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Parliament lawmakers raise e-fuels targets in bid to boost market

Lawmakers in the European Parliament’s industry committee voted Wednesday (13 July) to more than double the 2030 target for fuels produced from green electricity in the transport sector, a move aimed at bolstering the fledgling electro-fuels market

By: EBR - Posted: Friday, July 15, 2022

The binding mandates put forward by Brussels are intended to stimulate investment in the production of e-fuels.
The binding mandates put forward by Brussels are intended to stimulate investment in the production of e-fuels.

by Sean Goulding Carroll

Lawmakers in the European Parliament’s industry committee voted Wednesday (13 July) to more than double the 2030 target for fuels produced from green electricity in the transport sector, a move aimed at bolstering the fledgling electro-fuels market.

Industry committee MEPs want the 2.6% target tabled by the European Commission to be reached by 2028, with the minimum share increasing to 5.7% of transport energy by 2030.

Lawmakers also introduced a 1.2% synthetic fuel target for the maritime sector by 2030 – a measure absent from the Commission’s proposal.

The higher quotas for so-called “Renewable Fuels of Non-Biological Origin” (RFNBOs) were introduced in the EU’s Renewable Energy Directive, which is currently being revised to align with the bloc’s higher climate goals for 2030.

Quotas for RFNBOs are designed to “strengthen the market” for electrofuels – such as hydrogen, ammonia and synthetic hydrocarbons like e-kerosene – said German conservative lawmaker Markus Pieper who is the Parliament’s lead MEP on the revised directive.

Renewable hydrogen and carbon-neutral synthetic fuels are seen as key to decarbonising the hard-to-abate aviation and maritime sectors. However, they are currently produced in paltry quantities, making them next to impossible to purchase commercially.

The binding mandates put forward by Brussels are intended to stimulate investment in their production, thereby increasing supply and dropping prices.

The industry committee’s position on the updated renewable energy directive was adopted with 54 votes in favour, 14 against, and 6 abstentions.

Additional provisions agreed by lawmakers include increasing greenhouse gas emissions reduction targets for the transport sector to 16% (raised from 13% in the Commission’s original proposal), and a goal of 45% renewable energy by 2030 (up from the 40% proposal tabled last year).

The updated Renewable Energy Directive will be put to a vote by the full European Parliament during the 12-15 September plenary session in Strasbourg, after which it will form the Parliament’s negotiating stance in discussions with member states to finalise the law, possibly before the end of the year.

‘Not completely satisfied’

However, not all provisions in the revised directive were perceived favourably across the Parliament’s political spectrum.

Nicolas Gonzalez Casares, a Spanish MEP with the Socialists and Democrats (S&D) group, expressed reservations on the “principle of additionality” for producing e-fuels – the concept that new sources of renewable energy must be added to prevent hydrogen production monopolising green electricity capacity.

Centre-right lawmakers from Pieper’s European People’s Party (EPP) sought to simplify the process for hydrogen to be deemed “green”, making it possible to purchase electricity from the grid if the primary renewable energy source – such as solar or wind – is temporarily unavailable.

According to Pieper, the EPP’s aim is that “when there is no wind, purchasing from the grid is possible” for electro-fuel production, without losing the “green” designation.

But Green and socialist lawmakers objected against this because electricity taken from the grid can come from any source of energy, including fossil fuels like coal and gas, as well as nuclear power, which cannot be considered “renewable”.

“We are not completely satisfied with the principle of additionality for producing RFNBOs, because this proposal is too lax and may pose a problem for the credibility of renewable hydrogen production,” Casares told EURACTIV in emailed comments.

The Spanish lawmaker put forward an alternative compromise which hues more closely to the text contained in the current directive.

Industry reaction

The higher targets for electro-fuels were welcomed by the eFuel alliance, a Berlin-based trade association representing green fuel suppliers.

The Parliament committee vote is “an important signal to the fuel industry to prepare its business model for the sustainable energy transition” which at the same time “sets clear incentives for investments in renewable fuels” said Ralf Diemer, managing director of the eFuel Alliance.

Hydrogen Europe, an organisation representing companies in the Hydrogen sector, said the targets set by the committee are “the strong signals investors and project developers were waiting for”.

While the level of hydrogen and synthetic fuels in the transport sector energy mix was raised, the industry committee opted to maintain the targets for advanced biofuels – which are made from agricultural and forestry waste – proposed by the European Commission.

However, if new items are added to the list of EU-approved feedstocks for advanced biofuels (set out in Annex 9 of the directive), targets are to be increased proportionally following an impact assessment by the Commission.

The Advanced Biofuels Coalition LSB expressed disappointment with the Parliament committee vote, telling EURACTIV that some of the “very good elements” under discussion were watered down in the final proposal.

“Some of the original ideas circulated would have created strong investment incentives for the advanced biofuels sector. In the end, however, the compromise reached is very modest with regard to what is needed to be done to fast-track these investments,” said Marko Janhunen, chair of the Advanced Biofuels Coalition and director of public affairs at UPM.

“We consider that the strong message from the Commission’s REPowerEU proposal was not sufficiently heard,” he added, referring to the Commission’s proposal to end the bloc’s reliance on Russian energy.

Electro-fuels and road transport

While it is uncontroversial to suggest that e-fuels will be deployed to cut emissions in aviation and shipping, opinions differ as to whether electro-fuels should be used to decarbonise the road transport sector.

The topic came to the fore following EU proposals to prohibit the sale of new cars with internal combustion engines as of 2035.

Both the European Parliament and EU member states have agreed to the ban in principle, though EU countries have stipulated that the European Commission must carry out a review by 2026 examining the role e-fuels can play in decarbonising cars and vans.

Advocates, including right-leaning politicians, argue that e-fuels can prolong the life of internal combustion engine vehicles, which are a cheaper option for low-income consumers than EVs. E-fuels are also needed to decarbonise the existing vehicle stock, they claim.

Those against the deployment of e-fuels for cars and vans, including environmental campaigners and green lawmakers, point out that directly electrifying vehicles is more efficient than using scarce renewable electricity to create liquid fuels.

*first published in: www.euractiv.com

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