Ethanol s role in meeting the EU 2020 targets perspectives up to 2030 Robert Wright Geneva, 13 April 2016
About AGENDA Policy epure Update Voice of the European Renewable Ethanol industry Representing EU ethanol producers for all end-uses, e.g. energy, potable, industrial, and all pathways (conventional and advanced ethanol). Accounts for close to 90% of EU installed production capacity (around 9 billion litres). 50 members, including 24 producing members in 16 Member States Ensuring EU policies that promote the production and use of renewable and sustainable ethanol.
Outline AGENDA Policy Update Fuel ethanol perspectives by and post 2020 Policy recommendations
billion litres Fuel AGENDA Policy ethanol Update perspectives by 2020 The fuel ethanol market perspectives have changed dramatically over the last years. Following the adoption of the RED and FQD in 2009, EU Member States collectively expected an fuel ethanol consumption of 14.5 billion litres, of which 6 billion imported. In 2014, the JEC revised its projection to a mere 7.3 billion litres in a scenario of E10 accounting for 36% of petrol s market share. This is half of what was expected, and these volumes could already be supplied by existing capacities installed in Europe, thereby not requiring any new investments. 16 14 14.5 12 10 8 7.8 7.4 10.6 6 5.2 5.3 4 2 0 EU ethanol IPC EU ethanol production EU fuel ethanol consumption JEC scenario, E10 at 36% petrol market share JEC scenario, E10 at 100% petrol market share According to NREAPs 2014 2020 fuel ethanol consumption projections
The EU is not on track to meet the 10% target in 2020 The Member State Renewable Energy Progress reports and NREAPs show that progress towards the RED s 10% target has been slow in the past 5 year. Renewable energy use in transport accounted for 5.4% of energy in 2013, compared to 4.8% in 2010 when the RED had to be transposed by Member States. The Commission has recognised that meeting the 10% target is now challenging. Since 2010, the gap between the forecasted renewable energy in transport and the actual consumption has increased continuously. In 2014, Member States reached a level of renewables incorporation in transport (5,298 ktoe) that was 26% less that the forecasted in their NREAPs.
EU-28 Fuel ethanol in transport forecast vs actual consumption (ktoe) Actual ethanol consumption has remained relatively flat (about 2,750 ktoe), in contrast to the NREAP forecasts. In 2014, the gap between the actual consumption of fuel ethanol and that forecasted by the NREAPs was 1,873 ktoe - this is 40% short of the expectations created in 2010 In 2014, the average incorporation rate of ethanol in the EU petrol pool was 3.3%. This level must be raised if the Member States are to reach the RES-T target.
Fuel AGENDA Policy ethanol Update perspectives Post 2020 Context EU: We ll be defining the Post 2020 Energy and Climate framework fresh out of ILUC. While ILUC will lose political focus, the issue will not disappear, hence will need to be addressed. GLOBIOM shows ethanol is a valid tool to decarbonise the transport sector. International level: COP 21. State of play The EU has already agreed its 2030 ambitions. While nothing is (yet) prescribed for the transport sector, sustainable biofuels, incl. ethanol, have a role to play. A 27% renewables target at EU level: Impact assessment says the RES in transport would be 12-14% MS may establish binding renewables obligations (c.f. France in Energy Transition Law) A 40% emissions reduction target: Is it achievable without additional measures to decarbonise a transport sector which already accounts for over a third of total EU emissions? Impact assessment transport will have to reduce its emissions by 16%. Biofuels are one of the options to achieve the 40% reduction target. They will compete with other options on CO2 abatement costs.
