The Impact of the EU Biofuel Policy on the Feedstock Markets in the EU and Worldwide Stephan Hubertus Gay European Commission, DG Agriculture and Rural Development

2 2 EU Biofuel policy EU renewable energy directive (RED) mandate (10%, double counting of waste and 2 nd gen.), non-liquid Member State implementation (blending mandates, tax credits etc.) Sustainability criteria (reduction of emmission) and iLUC Commission Proposal: 10% target remains for all transport fuels 5% maximum for agricultural based biofuels double and quadruple counting of other biofuels More strict sustainability criteria and only reporting of iLUC Currently under discussion in Council and Parliament

3 3 Biofuel assumption Further shift in fuel consumption towards diesel, only slightly declining overall fuel consumption EU renewable energy directive (RED) mandate not reached with biofuels 8%, double counting of waste and 2 nd gen. 2 nd generation 0.2% in 2020, waste oils 0.9% Ethanol develops more favourable than biodiesel No changes in trade policy No change in existing biofuel policy Thus, two uncertainty scenarios regarding these assumptions

4 4 Major biofuel consumers (million t.o.e.)

5 5 EU fuel consumption (million t.o.e.)

6 6 EU biofuel consumption (million t.o.e.)

7 7 Ethanol production by feedstock (million litres)

8 8 Biodiesel production by feedstock (million litres)

9 9 Importance of biofuel use in feedstock use

10 Biofuels EU to become second largest biofuel user Share of diesel in fuel consumption increasing Biodiesel to remain major biofuel in the EU Cereals fastest growing ethanol feedstock Share in EU feedstock demand important for vegetable oil and sugarbeet, less for cereals Uncertainty regarding fuel consumption development Member State implementation of RED potential of 2 nd generation biofuels biofuel policy development

11 Biodiesel EU is the largest producer in the world Shift from pure biodiesel to blends (B7) Rapeseed oil is the main feedstock Other vegetable oils, and used cooking oils and animal fats are partly double counted Rapeseed increased its share in EU agriculture Temporarily with an price advantage

12 Monthly fuel consumer prices in Germany (EUR/100 l),

13 Monthly use of diesel-type biofuels in Germany ('000 tonnes),

14 Production of rapeseed by EU Member State in million tonnes,

15 Cumulative changes in area and yields by crops between and in the EU

16 Monthly vegetable oil prices in EUR/t,

17 Share of rapeseed oil sales by crushing facilities in Germany, Jan.-Nov. 2012

18 Baseline and scenarios The baseline (BASE):  Continuation of existing policy measures for the period  Macroeconomic assumptions as in DG AGRI Prospects  10% renewable energy in transport target is met by SC1 – 80% mandate: only 8% of liquid transport fuel comes from renewable energy by 2020 (EU outlook) SC2 – EC's proposal: EC's Directive proposal of October 2012 is implemented from 2013:  Share of 1st-generation = 5% max.  Waste oils = double its energy content; other 2nd-gen. * 4 SC3 – No policy:  No tax credits for ETand BD.  No blending obligation in the EU for ethanol

19 EU-27 biofuels energy shares in liquid fuels, 2020 (%) BASE80% man.EC's proposal No policy Biofuels (in fuel use) st gen based on waste oils other 2 nd gen Ethanol (in petrol use) Biodiesel (in diesel use) Biofuels in fuel use (RED)

20 Impact on EU Biofuels (% change vs. BASE in 2020) Ethanol Biodiesel

21 Impact on EU Feedstocks (% change vs. BASE in 2020) Use for BF production Producer prices

22 Impact on Feedstocks % change in WORLD PRICES vs. BASE in 2020

23 Impact on land use % change in harvested area in 2020 cereals, oilseeds, sugar crops and palm oil BASE million ha 80% man. EC's proposal No policy EU % -0.4% Brazil %-0.9%-1.6% Argentina %-0.6%-1.6% Canada + USA % -0.3% Indonesia %-1.4%-3.6% Other Asia % -0.6% Africa %-0.4%-1.0% WORLD million ha % -0.2%-0.3%-0.7%

24 Land use change by crops (No policy) (2020) Total = 5.9 million ha

25 Thank you! prices/medium-term-outlook/index_en.htmhttp://ec.europa.eu/agriculture/markets-and- prices/medium-term-outlook/index_en.htm

26 % change vs. BASE in 2020 Production Consumption Impact on EU Feedstock

27 % change vs. BASE in 2020 Imports Exports Impact on EU Feedstock