Proposed amendments to EU Fuel Quality and Renewable Energy Directives (revised)
In late September we provided an update on a draft proposal from the European Commission to amend Europe’s Renewable Energy Directive (RED) and Fuel Quality Directive (FQD) to address indirect land use change. The proposal is in the form of a new Directive that would amend sections of the existing Directives if passed into law. The headline measures in that draft proposal were:
- The introduction of ILUC factors into the carbon accounting under the Fuel Quality Directive target for reducing the carbon intensity of EU road transport fuels by 6% by 2020
- A proposed cap of 5% for the contribution of food based biofuels towards the Re- newable Energy Directive target that 10% of energy for transport should be renew- able by 2020
- A commitment to end market support for food based biofuels beyond 2020.
On 17 October, 2012, the European Commission released a finalized version of that pro- posal, which will now be submitted to the European Parliament and Council and enter the ‘co-decision’ process. The final Commission proposal contains some important changes from the draft proposal, and has been described as ‘watered down’1 and as a ‘missed opportunity’2 by social and environmental NGOs, while despite gaining concessions since the draft was leaked the biofuels industry has called it ‘totally unacceptable’3 and an ‘un- acceptable breach of confidence’.
The final proposal varies from the draft in several key ways. Crucially:
- ILUC factors would be introduced for reporting, but would not have regulatory ef- fect. In particular, biodiesel would be credited with substantial carbon savings for compliance with the FQD, even while at the same time fuel suppliers would have to report that with ILUC included there were no savings.
- Language is introduced to make it more clear that the ‘cap’ of 5% is in no sense an absolute limit on the use of biofuels, but only on their contribution to the targets in the Renewable Energy Directive. It would, for instance, be possible (and arguably likely) under this proposal for food-based biofuels to be used above the 5% cap to comply with the carbon savings target in the FQD.
- The language around the phase out of regulatory support for food based biofuels has been amended. The recitals now commit that “only advanced biofuels with low estimated indirect land use change impacts and high overall greenhouse gas sav- ings should be supported as part of the post 2020 renewable energy policy frame- work.” This is less categorical than the language in the draft, but the message is still clearly that Europe is looking to move beyond first regulatory support for first generation fuels.