Biofuels industry pushes for greater use in Europe to reduce reliance on Russia

Source: By Samyak Pandey, S&P Global • Posted: Monday, May 2, 2022

Industry leaders strongly stressed increased biofuels consumption through blending mandates and other measures in a bid to make Europe energy independent and reduce reliance on Russia at S&P Global Commodity Insights’ European biofuels conference April 28.

“Biofuels policy in the EU needs to be consistent and coherent,” AndrĂ© Paula Santos, public affairs director for the European Biodiesel Board, said at the conference. “We need to rely more on biofuels to be energy independent and reduce our reliance as the Russia-Ukraine war has shown. If Fit for 55 is implemented, we would need eight times more low carbon liquid fuel by 2030.”

The board is an association of companies producing biodiesel in EU.

The EU has been heavily relying on Russia for its energy needs. Russia recently suspended natural gas deliveries to Bulgaria and Poland, which could push the EU to move to other forms of energy as replacement fuels for Russian gas.

At the biofuels conference in Geneva, which could also be attended virtually, other leading industry players also called for expanding biofuels consumption in the EU through additional measures.

“Ambitious goals are most welcome, such as 30% reduction in GHG emissions,” said Annabel York, regulatory and strategy senior manager at BP. “With higher mandates, the demand for biofuel and its corresponding supply will also increase. This can also be filled with usage of intermediary crops that are both sustainable on land usage as well farmer income.”

Consumption of biofuels in the EU among three key sectors — road, marine and aviation — is set to surge further with major industry players advocating for long-term mandates and more ambitious targets in a bid to secure investment in infrastructure as well as energy independence.

There was a strong push for flexibility for countries in the EU for moving biofuels blending mandates beyond B10 or B15.

“Targets such as Fit for 55 are critical for businesses to invest,” said Sinead Lynch, vice president of low carbon fuels at Shell. “Achieving such targets are both a challenge as well an opportunity.”

Fit for 55, which Europe kicked off, targets cutting greenhouse gas emissions by 55% from current levels by 2030.

No to palm oil

There was a clear understanding and agreement among speakers and experts at the conference over phasing out palm oil in biofuels by 2030 in the EU. The experts urged no retraction of measures despite a raging food vs. fuel debate that is reignited amid ongoing food inflation across the world.

“We need to look at what can be implement now and in the future, such as Fit for 55 and RED III targets, rather than looking back on what we are phasing out,” said AndrĂ© Paula Santos, public affairs director, European Biodiesel Board. “Countries need to have flexibility how they want to fulfill the targets. They will rather reduce or not meet targets rather than go back on phasing out palm oil usage. Finland has reduced the targets for two years and will compensate for it in coming years.

“It’s not a food vs. fuel debate, but it’s about prices. However, biodiesel only comprises of 6-8 cents in 2 Euro/liter fuel prices.”

Experts in the conference suggested of allowing imports of genetically modified corn into the EU from the US to cover the shortfall of feedstocks for biofuels, while at the same time, controlling prices, rather than turning back the phaseout of palm oil.

European ethanol

“Our ethanol produced for biofuels comes from Europe, doesn’t lead to deforestation, unlike palm,” said Simona Vackeova, director of government affairs at EPure, an association of European renewable ethanol producers. “Also, for every 1 [mt] of ethanol produced, we also produce 1 [mt] of animal feed too. So, it’s not a food vs. fuel, but rather food, feed and fuel debate.’

Neste’s production of biofuels globally is likely to surge in the upcoming years, aided by higher consumption of waste and residue fats and oils, which is expected to grow to 40 million mt/year by 2030, Anselm Eisentraut, head of market intelligence strategy at Neste, said in a presentation at the conference.

Vegetable oils produced from advanced agriculture concepts and degraded lands have substantial growth potential beyond 40 million mt to 150 million mt, according to Eisentraut.