MEMO/07/5

Brussels, 10 January 2007

Promoting biofuels as credible alternatives to oil in transport

With the significant rise in oil prices and the growing concern about stable, secure and environmentally friendly energy supplies, the promotion of biofuels use in transport is a priority on the European political agenda. Today, biofuels are the only way to significantly reduce oil dependence in the transport sector. As part of its Energy Policy for Europe, the Commission is committed to encouraging the production and use of biofuels by proposing to set a binding minimum target for biofuels of 10% of vehicle fuel by 2020.

Transport in Europe is constantly growing. Cars and trucks provide such socio-economic advantages that life without them today is difficult to imagine. But the situation is becoming untenable. Transport produces nearly a third of CO₂ emissions – the greenhouse gas most responsible for climate change – and emissions are expected to grow significantly. Moreover the transport sector relies 98% on oil, a largely imported fossil fuel, which is set to become more expensive as reserves become depleted.

The EU is proposing an immediate response to this situation: it is encouraging the replacement of diesel and petrol with biofuels. These are clean, renewable fuels which are produced from organic material. The development of the sector will also create jobs and open up new markets for agricultural production. Biofuels also contribute to solving broad common problems, such as the diversification of energy sources and the fulfilment of Kyoto Protocol commitments.

In the biofuels directive adopted in 2003, Europe set itself the objectives of replacing 2% of petrol and diesel for transport by biofuels by 2005, and 5.75% by 2010. The 2005 target was not met. Substantial progress can be expected by 2010, but not enough to achieve the 2010 target. The Commission therefore proposes reinforcing the legislative framework, with a 10% minimum for the market share of biofuels in 2020.

While most biofuels deliver significant savings in greenhouse gas emissions, it is possible to produce them in ways that do not do this, or that cause other environmental problems. The Commission proposes the introduction of an incentive/support system to avoid this and to encourage the development of "second-generation" biofuels.

Several policies can stimulate the use and production of biofuels at European level. Tax exemption is a longstanding form of support for biofuels. Several Member States have also announced the introduction of biofuel obligations. These oblige suppliers to put a percentage of biofuels on the market, providing investors with a safety net and boosting the biofuel industry.

The most common biofuels today are biodiesel (made from oleaginous plants such as rapeseed and sunflower) and bioethanol (produced from sugar and starch crops such as beet or cereals). These two liquid transport fuels have the potential to replace diesel and petrol on a large scale. They can be used in the engines of modern cars (unmodified for low blends, or with cheap modifications to accept high blends) and distributed via existing infrastructures. Research is under way to develop “second-generation” production techniques that can make biofuels from woody material, grasses and some additional types of waste.

Annex: Progress in the use of biofuels in the Member States, 2003-2005

Source: national reports under the biofuels directive.