European country approaches to introduce biofuels

1
European country approaches to introduce
biofuels Luc Pelkmans, VITO Biomass Bioenergy
2008 Conference Tallinn, 27 29 February 2008
2
The PREMIA project

• Towards an effective market introduction of
  BIOFUELS HYDROGEN
• Specific Support Action in 6th Framework
  Programme of the European Commission
• Assess effectiveness of measures to support AMF
• EU-25
• Based on international experiences
• In relation to market maturity of AMF
• short term biofuels
• mid/long term hydrogen
• In national context
• June 2004 May 2007

3
Policy measures
4
Market maturity vs policy support
5
Market phases
Pre-market Pre-market Pre-market Market intro Limited market Market mature
RD Proto- types First demos Market intro Limited market Market mature
Liquid biofuels
1st gen. biofuels in low blends
High biofuel blends (vehicles)
Cellulose based biofuels (production technology)
Natural gas / biogas
Hydrogen
6
Demand side market support from small scale to
large scale development

• A successful policy needs to combine
• investment security to the industry by a stable
  policy framework, e.g. by setting long-term
  targets
• measures to build trust of the consumer (e.g. by
  fuel standards, collaboration with car
  manufacturers to ensure compatibility and
  warranty),
• measures to reduce the final consumer costs of
  alternative fuels and technologies.

7
Biofuels in the EU
8
Biofuel shares in 2006
The EU biofuel market consists of many national
markets with large differences in progress
9
Biofuels in the EU
Policies need to be efficient to reflect higher
market volumes !
10
Biofuels in Germany

• Tax exemption
• Focus on pure biofuels (biodiesel, PPO) until
  2004
• From 2004 also tax exemption for blended
  biofuels, incl ethanol
• Ecotax increase between 1999-2003 gt very high
  tax exemption
• Cooperation with vehicle manufacturers (warranty)
• Early biodiesel standard focus of fuel quality
• High success, both as pure biofuel and blended
• German biofuel consumption 2/3 of EU25
• From 2007 obligation system for blended biofuels,
  decreasing tax reduction for pure biodiesel and
  PPO
• Market for pure biodiesel and PPO may disappear
  from 2009
• Support programmes for BTL (biomass-to-liquid)
  from cellulose

11
Biodiesel in Germany
12
Biodiesel in Germany
10 of diesel consumption !
13
Biofuels in France

• Tax reduction
• Focus on low blends of biodiesel and ETBE
• Accreditation system (quota) for biofuel
  producers
• Quota determined by government
• Cooperation agriculture biofuel producers oil
  industry
• Fast build-up of biofuel production from 1994
• From 2005 (target 7 in 2010)
• increase of accreditation quota up to 2010
• introduction of biofuel target for fuel
  distributors,
• with penalty tax system (TGAP obligation)
• together with (lower) tax reduction

14
Biofuels in Sweden

• Tax exemption from 1992
• for all biofuels (pure blended)
• high blends (ethanol, biogas, biodiesel) in
  focus, but recently low blends create the volumes
• Procurement systems
• Common procurement initiated the FFV market
• Public procurement of environment friendly
  vehicles in public fleets
• User incentives (vehicle tax, free parking,
  exemption of toll)
• Mandate for fuel stations to offer at least 1
  renewable fuel
• Support programmes for ethanol from cellulose

15
E85 FFVs in Sweden
Source BAFF
16
Biofuels in Sweden
17
Main measures for current market phase

• tax reduction
• compensate higher production cost
• take into account lower energy content per litre
• substitution mandate for fuel distributors
• generally on overall sales
• penalty for non-compliance (higher than extra
  cost)
• other complementary measures may still be
  necessary,
• to increase availability of feedstock,
• to assure sustainability account for CO2
  performance of different biofuels,
• to stimulate new developments towards betters
  yields and CO2 performance,
• to incentivise the market (in case of dedicated
  vehicles),

18
Overview
  Biofuel share () Biofuel share () Tax reduction Obligation 
2005 2006
Austria 0.93 3.54 from Oct05
Belgium 0.00 0.01 Quota from Oct 06  proposed
Bulgaria 0.00 0.45
Cyprus 0.00 n.a.  
Czech Rep. 0.05 0.50 From Sept07
Denmark 0.00 0.15 CO2 tax  proposed
Estonia 0.00 0.12  
Finland 0.00 0.02 From 2008 
France 0.97 1.75 Quota TGAP from 2005
Germany 3.75 6.30 From 2007
Greece 0.04 0.90    
Hungary 0.07 0.28  
Ireland 0.04 0.09 Projects From 2009  
Italy 0.51 0.46 Quota
 Biofuel share ()  Biofuel share () Tax reduction  Obligation 
  2005 2006
Latvia 0.33 0.22  
Lithuania 0.72 1.72 From 2006 
Luxembourg 0.03 0.03   proposed 
Malta 0.52 0.58  
Netherlands 0.02 0.29 in 2006 From 2007
Poland 0.47 0.92 From 2008
Portugal 0.00 1.02  
Romania n.a. 0.07 From July07
Slovakia n.a. 0.69 From May06 
Slovenia 0.35 0.27 From 2006
Spain 0.44 0.53  
Sweden 2.23 3.10 AMF obl.  fuel stations
UK 0.18 0.45 From 2008
19
Country-specific Factors
Country grouping on common characteristics,
related to biofuel introduction
Economy Agriculture Energy Demand
GDP (Absolute value) GDP (PPS) Presence of industry Import tradition Agricultural area / fallow area / forest area Arable land per capita Average yields for energy crops (oilseeds / cereals) Employment in agriculture Share of agriculture in Gross Value Added Energy demand per capita CO2 emissions per capita Oil import dependency Transport energy demand per capita Number of road vehicles per capita Diesel / gasoline ratio
20
Clustering
21
Experience so far

• The EU biofuel market consists of many national
  markets with large differences in progress
• Germany, Sweden, Austria and France have played a
  leading role so far, other countries are now
  following.
• New EU member states are catching up, some based
  on early experiences (Poland, Czech Rep,
  Slovakia).
• Policies need to be efficient to reflect higher
  volumes
• Tax reduction systems can become very expensive
  (cfr. Germany)
• Obligation systems are entering the markets
• Fuel markets are basically global, and at least
  European-based (through EC standards). Further
  fragmentation through national standards,
  different blends, different control support
  systems should be avoided (can create distortions
  between countries).
• Opportunity for East European countries to
  produce feedstock for biofuels
• Actual success on the biofuels sector also
  depends on
• Level of industrialization size of the economy
• Role of agriculture in the economy
• Existence and role of sector associations / lobby
  groups
• Willingness of the Government to support biofuels
• Political drivers like energy security,
  greenhouse gas emissions,

22
contact

• Websites
• http//www.premia-eu.org
• http//www.elobio.eu
• More info
• Luc Pelkmans (VITO)
• luc.pelkmans_at_vito.betel. 32 14 33 58 30

23
Goal to gather and disseminate knowledge on the
application of biofuels on a European
scaleFocus on - higher blends, - suitable
vehicle fleets,- innovative production
technologies,- assessment of biofuel chains
(WTW).
24
Monitoring System for Biofuel ProjectsWell-to-wh
eel based, divided in different parts of the WTW
chain Provide monitoring framework for biofuel
projectsBenefits for on-going projects
Benchmark their performance with other
projects / knowledge Monitoring over time
Combine their application with other WTW parts
to come to overall WTW performanceSystem
contains background information based on
literature (ranges, examples) input from
on-going projects