Negotiators for the European Parliament and EU member states are finalising revised renewables, climate and other legislation that will affect the biodiesel sector. Argus spoke to the European Biodiesel Board (EBB) secretary general Xavier Noyon, with the Q&A below edited for clarity and length.
How do you see talks on a revised EU renewables law going?
There's no longer anything under discussion that would be a major catastrophe. The revised renewables directive could still not be ideal, for instance, due to proposals on the table to push for an early phase-out of palm or including soy-based feedstocks, via the tweaking of the indirect land use change (ILUC) criteria. The 7pc cap on the share of crop-based feedstocks in transport should remain stable. There's not much to lose, nor to gain, from this revised renewables directive.
What perspectives do you see for renewable fuels in EU transport?
The revised directive increases the renewable transport target beyond the original 13pc share proposed by the European Commission in 2021. Let's not forget that biofuels, and in particular biodiesel, continue to provide some 90pc of renewables in transport. That's not going to change overnight.
We still do not see how Europe can get to the volumes needed for renewable fuels without keeping a stable base of food and feed crops. Favouring electricity over renewables in transport does not come only from the renewables directive. Other instruments, notably CO2 standards for cars, hinder growth by unfairly benefiting power over renewable fuels.
Do you see growth from EU legislation on sustainable aviation fuels (SAFs)?
We wanted EU legislators to broaden the range of feedstocks beyond advanced ones listed in the renewable directive's annex IX to so-called mature feedstocks listed in Part B and beyond. That looks like it's not going to happen. This will severely limit available volumes.
The level of sustainable aviation fuel (SAF) mandates has been more of an issue for airlines. Talks on SAF mandate levels were somehow also politically linked to free allowances under the EU's emissions trading system (ETS). We ourselves focused more on broadening the SAF feedstock pool to avoid sourcing problems. There may now be negative effects on the sector if legislators actually go further and cut eligibility for certain advanced and mature feedstocks. Still, there will be growing demand for SAF feedstocks for at least 10-15 years.
Will inclusion of transport in the EU's ETS drive demand?
Inclusion of road transport in the ETS is a clear additional incentive for biodiesel demand. Impact is more difficult to gauge for inclusion of maritime transport into the ETS, also because maritime fuels legislation will exclude food and feed crops. And we need more time to assess the impact of further expansion of ETS coverage of aviation.
Could CO2 standards for heavy-duty vehicles effectively exclude liquid fuels, favouring electrification?
CO2 standards for trucks are very important for our sector. The commission may propose a distant deadline for a 100pc CO2 reduction for heavy duty vehicles (HDVs). The final text could end up looking very different after input from the parliament and EU member states.
If you look at CO2 car standards, amendments proposed by us and others, to include low carbon liquid fuels, failed to pass by very slim margins. Such amendments may well succeed in the CO2 truck standards.
When do you expect the EU biofuels database to be up and running?
The commission has announced April 2023. For years, industry has been asking for such database to address fraud concerns. It is a real issue for the whole industry, not just in terms of competition, but also due to general concerns on feedstock transparency. It'll be vital in tackling fraud and improving industry reputation.
It's also needed for trade issues. Think of Argentina, the main importer of FAME with trade under an EU-Argentina price and volume undertaking. All that requires a traceability database.
Do new proposals for renewable transport feedstocks add to transparency concerns?
While broadening the biofuels feedstocks in Annex IX of the renewable directive is a good thing, changes may add to compliance concerns. That's also due to member states differences on including specific feedstocks.
Take feedstocks from degraded lands. What is the exact definition going to be in various EU countries? After adding more mature feedstocks in Part B of the annex, why not increase that 1.7pc cap? This would reduce the possibility for fraud by unscrupulous actors on capped feedstocks.
There's also a trade aspect here with certification in non-EU jurisdictions. China is now the dominant exporter of FAME. And we don't really even have figures for HVO yet. That raises transparency issues that the database should address and solve. Mass balancing, as a method of attributing feedstock content, will be difficult. And physical separation in supply chains only adds to costs.
