EU eyes 26pc renewable transport by 2030
The European Commission has delayed until mid-July its presentation of a legislative proposal to boost renewables. A draft document indicates a 26pc target share for renewables in transport by 2030.
A 312-page draft staff working document drawn up by the commission substantiates a forthcoming proposal to revise the EU's renewables directive as part of a wider package of measures to reach a 2030 target to reduce greenhouse gas (GHG) by 55pc. The document confirms a target share for renewables in overall energy consumption of at least 38-40pc in 2030, hinted at last year when the 55pc GHG cut was proposed.
Options include boosting, from 14pc to 26pc, the target share of renewables in the transport sector by 2030, with the sub-target for advanced biofuels increasing from 3.5pc to 5.5pc, albeit taking into account the amount of advanced biofuels estimated for use in the aviation and maritime sectors.
Achieving the transport targets would require EU member states to set out obligations on fuel suppliers with various sub-options, including a requirement to obtain minimum shares for advanced biofuels and renewable fuels of non-biological origin (RFNBOs). Fuel suppliers could also face an obligation to reduce the emission intensity of fuels sold, with no sub-targets for advanced biofuels and RFNBOs.
The draft leaves a cloud over the future of the fuel quality directive (FQD) which, in addition to fuel quality standards, sets a target to reduce GHG emissions of transport fuels by 6pc but has an "outdated" set of sustainability criteria and administrative burden, according to the draft. One of the options considered to increase the share of renewables in transport to 26pc — with new fuel blends and a dedicated supply obligation for renewable aviation fuels — explicitly removes the FQD's 6pc emissions reduction target.
Also relevant is revision of existing fuel technical standards to facilitate introduction of B10 diesel, albeit with the introduction of an EU-wide B7 diesel protection grade for the significant share of vehicles not compatible with B10 by 2030, estimated at some 28pc.
The commission is expected to outline a raft of measures on 14 July aimed at achieving the 55pc GHG emissions reduction target by 2030. They include revisions to legislation covering sectors under the EU Emissions Trading System (ETS) and other sectors — including transport, buildings, agriculture, non-ETS industry and waste — that account for almost 60pc of total domestic EU emissions.
The commission will also make proposals for a carbon border adjustment mechanism and a revision to the renewable energy efficiency directives. A revision of the energy taxation directive will give favourable tax treatment to "sustainable biofuels, bio-liquids and biomass as well as for to renewable hydrogen and less favourable treatment to fossil fuels". The latter would require EU member states to unanimously agree. The commission has previously withdrawn a proposal to revise energy taxation due to opposition from a few member states.
Related news posts
Hoekstra to face 'tough' EU parliamentary hearings
Hoekstra to face 'tough' EU parliamentary hearings
Brussels, 18 September (Argus) — EU climate commissioner Wopke Hoekstra, who has been nominated again for the role, is expected to face "tough" hearings in the European Parliament, according to a senior European official. The official told Argus that Hoekstra might have a "slight" advantage, as he underwent parliamentary hearings in 2023 when he took over fellow Dutchman Frans Timmermans' climate portfolio. At the time, Hoekstra was questioned extensively about past work with Shell and on climate issues. European Commission president Ursula von der Leyen put forward new commissioner candidates on 17 September, assigning Hoekstra the climate, net-zero, and clean growth portfolio. All candidates will undergo hearings before the EU parliament votes on the new commission line-up. Hoekstra has said he is "honoured and humbled", but formal appointment depends on how he performs during the hearings before the European Parliament's energy, environment and other committees. Hoekstra's mandate would include drafting legislation to enshrine a 90pc cut in greenhouse gas (GHG) emissions by 2040, from 1990 levels, into European law. The commission's 2040 target, revealed in February, referred to a "net GHG emissions reduction of 90pc". Hoekstra last year made a "personal" commitment to defend a "minimum target of at least 90pc" net GHG cuts. Von der Leyen has tasked Hoekstra with designing climate policies for the post-2030 period and developing an Industrial Decarbonisation Accelerator Act. Other key objectives include channelling investment toward net-zero infrastructure and ensuring revenues from the EU's emissions trading system (ETS) are used "effectively" to drive decarbonisation. Hoekstra's responsibilities extend to advancing a single market for CO2, boosting carbon removals for hard-to-abate sectors, and phasing out fossil fuel subsidies. Hoekstra would work closely with former Danish climate minister Dan Jorgensen, who is nominated for the energy and housing portfolio, if both are appointed. Jorgensen will be responsible for advancing the Electrification Action Plan for industrial transition and overseeing a roadmap to phase out Russian energy imports. He is tasked with ensuring the "full use" of joint procurement mechanisms, with a mandate to extend the current aggregated demand system from gas to include hydrogen and potentially other commodities. Supervising both Hoekstra and Jorgensen, in addition to von der Leyen, will be Teresa Ribera, Spain's former climate minister. Ribera has been nominated as executive vice-president for a clean, just and competitive transition. European Parliament officials expect to receive financial declarations and other procedural documents in the coming days. That will allow parliamentary committees to send written questions to Hoekstra and other nominated commissioners, officially kicking off the hearing process. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Asia-Pacific faces $815bn/yr green financing shortfall
