The biofuels push

Publication date: 02 April 2008

PRESS RELEASE

Brussels, 2nd April 2008
FOR IMMEDIATE RELEASE

The FIA welcomes the increased role of biofuels in the EU’s Climate Change and Energy policy. But biofuels should not come at any economical, social and environmental costs.

On 23 January 2008, the European Commission proposed legislation that would, if adopted, oblige all 27 European Union countries to increase the share of biofuels in their transport fuel mix to 10% by 2020. The biofuels target is part of a wider proposal to boost overall renewable energy use by 20% by 2020 and decrease the EU's CO2 emissions by 20% by 2020, compared with 1990 levels.

While the promotion of biofuels is welcomed, care must be taken that the increased availability of such fuels, does not come at any cost to the environment or to drivers*. “Tax incentives are necessary to promote biofuels, but unless state support can bridge the gap towards market uptake in a reasonable time period, biofuels cannot be considered the fuels of the future,” explained Oliver Lenz at FIA's Brussels Bureau.

Cheaper alternatives
Lenz noted that state support is often crucial for boosting biofuels use, since the more expensive fuels would not easily find their way onto the market. “Current rules allow for biofuels subsidies in the form of tax breaks, meaning drivers who fill up on the fuels get a break at the pump,” said Lenz.

Under EU rules the biofuels tax breaks can continue until 2018 at the latest. But the European biofuels industry predicts that most EU countries will phase out tax breaks before 2018, passing higher costs onto drivers unless biofuel prices come down through greater market development and higher availability.

So called second-generation biofuels could provide an answer to the riddle. Unlike most current biofuels, which are produced from biomass like corn, sugar cane or palm fruit, second-generation fuels are made from the woody, cellulose fibres of plants and other biowastes. These could be produced in abundance.

But second-generation technology is still too expensive to be viable, with most experts predicting commercial use only in 2015 or later.

FIA’s contribution to the debate
At first glance, the 10% target is good news for those drivers who want to lessen the environmental impact of their vehicles, since biofuels are considered a ‘cleaner’ alternative to fossil fuels. But recent studies indicate that biofuels production can often lead to higher CO2 emissions than fossil fuel production.

The FIA thus argues that environmental concerns need to play a central role in any EU biofuels push. And any sustainability analyses should cover "well to tank" and "tank to wheel" carbon emissions, to assess the fuel’s genuine carbon benefit.

In its 23 January proposals, the Commission responded to criticisms of biofuels by including sustainability criteria, particularly on proper land use and minimum CO2 savings requirements. Nonetheless, sustainability and the Commission’s proposed criteria remain the subject of intense debate among EU legislators. This will be a crucial aspect of upcoming negotiations between the European Parliament and EU member countries. The FIA calls on the EU to avoid burdensome and expensive bureaucratic regulations on what biofuels are sustainable or not.

“Biofuels will only be able to penetrate the market if consumers are kept aware and informed of developments in a transparent and consistent way, including with respect to the actual greenhouse gas savings,” believes Lenz. The FIA sees a harmonised labelling scheme for biofuels as necessary. “With its outreach to over 40 million European motorists, the FIA is in a key position to provide input on such a scheme,” concludes Lenz.

* The FIA submitted detailed and extensive input to the Commission during a 2006 consultation exercise on the future of EU biofuels policy.

For more information contact: Olivier Lenz (o.lenz@fiabrussels.com)

BIOFUELS OVERVIEW
The EU proposal builds on 2003 legislation setting a non-binding target of 5.75% biofuels use in transport by 2010. Latest projections by the Commission indicate that the initial 2010 target will be missed, despite the fact that overall biofuels use in the EU doubled between 2003 and 2005. According to Commission figures, Germany, Sweden, France and the Czech Republic have the highest shares of biofuels in their vehicle fleets.  A separate effort is also underway to impose tougher greenhouse gas and other emission standards for EU petrol and diesel fuels.