Newsletter 1.2023

Dear reader,  

Welcome to the first EUROFUEL newsletter of 2023. Following the end of what has been an incredibly busy year in terms of legislative initiatives for the energy sector, in this edition we will look at the latest EU climate and energy policy developments, focusing in particular on the final adoption of key proposals of the Fit for 55 Package. We will also provide you withan outlook of what to expect in 2023.

The agreements reached by EU co-legislators on the new ETS and the Social Climate Fund in December, in particular, signal a significant step forward in fulfilling the promises of the EU Green Deal, with the first proposal extending the EU’s carbon market to the building sector, and the latter designed to shield EU households from the subsequent risk of raising heating fuel costs.

Nevertheless, much work remains to be done under the Swedish Presidency, which took over the presidency of the Council on January 1st, with the trilogue negotiations on the Renewable Energy and the Energy Efficiency Directives yet to be concluded, and key files such and the Energy Taxation Directive and EPBD lagging behind in the legislative process.

With so much still on the plate, we must remain vigilant and continue to work with policymakers to explain the need for heating oil and the essential role low carbon fuels can play to achieve EU’s climate objectives while making the transition acceptable for society as a whole.


Dr Ernst-Moritz Bellingen

Fit for 55: a look back

2022 has been an extremely impactful and disruptive year for the energy sector.


On the one hand, we witnessed a never-ending stream of emergency measures put together in haste by the EU to address the market disruptions caused by the Russian aggression to Ukraine and the subsequent raise in energy prices, with Member States adopting unprecedented measures to reduce energy consumptions and cap oil and gas prices under the REPowerEU Plan. On the other hand, legislative “business as usual” work continued on the salient elements of the Commission’s game changing ‘Fit for 55’ package.

In this respect, the year concluded with a BANG, with the Czech Presidency exceeding expectations by managing to conclude negotiations with the Parliament on a m ajority of files, including controversial ones such as the financing aspects of the REPowerEU Plan, the revised Emission Trading Scheme (ETS), the new Social Climate Fund, and the Carbon Border Adjustment Mechanism (CBAM).

Here’s a recap of what was agreed:


  • REPowerEU: On 14 December co-legislators reached an agreement on the proposal to include dedicated chapters in national recovery and resilience plans for funding energy projects under the REPowerEU Plan.  With regard to the funding of the grants, an additional 20 billion euros will be made available to Member States to reach the REPowerEU objectives to diversify the EU's energy supply and accelerate the use of renewable energies. Of this sum, €8 billion (40 percent) will come from the frontloading of national allowances auctioned under the ETS, while €12 billion (60 percent) will be taken from the carbon market innovation fund.
  • Emission Trading Scheme: After more than 30 hours of negotiations in trilogue, a provisional agreement was reached on 18 December at 2 am on the ETS proposal. Negotiators agreed to extend the EU’s carbon market to buildings and road transport (ETS2). The new carbon price will apply to petrol, diesel and heating fuels as of 2027. A price cap/stabilisation mechanism ensures that the price is stabilized at a maximum of 45 euro per tonne of carbon emitted. The new scheme also entails higher prices at the pump: up to 10.5 cents for a litre of petrol and 12 cents for diesel, according to a study by the Potsdam Institute for Climate Research. Heating fuels like gas, heating oil and coal will see their prices increase as well. An emergency clause was also adopted: in case energy prices are too high, the entry into force of the ETS2 will be delayed by one year (to 2028). Furthermore, the cost-pass through from fuel suppliers to final consumers will be reported and monitored by the Commission, and in the case the Commission finds that malpractices exist with regard to the pass through of carbon costs, the Commission will be required to present legislative proposals to address this. The agreement also includes a national opt-out, subject to strict requirements (when a Member state has higher ambition in their national scheme), intended for Ireland.
  • Social Climate Fund: Alongside the new ETS, co-legislators also reached an agreement on the establishment of a Social Climate Fund, designed to shield EU households from rising fuel costs. Under the deal, the fund will amount to €87 billion and will be disbursed as of 2026, one year before the new carbon price starts applying (2027). It will be financed by the revenues generated by the ETS2, with 25% of the funding coming from EU countries. 100% of national EU ETS revenue shall be spent on climate-related activities to protect jobs, consumers and climate.
  • Carbon Border Adjustment Mechanism: On 13 December, MEPs reached an agreement with the Council to establish a Carbon Border Adjustment Mechanism (CBAM). The CBAM will cover iron and steel, cement, aluminium, fertilisers, electricity, hydrogen (hydrogen was added upon request by the European Parliament), indirect emissions under certain conditions and some downstream products such as screws and bolts as well as similar articles of iron or steel. Before the end of the transition period, the Commission will assess whether to include other goods such as organic chemicals and polymers, with the goal to include all ETS products by 2030. The CBAM will become operational from October 2023 onwards and it will be phased in gradually in parallel to the phase out of ETS free allowances in order to ensure compatibility with international trade rules. At the start, the CBAM will apply only with reporting obligations with the aim to collect data. The governance of the CBAM will be centralised and the Commission will be mostly responsible for enforcement. The Commission also aims to conduct a review of the CBAM by the end of 2027, including an assessment of progress in international negotiations on climate as well as the impact on imports from developing countries.

