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European Parliament adopts RED II proposal

London — The European Parliament voted in favor of the RED II (Renewable Energy Directive) proposal Wednesday, and also voted to remove biodiesel made from palm oil from its list of biofuels that can count towards the EU's renewables target from 2021.

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It also voted that "biomass fuels consumed in transport, if produced from food or feed crops, shall be no more than the contribution from those to the gross final consumption of energy from renewable energy sources in 2017 in that Member State, with a maximum of 7% of gross final consumption in road and rail transport."

The vote, which had been eagerly awaited in European biofuels markets, will likely to spell the end of PME (palm methyl ester) imports of biodiesel from Asia from 2021.

The European Parliament also voted to include an overall transport target of 12%, containing a 10% blending mandate for "advanced" fuels, including electricity, waste-based biofuels and recycled carbon fuels.



"Today's parliament vote sends a clear message to the biofuels industry that growth can only come from sustainable advanced fuels such as waste-based biofuels, not from food crops. This compromise redirects investments into the fuels of the future and eliminates palm oil biodiesel, the highest emitting biofuel," clean fuels manager at industry body Transport and Environment Laura Buffet said.

This vote also included the Commission proposal to have a specific blending obligation for advanced biofuels.

"This is critical for their progressive deployment alongside sustainable conventional biofuels," vice-president for biorefining at Novozymes Thomas Schroder, said in a press release.

EWABA, the European Waste-to-Advanced Biofuels Association, have welcomed the broader definition of advanced biofuels, which will now include sustainable non-food and feed crop based wastes and residues and opens the door to the possibility for EU member states to choose the level of usage for feedstocks, namely used cooking oil and animal fats.

"Interesting on the bit about no palm from 2020, that's pretty significant," a European biodiesel market participant said, adding that they expected a reshuffle in the biodiesel market once it digested this news, and the ramifications, not only for PME imports into Europe, but also on the future of hydro-treated vegetable oil in Europe, which uses palm oil as a feedstock.


CAUTIOUS WELCOME FROM ETHANOL SECTOR


The initial response from ethanol traders was cautiously positive. "A bit more friendly for conventional biofuels as no more talk of phasing them out completely," a source said. Another source said the outcome was positive for ethanol as less PME in Europe would open up space for greater consumption for other crop-based biofuels including ethanol.

European renewable ethanol association ePURE said it saw the agreement on a 12% target for renewables in transport, as leaving room for sustainable biofuels to replace fossil fuels in the EU energy mix.

However, ePURE added that the EU needed to do more. "It needs a renewable energy policy that looks beyond labels like 'conventional' or 'advanced' and instead to the real sustainability credentials of biofuels."

"The Parliament has sent a message that not all biofuels are created equal by focusing on getting rid of those that drive deforestation like palm oil. But its amendments still risk making it harder for EU Member States to realistically boost renewables in transport," ePURE Secretary General Emmanuel Desplechin said.

Desplechin also said that the EU should keep in place the maximum contribution of crop-based biofuels at 7% to safeguard current and future investments, while ramping up advanced biofuels.

The parliament vote will act as the basis for negotiations with the European Council, which represents the governments of EU member states.

--George Griffiths, george.griffiths@spglobal.com
--Chrysa Glystra, chrysa.glystra@spglobal.com
--Edited by Jonathan Dart, jonathan.dart@spglobal.com