Fuel AGENDA Policy ethanol Update perspectives Post 2020 Oct. 2014 European Council conclusions included a renewed focus on transport. It invited the Commission to further examine instruments and measures for a comprehensive and technology neutral approach for the promotion of emissions reduction (...) in transport, for electric transportation and for renewable energy sources in transport also after 2020. An opening to biofuels in the ILUC compromise Continued support to sustainable biofuels, incl. 1G - Provided ILUC is addressed? Low-ILUC risk biofuels concept introduced by Council as part of RED-FQD discussions, taken up by Parliament and by Commission. Several scenarios may play up post-2020: Continued, renewed sectorial ambitions within RED and FQD - unlikely Inclusion of transport in ETS - unlikely No other specific measures for transport but existing legislation (incl. CO2 for cars regulation) Others? Communication on Decarbonising the Transport Sector expected early July 2016, RED II Q4 2016
EU climate and RES targets are at risk in the absence AGENDA Policy Update of a policy framework for low carbon fuels In the absence of framework fostering their uptake, biofuels Scenario A biofuels supply (mtoe) and energy contribution (RED basis %) 8.7% (DC) 5.5% share in transport will decrease to 5.5% by 2030, rendering the 12-14% RES-T anticipated in the Commission s impact assessment unachievable as other options will not ramp up fast enough. Therefore increased used of fossil fuels in transport. Part of the GHG savings triggered by biofuels would be lost. With the transport sector accounting for 25% of the EU s emissions, substantial additional savings would be required from the other non-ets sectors to achieve the targeted 30% emissions reduction compared to 2005. In the absence of a harmonised policy framework, advanced 2020 2030 GHG savings MtCO 2 e/y 48.3 40.1 % contribution to FQD 5.0% 4.4% biofuels (Annex IX-A) would only make a marginal contribution to RES-T. Source: E4Tech, Policy scenarios for transport under the 2030 E nergy and Climate framework, Feb. 2016
Outline AGENDA Policy Update Fuel ethanol perspectives by and post 2020 Policy recommendations
Policy AGENDA Recommendations Update 1- Implementation of the RED and FQD in relation to fuel blends European renewable ethanol is a low cost decarbonisation tool available at scale. To reap its benefits: E10 roll-out across the EU Member States to complete the internal market for fuels; Prerequisite is a public awareness strategy based on the experiences in several Member States, with cooperation between fuel producers, fuel distributors and car manufacturers. The objective is to provide clear information to consumers on the compatibility of the car with the newly introduced fuel. (Cf. Alternative Fuels Infrastructure Directive). Prep for E20 introduction, incl. on the normative and legislative side (CEN and modification of the FQD to allow blends with ethanol content higher than 10% v/v). The current blending limit of 10% prevents RED and FQD targets to be achieved (cf. JEC 2014). E20 would provide opportunities for OEMs to optimise the combustion process in the engine, allowing lower fuel consumption, reduction of CO2 emissions and other pollutants even further. Needed going forward is the continued introduction of E20 tolerant cars, the development of an E20 standard, the introduction and use of E20 and then E20 optimised cars (Cf. Autofuel consortium roadmap*); hence a revision of the FQD to allow ethanol content higher than 10% v/v. *E4tech (2013) A harmonised Auto-Fuel biofuel roadmap for the EU to 2030. E4tech.
Policy AGENDA Recommendations Update 2-2030 Energy and Climate framework Policy is the main blocking factor for sustainable biofuels deployment and uptake: needed is a longterm stable and ambitious decarbonisation policy for transport up to 203. This will incentivise the uptake of low carbon fuels such as ethanol, which has a low CO2 abatement cost, is available at scale and ready to use in existing fleet. Dedicated ramping-up target for advanced biofuels combined with intelligent financing. 3- Energy Taxation An energy products taxation based on the energy content and carbon footprint of the fuels. This would allow for a level playing field between fossil and non-fossil energy sources, and between alternative fuels. Thereby addressing the petrol-diesel imbalance. Conclusions: Even considering ILUC, European renewable ethanol is a low cost CO2 abatement tool that has a role to play Post 2020. It needs a stable, long-term regulatory framework to allow conventional ethanol to grow and for cellulosic ethanol to take off. The two can develop in harmony.