EU energy strategy for transport after 2020

Biofuels are returning to the political agenda in Europe as EU policymakers start to shape a strategy for reducing greenhouse gas emissions from transport after 2020. Biofuels producers continue to argue that they are an essential part of the solution, even as the low oil price puts an end to several cutting-edge projects, the European Commission prepares to publish a new report about indirect land-use change (ILUC) and some stakeholders urge a full focus on electrification.

It is obvious for EU biofuels producers that they are part of the solution. The big change since the EU’s first climate and energy package in 2008 is the rise of electric vehicles. In contrast, we’ve seen very little progress in liquid fuels.

The European Commission will issue proposals to decarbonize the transport sector later this year. The first milestone to look out for is a legislative proposal in spring for national emission reduction targets covering economic sectors outside the EU Emission Trading scheme (ETS), i.e. transport, buildings and agriculture.

In October 2014, European leaders agreed to cut emissions from these sectors by 30% by 2030 versus 2005 levels. Transport accounts for the largest share, a third, of these emissions. At the same time, the Commission will issue a non-legislative strategy for decarbonizing the transport sector and launch a public consultation on bioenergy. The latter will feed into proposals for a new EU renewable energy directive with sustainability criteria for solid and gaseous biomass as well as biofuels due by the end of the year. A consultation on the new directive just ended on 10 February.

When it comes to biofuels specifically, the Commission recognizes that it needs to do something. If we look at the current development of oil prices, it is very certain that at least in the short to medium term, the regulatory framework will be very important for the perspectives of biofuels.

So far the Commission has proposed neither to extend a renewable energy quota for the transport sector nor a greenhouse gas emission reduction target for fuel suppliers beyond 2020.

What has become ever clearer over time is that the future of biofuels in Europe lies in using advanced feedstocks such as energy crops grown on marginal land, and wastes and residues. Biofuels that rely on arable land have been discredited by studies that accuse them of indirect land-use change (ILUC), i.e. that their cultivation indirectly displaces forest and therefore increases carbon emissions. The existence and degree of ILUC continues to be contested by the biofuels industry.

This is why all eyes are turning to a new ILUC study that experts say will underpin post-2020 EU biofuels policy. The work, carried out by a consortium of consultancies – Ecofys, IIASA and E4Tech – uses a model called “GLOBIOM” to model ILUC for different feedstocks and policy scenarios. The work was finished last autumn, but the Commission has yet to publish it. Some of those involved expect it by the summer, others believe that the Commission may wait until the end of the year.

ILUC remains very sensitive – it basically refutes any contribution of biodiesel to climate action – and new findings are certain to displease some. In this case, the study will confirm that the ILUC concept is true. The results remain confidential, but another source close to the work suggests that the new model does not overturn basic earlier conclusions: There is anything that will fundamentally affect our understanding of the impact of European biofuels policy. There is nothing that fundamentally affects our understanding of the hierarchy between different feedstocks.

A biofuel is low-ILUC risk when it can be demonstrated that additional biofuel feedstock is produced compared to the existing situation. This can be done through increasing crop yields (in a sustainable manner), reducing supply chain inefficiencies, and expanding into low-carbon, low-biodiversity land.

There are some signs that the Commission is starting to think about advanced biofuels for sectors like aviation as an industrial development opportunity. Experts are currently exploring whether and how the conventional biofuel industry could help grow advanced biofuels. Traditional biofuels will have to be accompanied by new options. The good news however, is that the same biofuels volumes can contribute more to decarbonisation than we thought in the past. That just leaves policymakers to decide on ILUC.