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European Car Manufacturers and Oil Companies Join to Create a Biofuel Roadmap

European Car Manufacturers and Oil Companies Join to Create a Biofuel Roadmap

A consortium of six major car manufacturers and oil companies in Europe – Volkswagen, Daimler, Honda, Neste Oil, OMV and Shell – has today published a “biofuel roadmap” for the EU to 2030. The roadmap, prepared by technical consultancy E4tech, may be seen as an attempt by the industry to transcend the current deadlock between the European Parliament and EU Member States over new biofuels legislation, which is crippling biofuel investment. The roadmap provides, for the first time, a comprehensive long-term plan for EU-wide biofuel policy that connects the fuels and auto industries and that, according to these industries, would deliver “important greenhouse gas emission savings”.

The reason why the companies commissioned the Roadmap, says Ausilio Bauen, Director E4tech and one of the authors in an interview with Energy Post, is the “policy uncertainty” that is currently holding the biofuels industry in its grip. “The policy framework is very unstable at this moment”, says Bauen. “Revisions could be made to the Renewable Energy Directive and to the Fuels Quality Directive that apply till 2020. And there is a lack of a sense where road transport will be headed beyond 2020. There are different policies in various member states and different policies that apply to fuel suppliers on the one hand and auto manufacturers on the other. As a result, there is little investment taking place at the moment in the European biofuels industry.”

According to Bauen, the new roadmap represents “the first time” that anyone looks in detail at what biofuels could contribute to decarbonising road transport. “So far there has been ambition, but no detailed vision of how this could be achieved. Nobody has really looked at what the fuel industry can achieve in terms of sustainable biofuels supply. Nor how the auto industry could affordably integrate biofuels into its vehicle fleet. So for the first time we present a vision of what biofuels could achieve in road transport in Europe.”

Advanced biofuels

The analysis by E4tech shows first of all that liquid fuels will remain the dominant option in road transport to 2030 and beyond. “Not because alternatives, such as electric cars or gas-powered gas cars, are not important”, says Bauen. “They are, but it takes time to implement them. We may achieve significant sales of alternative vehicles by 2030, but the total numbers will still be limited. So there is a need to decarbonise liquid fuels.”

Related article: Research Unlocks Algae Biofuel Potential

The main conclusions of the Roadmap are that a “range of biofuels” could deliver:

•    At least 8% of the EU’s 2020 10% Renewable Fuels target.
•    4% of greenhouse gas emission savings required to meet the 6% Fuel Quality Directive target in 2020.
•    12-15% of energy to the transport sector by 2030, representing overall greenhouse gas emission savings of around 8%.

Further, it concludes that “advanced biofuels” (not based on food crops) could “grow to at least 20% of the biofuels market in Europe in 2030 if the right policy incentives are put in place.”

If we look at how these percentages are translated in terms of concrete fuels, the Roadmap suggests the following options:

•    “Supply FAME biodiesel within the existing B7 blend wall, given vehicle cost and feedstock availability challenges associated with going beyond the blend wall.” (A B7 blend wall means that enignes should be at the very least tolerant of up to 7% biodiesel in fossil diesel fuel, excluding “drop-in” biodiesel, which can be blended at much higher proportions.)
•    “Aim for maximum E10 ethanol roll-out by 2020, followed by the introduction of an E20 ethanol blend in 2025.”
•    “Focus on the accelerated development of advanced biofuels based on lignocellulosic feedstocks and on drop-in biofuels, particularly diesel drop-ins including Hydrotreated Vegetable Oil (HVO)”.
•    “Advanced biofuels based on lignocellulosic feedstocks, wastes, and residues, and other feedstocks such as algae, will make a small contribution by 2020 based on business-as-usual projections, but could represent at least 20% of the biofuel diesel and gasoline substitutes by 2030. However, with strong industry and policy support, availability could be doubled in the EU as the ramp up could be accelerated following demonstration of the technologies.”

Additional regulations

An intriguing question is how this industry Roadmap relates to the debate that has been going on in the European  Parliament and the Council of Ministers about further regulation of biofuels. At this moment there are two main pieces of legislation applicable . There is a 10% renewables-in-transport target that member states have to achieve. And there is the EU’s Fuel Quality Directive under which the oil companies have a 6% emission reduction target for road transport fuels by 2020.

As a result of concern over the sustainability of many biofuels, however, the European Commission has proposed additional regulations. But these plans have left the European Parliament and member states deadlocked. Specifically, the EP has proposed that at most 6 percentage points of the 10% renewables target may be derived from biofuels based on food crops and other land-based feedstocks and at least 2.5 percentage points must be derived from “advanced” biofuels (e.g. waste matter).

At the same time, the EP has proposed binding “ILUC factors” to be added to the fuel quality rules. ILUC means “indirect land use change”, referring to the “indirect” displacement of forest or other carbon-rich land by crops grown for energy. Thus, binding ILUC factors are penalties tied to emissions derived from biofuels that cause indirect land use change. In practice, they would amount to the penalisation of biodiesel in particular, which have the effect of removing the incentive for fuel suppliers to produce biodiesel as a means of meeting their reduction target. The biodiesel sector has said the introduction of binding ILUC factors would paralyse their activities.

Related article: Washington Gives in to Pressure and Cuts Biofuel Mandate

The EU Member States do not want to go as far as the EP. They are considering a 7% cap on biofuels from land-based crops, a 1% target for advanced biofuels and non-binding ILUC factors. This debate has not been resolved yet and contributes to the “policy uncertainty” for the sector that Bauen refers to.

The Roadmap does not take a specific position on either of the two proposals. It is rather intended as a long-term vision that transcends these proposals, Bauen acknowledges. According to the E4tech Director, however, a “6-7% cap is possible, as long as it is complemented by concerted industry action to expand advanced biofuels. Then advanced biofuels could make a larger contribution, decreasing the need for other biofuels.”

Likewise, the Roadmap does not provide a detailed analysis of how ILUC factors should be regulated, but Bauen agrees they “are a significant concern. They can be dealt with by imposing a cap or by introducing more stringent sustainability criteria that would help mitigate ILUC.” The Roadmap recommends a ‘well-targeted combination of these two approaches”. Says Bauen: “ILUC needs to be tackled and it can be tackled.”

But most importantly, Bauen stresses, is that “biofuels will not grow in Europe without a vision – a joined-up auto and fuel industry vision, supported by policymakers and a stable regulatory framework. If that is not there, it will lead to confusion in the market and inadequate solutions.”

By. Karel Beckman of Energy Post

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