversial price cap, the Member States finally reached a consensus on two separate measures that have both at different times been referred to as price caps.

Firstly, Member States agreed to give the Commission the power to come forward with another proposal explaining how exactly a temporary price cap on the benchmark European gas trading hub, the Dutch TTF, would work. This cap, that would kick in “as a last resort” during periods where gas prices spike excessively, has so far been bereft on details — with the EU executive now able to give further information. Leaders overcame significant resistance from countries including Germany on this, even if the cap was still significantly narrower in scope than previous proposals put forward by countries.

Secondly, EU leaders also said the Commission should urgently look into a cap on the price of gas used to produce electricity — the so-called Iberian mechanism, already in place for months in Spain and Portugal. Countries including France and Spain were pushing for this most energetically, while others highlighted that it could lead to “leakage” of gas if not applied uniformly and cause a surge in gas demand, burning through the EU’s hard-earned reserves. That is likely why the leaders’ request came with a long list of conditions, including a “cost and benefit analysis.”  An extra provision was also introduced in the summit conclusions, asking the Commission to consider using its emergency powers for the “fast-tracking of the simplification of permitting procedures to accelerate the rollout of renewables.”

EU leaders reached an agreement on the proposed measures during the European Council summit on 20-21 October, and the agreed measures where further discussed at the formal Energy Council meeting on 25 October, where EU ministers examined the key elements of the Commission’s proposals. Another emergency Energy Council is set to be scheduled for November to bring the plan into force.

Yet, nothing is written in stone, as Germany’s scepticism on price caps remains — on the grounds that such measures risk pushing up consumption and endangering supply. A sentiment clearly reflected in Chancellor Scholz comment that if energy ministers do not succeed in finding a consensus, “the European Council will have to go back to the drawing board.”

This never-ending list of measures and counter measures is undoubtedly having a huge impact on our sector, and we will continue monitoring the proposals coming from Brussels.

While the Fit for 55 trilogues continue to progress, MEPs and Member States are getting ready to finalise their positions on EPBD

Trilogue negotiations have finally started for most of the files under the Fit for 55 package. Significant progress is being made in particular on some of the key files for the heating sector such as the Renewable Energy Directive (RED) and the revision of the EU Emissions Trading System (ETS), with the Czech Presidency eager to close the negotiations during its term.

Negotiations are especially moving forward on the new ETS for transport and buildings, with the European Parliament seemingly pushing for the so-called ETS2 to be implemented only in 2029, notwithstanding possible derogations at Member State level. On the other hand, making progress on REDIII, with REDVI concurrently being debated in the Parliament, and while in the middle of an economic crisis, a climate crisis and a war, is no easy job, and analysts foresee the files could drag into 2023.

Most importantly, however, there seem to be light at the end of the tunnel for those awaiting the EU co-legislators to finalise their positions on the critical revision of the Energy Efficiency in Building Directive. On 25 October, in fact, the Council reached a general approach on the compromise text proposed by the Czech Presidency. According to the text, as regards new buildings, the Council agreed that:

• from 2028 new buildings owned by public bodies would be zero-emission buildings.
• from 2030 all new buildings would be zero-emission buildings.

For existing buildings, Member States also agreed to introduce minimum energy performance standards that would correspond to the maximum amount of primary energy that buildings can use per m2 annually. The purpose is to trigger renovations and lead to a gradual phase-out of the worst-performing buildings and a continuous improvement of the national building stock. Additionally, requirements were decided to ensure that all new buildings are designed to optimise their solar energy generation potential, while suitable solar energy installations should be deployed on all new residential buildings by 31 December 2029.

While the Council position is still lacking in the recognition of a truly technology neutral approach, it does nevertheless go in the right direction by recognising the need for flexibility in addressing national differences in the path toward decarbonising the building sector. And it will be interesting to see how the Member States approach will be faced by the European Parliament, where, in stark contrast to the Council, MEPs have yet to find a common position after postponing a final vote in the ITRE committee to the end of November in order to have more time to iron-out a suitable compromise.

France will start the distribution of F30

The ministerial decree authorizing the biofuel F30 to be placed on the market, has been published. The ministerial decree was published in the Official Journal on Sunday October 2.

This F30 must be used in boilers installed as from 1 July 2022. Boilers in service must continue to use traditional domestic fuel oil. However, F30 can also be used in boilers currently in service, provided that they are technically adapted. In particular, it will be necessary to replace the burner with an F30 burner and check the compatibility of all the equipment. But this is not an obligation; the user can stay on traditional domestic heating oil.

F30 is subject to the same taxation as domestic heating oil. This will be the next project of the FF3C for the next finance law. Indeed, an incentive taxation could convince users of boilers in service to switch to the use of this new fuel by changing the burner.

More than 300 sites, spread across the national territory, are ready to ensure F30 deliveries.