In its Biofuels Barometer, EurObser'ER proposes a very interesting conclusion on the development of liquid biofuels in the European Union. It resumed below. To read the original document, you can visit the website of EurObserv'ER.
The biofuels market is not like any other market because its development is intimately associated with its total or partial exemption from the tax on petroleum products. The cost associated with the tax exemption of biofuels has led certain States to define overall financial packages corresponding only to production quotas authorised to benefit from tax exemption. Biofuels are thus found in certain cases in a closed market or in one where competition takes place between the different sectors in a context of winner/loser. This is especially the case in France and Italy, where the exemption is limited to production quotas reviewed regularly. Today, these limits are still purely political because European law allows the member States to benefit, after authorisation, from a total exemption for biofuel consumption without any production restrictions. This is the direction that Germany (until 2007) and Spain have decided to follow in choosing a total tax exemption and absence of quantity approvals, thus making it possible for the two sectors to develop very rapidly. The direct admission of ethanol in petrol is also indispensable for the development of biofuels in Europe, since ETBE production is limited by the production of isobutylene which is supplied by the oil industry.
European Commission biofuels progress report
On 10 January 2007, the Commission submitted a progress report on the use of biofuels in EU Member States to the Council and the European Parliament . In this report, the Commission again asserts that an increasing use of biofuels shall have a significant beneficial effects on the security of supply and contribute to the reduction of greenhouse gas emissions. The use of biofuels is the only solution currently available to reduce the near-total dependence on fossil fuels in the transportation sector and is one of the ways to significantly reduce greenhouse gas emissions.
The Commission further states that the share of biofuels in 2005 hardly exceeded 1% (compared with 2% according to the original target of Directive 2003/30/EC). It also concludes that the target of 5.75% biofuels by 2010 will most likely not be reached and believes (based on the policy and existing measures) that the penetration of biofuels in 2010 to 4%.
In order to enable biofuels to move from their current share of 1.76% (2006) to a share of 10% in 2020 as foreseen in the Biomass Action Plan, the following steps are necessary:
spaced out modifications of Directive 98/70/EC so as to allow the incorporation of biofuels at a level significantly higher than today;
installation, aboard new vehicles, of inexpensive adaptation modules ensuring their compatibility with higher biofuel blends;
marketing, by the oil industry, of a base petrol with a lower vapour pressure or amendment of the directive on the quality of fuels to take into account variations in the vapour pressure due to the presence of low concentrations of ethanol in gasoline;
availability of second-generation biofuels;
measures to ensure a maximum environmental performance of biofuels production, by discouraging the use of biofuels that generate more greenhouse gas emissions than they avoid or significantly affect biodiversity; a system of surveillance and reporting by the Commission on the environmental impact "from well to wheel" of the production and use of biofuels;
maintaining a balanced approach regarding international trade of biofuels, so that both domestic producers and exporting countries can invest with confidence in the opportunities created by the expansion of the European market.
It is essential, as a first step, that the EU should review the biofuels directive in order to (1) confirm its determination to reduce its dependence on oil in the transportation sector and to move towards a low carbon economy, (2) establish minimum standards for the share of biofuels in 2020 (10%) and (3) ensure that low performance biofuels are discouraged while high performance biofuels are encouraged (in terms of environmental impact and security of supply).
The Commission should submit a proposal in this regard in 2007.