In April 2009, the EU Council of Ministers and the European Parliament adopted the Renewable Energy Directive (RED) as part of the EU Climate Package. It includes the 20-20-20 goals for the year 2020: a 20 percent reduction in greenhouse gas (GHG) emissions compared to the levels of 1990; a 20 percent improvement in energy efficiency compared to current forecasts for 2020; and a 20 percent share for renewable energy in the EU energy mix. Part of this 20 percent share is a 10 percent minimum target for renewable energy consumed in transport.
The EU requires that biofuel meet certain criteria to receive tax incentives and count toward the targets. The criteria include greenhouse gas (GHG) savings, land with high biodiversity value and high carbon stock, and effects on indirect land-use change (ILUC). Legislation requires that all biofuel used in the EU, whether produced in the EU or a third country, be certified by a control body adopted by the Member State (MS) authority or the European Commission (EC).
There are three different ways for biofuels, including those that are exported to the EU, to be certified and count towards the 2020 target. Those three options are:
- Voluntary schemes
- Certification approved by a MS competent authority to apply in that MS
- Bilateral or multilateral agreements
The U.S. preferred the third option, bilateral agreement, but no negotiations for bilateral agreements on biofuel certification have occurred.
In April 2015, the U.S. Soybean Export Council (USSEC) submitted an application to DG Energy to recognize the U.S. Soybean Sustainability Assurance Protocol (SSAP) as a voluntary certification scheme. In early 2018, USSEC submitted a new application to DG Energy. On January 29, 2019 the European Commission recognized the voluntary scheme developed by the U.S. soybean industry that demonstrates compliance with the sustainability terms of RED. EU soy crushers can now use oil from U.S. beans to produce biodiesel that counts towards mandatory national renewable transport fuel targets under the EU’s Directive.
For more information see the EU-27 Biofuels 2018 Annual Report (coordinated by FAS The Hague).
European Commission’s proposal on RED II for Post 2020
On November 30, 2016, the European Commission (EC) released the proposal on the Renewable Energy Directive post 2020 (RED II) as part of the comprehensive “Clean Energy for All Europeans” package, which includes initiatives on energy efficiency, the electricity market, the security of electricity supply, and governance rules for the EU Energy market.
On June 14, 2018, negotiators from the Council, the European Parliament and the Commission found a political agreement on the Renewable Energy Directive (RED II). The deal will now have to be formally approved by the European Parliament and the EU Council before being published in the EU Official Journal and entering into force.
The deal includes a 32 percent binding renewable energy target for the EU for 2030, with an upward revision clause to be revisited in 2023. The Council, the European Parliament and the Commission had each put forward their own proposals, and this negotiated outcome is closest to the Parliament’s position, which had the most ambitious target. The target for the transport sector was set at 14 percent, compared to 10 percent until 2020. The agreement also sets out a binding 3.5 percent target on non-crop based advanced biofuels by 2030. Crop-based biofuels will be capped at the level consumed in each Member State in 2020, with an additional 1 percent point allowed over present consumption up to the overall cap of 7 percent. The parties also agreed on a freeze for the use of high-risk indirect land use change (ILUC) biofuels at the 2019 levels, and to phase them out completely by 2030. Although specific crops are not explicitly mentioned in the agreement, the political will of the negotiators is clear in targeting palm oil. The Commission will now (before February 1, 2019) have to adopt a Delegated Act to set out the specific criteria on what the EU will consider a high-risk ILUC biofuel and if crops other than palm – e.g., soybean – will be included in the phase out.
Indirect Land Use Change (ILUC)
On July 16, 2015, the Agriculture and Fisheries Council of the European Union officially endorsed the European Commission’s (EC) proposal on Indirect Land Use Change (ILUC), which was originally submitted in 2012. The new directive amends the 2009 renewable energy directive (RED) and the 1998 fuel quality directive (FQD). The ambition is to limit global land conversion for biofuel production, and to increase the climate benefits of biofuels used in the EU. The directive places a 7 percent cap on conventional biofuels that can count towards the RED targets and includes a provision for double counting of feedstocks for advanced biofuels, in order to encourage a transition to advanced biofuels.
The proposal includes the following elements:
- Fuel suppliers must report to the EC and MS the estimated level of GHG emissions caused by ILUC, i.e. freeing up more land to grow food crops, in order to offset the switch to biofuel production
- Seven percent cap contribution of first generation biofuels to the 10 percent target for renewable energy in transport by 2020. MS are free to set lower caps;
- Multiplication factor of 5 for electricity from renewable sources used for electric road vehicles and of 2.5 for renewable electricity used in rail transport;
- MS were given a target value of 0.5 percent for the share of advanced biofuels consumed in transport in 2020. Lower targets may be set based on certain grounds: a) limited potential for production, b) technical or climatic features of the national market for transport fuels, c) national policies putting particular emphasis on incentivizing energy efficiency and renewable electricity in transport. Advanced biofuel MS national targets are required to be set no later than 18 months after the EU Directive enters into force;
- Double counting of the contribution of advanced biofuels towards the 10 percent target;
- MS would be required to respect the waste hierarchy principle when incentivizing waste biofuels;
- The EC must report and publish data on ILUC-related emissions, and;
- The EC must report back to the European Parliament and the Council of Ministers on the scope for including ILUC emission figures in the existing sustainability criteria.
The proposal was initially met with heavy criticism by industry and environmental groups who believe this u-turn from the EC increases uncertainties in the industry and will even put the sector to an abrupt halt in some MS. The groups say the proposal is based on unfounded and immature ILUC science and the 7% cap in 2020 would destroy the biofuels industries as well as related sectors such as crushing and sugar facilities. Capping all conventional biofuels without distinction has led the biofuels sector to question whether policy makers can define objective and evidence-based biofuels policy in the future.