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Andris Piebalgs

Energy Commissioner

Biofuels – the green alternative for transport

Key note speech at the International Biofuels Conference
Brussels, 5 July 2007

Ministers, Excellencies, Ladies and Gentlemen,

Distinguished Guests,

It is a great pleasure for me to be speaking at this significant event.

In my address today, I would like to cover three key questions:

  • why are biofuels important?
  • what is the European Union doing to promote them?, and
  • why do we need to work together at international level in this policy area?

The importance of biofuels

Biofuels are important because they tackle two of the most difficult challenges we face in energy policy.

The first challenge is security of energy supply. Transport depends on oil for 98% of its fuel. That degree of dependence would be a worry, whatever the fuel. It is of double concern given that oil is the fossil fuel of which global supplies are lowest, and of which the EU has least. We need to pursue many solutions to this problem; but today, biofuels are just about the only large-scale option available to diversify fuel sources in the transport sector. We must ensure that we take advantage of the opportunities they offer.

The second challenge is climate change. Greenhouse gas emissions in transport are growing fast. This growth is negating the savings being made elsewhere. On present trends, transport will account for more than 60% of the EU's increase in carbon dioxide emissions between 2005 and 2020; it is essential for these trends to be reversed. At EU level, there are just two policies with the capacity to do this on a significant scale: vehicle efficiency improvements and biofuels. We must promote them both strongly.

Biofuels offer other opportunities too – notably their potential contribution to employment in rural areas, both in the EU and in developing countries – as well as the scope for technological development, for example in second-generation biofuels.

For all these reasons, biofuels are a key part of our energy policy.

The EU's policy for promoting biofuels

The European Union's promotion of biofuels took its first big step forward in 2003, with the adoption of our biofuels directive – a piece of legislation that each EU Member State must translate into national law. At that time, biofuels only had ½ a percent of the transport fuel market[1]. The directive set two "indicative" targets - a 2% share of the EU fuel market in 2005 and a 5.75% share in 2010.

Disappointingly, we did not achieve this first indicative target. Even last year, biofuels' share only reached 1½ percent. But the pace of implementation is picking up. I am glad to say that nearly all the 27 EU Member States have now put measures in place to support biofuels – a big contrast from the situation in 2003, when only 5 were doing so. Some are using tax exemptions, others are using "biofuel obligations" under which fuel suppliers must include a given proportion of biofuel in the fuel they sell. Many are using both these tools. With this major increase in Member States' efforts, we expect to see biofuels' share reach 4 to 4½ percent in 2010.

Still, though, it does not look as if the full 2010 target will be achieved.

Given the increasing urgency of the problems we aim to address – insecure energy supplies and climate change – we therefore reviewed our policy – aiming both to improve our ability to achieve the targets we have set, and to look forward beyond 2010.

I am glad to say that this review has found its place in a clear and supportive overall policy framework: the Action Plan for launching a "new energy policy for Europe", set out in March by the EU Member States. This plan reaffirms the importance of greenhouse gas reduction and security of supply as key objectives of energy policy. For renewable energy in general, we now propose a binding European target of a 20% share in 2020 – three times higher than its contribution today. For biofuels, we propose a 10% share of the transport market in 2020. But this time this target will no longer be indicative – it, too, will be binding.

This strategy represents a step change in the ambition of our policies on renewable energy, and in the introduction of a strong European policy framework to support their achievement. For biofuels, it will mean nearly a sevenfold increase in consumption.

It is, of course, essential to ensure that this increase is fulfilled in a sustainable way.

We cannot just sit back and assume that this will happen automatically.

Most biofuels deliver solid greenhouse gas savings – but there exist inefficient production techniques that do not. The use of these production techniques must be avoided.

Most biofuels will be produced on land that has been cultivated for generations. But some will come from land that is newly brought into cultivation. Here, there is a risk of causing big greenhouse gas losses through the release of carbon stored in the soil and in plants. There is also a risk of disturbing biodiversity and disrupting natural habitats. These risks, too, need to be avoided.

