February 26, 2014 / 11:17 AM / 4 years ago

RPT-EU policy gap choking off next generation green fuel-industry

(Repeats Tuesday story without change)

* New research underlines benefits of new generation biofuel

* Commission 2030 policy outline omits transport goals

* Research has questioned credentials of first-generation fuels

By Barbara Lewis

BRUSSELS, Feb 26 (Reuters) - Projects to deliver a next generation of green transport fuel, which new research says could cut EU oil consumption by millions of tonnes per year, are on hold because of an EU policy vacuum, representatives of the industry say.

Specific EU targets for low carbon transport fuel expire in 2020 and suggested EU climate and energy policy for 2030, to be discussed by EU ministers in Brussels next week, includes only an overall carbon-cutting goal for all energy.

Research, published on Wednesday, by the International Council on Clean Transportation (ICCT) and the NNFCC, a British consultancy, found the next generation of sustainable biofuels made from household, agricultural and forestry waste could create 300,000 jobs and cut EU consumption of oil by 37 million tonnes of oil annually by 2030.

The ICCT provides scientific research to guide regulators such as the European Commission, the EU executive.

One of the pioneering firms in second generation fuels is Finland’s UPM, which uses a by-product of wood pulp to make fuel. Later this year, it is scheduled to start output at the world’s first wood-based biodiesel refinery in Lappeenranta, Finland.

UPM was also granted 170 million euros ($233 million) in EU funding for a biorefinery in France, but says it cannot use it for now because of lack of policy certainty.

Another Finnish company Vapo Oy said last week it was freezing project planning for a biodiesel plant using wood waste.

It had been promised 88 million euros of EU money if the project were realised, but in a statement said “increased uncertainty concerning the legislation on renewable fuels” meant it could not go ahead.


UPM, however, says biofuels offer the greatest chance to reduce transport emissions over the coming decade and it has pressed on without any public grants with the Lappeenranta refinery, which required investment of 150 million euros.

Marko Janhunen, a vice president at UPM Biorefining, told Reuters technology improvements, plus gains from reduced oil import bills, add to the economic viability of the next generation of biofuel.

The biggest obstacle was lack of regulatory certainty.

“It is difficult to see investment decisions being taken due to the uncertain situation,” Janhunen said. “The EU’s post 2020 energy and climate policy package unfortunately did not increase the confidence in the markets.”

Wednesday’s report found some kinds of second-generation biofuel needed short-term financial help, but said “others are close to being competitive and require little more than policy certainty”.

Debate on biofuels has been heated in Brussels as research has revealed the problems with a first generation of biofuel made from food crops, such as maize and palm oil.

Critics say the first generation does more harm than good because it can inflate food prices and the extra demand for acreage leads to clearance of rain forest or peat land, meaning it can be worse in terms of emissions than conventional fuel.

Commission attempts to get the European Union to cap the amount of first generation biofuel have foundered after opposition from those that have invested in it.

Representing the first and second generation bio-ethanol industry body ePURE said in a statement the Commission’s decision not to put forward post-2020 binding targets for renewable energy use in transport ignored the “very pressing need” to decarbonise the sector, which is responsible for a quarter of EU greenhouse gas emissions.

$1 = 0.7285 euros Editing by William Hardy

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