'Fuels of the Future'

On the occasion of the annual Fuels of the Future conference (Berlin, 23-24 January) representatives from the European biofuels industry gathered in Berlin, Germany.

The principal organisers of the two-day conference were the German Bioenergy Association (BBE) and the Union for the Promotion of Oil and Protein Plants (UFOP). The conference featured speakers with diverse backgrounds, who presented a complete summary of the current situation and the future of biofuels in Germany, Europe and the world.

On the first day, the seminar opened with three general panels. The first panel treated the political framework conditions for biofuels with a focus on Germany. Helmut Lamp, Chairman of the Board of the German Federal Association of Bioenergy (BBE) opened the conference by outlining the changing energy priorities in Germany due to Fukushima accident.

Generally, he suggested that in the EU more bioenergy should be produced and consumed.  Speaker Dr.Klaus Kliem, chairman of the UFOP board, addressed the main challenges that the German biofuels industry is facing, which relate to the tax system for biodiesel - more precisely, biodiesel used as fuel, fulfilling the sustainability criteria, currently enjoys a tax reduction of €303.40 per litre.

This reduction, however, is valid only until 1 January 2013. After this date, the tax reduction will only amount to €21.40, hence there is a fear that if the tax reductions on biofuels are reduced or completely expire, the consumers will face higher prices for biofuels at the pump.

The second panel included a discussion round on ethical aspects of expanding the biofuels market. Government, think tank and industry representatives picked up topics such as the responsibility of policy-makers, economy and society for sustainable mobility.

The third panel had ‘sustainable production of biofuels’ as a central theme. Dr. Matthias Nickel, head of division of the Federal Institute for Agriculture and Nutrition explained the EU Renewable Energy Directive (RED) sustainability criteria. These relate to greenhouse-gas savings, land with high biodiversity value, land with high carbon stocks and agro-environmental practices in order to assess their environmental value.

For a biofuels producer, there are three ways to show compliance with the mentioned sustainability criteria: compliance with a national scheme (member states), compliance with a voluntary scheme (private organisations, NGOs) and compliance with a bilateral agreement. Only if there is compliance with one of the schemes will the biofuel produced be counted towards the EU’s 10% target of renewable energy in the transport sector in 2020.

Thus far, the EU has approved seven voluntary schemes, but many are not practical for users. Moreover, the schemes should be harmonised in order to facilitate their mutual compatibility. The International Sustainability and Carbon Certification (ISCC) and REDcert schemes rank among the most frequently used.

Day two of the ‘Fuels of the Future’ conference was divided into more specific parallel panels on biodiesel, bioethanol, vegetable oil and biomethane.

The biodiesel panel looked into market trends and perspectives for the German and European biodiesel sector. German Biofuel Industry Association President Detlef Evers addressed the challenges for European producers relating to biofuels production in third countries and their imports into the EU.

According to the representative, subsidised and cheap imports of biofuels form third countries lead to overproduction in the EU. Producers in Spain and Italy are harmed the most by this condition. The biggest third countries exporters are Argentina and Indonesia.

Nonetheless, European producers need feedstocks for their own biofuel production. The panel on ethanol had as a theme the biofuel mixture E10, trends and prospects of biofuel from Brazil and second generation ethanol. A conclusion was drawn that in Germany the introduction of E10 was a failure due to a variety of aspects. Brazil is already a big producer of bioethanol derived from sugarcane and is planning to expand its capacities. Furthermore, promising projects on cellulosic ethanol and biobutanol are in a well developed stage.

Generally, a topic heavily discussed among the stakeholders throughout the two days of the event was indirect land use change (ILUC).

This issue must be seen in the context of the fuels versus food debate since the EU biofuels policy is facing strong criticism from environmentalists claiming that biofuels production increases food prices, hunger in the least developed countries and cultivation of grassland - savannah and land grabbing. ILUC refers to the unintended effects of releasing carbon due to land-use changes induced by the expansion of agricultural areas for ethanol or biodiesel production. EC DG Energy presented the status of their activities regarding ILUC.

In December 2010, the EC published a report on ILUC proposing four policy options to tackle ILUC. The EC also published four studies assessing the ILUC. At the moment the EC is finalising its impact assessment, which would focus on the research of the following policy options. Option number one would mean taking no action for the time being, while continuing to monitor. Second, an increase the minimum greenhouse gas saving threshold for biofuels.

Third, the introduction of additional sustainability requirements on certain categories of biofuels and, the final option is to attribute a quantity of greenhouse gas emissions to biofuels reflecting the estimated indirect land-use impact.

Even though the German industry is convinced that European farmers will have no difficulties in complying with any ILUC requirements, planned EU action on this matter was criticised by the majority of participants.

According to many at the conference, ILUC would mainly be a burden for farmers from third countries - the criticism focused on the EU studies used for the assessment of ILUC. The industry claimed that the studies are merely prognoses and thus cannot be used for drafting any legislative measures tackling ILUC.

Moreover, the EC’s proposed options to tackle ILUC would harm the existing European biofuels industry. Doubts about compatibility with World Trade Organization (WTO) law were also expressed.

Hence, to avoid Europe lacking sustainable feedstock for biofuels production due to burdensome and invalid ILUC criteria, the German biofuels industry has proposed to deal with the issue on a bilateral basis with third countries.

In conclusion, in line with the title of the conference, Fuels of the Future, participants agreed that biofuels are necessary and in many cases the most promising medium to help Germany and the EU to achieve its greenhouse-gas emissions targets.