EU: Fuels: Biofuel Policy

Overview

The Renewable Energy Directive (RED) mandates that 20% of all energy usage in the EU, including at least 10% of all energy in road transport fuels, be produced from renewable sources by 2020. Alongside the RED, an amended Fuel Quality Directive (FQD) requires the road transport fuel mix in the EU to be 6% less carbon intensive than a fossil diesel and gasoline baseline by 2020.

  • Standard type: Biofuel penetration targets, renewable energy mandates, carbon intensity targets
  • Regulating body: The Renewable Energy Directive (RED) is regulated by the European Commission Directorate General for Energy (DG Energy), and the Fuel Quality Directive (FQD) by the Directorate General for Climate Action (DG Clima)
  • Current standard: Fuel Quality Directives Directive 2003/30/EC and Directive 2009/30/EC, Renewable Energy Directive 2009/28/EC
  • Applicability: All road fuel, electric vehicles

History

The European Union (EU) began implementing biofuel-related targets in 2003 with (Directive 2003/30/EC). The Biofuel Directive set indicative biofuel penetration targets of 2% by the end of 2005 and 5.75% by the end of 2010. In 2009, the EU Commission passed two major directives supporting the increased use of renewable fuels extending to 2020. The Renewable Energy Directive (RED) mandates that 20% of all energy usage in the EU, including at least 10% of all energy in road transport fuels, be produced from renewable sources by 2020. Alongside the RED, an amended Fuel Quality Directive (FQD) was passed requiring that, by 2020, the road transport fuel mix in the EU should be 6% less carbon intensive than a fossil diesel and gasoline baseline.

Targets

The Renewable Energy places a target that 10% of energy in transport should be from renewable sources by 2020. Renewable energy used in aviation and shipping is eligible to be counted towards national targets under the Directive, even though energy used in these modes is not counted towards defining the overall national 10% targets. The Fuel Quality Directive places a target that the carbon intensity of European road transport fuel should be reduced by 6% by 2020 compared to the baseline. It further imposes ‘indicative targets’ (i.e. optional targets) for additional carbon intensity reductions of 4% for a total of 10% reduction in carbon intensity of the fuel mix. Half of the additional savings (2%) therefore targets electrification and carbon capture and storage. The second 2% additional reduction would be achieved through the purchase of Clean Development Mechanism (CDM) credits. The Renewable Energy Directive requires that under national biofuel support systems, “the contribution made by biofuels produced from wastes, residues, non-food cellulosic material, and ligno-cellulosic material shall be considered to be twice that made by other biofuels.” The Fuel Quality Directive does not allow double counting of any biofuels.

Sustainability Criteria and GHG Assessment

The Renewable Energy Directive and Fuel Quality Directive impose requirements that biofuels should meet certain sustainability criteria. These criteria also apply to bioliquids for heat and power, but not to other forms of renewable energy such as solid biomass. These cover the greenhouse gas emissions savings from using the fuels, and the types of land that may be converted to biofuels production. There are also conditions on European feedstock production on cross-compliance with agricultural sustainability rules.

Greenhouse gas emissions

The two Directives are explicitly targeted to reduce GHG emissions. Both Directives set a minimum threshold of 35% greenhouse gas (GHG) savings compared to fossil fuel that must be achieved by a biofuel to be eligible for support under Member State renewable energy policies. This 35% threshold did not apply to facilities that were already in operation by 23 January 2008 until after 1 April 2013. In effect from 1 January 2017 onward, this GHG savings threshold rises to 50%. Beginning on 1 January 2018, installations starting production on or after 1 January 2017 must meet 60% or higher GHG savings compared to fossil fuels. The Directives define a lifecycle methodology (detailed by Article 7d(1) and Annex IV in the Renewable Energy Directive) to calculate greenhouse gas emissions from biofuel production. Based on the methodology, the European Commission has calculated default emissions for different biofuel production pathways. Regulated entities reporting biofuel under the Directives may in general report that it has the default carbon intensity without providing any additional information to Member States. The Directives also include values for typical emissions, which are in general lower than default emissions. Regulated entities that are able to provide additional information about their production processes will be permitted to report based on typical emissions values. The Directive also allows regulated entities to provide process specific information to generate a different lifecycle emissions intensity value. At present, the Directives do not account for indirect land use change (iLUC) in their lifecycle calculations of GHG savings, which include only direct emissions. The Directives do, however, recognize iLUC as an issue; they require the European Commission to submit a report reviewing the impact of iLUC on GHG emissions by the end of 2010 along with, if appropriate, a proposal to account for it. The European Parliament and the Council are required to vote on any such iLUC proposal by the end of 2012. Both these deadlines have been missed. See following section on the European Commission’s iLUC proposal.

