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Position of the Fédération Internationale de l'Automobile (FIA) to the European Commission’s consultation paper on the "Review of the Biofuels Directive"


Publication date: 18 July 2006


The Fédération Internationale de l’Automobile (FIA) represents through its affiliated members, national motoring and touring organisations in Europe, more than 40 million citizens in the European Union. As passenger cars are one of the important users of fossil fuels we would like to take this opportunity to bring our contribution to the debate on biofuels from the perspective of the motorists.

 

The FIA supports the integrated approach of the European Commission with regard to environmental protection and energy efficiency. Technological innovations, infrastructure improvement and behavioural changes in drivers must be combined to contribute to higher levels of environmental friendliness and energy efficiency. This strategy does and must involve numerous stakeholders, including vehicle manufacturers, fuel suppliers, road infrastructure managers, drivers, public authorities and customers. The integrated approach should aim at increasing the economic, social and environmental sustainability of mobility using a range of instruments, including technology innovations, road infrastructure design and management, alternative fuels, taxation, advanced driver training and consumer information.

 

In the transport sector the development of the fuel prices is giving new incentives to develop and use more fuel efficient vehicles and alternative fuels. The European Union biofuels Directive, adopted in May 2003, aims to promote the use in transport of fuels made from biomass, as well as other renewable fuels. The development of alternative fuels is very important. The FIA supports the initiatives of the European Union leading to an increased use of biofuels in the transport sector. The reduction of CO2 emissions in road transport and the decrease of the dependency of energy supply need to be tackled by a bundle of measures. The use of biofuels is an important pillar, next the increase of the energy efficiency of cars and the promotion of energy efficient driving. The FIA welcomes a European approach on this issue.

 

The use of biofuels in the transport sector has to be tackled differently in the case of petrol or diesel engines. Up to 5 % bio-diesel (RME / FAME) can be added to fossil diesel without any technical modification to the engine. The addition of a higher proportion of bio-diesel is currently not approved by the car manufacturers and could only be realised in the future with a different car fleet. The quality norm for diesel fuel would have to be modified and petrol stations would need to specifically signalised in order to avoid misfilling. Specifically adapted cars, in particular commercial vehicles and older car types, can use pure biodiesel.

 

The addition of ethanol to petrol presents a series of problems fort he consumer. It is currently not guaranteed that the addition of 5 % ethanol to petrol will not lead to malfunctioning. The solution of well-known problems related to vapour pressure abnormality and water affinity is linked to a higher complexity in the production process and in the process of the oil transformation. This higher complexity in the process leads to significantly higher costs (ca. 1 billion euro, source: MWV) for the consumer. The addition of ethanol to petrol is therefore only acceptable in the form of ETBE, as it is already for the most part the case.

 

Please find below the FIA’s answers to the Commission’s public consultation questionnaire in the hope that it is a useful contribution to the ongoing policy debate on this important topic and that it can help the Commission to determine its policy on biofuels. The focus of our response lies on the demand and consumer perspective. We are however aware that the increased use of biofuels will have significant consequences on the offer and production.

 

Question 1

Is the objective of promoting biofuels still valid?

 

The advantages of biofuels are well known. They provide an alternative to fossil fuels in the transport sector and provide better environmental performance. The original objectives were: i) security of fuel supply, ii) carbon reduction, iii) stimulation of rural economies. These are all still high priorities for European Union and member states. There are other measures for instance in relation to power generation that could be adopted as well, but biofuels have a great potential to enable the transport sector to make a valuable contribution to carbon reduction.

 

Biofuels need to be further promoted. The use of bio-energy in the transport sector is however related to higher costs than the substitution of fossil fuels in other sectors, for example heating and electricity. A part of the needed fuel in the transport sector, where a significant share of fuel produced from oil is used, should come from biofuels in order to reduce the CO2 emissions of this sector. It is however not sensible to force an increase at any cost. As a rule biofuel technologies have low energy efficiencies per hectare and the cost of producing biofuel is currently higher than the production price of fossil fuel.

