EU will need imports to hit biofuel targets
Financial Times
By Andrew Bounds in Brussels and Fiona Harvey in London

Published: February 1 2007 02:00 | Last updated: February 1 2007 02:00

Europe will need to import thousands of tonnes of bio-fuels to hit stringent new targets proposed by Brussels on Thursday.

Oil companies said a law requiring all petrol to be blended with 10 per cent ethanol by 2020 would call for supply from countries such as Brazil that could produce vast quantities at cheap prices.

“Europe cannot produce enough,” said Peter Tjan, of the European Petroleum Industry Association. “We will swap oil from Saudi Arabia for biofuels from Brazil and Malaysia. Does that help energy security?”

Under the plans, filling stations in the European Union would have to offer two blends of petrol from 2009: E5, with 5 per cent ethanol, and E10, with 10 per cent. By 2020, only E10 would be permitted. Restrictions on ozone emissions would be loosened to allow the blending.

The directive, which must be approved by member states and the European parliament, would also cut the amount of sulphur in diesel fuel by up to 90 per cent.

In addition, all petroleum producers would have to calculate their carbon emissions from extracting, transporting and burning fuel by 2009 - a “bureaucratic nightmare”, according to Mr Tjan. Between 2011 and 2020 they must reduce them by 10 per cent. Mr Tjan said using biofuels would generate the bulk of the saving. Refineries must already buy carbon permits under the EU’s trading scheme.

The move comes just weeks after California, the US’s biggest state, enacted a similar plan. “This is a test of our capacity to translate political priorities into concrete measures. It will further underpin Europe’s shift towards the low-carbon economy,” said Stavros Dimas, environment -commissioner.

Mr Dimas is eager to demonstrate that commitment after having to water down plans to force carmakers to produce cleaner engines. Next week the European Commission is expected to set targets that will require carmakers to cut emissions by one-fifth by 2012.

The environmental movement is split over the plans. The Green party in the European parliament opposes a rush to plant-based fuel, saying its production results in clearing rainforests for energy crops and raises food prices in poor countries by diverting land use.

Claude Turmes, a Green MEP, said: “The Commission is diverting attention from the real problem - the cars that use the fuel - and creating the illusion that fuel from plants is the panacea for our climate problems.”

However, Reuters reported that low biodiesel sales, especially in Germany, were depressing European rapeseed and rapeseed oil prices.

Jos Dings, director of Transport and Environment, a campaign group, welcomed the move. “It is good that the Commission is concentrating on carbon emissions from fuel as well as cars,” he said, accusing the German car industry of “mindless scaremongering”.

Bioethanol is usually made from wheat or sugar, but the energy required to grow and distil the grains reduces the benefit of using it as a fuel - a litre cuts emissions by less than half on average. Deforestation to clear farmland could contribute more to climate change than the resulting fuels save in emissions.

Copyright The Financial Times Limited 2007