Renewable Energy Association
Press Release
IMMEDIATE RELEASE
28th September 2012

Industry committed to technological progress, but REA [1] warns speed and scale of proposals likely to destroy, not build on, sector innovations

The UK biofuels industry stands to be devastated by draft proposals being developed by the European Commission [2]. If implemented, the proposals would shift the goalposts for the industry so dramatically that millions of pounds of investment could be wasted, including in the most advanced UK businesses. All significant investment in the sector would likely cease and dependency on oil will increase. Nearly £1 billion has been invested in the UK in the production of sustainable biofuels, but our industry remains small by EU standards.

The biofuels sector is the only fuels sector where mandatory sustainability standards are legally enforceable. Targets set under the Renewable Energy Directive (RED) have ensured that Government and industry can robustly differentiate between sustainable and unsustainable biofuels. The UK industry has been particularly innovative in meeting these requirements, achieving average greenhouse gas (GHG) savings from UK-produced biofuels of 69% [3] while increasing co-production of animal feeds [4]. The Government’s ‘Bioenergy Strategy’ recognises the role of biofuels in meeting carbon targets over the next 20 years [5].

Clare Wenner, Head of Renewable Transport at the REA, said:

“The UK industry is particularly vulnerable to these proposals because it is small and because investment has been hindered by the lack of clear domestic policy. The great irony is we have been repeatedly asking for a clear pathway to 2020, not least to secure investment in technological advancement. Nobody listened. Now Europe is planning a quantum leap which threatens to wipe us out. It is a double whammy and an absolutely galling prospect for companies that have invested millions in good faith.”

Four elements of the EC proposals are highly problematic:

• The proposal to limit crop biofuels to no more than half the 10% target for renewable transport with immediate effect. Crop-based biofuels are an essential start in developing the market for sustainable alternatives to fossil fuels. Once that market is established then investment in the more complex and costly biofuels made from non-crop feedstocks will come on-stream. It is commercially illogical to expect investors to embrace the more expensive, technologically complex biofuels, and for consumers to pay for these, before a functioning non-fossil fuel liquid fuel market is established. This proposal will entirely derail a workable forward development trajectory for the UK industry.

• The removal of all subsidies for crop-based biofuels post-2020. Plants have been constructed, or are under development, based on the expectation of a post-2020 framework, and there is a clear need for market transition to second generation biofuels which will be based on the existing the biorefineries infrastructure. The shifting of the goalposts will derail current and committed investment estimated at hundreds of millions of pounds in the UK alone and provide no longevity for future investments.

• The proposed retrospective introduction of a 60% GHG saving requirement for all new biofuels plant in operation after July 2012. While the REA supports the increased GHG savings, its retrospective nature will shift the goalposts for plant under construction, potentially wasting major investments made so far.

• The proposed ILUC factors in the Fuel Quality Directive (FQD). These will be particularly damaging to crop based biodiesel which is dominant in Europe, and risks undermining progress towards the 6% emissions savings target that the FQD requires EU fuel suppliers to achieve by 2020.

The REA believes that the proposals would damage the UK’s low carbon ambitions, leave the transport sector hooked on fossil fuels, and pull the rug from under our nascent sustainable biofuels industry. The framework for biofuels is highly complex, as are many of the issues around it, and the industry is frequently frustrated by gross over-simplifications in the biofuels debate.

Clare Wenner added:

“The UK biofuels industry has shown a tremendous willingness to achieve and exceed environmental and sustainability standards. Yet these sustainable biofuels, which are making a real contribution to reducing carbon emissions here and now, are not getting the recognition they need and deserve because they have been unfairly tarnished by the controversy over unsustainable biofuels. Investment is already suffering because of a half-hearted policy framework, but it will dry up altogether if these proposals go through.

“These proposals stand to cost us not just jobs and investment, but also our carbon and renewable energy targets. Fossil fuel consumption will increase, and the opportunity to establish a green industry which offers real world climate solutions today, and even greater solutions in future, will be lost.

“We urge the Government to reject the proposals in their current form because they are wholly insensitive to investment cycles and to the weak position the UK industry is already in due to the lack of any clear pathway to 2020.”

ENDS

For further information or to request an interview, please contact:

REA Press Office: +44 (0)2079 810 856, or:

Name: Clare Wenner
Title: Head of Renewable Transport, REA
Tel: +44 (0)7802 487 679

Notes to Editors

1. The Renewable Energy Association represents renewable energy producers and promotes the use of all forms of renewable energy in the UK across power, heat, transport and renewable gas. It is the largest renewable trade association in the UK, with over 900 members, ranging from major multinationals to sole traders. For more information, see: www.r-e-a.net

2. For more information, see the following articles:

Reuters: ‘Exclusive: EU to limit use of crop-based biofuels - draft law’, 10th September 2012. Available at: http://uk.reuters.com/article/2012/09/10/us-eu-biofuels-idUKBRE8890SJ20120910

Reuters: ‘EU Commission to cap food-based biofuels in major shift’, 17th September 2012. Available at: http://uk.reuters.com/article/2012/09/17/us-eu-biofuel-idUKBRE88G0IL20120917

3. See ‘Verified RTFO biofuel statistics: obligation year 2010/11’, 29th March 2012, p. 27, Table 7. Available at: http://assets.dft.gov.uk/statistics/releases/verified-rtfo-biofuel-statistics-2010-11/year-3-verified-report.pdf

4. Read more about the uses of co-products from biofuel production in the animal feed industry in the winter 2012 issue of REA News: ‘Food and Fuel 2: Biofuels’ by Dr Michael Marsden, p. 23, available at: http://issuu.com/newnorth/docs/rea_news_winter_2012_lr/23?mode=window

5. DECC/Defra/DfT: ‘The Bioenergy Strategy,’ 26th April 2012. Available at:http://www.decc.gov.uk/en/content/cms/meeting_energy/bioenergy/strategy/strategy.aspx

The Bioenergy Strategy states (p. 51) that:

“Potentially for as long as we use fossil fuels, sustainable first generation biofuels … offer a cost-effective contribution to reduced emissions from transport in line with our carbon reduction objectives.”