 

Question 2.1
With existing policies and measures, will biofuels achieve a market share of 5.75% in the EU by end of 2010? (Please give reasons for your answer)

 

The question whether biofuels achieve a market share of 5.75% in the EU by end of 2010 cannot be answered. In the short run further tax exemptions are needed in order to achieve the goal of the EU biofuels Directive. In the long run however the biofuels will have to meet the traditional fuels on equal terms. Otherwise it is not the fuel of the future.

 

Question 2.2
What are the main factors favouring the development of biofuel use in the EU? What are the main obstacles?

 

Main factors favouring the development of biofuel use are:

  • Assuring the competitiveness of biofuel prices through reduced tax rates that are guaranteed over an adequately long time horizon,
  • Developing a cost efficient technical infrastructure that allows passenger cars and commercial vehicles to reach the most advanced exhaust standards with biofuels,
  • Promoting research and development of efficient, environmentally friendly and cost efficient production processes for biofuels of the second generation.
  • Shifting from the Common Agricultural Policy to encourage farmers to examine more market driven products, amount of set-aside land available for biofuel crops, technical know how for development of efficient processing plants.
  • Increasing consumer awareness for alternative fuels, in particular biofuels and informing the consumers about the environmental advantages of available technologies.

Main obstacles:

Absence of long term fiscal guarantees for biofuel support to give long term investor confidence for infrastructure and product development.Question 3.1
Looking towards 2010, is the present European system of indicative targets and support for biofuels appropriate or does it need to be changed?
 

The timeframe until to 2010 is too short to change the system of targets and support for biofuels. The current framework of targets and support should stay until 2010 for stability.

 

Question 3.2
What are your views on the advantages and disadvantages of the options described in section 3.2 of this paper?

 

Calls by the European Union to increase the use of biofuels in the transport sector without tangible consequences if objectives are not met do not lead to a reduction of CO2 emissions or to less dependence in energy supply. Such targets should therefore be mandatory for all member states. How to reach the objectives should be left to the individual member states following the principle of subsidiarity.

 

While the definition of a mandatory share of biofuels is important, the absolute height of this quote is important. A too ambitious objective leads to an inadequate burden in the transport sector, particularly as the use of alternative fuels in other areas is easier and cheaper.

 

All member states should pursue the same objectives, i.e. the same share of biofuels in the total fuel market, in order to avoid market distortions. Biofuels should be tradable in the whole European economic area without restrictions. Option A (fix targets for each member state) complies to this condition. A significant increase of the needed quantities of biofuels related to the future increase of the biofuel shares necessitates sufficient time span in order to develop the increase the capacities to produce the raw materials and the fuels.

 

In order to increase the acceptance of biofuels the general public should be informed through campaigns (option J) and the biofuel content should be indicated at the petrol station (option I). Both need more effort and support to motivate consumers to want biofuels, understand how to obtain them and derive the greatest environmental benefit. An example of success in this area would be organic foods. Once consumers are convinced there is a benefit for them, they will be more willing to preferentially select and in many cases pay a premium if required. In order to enhance the market for innovative fuel and motor technologies the FIA stresses the need for better consumer information. The FIA can support the EU using its relationship to more than 40 million European motorists. The market penetration will only be possible if consumers understand new technologies and their positive effects on the environment. This should also be accompanied by the putting in place of the necessary infrastructure needed for refuelling.

 

The FIA plays an important role in the information of European consumers. The FIA has been heavily involved in the development of eco-labelling as a means of providing consumers with the necessary information to make environment-friendly decisions. What is needed is a harmonised labelling scheme for biofuels. Conflicting information is very confusing for the consumer. This system should be better than the current labelling for CO2 which has not the effect that was intended.

 

Option H (voluntary agreement with vehicle and oil industries) should also be pursued.  If it can be achieved without too much compromise, the industries are best placed to come up with the technology and then fund the marketing to the consumer.

 

Question 3.3
How should the option(s) you favour be put into practice?

 

See answer to question 3.2.

