WORKING PAPER. Brussels, 23 April 2018 WK 4844/2018 INIT LIMITE AGRI CLIMA CONSOM ENER ENV IND TRANS

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1 Brussels, 23 April 2018 WK 4844/2018 INIT LIMITE AGRI CLIMA CONSOM ENER ENV IND TRANS WORKING PAPER This is a paper intended for a specific community of recipients. Handling and further distribution are under the sole responsibility of community members. CONTRIBUTION From: To: Subject: General Secretariat of the Council Working Party on Energy UK comments on the revised Directive on renewable energy Delegations will find in annex the UK comments on the revised Directive on renewable energy. WK 4844/2018 INIT LIMITE EN

2 UK RESPONSES ON THE PRESIDENCY NON-PAPERS ON TRANSPORT & BIOENERGY SUSTAINABILITY UK suggested amendments can be found in the Annex (page 4). Proposed wording is in red font, bold and underlined. Note: Amendments where we support the Presidency s approach are not listed below. Definition recycled carbon fuels - Art. 2 (AM 104 & 229) We can accept the European Parliament s (EP) additional wording as a compromise. However, we would have preferred the EP s approach that potentially would have covered a wider range of these fuels which are still in an early stage of development, whilst setting out clear criteria. Obligation on Fuel Suppliers - Art. 25 (1) Structure vs ambition level (Art. 25 (1)): This is a UK priority. Any targets need to be achievable in a sustainable and cost-effective manner, taking into account the differences in the biofuel mix and infrastructure across Member States. We support the structure of the Article as per Council General Approach; the EP proposals risk being too complex and overly prescriptive. Depending on the accounting rules in place, we may have some flexibility on the overall target, but this depends on the details and e.g. does not extend to the advanced biofuels sub-target. Interim advanced target (AM 217): While we do not support putting in place trajectories, we could ultimately accept a 2022 interim advanced sub-target at a level of 0.2%. Exemption of certain fuel suppliers (AM 217): We see no issue with exempting suppliers of electricity and renewable fuels of non-biological origin from the advanced biofuel sub-target, but do not think that this goes far enough. We consider it essential for Member States to have the flexibility to choose the most cost-effective solution on the basis of their market structure. As a compromise, we suggest wording similar to the one in the current Fuel Quality Directive which would give Member States the flexibility to exempt certain fuel suppliers provided incentives are in place for voluntary contributions (see Annex). Waste hierarchy (AM 221): To ensure that only genuine wastes and residues are used in the biofuel production, we consider including a reference to the waste hierarchy as essential. However, we also understand other Member States concerns with regards to some of the EP s legal wording and duplication. As a compromise, we suggest using the wording of the existing Directive (see Annex). Multipliers Art. 25 (1b) AM 139 and 220 Double counting of Annex IX part A and B: This is a UK priority. We consider the option to double-count as essential to promote waste-based biofuels in our fuel mix and to achieve the advanced biofuels sub-target. We would therefore not support a distinction between Annex IX part A and B feedstocks in terms of double counting. Similarly, we cannot agree with a 1.7% cap on Annex IX part B feedstocks.

3 Adapting the overall transport target to level of the cap on crop-based biofuels: This is a UK priority. We support the mechanism to adapt the overall target level to the crop cap. Other multipliers: We support the other multipliers as agreed in Council General Approach; any flexibility may depend on the targets put in place. At the same time, we are concerned about unclear additionality requirements for renewable electricity in the EP text. Aviation multiplier: We have some flexibility with regards to a higher aviation multiplier, provided safeguards are put in place to avoid any distortions to the market, i.e. feedstocks or biofuels simply being shifted from road to the aviation sector (e.g. in the recitals). While we support signals to encourage the uptake of biofuels in the aviation sector, we also need to be careful that the right incentives are put in place for new fuels to come forward. Palm oil issue Art. 25, 2 and recitals We can agree to the Presidency s suggested compromise for Art. 25, 2 and the recitals, which allow Member States to address the issue of high ILUC risk biofuels, for example by setting a lower crop cap or limiting in particular oil-based crops. We would also like to flag that in the case of the UK, double counting has also proved as an effective way to encourage the use of waste-based biofuels with lower ILUC risks. However, the amendments will require further clarifications, in particular in relation to the low ILUC risk biofuels. For example, regarding who will make the assessment as to which biofuels can be classified low ILUC risk, and how we will ensure a harmonised approach across Member States. The Directive will need to include some further detail or at the very least refer to further details to be set out in an implementing or delegated act. Art Sustainability criteria GHG criteria (Article 26 (7), AM ): This is a UK priority. The UK can show flexibility towards EP proposals for higher GHG savings requirements, and in particular to allow Member States to set higher GHG thresholds instead of choosing a particular value that may not work for all Member States. In the case of biofuels, this would enable us to set other thresholds specifically for research and demonstration projects and first-of-their kind installations, which may not reach the economies of scale in the early stages. Additional questions Definition of renewable fuels of non-biological origin (AM 291): We do not support the wording proposed, in particular the requirement that the carbon feedstock should be captured from ambient air rather than at the source. Such an amendment would encourage inefficient processes. However, we agree with the principle that no additional economic benefits should be created to emit CO 2. We believe that this might be better addressed by the GHG savings methodology to be put in place by the Commission. Review Annex IX (Art. 7/25, AM 140, ): We can agree with the EP s suggestion for a regular review of feedstocks listed in Annex IX and that feedstocks may even be removed,

