Decisionmaking on EU biofuels regulatory framework is heating up

The debate in the European Union on crucial legislation for the biofuel industry is entering a decisive phase. A number of sensitive issues still need to be resolved. If everything goes according to planning Europe should have a new legal framework for biofuels by March 2009 at the latest. In this commentary we tackle the most controversial issues followed by an assessment of what could be the final outcome.

Introduction
The outcome of 2 bills under discussion, revision of fuel quality standards and a framework for the promotion and use of renewable energy, will determine the future market for biofuels in Europe. On some major issues the debate is still in full swing and the outcome is not easy to predict.

The 27 EU Member States (Council of Ministers) together with the 783 Members of the European Parliament need to agree on a common text a.k.a. Directive. As always there are many details where we see within and between the 2 institutions differences of opinion. However, putting aside all the nitty-gritty there are 2 major items left which are the most political sensitive and difficult ones: sustainability criteria for biofuels and the binding nature as well as the level of the transport target (10% as proposed by the European Commission).

Sustainability
Introducing environmental and social-economic sustainability criteria in both the draft Fuel Quality Directive (FQD) and the draft Renewable Energy Sources Directive (RES-D) proofs to be more difficult than was expected. As both bills embrace biofuels in their scope Parliament, Council and European Commission agreed in March this year that there should be only one single set of criteria in both bills. An ad-hoc working group in the Council (with representatives of the Commission attending) has been set up to discuss the sustainability criteria and to agree on a common set of core criteria which should become part of both directives. A number of details could be settled rather quickly whereas some issues, which are politically highly sensitive, are still not solved. Those issues are the level of GHG saving, the inclusion of social criteria and the calculation of indirect land use change effects. These issues are also rather controversial in the European Parliament.

With regards to the GHG saving requirement some WG-delegations favour higher savings than the 35% proposed by the Commission. Others, however, still think that this might be too high. Agreement could be reached on the so-called 2-step-approach, which says that the level of GHG emission savings needs to increase step-wise. However, the dates and levels of the second step are not yet determined as views vary broadly. The initial 35% threshold starting with the entry into force of the Directive however seems to be accepted in the WG and a 2nd step of 50% as of 2015 seems to be likely. However, Parliament might wish to already begin with a higher 1st step.