CIAA preliminary comment on the Proposal for a Directive on the promotion of the use of energy from renewable sources

Date

02 Apr 2008

Sections

Health & Consumers

Press release

While the proposed directive on the promotion of the use of energy from renewable sources introduced a number of improvements compared to earlier draft (in particular as regards some flexibility provided to Member States to implement the biofuels target in the run-up to 2020 and the introduction of a monitoring system), these elements are far from sufficient to address core food and drink industry concerns as regards the potential impact the policy will have on the availability of raw materials for food and feed production. It is critical therefore that Council and Parliament respond by introducing the following aspects into the proposal during the co-decision procedure:

* The 2007 Spring European Council decision must be followed: the 10% biofuel targets must be subject to second generation being commercially available and sustainability schemes being effective.
* A full impact assessment should be commissioned to consider: the availability of second-generation biofuels; worldwide developments in biofuels to ensure the availability of raw materials imports; and finally, the impact on other sectors directly or indirectly affected by the policy.
* The introduction of a formal review clause linked to the availability of second- generation biofuels should include a trigger/threshold for action for the case that it can be anticipated that second-generation biofuels are not commercially available and the sustainability scheme is not effective in practice by the 2020 deadline.
* A mechanism to prevent crisis situations in agricultural markets and notably food markets should be included in the draft directive to ensure rapid reaction, if necessary.

The CIAA assessment of the proposal for a directive raises a number of specific comments.
A full impact assessment and coherence are key in this process

The proposed Directive on the promotion of the use of energy from renewable sources is a major policy proposal laying down the framework for the development of biofuels over the next decade and beyond.

It is therefore particularly unfortunate that this draft piece of legislation has not been based on an overall assessment of the different policy options available to reach the declared objectives i.e. the reduction of GHG emissions and the promotion of secure energy supplies. Instead, the impact assessment released by the Commission, together with the proposed directive, mainly addresses the optimal, legal way to ensure that the 10% target is achieved. CIAA also regrets that the Commission does not ensure transparency on studies carried out on its behalf, such as the study on the impact of the biofuel development on the food and drink sector(1).

In elaborating this new policy, it is crucial to take into account the necessary coherence between the different policy objectives, CAP in particular. Measures developed under this policy should prevent major market imbalances and disruptions that would prove damaging for the EU food and drink industry and for the European consumers alike. Ensuring availability of agricultural raw materials of quality at a competitive price for the food and feed sector should be part of the design of the renewable energy policy.

=> CIAA requests, as a minimum requirement, to up-date and enlarge the impact assessments, published by the Commission in 2007, taking into account the existing situation and, proposed measures and studies carried out in the meantime, including by its own services. CIAA considers key to assess the availability of second-generation biofuels in the next 10 years, worldwide developments which will have an impact on the possibility of importing agricultural raw materials or biofuels and the impact on sectors, such as food and drink, currently using raw materials that will be diverted into biofuels production.

The fuel quality directive appears to include a mandatory greenhouse gas reduction target of 10% in fuel lifecycle emissions per unit of fuel energy between 2010 and 2020. CIAA understands that in order to meet this other target, biofuels up-take would have to grow by more than 10% of transport fuels, ambitioned by the biofuels directive. This will largely be dependent on the types of biofuels used and their varying contributions to reducing greenhouse gases. Considering the difficulties a 10% biofuels target may cause, this separate objective would add further burden on sectors concerned.

=> CIAA calls on EU legislators to ensure consistency throughout EU legislation related to biofuels. The objectives of two draft directives on fuel quality and on renewable energy must be made compatible in terms of targets and sustainability criteria.

Targets subject to sustainability scheme and second-generation becoming commercially available

CIAA supports the caveats in the 2007 Spring Summit conclusions which state that the 10% binding minimum target for bio-fuels in 2020 proposed by the EU Commission, must be introduced in a cost efficient way and be subject to production being sustainable and second generation bio-fuels becoming commercially available. These conditions are of utmost importance to sectors, like the food industry, dependent on availability of raw materials. The Commission has not respected the second-generation biofuels condition on the grounds that biofuels investors need certainty. This demonstrates a lack of balance and consideration for related sectors, such as the food and drink industry sector. Its investments are at least as valuable and in need of certainty.

=> The 2007 Spring European Council decision must be followed: the 10% biofuel targets must be subject to second-generation becoming commercially available and to production being sustainable.

The CIAA assessment of the availability of raw materials by 2020(2) has led to the conclusion that important variations are possible in the anticipation of the key factors. Without the viability of second-generation biofuels, the supply situation on EU markets may be tighter than anticipated by the Commission, even more so for the biodiesel balance. Supplies will have to rely on imports from world markets, which will however also face strong pressure and demand from food and non-food sectors.

=> CIAA calls for the incorporation of a formal review clause in the legislation for an assessment with regard to the availability of second-generation biofuels in 2015 at the latest, to prevent major market imbalances and disruptions of agricultural raw materials. This is the only way to implement the 2007 EU Spring Summit decisions. If it appears that second-generation biofuels are not becoming available, the target should be reviewed.

The proposed ‘force majeure’ provision applies to the overall renewable energy target and would not provide any appropriate response to biofuel supply issues only.

CIAA welcomes the absence of binding intermediate targets for bio-fuels in the run-up to 2020. This should leave Member States with some flexibility in the period of implementation to adapt to local situations.

Beyond monitoring, CIAA request for crisis prevention mechanisms

CIAA notes that efforts have been made in trying to address some food and drink industry concerns as regards the availability of raw materials for the production of food. According to the proposal, the Commission will have to monitor the impact of bio-fuel development on commodity prices changes and on food security and to propose corrective actions.

The scope of the corrective action, that the Commission may have to take on the basis of a report to be prepared every two years, has to be further specified. The proposal needs to state clearly that the corrective actions should not be limited to technical issues but designed to amend more essential parts of the directive, if necessary. CIAA considers that the Commission’s reporting commitments and possible corrective actions will be totally insufficient to address crisis situation rapidly.

=> CIAA calls for mechanisms to prevent crisis situations on agricultural markets, such as serious market imbalances and supply shortage in agricultural raw materials. The Commission should work on concrete criteria to trigger such temporary action (TRQ opening, temporary suspension of tariffs, target opt-out clauses). In particular, the directive should offer Member States a mechanism for the temporary suspension of national biofuels targets to prevent crisis situations.

Sustainability system: strike right balance between objectives and enforceability/simplicity

CIAA shares the Commission views regarding the importance of an environmental sustainability system. Looking at GHG emissions and at land use, from both a bio-diversity and carbon stock value, they seem to be appropriate criteria to judge the environmental sustainability of biofuels, beyond cross-compliance. Further debate would help clarifying whether other important factors, like water supplies and wider sustainability implications that impact global food supplies – including economic and social impacts – could also be taken into account.

CIAA notes that a number of definitions are still pending and that the Commission has missed out reference or default values for the green-house gas savings for some products, which will require further investigation, i.e. soybean oil.

=> It is essential that any approach strikes a balance between the objective of reducing GHG emissions, protecting the environment and the need for workable solutions that are easily measurable, enforceable and verifiable. The criteria must be effective in achieving their objectives.

(1) Study Commissioned by DG Enterprise to the University of Bologna: “the Impact of the increased use of biofuels on the competitiveness of biofuels”

(2) TCO/ 230/07 CIAA assessment: the impact of the biofuels development in the EU on availability of key agricultural products by 2020

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