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03/19/2014
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European Heads of government set to discuss 2030 Climate and Energy Package

Later this week, European heads of government will meet in Brussels to discuss, among other issues, the European Union’s 2030 Climate and Energy Package which – as I mentioned in my previous blog – effectively called for an end to the Fuel Quality Directive after 2020 and for a phasing out of public support for first generation biofuels in transport.

European environment and energy ministers, earlier this month, had their first debate on the Package, which essentially represents the EU’s climate abatement plan to 2030 after the current one technically expires in 2020.

In general, various environment and energy ministers welcomed the European Commission’s proposal and agreed that regulatory predictability and strong signals are needed for businesses and investment as well as increased efforts in infrastructures and interconnections. However, as usual the devil is in the detail and a divide amongst member states was already clear on the transport issue.

Despite opposition from various Member States, a number of countries (Belgium, Finland, Italy, Luxembourg, Netherlands and Slovenia) mentioned the importance of having a dedicated renewables-in-transport target after 2020. In addition, Belgium, the Netherlands and the UK specifically argued that the Fuel Quality Directive should continue beyond 2020 and called on the Commission (which initiates EU policy proposals) to put forward a legislative proposal.

The Commission had hoped that member states could agree on targets, such as a new carbon reduction goal, ahead of the heads of government meeting Thursday and Friday.

The biggest obstacle to such an agreement would be that the more coal-dependent EU member states from Central and Eastern European region (CEE) are likely to “hold out” on agreeing to a 40% carbon reduction target for as long as possible in order to “get a better deal” on how compliance targets will be divided up among EU member states.

So, while the large member states such as the UK, France and Germany are keen for a clear decision at the meeting at the end of this week, member states from the CEE region are unlikely to have any problem with everyone else having to wait for a deal until say 2015. It remains to be seen if the heads of governments will build on the comments in favour of a renewables-in-transport target made by some member states earlier in the month and whether this will be actually used as a bargaining tool later on during negotiations.

This uncertainty raises our doubts on a number of issues.

First of all, without the necessary pressure from the Commission to reduce transport emissions, and especially without a target for renewables-in-transport, how can the Commission expects significant progress in the decarbonisation of transport which still remains one of the most polluting sectors in Europe?

Secondly, should, as expected, member states not agree on a position this week, the next possible Council meeting of heads of government would be in June. However, the June Council will be dedicated to, among other issues, immigration; meaning that any agreement on 2030 targets would probably be pushed into autumn.

Such delay makes the future of the biofuel policy in Europe even more uncertain. The 2030 Package, as currently written by the Commission, got rid of transport targets and the FQD. If member states do not reintroduce those targets during coming negotiations, what interests would the Commission and the Council (where Member States are represented at the EU level) have to push for discussing the unresolved issue of Indirect Land Use Change (ILUC) in biofuels?

Greece, which currently holds the EU’s 6-month rotating Presidency, may schedule a meeting of member states which periodically meet on ILUC by the end of March if the Greeks feel that member states are willing to adjust their positions on the ILUC issue. However, as of yet, nothing has been scheduled.

A number of conditions need to materialise for any final agreement on the ILUC issue to have a positive long term impact. Member states should ideally manage to agree on a more nuanced common position on ILUC, which takes into account the environmental performance of biofuels, and a political statement should come from the European Council in favour of a renewables-in-transport target which at that point would have more chances to be introduced in a future Commission’s proposal. Otherwise, if FQD and RED end after 2020, any efforts to make industry account for indirect emissions from their biofuel production (so-called ILUC factors) would be in vain. Europe would once again miss the opportunity to promote sustainable biofuels such as Brazilian Sugarcane Ethanol.

Géraldine Kutas

A seasoned professional specializing in international trade policy, Géraldine Kutas leverages over a decade of experience to strengthen UNICA’s activities across the European Union, the United States and Asia. She has a deep expertise in biofuels and agricultural policies, coupled with extensive exposure to multilateral and regional trade negotiations in agriculture. Ms. Kutas is the author and co-author of several international publications on these topics. Before joining UNICA, she was a researcher and a professor at the Groupe d’Economie Mondiale at Sciences Po(GEM), Paris, and coordinator of the European Biofuels Policy research programme (EBP). Ms. Kutas has also worked as a consultant at the Inter-American Bank of Development and for agro-business firms. Ms. Kutas has a Ph.D. in International Economics from the Institut d’Etudes Poliques de Paris and a Master degree in Latin American Studies from Georgetown University, Washington DC.