EU agreement on ILUC caps conventional biofuels at 7 percent

By Ron Kotrba | July 31, 2014

On June 13, the European Union Energy Council announced it had reached a political agreement on measures to incorporate indirect land use change (ILUC) into EU biofuel policies. Biofuel trade groups say the move is expected to restore investor confidence.

The agreement places a 7 percent cap on the use of conventional biofuels. It also encourages the transition to second- and third-generation biofuels. To support the move to advanced biofuels, member states are invited to promote their use and are required to set national targets for advanced biofuels based on a reference value of 0.5 percentage points of the 10 percent target for renewable energy in transport of the renewable energy directive (RED). According to information released by the EU Energy Council, member states can set a lower target under certain circumstances.

Information published on the agreement also notes that a new annex to the RED has been established that contains feedstocks for advanced biofuels that could count double toward targets. Double counting is also permitted for advanced biofuels not listed in that annex, but used in existing installations prior to the adoption of the new directive.

The agreement also includes additional incentives for advanced biofuels by extending the tool of statistical transfers of the renewables directive to cover such advanced biofuels, and the double counting of the contribution of these biofuels is extended to the overall renewables energy targets.
In addition, the agreement includes a provision to generate electricity from renewable sources in order to reduce greenhouse gas (GHG) emissions in transport.

The EU Energy Council also indicated that ILUC reporting on GHG emission savings from the use of biofuels will be carried out by the commission using data reported by member states. Finally, a review clause in the agreement makes it possible to introduce adjusted estimated ILUC factors into the sustainability criteria.

The European Biodiesel Board welcomes the final agreement and fully supports the point of view expressed by a large number of member states that any attempt to decrease the 7 percent objective would pose a threat to the EU economy and agriculture.

Rob Vierhout, secretary general of ePURE, the European renewable ethanol industry association, calls the agreement “welcome progress” and says it should pave the way towards a stable policy framework that will restore investor confidence in the biofuel industry. He also notes, however, that more progress needs to be made.

“The proposed ceiling of 7 percent for conventional biofuels could limit the uptake of renewable ethanol as the majority could come from existing biodiesel capacity,” he says. “It is essential that the ceiling is combined with a separate renewable in petrol target as proposed by the European Parliament in its first reading position.”

“Low- or no-ILUC-risk biofuels should count toward the target above the ceiling, as a way to promote further market penetration of the best performing biofuels,” Vierhout says. “To date, the analysis on ILUC merely confirms that ethanol makes a very strong contribution to the decarbonization of Europe’s road transport.”

While the proposed 0.5 percent subtarget for advanced biofuels is a start, Vierhout says it must be higher, particularly after 2020. He adds that any target must exclude the current system of multiple counting, which allows more fossil fuels to be used.

The U.K.-based Renewable Energy Association says the new agreement will effectively bring a close to almost two years of investment-blocking policy paralysis in the low carbon fuels sector. While the REA says it continues to oppose the use of ILUC factors in GHG accounting for biofuels, the organization adds the new proposal should give the existing biofuels industry room to grow and invest in the development of advanced biofuels. The REA also says it remains opposed to double counting toward the renewable energy target.

The REA points out that the proposal must undergo a second reading in the new European Parliament before it becomes law.  “All EU member states are committed to securing 10 percent of transport energy from renewable sources, such as biodiesel, bioethanol and biomethane, by 2020,” the organization states. “The UK Renewable Transport Fuel Obligation is currently set at 4.75 percent (by volume, equivalent to 3.8 percent by energy). The government has previously stated that it would not raise the RTFO beyond this year due to the ongoing uncertainty over the European ILUC dossier. With ILUC now resolved, the REA calls on the Department for Transport to set out the RTFO to 2020 to give our members the policy framework they need to secure investment in both current and advanced biofuels.”

“This is a compromise that will frustrate parties on both sides of the debate, but the overriding feeling is one of relief that the ILUC saga is finally drawing to a close,” says Nina Skorupska, chief executive of the REA. “Our members and stakeholders have grappled with this issue for several years, when they would rather have been focusing their efforts on creating jobs in sustainable biofuel production. We urge the government to get its own house in order now so that the transport sector can get the low carbon momentum back on track and catch up with the progress being made in renewable heating and electricity.”

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