RED III passes Dutch parliament, reassuring biofuels traders of timely transposition into law

The Dutch House of Representatives, or Tweede Kamer, voted to implement the EU's Renewable Energy Directive, or RED III, in a parliamentary session late on Oct. 2.

The legislation will be subject to further review by the Dutch Senate, or Eerste Kamer, before it is officially transposed into law, but the Tweede Kamer's decision in favor has assured market participants that the Netherlands will meet its transposition target date of Jan. 1, 2026.

While the legislation passed the lower house of the Netherlands' bicameral parliament with 107 votes in favor out of a possible 150, several proposed amendments were also adopted following a parliamentary debate on Sept. 29.

"The Senate will discuss on October 7 how to proceed," Jacobus Wennekers, Founder of Renewable Strategies, a public affairs and sustainability consultancy based in the Netherlands, said on Oct. 3.

"Either [they'll] set a date for written input, issue a blank report for swift adoption, or opt for a plenary debate without written questions," Wennekers also said.

"Although a majority in Parliament supported the bill, this does not mean the Senate will refrain from being critical," Wennekers added. "A written round of questions is expected, but since no amendments can be made at this stage, the legislation remains on track to be adopted in November or December and transposed into Dutch law by the Jan. 1, 2026, deadline."

Amendments adopted

The Tweede Kamer adopted several amendments to RED III in the session held on Oct. 2, following an initial debate on Sept. 29.

The targets and obligations set out in the legislation will be extended from 2030 to 2035, with an annual review of the mandate to ensure a "level playing field" with the obligations set out in other EU member states' mandate structures.

The State Secretary committed to introducing a 2 petajoule sub-target for the direct use of green hydrogen, in addition to the existing biofuel blending targets. Furthermore, the Tweede Kamer adopted a motion calling for the exploration of bio-LNG mass balancing.

Notably, the House also voted to adopt an amendment clarifying which bioethanol can count toward RED III obligations, linking the Combined Nomenclature code 2207 10 00 to future eligible volumes. This amendment is intended to promote the use of undenatured bioethanol produced domestically within Europe over other imported, denatured volumes. Currently, the duty paid on denatured ethanol is Eur102/cu m versus Eur192/cu m for undenatured ethanol.

"This potentially will raise the price by about Eur100/cu m," a blender said.

"This is very bullish," another ethanol trader added, referencing the adopted Dutch amendment.

Germany and Belgium aligned?

While the market has derived renewed confidence in the Dutch RED III transposition timeline from the Tweede Kamer's vote on Oct. 2, uncertainty persists over the expected implementation date in key neighboring markets such as Germany and Belgium.

Thierry Aartsen, the Dutch Minister for the Environment and Public Transport, reiterated the Netherlands' commitment to a Jan. 1, 2026, RED III transposition target during an initial parliamentary debate held earlier this week.

"Our Belgian counterparts have confirmed once again that Belgium will implement the measure from January 1, 2026, [...] let us, as the Netherlands, strive for a level playing field [...] the same applies for my German colleague; we have also agreed that we will do this properly," the Minister said on Sept. 29.

Increased confidence in the transposition timeline of RED III in these key markets will likely contribute to buoying prices for advanced biofuels as traders seek to build up positions ahead of next year's mandates, which are expected to strengthen demand and drive prices higher. However, official clarity on the expected timeline of transposition in both Germany and Belgium remains lacking.

Germany had been scheduled to debate the legislation in the Bundestag on Oct. 10. However, the issue has since disappeared from the publicly available agenda on the Bundestag's website.

"The topic of RED III is not yet part of any agendas [for Bundestag sessions]," a Germany-based biofuels trader said on Oct. 2. "I'm not exactly sure when it will be discussed."

Market reaction

Market sources noted that the successful implementation of RED III in the Netherlands ought to be a broadly bullish signal for European biofuel prices, particularly for advanced fuels, given that their use is subject to a minimum sub-target of at least 5.5% under RED III. Further, the incoming legislation mandates more ambitious greenhouse gas reduction targets and higher biofuel blending targets and ends preexisting double-counting incentives.

The immediate impact in the spot market does not appear to have been drastic; however, as market participants await seeing whether news of the legislation's probable transposition will inspire greater interest in building up positions ahead of next year.

"I'm not really seeing markets on the move yet," a biofuels trader told Platts on Oct. 3, referencing any potential impact from Oct. 2's vote.

Platts, part of S&P Global Energy, assessed the RD-A outright price at $2,586.25/mt on Oct. 3, up 0.64% week over week. Similarly, the RD-B outright settled at $2,470.75/mt, 2.27%, or $54.75/mt, higher week over week, resulting in a $115.50/mt spread between the two products.