 

Question 3.4

Should other options than those in section 3.2 be considered?

 

None.

 

Question 3.5

If your preferred option(s) would have implications for granting tax reductions/exemptions for biofuels, for example if these fiscal measures had to be prohibited, would that change your answer?

 

As mentioned above tax exemptions are currently needed in order to achieve the goal of the EU biofuels Directive.

 

Question 3.6
Should Member States be able to provide tax reductions / exemptions and lay down biofuels obligation at the same time – or should it be „ one or the other“?

 

A mandatory addition of biofuel would lead to an increase of the fuel prices as tax incentives would disappear. The addition of biofuel on a voluntary basis allows the higher production cost of biofuels to be compensated by the lower tax rates on biofuels. In this framework the addition of 5 % biodiesel to fossil diesel happens without a legal obligation. This incentive should be kept in future and reinforced where necessary.

 

Question 4.1

Should there be a system – for example, a system of certificates - to ensure that biofuels have been made from raw materials whose cultivation meets minimum environmental standards?

If so,

- What should be addressed in the standards?

- How should the system work? Are there good models to draw on?

- Should the biofuels directive be amended so that only biofuels which comply with environmental sustainability standards count towards its targets?

 

Biofuels are not per se environmentally friendly. A system is therefore necessary to ensure that minimal standards for cultivation and production, also for imports from outside of the European Union. At least the use of fertilisers and pesticides as well as the biodiversity need to be considered in agriculture. In the production of biofuels it is important to consider the emission of greenhouse gases and of classical pollutants. The analysis should cover "well to tank" or "tank to wheel" carbon emissions, to give genuine carbon benefit. An overall ecological assessment needs to be performed in particular if land is used for the production of biofuels that has not been used for agriculture before. Such an overall ecological assessment should however not lead to too burdensome bureaucratic regulations. The analysis should also cover labour standards to safeguard against exploitation in some markets and give EU producers level playing field for competition. The total energy and emissions balance needs to be taken into account.

 

Question 4.2

Should a wider system of certificates be introduced, indicating the greenhouse gas and/or security of supply impact of each type of biofuel?

If so,

- How should this certification system work?

- How should the greenhouse gas and/or security of supply benefits of different biofuels be measured?

- Should biofuels with good greenhouse gas and/or security of supply performance be rewarded within biofuel support systems for biofuels? If yes, how?

 

It's relevant to certificate the biofuel that deliver more greenhouse benefit than others, in favour of better designing support systems to give incentives to products that bring the better performances.

 

Question 4.3
Should there be a scheme to reward second-generation biofuels (made with processes that can accept a wider range of biomass) within biofuel support systems?

 

Biofuels of the second generation need to be supported in research and development and their introduction needs to be supported by the authorities. Compared to biofuels of the first generation biofuels of the second generation have however to be assessed using the same criteria regarding their ecologic and greenhouse gas impact.

 

The development of biofuels of the second generation should not preclude or prejudice against investment in other technologies which increase sustainable fuel production. For example, recycling waste plastic into diesel would not count towards biofuels target, but would reduce landfill and would not use additional fossil fuel. Obviously each technology would have to be assessed for carbon costs against benefits, but at present there may be sustainable fuel options which are ruled out by the structure of the EU schemes.

 

Question 5.1
Should the EU continue action in favour of biofuels after 2010?

 

The EU action should continue acting in favour of biofuels after 2010, through tax reductions, support for research, campaigns to inform consumers on the benefit of biofuels. The FIA wishes to give its support to initiatives of the EU on biofuels to reach the European motorists. As investors are looking for long term commitment, the targets should be extended to 2015 with a review before then to consider 2020.

Question 5.2

 

If the EU is to continue acting in favour of biofuels after 2010, should this action include or exclude the definition of a quantified target for biofuels?

 

Targets should remain political and be expressed in terms of greenhouse gas savings from biofuel use. Auditing for certification scheme will easily give this measure.

