Biofuels and the Renewable Energy Directive

By Seán Kelly, MEP, (pictured)
Spring 2018

Seán Kelly, MEPIn February, inter-institutional negotiations between Council and Parliament on three key elements of the Clean Energy Package - the Governance Regulation, the Energy Efficiency Directive, and the Renewable Energy Directive - got underway. The Renewable Energy Directive in particular sees the institutions head into negotiations with quite differing positions. Parliament has been more ambitious generally in its approach to the file, opting for the higher overall target of 35%, while also increasing ambition on articles dealing with issues such as heating and cooling, distributed generation, and planning.

Perhaps the issue that causes the most contentious debates in Brussels policy circles is that of renewable energy in transport, and specifically the use of biofuels to meet the targets. This is an issue that has been ongoing for a number of years now, with the original Renewable Energy Directive including an obligation to review the impact of indirect land use change (ILUC) on greenhouse gas emissions associated with biofuels, leading to the introduction in 2015 of the so-called ILUC amendments which capped the share of conventional biofuels that can be counted towards the 2020 renewable energy target to 7%. At the end of 2016, the Commission came forward with its proposal for the recast of the Renewable Energy Directive for the period to 2030, which brought the proposed phase-down of the cap from 7% in 2020 to 3.8% by 2030. With all of these changes in recent years, it is clear that the biofuels sector has had to put up with quite a lot of uncertainty, which has hindered investment.

So how is the situation looking on biofuels as negotiations get going? Firstly, I think that both Parliament and Council have both adopted quite sensible, albeit different, approaches and I think it gives us something to build on. Council has rejected the proposed phase-down of the cap, and has looked to maintain it at 7%, as agreed in 2015, up to 2030.

In Parliament we agreed upon a different approach whereby Member States would each be capped at their current levels, and the level of this cap would be maintained to 2030, with some flexibility for Member States with shares below 2%. I think the position Parliament has adopted sends two important political messages: firstly that we reject the Commission proposal for a gradual phase out of conventional biofuels, and secondly that we want to protect the investments that have already been made, avoiding any retroactivity in this regard. I think with the two positions that are now on the negotiating table, there is scope for us to work towards a pragmatic outcome.

There are of course real sustainability concerns on conventional biofuels, and the challenge for us as negotiators is clear: find a pragmatic solution on biofuels that avoids burning investors, but also ensures that the biofuels we use are sustainable. In the Parliament’s position we have included a text that would consider Palm Oil to be unsustainable and therefore not eligible to be counted towards the achievement of targets from 2021 onwards. Concerns about this text have been put forward in recent weeks, particularly from representatives of Indonesia and Malaysia - two large Palm Oil producers that would stand to be greatly impacted by this. The arguments against the ban is that it would not be in line with WTO rules. This may be the case, but the inclusion of the text, from a political perspective, means that we will at least need to try to find a solution that does not incentivise the biofuels, such as palm oil, with the highest environmental impact.

I have long argued that a workable solution needs to be found to ensure that we do not paint all conventional biofuels with the same brush; some are clearly better than others. The reputation of biofuels has been tarnished due to the unsustainable production of certain feedstocks and their environmental impact; palm oil is the obvious example. Biofuels grown by European farmers which achieve high greenhouse gas savings, and which produce high-protein animal feed as a by-product, are not the same as imported palm oil. In the Committee stage of Parliamentary discussions, I proposed drawing a distinction between good and bad biofuels along these lines, but unfortunately the emotive nature of this topic meant it was very difficult to get agreement.

It is clear to me that we should promote the better performing biofuels, and end support for the worst ones; the way in which we achieve this is less clear. The proposed phase-out of conventional biofuels is difficult for many Member States and political groups for a number of reasons, most of which I have outlined already. Additionally, the uncertainty and disagreement around the methods used to determine ILUC factors for different feedstocks means that using these to determine sustainability is extremely unlikely to get agreement.

Am I therefore pessimistic about finding a solution? I genuinely am not. As a team of rapporteurs in the European Parliament, we have built up a strong understanding and a very effective working method over the last year. While we have differing ideological perspectives on most issues, there is always a will to find a compromise. This is the attitude that we will bring into negotiations with Council, and I hope that the Bulgarian Presidency will join us in this approach. Vice President Sefcovic has set us a target of October 2018 to conclude negotiations on the Clean Energy Package.

Although there are a number of issues of contention within the Renewable Energy Directive, which extend far beyond biofuels, I am confident that with the right cooperation, flexibility and political will, we will be able to reach a strong and ambitious agreement which allows us conclude well in advance of this target and which puts us on track to meet our 2030 Climate and Energy targets.