Asia-Pacific faces $815bn/yr green financing shortfall
Singapore, 18 September (Argus) — Asia-Pacific holds significant investment opportunities in the energy transition, but obstacles such as insufficient public funding, lack of regulation and investment risks have resulted in a financing shortfall in the region. The Asia-Pacific region needs at least $1.1 trillion/yr in climate financing, but actual investment falls short by at least $815bn/yr, said Singapore's ambassador for climate action Ravi Menon at a conference in Singapore last week, referencing data from the International Monetary Fund (IMF). There is existing green funding in the region such as from the Asian Development Bank (ADB), which estimated its investments amounted to $10.7bn in 2023, and bilateral arrangements like the $600mn India-Japan fund, established by India's National Investment and Infrastructure Fund and Japan Bank for International Co-operation in October 2023. But this is insufficient, especially as the region's energy demand is only set to rise further. Energy demand in Asia is growing by 2.9pc/yr, the highest of any region in the world, said Menon. Renewables such as solar and wind are now more cost-competitive than fossil fuels, but the region needs more grid connectivity and capacity to make renewable energy a viable option. Building transmission lines and energy storage in the region alone will cost about $2.4 trillion over the next 10 years, added Menon. Obstacles to capital flows Total energy investment worldwide is expected to exceed $3 trillion in 2024, with about $2 trillion going to clean technologies and slightly over $1 trillion toward fossil fuels, according to the IEA's World Energy Investment 2024 report. Fossil fuel financing by the world's 60 largest banks rose to $705bn in 2023 , up by 4.8pc from $673bn in 2022, with the rise largely driven by LNG financing. The continued investments in fossil fuels and fossil fuel-based technologies will lead to more carbon-intensive infrastructure, divert capital from clean energy alternatives and undermine climate targets, derailing Asia-Pacific from its energy transition goals. Emerging economies typically have "many developmental needs" to take care of, hence public financing in these countries cannot shoulder the overall trajectory of growth of energy transition financing, said the Institute for Energy Economics and Financial Analysis' (IEEFA) sustainable finance and climate risk research lead Shantanu Srivastava at the IEEFA Energy Finance 2024 conference earlier this month. Many smaller economies rely on financing from multilateral development banks (MDBs), but this comes in "bits and pieces" and with many strings attached, he added. It is hence essential to bring in private capital, but the region faces challenges in attracting private investments. The lack of a sound climate information architecture hampers accurate assessment and tracking of climate risks, which impedes investors' ability to make decisions and prevents the scale-up of climate finance, according to the IMF. Other measurable risks — such as political risk, credit risk, and foreign exchange risk — often significantly raise the risk premium of investments into the region. Investors tend to expect higher returns on investments with higher risk premiums, but there are limited investment opportunities available which would provide such returns and this prevents foreign capital from scaling, according to Srivastava. Insufficient regulatory and government measures in the region as well as the inconsistency of existing ones also deter private investors, as these increase project execution risks. Policy continuity and long-term visibility of what the country is going to do is essential as a "policy flip-flop" deters investor confidence, Srivastava said. Tools to attract more climate finance Blended finance is necessary to mobilise private capital for Asia's energy transition, according to Menon. Governments and development finance institutions could provide concessional or risk capital in the form of grants and limited guarantees, while MDBs can provide technical assistance in the form of development expertise, capacity building and institutional support, he said. Finance can also be encouraged through sovereign sustainable bonds, which can stimulate local sustainable bond markets by setting long-term price benchmarks, boosting liquidity, and serving as models for private issuers, according to IEEFA. The issuance of these bonds also signal a dedicated government commitment to sustainability goals and can drive the development of a robust and transparent regulatory environment, IEEFA added. This is crucial for the long-term growth and stability of the region's sustainable bond markets, which is essential for boosting investors' confidence. Another method is through revenue generation tools, such as carbon pricing and carbon taxes, according to the Financing Just Transition Through Emission Trading Systems report released earlier this month by think-tank Asia Society Policy Institute (ASPI). Carbon pricing sends a strong signal to reduce greenhouse gas emissions and indicates the government's intent to intensify efforts related to energy transition, which encourages private capital flow, stated the ASPI report. Carbon pricing also has the potential to generate substantial revenue, which can be allocated to climate funds to support low-carbon technology innovation and aid enterprises in making green investments, to aid low-carbon transition efforts, the ASPI report added. By Joey Chan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
