Standpunt Belgische Petroleum Federatie Stakeholderoverleg Europese milieu - transportdossiers Coördinatie Comité Internationaal Milieubeleid - Werkgroep duurzame mobiliteit 25 februari 2008 – Brussel Jean-Louis NIZET (Presentation based partially on EUROPIA documents - European Petroleum Industry Association) Brandstoffen Herziening richtlijn brandstofkwaliteit en richtlijn hernieuwbare energie

2 BELGIUM PETROLEUM FEDERATION (BPF) Standpunt Belgische Petroleum Federatie Agenda: Fuel Quality Directive – Areas of concern: – Limitation of applying the article 7a to fossil fuels – Separate “High Biofuel Petrol” grade – Relaxation of petrol vapor pressure – PAH’s in diesel Comments on directive on promotion of renewable energy Biofuels: – Current Belgian system – Evolution of legislation – BPF request in case of obligation

3 BELGIUM PETROLEUM FEDERATION (BPF) Fuel Quality Directive – Areas of concern Areas of concern: 1.Limitation of applying article 7a to fossil fuels: “decarbonisation” concept  GHG reduction = 1% per year 2.Separate “High Biofuel Petrol” grade 3.Relaxation of petrol vapor pressure 4.PAH’s in diesel

4 BELGIUM PETROLEUM FEDERATION (BPF) Fuel Quality Directive (1) 1. Limitations of applying article 7a to fossil fuels Upward pressure on CO² emissions from refineries due to: –increasing diesel demand & subsequent higher energy needs –potential new legislative measure on fuels spec’s (e.g. sulfur content) Biofuels blending is the only option to reduce CO² from the road fuels: –16 % biofuels would be needed to meet the “7a target” –inconsistent with the 10 % target of the REN

5 BELGIUM PETROLEUM FEDERATION (BPF) Fuel Quality Directive (2) 1. Limitations of applying article 7a to fossil fuels In the expectation of limited FAME & BTL availability, 16 % biofuels could result in a 60 % share of ethanol in gasoline. –Such high ethanol levels would not be compatible with the existing vehicles & fuels spec’s. The GHG emission target does not reflect the availability of qualified volumes of biofuels: –The 10% GHG target has been set in the absence of a “GHG emission calculator” and of a “biofuels sustainability certification scheme”

6 BELGIUM PETROLEUM FEDERATION (BPF) Fuel Quality Directive (3) 2. Separate “High Biofuel Petrol” grade EU benefits from the 1993 harmonization of diesel & gasoline specifications in terms of: –Security of supply (high degree of exchangeability across the EU) –Enabling engine / after treatment technology everywhere in EU Creation of extra grades do no facilitate the attainment of aggressive biofuels targets: –Significant cost & lead time required to install additional supply infrastructure –Consumer uncertainty (awareness, price behavior limit uptake of new grades) –New diesel or gasoline grades will confuse the customer & result in vehicle “misfuelling”

7 BELGIUM PETROLEUM FEDERATION (BPF) Fuel Quality Directive (4) 2. Separate “High Biofuel Petrol” grade The increased use of biofuels should be associated with the EN228 & EN590 grades & not result in the proliferation of additional grades. Mismatch between targets in FQ & REN directives and the corresponding CEN specifications must be resolved. The CEN process (European Committee for Standardization) is the right process to create new specifications. The European legislation should not substitute the CEN process. So, the additional petrol grade with 10% ethanol should be removed from the FQD; oxygen content within annex III can be increased for allowing blend of up to 10 % EtOH. To safeguard vehicles not compatible with 10 % EtOH, a max. 5% EtOH grade must be kept to a certain date.

8 BELGIUM PETROLEUM FEDERATION (BPF) Fuel Quality Directive (5) 3. Relaxation of petrol vapor pressure Following CONCAWE study, a reduction of vapor pressure in petrol from 60 to 56 kPa has a very limited impact on: –change of air quality (<1 % reduction of road transport VOC by 2020) –human health (< 0,2 % reduction of all VOC’s, resulting in a reduction of ozone health impact of < 0,05 % by 2020) N.B. Any consideration for a relaxation of vapor pressure limit should apply to all fuels irrespective of their composition & must take full consideration of all environmental implications.

9 BELGIUM PETROLEUM FEDERATION (BPF) Fuel Quality Directive (6) 4. Polycyclic aromatic hydrocarbons (PAH) in diesel Further PAH reduction from 8 to 6 % PAH’s would not be beneficial for the air pollution (no reduction of air pollutants in light or heavy duty vehicles), but would be detrimental to CO². Such reduction would require major investments in refineries. Due to required change in refinery process conditions, a 6 % PAH target would increase the E27 refinery CO² emissions by ~2 Mio tons par year.

10 BELGIUM PETROLEUM FEDERATION (BPF) Directive on promotion of renewable energy Areas of concern: Achievability of targets Regulation to avoid duplicating/conflicting targets between the Renewable Energy Directive (REN) & the Fuel Quality Directive (FQD) GHG methodology & cost effectiveness Sustainability criteria & certification control Diesel fuels specs in the directive

11 BELGIUM PETROLEUM FEDERATION (BPF) BIOFUELS – Current Belgian system No obligation: Target of 5% FAME in diesel & 7 % EtOH in gasoline (under the form of pure bio EtoH or 15 % ETBE); Fiscal incentive for companies who blend biofuels, providing that bio components (i.e. FAME, EtoH) are bought to a limited number of certified producers (quota allocated); Timing biodiesel: –1/11/2006:3,37% FAME (volume %) –5/3/2007:4,29% FAME –1/10/2007:5% FAME Timing ethanol: –1/10/2007:7% bio EtOH or 15% ETBE

12 BELGIUM PETROLEUM FEDERATION (BPF) BIOFUELS – Evolution of legislation Biofuels incorporation might become mandatory: Following the art.183 of “programma wet” of April 27, 2007, this will require new legislation by the new government European experts’ advice in case “ biofuels mandatory” : –Free market for biofuels –No fiscal incentive linked to quotas & certified producers

13 BELGIUM PETROLEUM FEDERATION (BPF) BIOFUELS – BPF request in case of obligation Open market condition at market price (no restrictive scheme of approved suppliers of bio components); suppliers of bio components to ensure sustainability & quality of their production; Flexibility of exchanges of bio components & blended fuels and tradability of bio certificates (critical for the Belgian internationally oriented petroleum industry); Respect of the « Programma Overeenkomst »: all costs to be reflected in the structure of the maximum prices of fuels; Alignment of fuels specifications with CEN norms (no infringement of European norms, no proliferation of new grades) Promotion of the most cost effective GHG reduction option (« well- to-wheel » analysis; expanded list of biofuels including 2 nd generation);

14 BELGIUM PETROLEUM FEDERATION (BPF) BIOFUELS – BPF request in case of obligation For the monitoring & verification of the blending targets (bio %), the calculation rules must be clear and based on ratios between: –volumes of bio components which have been purchased and traded –volumes of motor fuels which have been put into consumption in Belgium. We support to the concept of sustainability and the use of criteria for assessing sustainability, providing: –One pan-European sustainability scheme, based on one single European standard and methodology; –Enforcement of the certification mechanism under the control of the Belgian authorities and selection of an independent certification body by these authorities; –Responsibility of the bio producers for issuing compliance certificate for sustainability of their bio components.