With the details ironed out, the provisional agreements now need to be confirmed by the EU Member States and the European Parliament, which will hold a plenary vote in January or February.


Fit for 55: a look forward

Even though 2022 ended with marathon negotiations and a cascade of agreements, that does not mean that the work is done. Far from it! The most critical files for the future of the heating oil sector are in fact still on the table, and in 2023 it will be up to the new Swedish Presidency to pick up where the Czech left off and pursue outstanding negotiations with the Parliament.

Overall, it is a common expectation that the Swedish Presidency will probably not be a presidency of visions and high ambitions but will rather focus on the practicality of implementing various files that are still open. On the energy side, this means that their main concern will be to carry over the finish line the last of the Fit for 55 proposals. These include concluding trilogue negotiations on the Renewable Energy Directive and the Energy Efficiency Directive, as well as making progress on the work on the Energy Performance of Buildings and the Energy Taxation Directives. 

However, while an agreement on RED and the EED is pretty much guaranteed, despite some outstanding differences remaining on the overall targets for 2030, the divided position on the EPBD will probably make for difficult negotiations. In particular, all eyes are now on the Parliament, where MEPs on the ITRE committee are finally set to vote on an amended proposal on the EPBD on January 24, after a series of postponements. And to keep the pressure up, Eurofuel is doing its part, recently signing a joint letter together with ECFD (European Confederation of Fuel Distributors), FuelsEurope (European Petroleum Refiners Association) and UPEI (Europe's Independent Fuel Suppliers) voicing the concerns of the industry that some of the proposed measures will hinder the possibility for European citizens to have access to the necessary incentives and technologies to upgrade obsolete and/or inefficient heating systems with the progressive integration the new generation of renewable and low-carbon liquid products.

Meanwhile, the battle also rages on in the Council over the revised tax rules for energy products, with the Swedish presidency expected to struggle to reach the unanimity required to adopt the legislative proposal due to several Member States expressing doubt on increasing the cost of fuels while households are spending a large chunk of their incomes on heating their homes and powering their cars. As always, together with its partners and allies, Eurofuel will engage with key policymakers working on this file to ensure that tax provisions covering basic heating needs should remain affordable to all citizens.


USA moves to B100

In the EU, decision-makers are not the only ones aiming at achieving the energy transition while in an energy crisis: several sectors are also very active. Eurofuel keeps working on field tests to demonstrate the compatibility between boilers and low-carbon and renewable liquid fuels (spoiler: they are compatible) and published its Roadmap to 2050.

Similarly, our colleagues from the other side of the Atlantic, are making great progress towards the acceptance of 100% biodiesel for heating.

On 14 November 2022, an update to the standard UL 296 was published by Underwriters Laboratories (UL) which expands its scope to include liquid-fuel-fired burners intended for use with biodiesel blends of 20% to 100% (B20-B100) with heating oil. UL296 is the standard developed by Underwriters Laboratories for safety testing of liquid-fuel-fired burners.

Prior to this update, the UL standard included procedures for evaluation of burners for use with biodiesel blends up to B20. The updated standard includes the procedure and requirements for burners up to B20, including endurance of elastomers and seals in extended exposure to the fuels. Additionally, the updated standard has added a unique new test in which a burner is set-up for use with B100 as per manufacturer specifications. The fuel is then switched to heating oil without biodiesel included (B0), and no burner settings are modified. The burner still needs to operate cleanly and safely after this fuel change.

This new standard has been eagerly awaited by the liquid fuel heating industry as it allows for the development and market introduction of heating appliances rated to run on 100% low-carbon biodiesel, drastically reducing the carbon emissions of home heating systems.

A number of industry entities have been working towards this update of UL296, including NORA, Clean Fuels Alliance, Carlin Combustion Technologies and R.W. Beckett Corporation.

Michael Devine, NORA’s president said, “This standard update is most welcome as it accelerates the liquid fuel industry’s conversion to low-carbon home heating. The ever-increasing blends of biodiesel in our fuel eliminates more and more carbon, making liquid fuel heating an essential component in addressing climate change. Amending UL 296 allows liquid fuel equipment manufactures to provide equipment that aligns with public policy requirements for carbon reduction. NORA has been able to demonstrate that a home heated with 100% biodiesel using solar panels to produce its electricity can become a Net-Zero home quickly and at an economically viable cost.”