EPA already at work on 2026-forward RFS rules
EPA already at work on 2026-forward RFS rules
Monterey, 17 September (Argus) — The Environmental Protection Agency (EPA) has started work on the second set of rules for the Renewable Fuel Standard (RFS), expected to span multiple years beginning in 2026, a spokesperson said today. The rule will likely establish renewable volume targets for multiple years under the RFS, although the exact timeframe has not been confirmed, EPA deputy office director Ben Hengst said today at the Argus North American Biofuels, LCFS and Carbon Summit in Monterey, California. Work on the incoming rule was originally not expected to begin until early 2025. Updated analysis, especially regarding advanced biofuels and feedstocks, will inform new rulemaking, as well as the inclusion of regulatory changes intended to improve the program's implementation, Hengst said. Unprecedented growth in US biofuels imports led overall advanced biofuel supply in 2023 to far surpass EPA projections. But biomass-based diesel volumes for the current rules were based on projected growth in North American feedstock supply — not international availability nor the nameplate capacities of US refineries, Hengst said. There were also large increases in imported feedstocks for biofuel production, namely in used cooking oil and tallow. But the potential for an upset in global trade flows remains an agency concern. Domestic policy in some countries could boost offshore consumption of feedstocks and finished fuels that have arrived to the US market in recent years, while the US policy environment itself remains vulnerable to change. The EPA is also navigating recent adverse judgments against its interpretation of the Small Refinery Exemption program and is prioritizing the development of options that would comply with court orders. There was no clarity provided on eRINs as the EPA continues to consider its options. By Jasmine Davis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
US regulatory clarity vital to sustain biofuels growth
US regulatory clarity vital to sustain biofuels growth
Monterey, 17 September (Argus) — Clarity from both US state and federal regulators regarding the rules and incentives for biofuels production is essential to ensure continued growth to achieve underlying carbon-reduction targets, industry stakeholders said today. A lack of guidance for incentive programs and qualifications for 2025 and beyond is already hindering trade and investment in key US biofuels markets, panelists said today at the Argus North American Biofuels, LCFS and Carbon Summit in Monterey, California. The current biodiesel tax credit (BTC) is scheduled to give way to the Inflation Reduction Act's Clean Fuels Production Credit (CFPC) in January, while narrowed proposed targets and credit qualifications in state Low Carbon Fuel Standard (LCFS) programs has effectively left key portions of the biofuels market in a holding pattern. Alignment and certainty between regulatory bodies on what will be incentivized and credited in the future will be an essential component of business and investment decisions in the industry, necessary to reach ambitious carbon-reduction targets within the next decade. "The fact that we don't have clarity mid-September for a tax credit going into effect on 1 January, is really hard to believe," said Kurt Kovarik, vice president of federal affairs for Clean Fuels Alliance America. "No one knows the rules of the road with respect to 45Z." Panelists echoed opposition to proposed California caps on crop-based renewable feedstocks that discussed on Monday at the conference during sustainable aviation fuel (SAF) discussions. "If the goal is to remove carbon, the extent to which we can base it on science and not pick winners and losers is in everyone's interests," Kovarik said. "All you're going to end up doing is limiting the driving out of carbon." But speakers today further warned of the potential for a duplication of efforts by parties trying to satisfy both state LCFS programs and the federal Renewable Fuel Standard program. Proposed requirements may also require an unprecedented level of collaboration between segments of the US renewables supply chain. Those requirements could be more disruptive than the feedstock cap itself and potentially have the greatest limiting effect on fuel supply into California, said Don Gilstrap, Chevron's manager of fuels regulations. With that goal in mind, declining carbon intensity targets are already providing the necessary incentive for producers to pivot away from crop-based renewable feedstocks, Gilstrap said. But panelists were optimistic about rising interest in replicating LCFS-style focuses on carbon intensity — an approach they theorized would "unleash innovation" across both the finished fuels and feedstocks segments of the industry. By Jasmine Davis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more