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In November 2001 the European Commission published a communication and two directive proposals designed to promote the usage of biofuels and other alternative fuels in road transport. The directives proposed would require an increasing and mandatory proportion of all diesel and gasoline sold in Europe to be biofuel, whilst allowing Member States to apply differentiated tax rates in order to foster the development of such biofuels. The proposals are currently under consideration by the Council and the European Parliament. These proposals are part of a wider plan to substitute 20% of traditional fuels by alternative fuels in the road transport sector by 2020.
EFOA, the European Fuel Oxygenates Association, has been established in 1985 as a sector group of Cefic, the European Chemical Industry Council. It represents the European producers of chemical ethers, specifically MTBE, TAME and ETBE, the most widely used fuel oxygenates.
Fuel oxygenates are oxygen-rich compounds used as a component of gasoline. They act as octane enhancers, with the additional benefit of making gasoline burn more completely, thereby reducing exhaust emissions. Oxygenates can be blended into gasoline in two forms: alcohols (such as methanol or ethanol) or ethers. The technical characteristics of ethers such as MTBE, ETBE and TAME are very similar. Ethers are inherently superior to alcohols which, when added to gasoline by themselves, tend to be very volatile and water soluble, creating problems in the fuel distribution system and vehicle engine. For this reason ethers, and MTBE in particular, have become the world's fuel oxygenates of choice for the refining industry. MTBE and ETBE are proven fuel components that enable the refining industry to meet the technical challenges of ever stricter fuel specifications and deliver high octane, clean fuels to the market.
In Europe, the demand for fuel oxygenates is currently stable at approximately 3.5 million tonnes per year, the vast majority of which (3 million tonnes) is met by MTBE. European ETBE production started in the early 90?s and currently reaches 500,000 tonnes, with units operating in France, Spain and Poland.
Today, large production facilities of bioethanol make possible, through fiscal incentives, the production of ETBE (ethyl tertiary butyl ether), which is a biofuel and is included in the legislation proposed. Longer term research is underway to develop production of biomethanol from biomass. MTBE produced from such biomethanol would also qualify as a biofuel. Furthermore, methanol is currently produced from natural gas, which is itself seen as an alternative fuel alongside biofuel.
EFOA is therefore particularly interested in the development of the biofuels directives and the discussion on alternative fuels. It has been recognised as a stakeholder by the European Commission and is a member of the European Commission Consultative Group on Biofuels for Transport.
The objectives of the European Commission action plan, including the draft directives, are stated to be:
Help reduce the European Union?s dependency on external supply for oil
Contribute to the achievement of the EU greenhouse gases emission reductions objectives as agreed in Kyoto
Meet the objective of substituting 20% of traditional fuels by alternative fuels in the road transport sector by 2020
The draft directive on the promotion of biofuels for transport states that all Member States must ensure by end of 2005 a 2% minimum proportion of biofuels of all gasoline and diesel fuels sold on their market, and that this share must be gradually increased to 5.75% in 2010. The second draft directive on excise duties would give Member States the possibility to achieve this objective by applying reduced excise duties to biofuels.
The proposed directives, as they currently stand, are likely to lead to different approaches being taken by the various Member States.
Whereas the European fuel and fuel components market has been successfully built by industry to become an efficient, highly integrated pan-European market, EFOA is concerned that the draft directives, especially the compulsory blending of biofuels, could create market distortions and inefficiencies.
EFOA is opposed to establishing mandatory volumes of biofuels. Any European objective to promote biofuels should be based on indicative targets instead. It should also rely on sound economic principles. Today, biofuels require fiscal incentives to become economically viable at a cost that authorities feel is justified. However, Europe's aim should be to reduce the overall cost of bringing biofuels to the market. This is best achieved, not by creating a compulsory level of biofuels, but by allowing the most cost efficient biofuels to access the market unimpeded.
The task of defining and implementing the ambitious goals set in the European Commission action plan is clearly beyond the scope of expertise of an organisation such as EFOA and must rest in the hands of the European institutions ? Council, Commission, Parliament. In its field of competence however, industry has a role to play and for its part EFOA is ready to:
Co-operate with the relevant authorities at European or national level;
Study the impact that the proposed directives would have on the supply and demand of essential components such as fuel oxygenates;
And evaluate the possibility to adapt its production capacity to meet the challenges of the proposed European action plan on biofuels and alternative fuels.
and generally contribute to an open and continuous dialogue with the European authorities towards the achievement of a workable European biofuels policy.
For further information, contact :
Bruno H, Director General, EFOA, tel: +33 1 53 53 14 93 - Bruno.Hery@efoa.org
EFOA secretariat: Graeme Wallace, Cefic, tel: +32 2 676 74 10 - gwa@cefic.be |