 

Question 5.3
Should EU action include the following measures (which could be pursued without defining a quantified target):
a) support for research, development and dissemination of good practice?
b) continued Community financial support for the supply of biofuels and their feedstocks?
c) continued scope for Member States to support biofuels through tax reductions/exemptions?
d) the labelling of all fuel to show the proportion of biofuel it contains?
e) a campaign to inform consumers of the benefits of biofuels?
f) any other options?

 

The European Commission should promote the research and development of efficient, environmentally friendly and cost efficient production processes for biofuels of the second generation. Moreover reduced tax rates need to be guaranteed over an adequately long time horizon in order for producers and consumers to get the needed reliability.

 

Question 5.4
If the EU is to define a quantified target for biofuels after 2010, what should it be? What year(s) should it relate to - 2015? 2020? both?

 

The overall share of 5.75 % of the value of biofuels at the end of 2010 is an ambitious target that should not be significantly tightened. The share should not or only moderately increase over a long time horizon (e.g. few percent until 2020).

 

Question 5.5

If the EU is to define a quantified target for biofuels after 2010, should this be expressed

in terms of

- market share (as in the present directive)?

- greenhouse gas savings from biofuel use?

- reduced oil consumption from biofuel use?

- reduced fossil fuel consumption from biofuel use?

 

Biofuel producers and consumers need long lasting and reliable framework conditions. The European Union should continue to prescribe mandatory biofuel shares as “share of biofuels and other alternative fuels of the overall fuel market value”. As mentioned above the share should not or only moderately increase over a long time horizon.

 

Question 5.6

If the EU is to define a quantified target for biofuels after 2010, should this remain a purely political step (accompanied by monitoring) or should it be given concrete form? If the latter, should this be in the form of:

a) adding reference values for later years to the biofuels directive as presently drafted?

b) one or more of the options in section 3.2?

c) some other form?

 

See answer to question 5.5.

 

Question 6.1

Do you have any comments on the following issues, listed in the biofuels directive for inclusion in the Commission’s progress report:

a) the cost-effectiveness of the measures taken by Member States in order to promote the use of biofuels and other renewable fuels?

b) the economic aspects and the environmental impact of further increasing the share of biofuels and other renewable fuels?

c) the life-cycle perspective of biofuels and other renewable fuels [and] possible measures for the further promotion of those fuels that are climate and environmentally friendly, and that have the potential of becoming competitive and cost-efficient?

d) the sustainability of crops used for the production of biofuels, particularly land use, degree of intensity of cultivation, crop rotation and use of pesticides?

e) the assessment of the use of biofuels and other renewable fuels with respect to their differentiating effects on climate change and their impact on CO2 emissions reduction?

f) further more long-term options concerning energy efficiency measures in transport?

 

Biofuels offer an unique opportunity to, simultaneously, enhance exports from developing countries, promote rural development, diversify the range of energy sources reducing oil reliance and met Kyoto protocol reduction targets for EU.

 

Question 6.2

What are the prospects for second-generation biofuels that can be made from a wider range of biomass? Can they be expected to be cost-competitive with first-generation biofuels and if so by when?

 

Biofuels of the second generation have to be assessed using the same criteria regarding their ecologic and greenhouse gas impact as the biofuels of the first generation. In the long run the biofuels of the second generation will have to be cost-competitive with other fuels.

 

Question 6.3

It is sometimes suggested that vehicles can travel more kilometres on a given amount of biofuel than on an equal amount (measured by energy content) of conventional fuel. Are any data or explanations available on this point?

 

As a rule biofuel technologies have low energy efficiencies per hectare.

 

Question 6.4

Problems have been reported in interpreting the directive’s requirements on the calculation of the contribution of certain types of biofuel (notably ethers such as ETBE). Could the drafting of this directive be improved on this point? If so, how?

 

There is uncertainty in particular for ETBE from biologically produced alcohol, if it is to be considered as a biofuel. The Directive should clarify this.

 

The FIA remains at your disposal for any further discussion should you so wish.

 

FIA European Bureau

July 2006

 


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