Environmental criteria and requirements

Both Directives restrict production of biofuels on land that had high biodiversity status or high carbon content in or at any point after January 2008; i.e. it restricts the conversion of high biodiversity or high carbon stock land for biofuel production. High biodiversity land is defined to include:

  • Wooded land where there is no evidence of human activity and ecological processes have not been disturbed.
  • Nationally designated nature protection areas
  • Internationally designated conservation areas
  • Highly biodiverse grassland, whether or not that biodiversity is maintained by human intervention

High carbon stock land is defined to include:

  • wetlands
  • continuous forests
  • discontinuous forests with greater carbon content than the replacement system
  • peatland where exploitation would involve drainage.

The Directives forbid ‘gold-plating’ – i.e. Member States must offer access to their support schemes to biofuels that meet the requirements laid out by the Directive, and cannot add additional sustainability criteria. As well as mandatory sustainability requirements, the Directive asks that the Commission report to the Parliament and Council on measures taken in countries supplying substantial amounts of biofuel feedstock to protect soil, air and water quality. The Commission must also report on social sustainability, in particular in developing countries and with respect to land rights. This shall include reporting on implementation in third countries of various ILO Conventions (see Article 7, paragraph 7). The Directive requires that Member States should take measures to ensure that information reported by regulated entities is accurate. Information about biofuel sustainability must be tracked using a mass balance chain of custody system. The Directive also gives the Commission the power to adjudge that specific biofuel certification schemes provide adequate assurance of the sustainability of biofuels. List of approved schemes

Implementation

The Renewable Energy Directive and Fuel Quality Directive do not apply directly to economic operators, but rather puts an obligation on European Member States to ensure that targets are achieved. This included the requirement to have implemented measures to meet the targets by 5 December 2010. It is generally expected that Member States will impose requirements on transport fuel suppliers to support the supply of renewable energy. The availability of market mechanisms such as certificate trading to allow flexibility in meeting requirements will vary from state to state. In 2010, all European Union member states were required to submit a National Renewable Energy Action Plan (NREAP) that detailed how each member state intended to meet their contribution to the RED and FQD. Many member states have not yet implemented plans to meed these directives.

ILUC Proposal

In October 2012, the European Commission published a proposal COM (2012) 595 to limit the use of food-based biofuels and to include ILUC emissions when assessing the greenhouse gas effect of biofuels. The use of food-based biofuels to meet the 10% renewable energy target of the RED would be limited to 5%. This proposal is currently being voted on by the European Parliament and Council. The Commission’s proposal would amend the current Renewable Energy and the Fuel Quality Directives. Some of the key points of the proposal are:

  • To increase the minimum greenhouse gas saving threshold for new installations to 60% in order to improve the efficiency of biofuel production processes and to discourage further investments in installations with low greenhouse gas performance.
  • To include indirect ILUC factors in the reporting by fuel suppliers and member-states of greenhouse gas savings of biofuels and bioliquids.
  • To limit the amount of food crop-based biofuels and bioliquids that can be counted towards the EU’s 10% target for renewable energy in the transport sector by 2020, to the current consumption level, 5% up to 2020, while keeping the overall renewable energy and carbon intensity reduction targets.
  • To provide market incentives for biofuels with no or low ILUC emissions, and in particular for biofuels produced from feedstock that do not create an additional demand for land, including algae, straw, and various types of waste, by double or quadruple counting the energy from these fuels when determining compliance with the 10% renewable energy in transport target of the Renewable Energy Directive.

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