Talks between the European Parliament and EU member states on revision of the renewables directive (RED III) finally turn to details that will define waste-based biodiesel consumption until the end of the decade. Waste-based biofuels require the right policy to drive investment, European Waste-based and Advanced Biofuels Association (Ewaba) president Michael Fiedler-Panajotopoulos tells Argus. The following is an edited interview.
How do you see EU legislation progressing for sustainable aviation fuel (SAF), maritime fuels and vehicle emissions?
The devil is in the detail. Road, land and maritime transport fuels are similar in terms of chemical composition of the molecules. But aviation renewable fuels consist of different molecules. For aviation, first generation crop-based biofuels were excluded due to concerns about sustainability and food-feed competition. The [European] commission, in practice, focused its SAF proposal solely on waste lipids. Filling the proposed SAF mandate with hydroprocessed esters and fatty acids (HEFA) from waste lipids is more competitive than novel and advanced technologies like power-to-liquids, Fischer-Tropsch or alcohol-to-jet (ATJ).
The real effect of the indiscriminate SAF mandate is to deprive a significant proportion of waste-based biofuels industry of feedstocks to process. More worrying is that this will mean less net greenhouse gas (GHG) savings in Europe because the HEFA process is less efficient. Policy should not favour one fuel over another or one industry over another, but support efficient use of feedstocks and efficient decarbonisation.
Has hydrotreated vegetable oil (HVO) demand for used cooking oil (UCO) feedstock led to negative margins for traditional biodiesel producers?
Demand for HVO has been rising for several years. But industry has coped well since supply was adequate for both markets and trade that grew uninterruptedly. Unfortunately, though, Covid-19 abruptly changed the paradigm with supply shortages pushing up feedstock prices and squeezing margins.
The main barrier for biodiesel producers, often smaller firms, were transport prices that quadrupled. That prevented business done until then in flexitank and ISO-tank containers. Firms had to move to bulk.
Is the market sustainable for waste-based biofuel producers?
Waste biodiesel producers are often small firms with collection systems set up over a decade ago for nearby plants and the local economy. An undifferentiated blending mandate for SAFs, proposed by the commission in July 2021, largely promotes HEFA from waste oils. This causes significant operational issues for Ewaba members. Stability is a major issue for waste biofuels and we are seeking an expanded range of eligible feedstocks.
What feedstock potential is there in Europe?
We've reached maturity in Europe at industrial level. There are challenges to household UCO collection even if it is taking place in several areas. So the 'collectability' of waste feedstocks remains complicated. Certain studies may have portrayed a rosier picture for feedstock availability. Markets have since returned to some kind of normality even if supply chains remain somewhat disrupted, not only in the waste lipids sector. And we are also facing a new regulatory front with the EU's Fit for 55 legislative proposals.
What is your take on parliament's vote to increase the existing limit to feedstocks from UCO and animal fats?
Parliament has a provision increasing the existing proposed limit set for UCO and animal fats beyond 1.7pc subject to revision and expansion, by the commission, of potential feedstocks. We already have the Netherlands, Germany, Italy, and prior to leaving the EU, the UK, going beyond or seeking to go beyond a 1.7pc share of transport fuels. Increasing the feedstock base will take some pressure off from UCO supply, the main waste-based fat used. We also welcome the increase the increase in overall and specific transport renewables targets as good for renewables, industry and for GHG savings.
What about removing multiple counting for certain transport energy?
Double counting created the waste-based biofuels industry. It was needed due to the higher processing costs. Fuel suppliers were incentivised to buy a more expensive product. It allowed producers to collect and process feedstocks. The commission's current proposal, RED III, proposed strict migration to a GHG reduction system. Member states, though, are proposing both a volume-based energy target share or a GHG savings system. This would allow for double counting.
How do incentives for the use of electricity in transport compare?
Legislation ignores power emissions that are actually becoming less sustainable at this very moment due to coal. We fully support electrification, notably for light vehicles. But there are the commission's own estimates that some 80pc of the vehicle fleet still running internal combustion engines in 2030. All these vehicles will need liquid fuels until 2040. CO2 emissions standards for cars, and other legislation, for instance, does not take account of emissions linked to raw materials for batteries. There's no consideration of growing dependency on non-EU sources suppliers.
