EU is ‘driving without a map’ on biofuels policy, auditors find

The EU’s complex policy approach to biofuels lacks a long-term outlook and risks undermining the bloc’s transport decarbonisation targets, an analysis by the European Court of Auditors (ECA) has found.

The ECA, an independent watchdog, examined the EU’s support for biofuels to cut transport emissions, and found that the ever-shifting web of policies have led to an unclear road ahead for the fuels.

In the early 2000s, the European Commission considered crop-based biofuels as a key means to achieve clean mobility and pushed forward legislation to ensure they reach 10% of energy use in road transport by 2020. 

However, the policy was reversed years later following concerns that biofuels could contribute to deforestation abroad, a concept known as indirect land use change. In 2015, EU legislators decided to place a 7% limit on how much crop-based biofuel can be used in the road transport sector.

Since then, EU policymakers have bet largely on electrification to decarbonise passenger cars and attempted to set ground rules that mitigate potential environmental harm whilst harnessing biofuels to decarbonise the transport sector.

But according to auditors, in doing so policymakers have created a “foggy future” for biofuels in the EU.

“The EU framework for biofuels is complex and has changed frequently over the last 20 years,” Nikolaos Milionis, the ECA member who led the audit, told journalists.

“Biofuels are meant to contribute to the EU’s climate-neutrality objectives and enhance its energy sovereignty. With its current biofuels policy, however, the EU is driving without a map and runs the risk of not reaching its destination,” he said.

The changeability of the EU’s biofuels policies has reportedly affected investor confidence, with the report finding that “the lack of policy predictability may increase risks for private investments and reduce the attractiveness of the sector”.

As biofuels are generally more expensive to produce than fossil fuels, policies are used to boost their attractiveness, such as allowing advanced biofuels, made from residues and wastes, to count twice towards transport renewable energy targets.

But the use of multipliers for advanced biofuels was criticised by auditors as obscuring the true progress made in cutting emissions.

“Relevant EU legislation allows certain types of biofuels to be double counted for EU targets, but the Commission does not transparently disclose the impact of multipliers on the share of renewable energy in transport,” states the report.

Sustainability and fraud

Despite the EU’s renewable energy directive setting out sustainability criteria for biofuels, lingering concerns remain over their level of carbon savings, according to auditors. 

The narrative that biofuels will increase Europe’s energy independence was also questioned, as feedstock imports have increased in line with rising demand for biomass. The report highlights the example of Finland, where 90% of biofuels consumed used non-EU biomass.

For biofuels made from animal lipids and used-cooking oil, it is expected that much of the feedstock supply will come from abroad, particularly from China, the UK, Malaysia and Indonesia.

But instances of fraud, where restricted virgin palm oil was labelled as used-cooking oil – a feedstock championed by the EU for biofuel production – has also raised questions over the integrity of waste biofuels.

In August, the European Commission launched an investigation into such biofuels from China and the UK following suspicions that cheaper feedstocks were being passed off as second-generation biofuels.

Scalability

Meanwhile, the EU recently adopted two pieces of legislation to promote advanced biofuels in aviation and maritime transport, where electrification is not a viable option for the moment.

ReFuelEU Aviation mandates that a progressively increasing percentage of green jet fuel is blended with fossil kerosene to decarbonise the aviation sector, while FuelEU Maritime sets carbon-reduction targets for the fuels used in shipping.

However, Europe’s ability to produce second-generation biofuels is not expected to be able to meet demand in the short term – a reality partially attributable to the unstable policy landscape.

“The EU production capacity for sustainable aviation fuel is currently very limited, and the EU lacks a roadmap on how to speed up production,” said Milionis, unfavourably comparing the EU with the United States.

Current production capacity for advanced biofuels in the EU reaches only around one tenth of the quantities needed for ReFuelEU Aviation.

“The Commission has funded research into advanced biofuels and relevant demonstration projects, but deployment of these fuels has been slower than expected,” states the report, noting that the EU allocated some €430 million to research and deploy advanced biofuels.

The report calls on the European Commission to “increase biofuels policy stability” by preparing a pathway for the sector beyond 2030. The EU executive should also better categorise feedstocks to provide clarity to member states and stability to industry.

Finally, auditors recommend that the Commission improve the level of data it collects around biofuels, including on the origin of feedstocks (which is currently missing), as well as increasing transparency around the effect of multipliers on the renewable energy share in transport.

[Edited by Frédéric Simon]

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