Furthermore, in order to achieve the 10% biofuel share as efficiently as possible, we must aim at the earliest possible entry into the market of "second-generation" biofuels. These can be made from a wider range of raw materials such as straw, organic wastes and woody material. This will increase the security of supply benefits of the policy, as well as its environmental performance.

The EU's Action Plan underlined the need for such a strong push for second-generation biofuels and for an effective sustainability scheme.

Now the European Parliament will give its view in September. We hope that it will also support this approach.

Meanwhile we are working out how to translate our ideas into a solid proposal for legislation.

We plan to incorporate our biofuel measures, alongside other measures needed to push the share of renewable energy up to 20%, in a single directive. This should be ready before the end of the year. It will then be up to the European Council and Parliament to consider the proposal and reach a final view.

The directive will give legal backing to the 10% target for biofuels.

Alongside this, it will contain a sustainability scheme. The details of this are still being worked out. Our initial ideas are as follows:

  • First, we need to set minimum sustainability standards for biofuels;
  • Second, only biofuels that meet these standards will count towards the 10% target;
  • Third, only these biofuels will be eligible for tax exemptions; only they will count towards biofuel obligations.

These rules will, of course, apply equally to domestically produced biofuels and to imports.

There is, of course, a great deal of debate about what exactly the minimum sustainability standards should be. The Commission recently held a consultation exercise in which stakeholders from within and outside the EU expressed many different ideas on this point. We are studying the results closely; and we also look forward to hearing the views that will be expressed during this conference. It is crucial to get this part of our policy right, and to devise measures that are simple yet effective.

International cooperation for promoting biofuels

This brings me to the last point I would like to cover: why do we need to work together at international level as we develop our biofuel policies?

One important reason is that we expect and hope to see an increase in global trade in biofuels and in biofuel feedstocks.

Now, as far as the EU is concerned, I should point out that we could – if we had to – fulfil our 10% target for 2020 entirely through domestically produced biofuels – notably, by using "set-aside" agricultural land and by reducing the rate at which arable land is being abandoned in the EU. This approach would imply only a small increase in agricultural commodity prices – a matter of a few percentage points.

However, even if this approach is technically possible, it is not the one that we want to follow. We think that this purely domestic sourcing of biofuels is neither likely – given current trade rules, and the increased trade liberalisation we hope to see in future – nor desirable. Instead, we aim at a "balanced approach" under which domestically produced biofuels and imports will both contribute to meeting the EU's growing needs.

We are keen to work constructively with other countries, regions and international organisations to create the necessary framework for this increased trade in biofuels.

We need to ensure that our biofuel standards, and those of our main trading partners, create no unnecessary obstacles. With the European Committee on Standardisation, we convened an international conference on this topic in February. This set out a roadmap for our future work on internationally compatible biofuel standards. We will continue to work vigorously to implement this.

We also need to work for convergence on biofuel sustainability – both on the minimum standards that will be set for biofuel use in each country or region, and for the procedures to be used to verify these.

But trade issues are not the only reason for working together.

A wider principle of solidarity is also at play, because when one country or region adopts a sustainable policy of biofuel development, everyone gains.

We all gain from the consequent reduction in greenhouse gas emissions.

We all gain as biofuels become an increasingly credible alternative to oil-based fuels in the transport market.

We all gain from the emergence of new opportunities for economic development in rural areas.

And we all gain because each country's experience offers lessons that others can draw on. At EU level we have learnt a lot from the pioneering efforts of certain Member States, from Brazil and from others internationally.

We must, and we will, plan our biofuels policies to take advantage of these benefits from international cooperation.

Ladies and gentlemen,

For all these reasons, the European Commission is committed to giving a strong international dimension to its work on biofuels.

This conference is a signal of this commitment and an important step in taking it forward.

Biofuels are not the panacea for all our energy problems. But they are an essential component of our future approach to energy policy, and a way to make sure that the transport sector plays its full part in our efforts to tackling global warming and to diversify fuel sources. It is exciting to see so many people gathered here today.

I look forward with great interest to the lessons that we will be able to learn over the next day and a half of discussions.

Thank you for your attention.

[1] To be precise, biofuels' share is measured as a proportion of 'transport petrol and diesel'.

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