4 subject to a grandfathering clause. This is to ensure biofuels from these feedstocks are genuinely advanced, taking into account latest available evidence. To provide policy certainty, it could be helpful to refer to the principles listed in Art. 7(5) and use implementing rather than delegated acts. Publication of the origin of biofuels (AM 259): We think rather than creating another obligation for Member States, this could be addressed as part of the database to be put in place. We already publish statistics on the origin of feedstocks used in biofuel production on a quarterly basis and could ultimately accept a provision along those lines. Commission examination of compliance with Art. 26 (Art. 27 (7bis)): We have concerns about extending the power to ask for a Commission examination from Member States to economic operators, who could also use such power also against competitors. Supervision of certification bodies (Art. 27 (7)): Scrutiny reservation. Other issues High-power recharging points along TEN-T network (Article 16, AM 354): We do not think that the Renewable Energy Directive is the right place for such a requirement. The current wording is unclear, e.g. in terms of what swift availability of renewable sources for transport means and may be better suited for a recital. However, as the provision is overall in line with existing policies, we could agree to this compromise. [Note: location might be a more suitable word than places in the current drafting.] Deletion of the category biomass fraction from municipal waste (Annex IX part A, AM 274): We do not support the deletion of this category, but if required would have flexibility to amend the wording to address potential concerns about this category.

5 UK SUGGESTED COMPROMISE PROPOSALS Waste hierarchy We suggest re-inserting the existing text of the existing Renewable Energy Directive as a compromise, which would also have the benefit of safeguarding existing policies in Member States and ensuring that only genuine wastes and residues are used as feedstocks for the production of biofuels. Commission/ European Parliament Council [ ] AM 321 2a. Member States shall ensure that their national policies, including support schemes, are designed to conform to the waste hierarchy, as set out in Article 4 of Directive 2008/98/EC and avoid significant distortive effects on markets for (by)products, wastes and residues. To that end, Member States shall regularly review their national policies and justify any deviation in the reports required under Article 18(c) of Regulation of the European Parliament and of the Council [on the Governance of the Energy Union, 2016/0375(COD)]. Compromise proposal When setting policies for the promotion of the production of fuels from feedstocks listed in Annex IX, Member States shall have due regard to the waste hierarchy as established in Article 4 of Directive 2008/98/EC, including its provisions regarding life-cycle thinking on the overall impacts of the generation and management of different waste streams. AM 143 5a. When setting policies for the promotion of production of fuels from feedstocks listed in Annex IX to this Directive, Member States shall ensure that the waste hierarchy established in Directive 2008/98/EC is complied with, including its provisions regarding life cycle thinking on the overall impacts of the generation and management of different waste streams. AM 323 Biofuels, bioliquids and biomass fuels produced from waste and residues, other than agricultural, aquaculture, fisheries and forestry residues, need only fulfil the greenhouse gas emissions saving criteria set out in paragraph 7 in order to be taken into account for the purposes referred to in points (a), (b) and (c) of this paragraph. However, their production from waste and residues covered by Directive 2008/98/EC shall be in line with the principle

6 of the waste hierarchy as laid down in Directive 2008/98/EC. This provision shall also apply to waste and residues that are first processed into a product before being further processed into biofuels, bioliquids and biomass fuels. Obligated parties under the fuel supplier obligations We suggest the following compromise proposal that would allow for flexibility for Member States to decide which suppliers to include in their support mechanism, while ensuring that some measures are taken to include in particular in relation to electricity suppliers. The wording is similar to the wording in the current Fuel Quality Directive. Note: The change in Article 2 is considered necessary to ensure that the wording does not suggest that fuel would generally include electricity. RED2 - Council RED2 European Parliament Compromise proposal Article 25 Article 25 AM 217 Article [ ] Member States may exempt or distinguish 1. [ ] Fuel suppliers supplying only fuels in the form of between different fuel suppliers and energy electricity and renewable liquid and gaseous carriers when setting this obligation, ensuring varied maturity and cost of technologies is taken into account. transport fuels of non-biological origin do not need to comply with the minimum share of advanced biofuels, other biofuels and biogas produced from feedstock listed in Annex IX. Article 2 (gg) fuel supplier means the entity supplying fuel to the market that is responsible for passing fuel [ ] through an excise duty point or, in case of electricity or where no excise is due or when it is duly justified, any other relevant entity designated by a Member State; Article 2 (gg) fuel supplier means the entity supplying fuel to the market responsible for passing fuel or energy through an excise duty point or, where no excise is due, any other relevant entity designated by a Member State; [ ] Member States may exempt from the requirement in Article 25(1) fuel suppliers who supply electricity, renewable fuels of nonbiological origin or supply volumes of fuel below a de minimis threshold. In case such an exemption is applied, Member States shall ensure that those suppliers may choose to become a contributor to the targets set out in Art. 25 (1), if they can demonstrate that they can adequately measure and monitor electricity supplied for use in those vehicles. Article 2 (gg) fuel supplier means the entity supplying fuel to the market that is responsible for passing fuel or energy through an excise duty point or, in case of electricity or where no excise is due or when it is

7 duly justified, any other relevant entity designated by a Member State;