EU ministers stymie biofuels deal

Perpignan, 12 December (Argus) — EU energy ministers have failed to agree on legislation aimed at reducing the use of first-generation biofuels made from food crops.

The failure means that the European biofuels industry faces continuing uncertainty, because any redrafted bill will likely not be read until after parliamentary elections in May.

Energy and environment ministers met in Brussels today. The original proposal from the European Commission, made in October last year, aimed to cut the blend rate in first-generation transport fuels to 5pc from 10pc. A compromise level of 7pc was put forward after its passage through the European Parliament. But ministers from Poland and Hungary wanted to keep the 10pc blend level for first-generation biofuels, while ministers from countries including Denmark, Luxembourg, Belgium, the Netherlands and Italy said a 7pc cap was too high. All of them voted against the proposal, meaning that the legislation will have to be rewritten before being returned to parliament.

“The commission proposal, as further amended, is considered by some member states no longer to be sufficiently ambitious, it is too watered down. Others consider it to be too ambitious. So we have a large number of member states who are preventing agreement but for different reasons and their reasons for voting against vary quite widely,” EU energy commissioner Gunther Oettinger said.

Environment commissioner Connie Hedegaard, who put forward the original proposal for a 5pc cap, labeled the countries that voted against the compromise text “an unholy alliance”. “The most ambitious and least ambitious member states have blocked progress at council. For how long? Waiting time means uncertainty for the biofuels industry,” she said.

An attempt to measure food versus fuel indirect land use changes (ILUC) has been at the centre of the debate between first-generation producers, advanced biofuels groups, politicians and environmental organisations over its accuracy and methodology. First-generation producers and farming federations attacked the inclusion of ILUC estimates in any new decree, prompting them to lobby members of the European Parliament (MEPs). But an unusual alliance between environmentalists, some politicians and advocates of advanced non-food crop biofuels — such as airline British Airways, Italian biochemical firm Chemtex and Denmark's Dong Energy — said the EU must move more strongly to increase the amount of biofuels made from feedstock such as algae, straw and waste. Prospective second and third-generation producers said the uncertainty over the EU's legal framework means that investment in the sector is being lost to the US and Brazil.

The bill will now pass from the current presidency of the EU under Lithuania, to the incoming Greek presidency. But Greece will likely find it almost impossible to redraft and return the bill to plenary before the parliamentary elections. This means that the decree will be in limbo until autumn next year at the earliest, even if compromises on methods to calculate ILUC can be found by then.

The failure to pass the bill means different EU states now hold a variety of blend level rates, with a lack of clarity as to what the objectives are for 2020 and how they will be met. Spain has a 4.1pc cap on biofuel blending, the UK a 4.75pc limit and France has a 7pc cap.

The fact that only a minority of countries blocked the legislation gives some hope for an eventual passage of the bill, Oettinger said. “What is important is that no one is denying that there is a need for reform. There is a general acknowledgement within the council of the need to reform the directive which means I am fairly optimistic that at the end of this process there will be an amendment to the directive to avoid the ILUC effect and to provide incentive to move towards a second generation of production of renewable energy sources.”

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