1. | 1 ExCo 61 14 May 2008, Oslo Biofuel sustainability in the renewable energy directive – State of play EUROPEAN COMMISSION Kyriakos MANIATIS Biofuels & Polygeneration Innovation and Technology Development in Energy Unit

2. | 2 ExCo 61 14 May 2008, Oslo Contents Energy and Climate package of 23rd January Biofuels sustainability and criteria in the renewable energy directive State of play of the sustainability discussion on EU level What‘s next on the overall package?

3. | 3 ExCo 61 14 May 2008, Oslo Package of energy and climate measures Reform of emissions trading scheme (ETS) National targets for greenhouse gas emissions in non-ETS sectors (buildings, transport, agriculture) Directive on Carbon Capture and Storage (CCS) Renewable Energy Directive Reform of environmental state aid guidelines 3

4. | 4 ExCo 61 14 May 2008, Oslo Renewable Energy Directive Sets targets for 2020: »National targets for the overall share of renewable energy (adding up to 20%) »Targets for renewable energy in transport (10%) Flexibility in meeting targets: »Electricity and large-scale heat consumed in one Member State can count towards the target of another Removes obstacles to the use of renewable energy: »Improving administrative procedures, information provision and grid access »Higher blends of biofuel in diesel Improves the performance of renewable energy: »Efficient forms of renewable energy in buildings »Biofuel sustainability and national reporting »Incentive for second-generation biofuels 4

5. | 5 ExCo 61 14 May 2008, Oslo Biofuels sustainability Main Issues 5 »Sustainability is a sine qua non condition for biofuels promotion in the EU! Sustainability criteria must be met in order to obtain incentives Scheme based on international science and norms (UN IPCC, FAO etc.) Non-discriminatory – WTO compatible

6. | 6 ExCo 61 14 May 2008, Oslo | 6 Biofuels sustainability – Scope The sustainability criteria apply to: »Biofuels (liquid and gaseous fuels used in transport) »Other bioliquids (liquid fuels used in heating and electricity) By 2010, the Commission will report on criteria for other energy uses of biomass

7. | 7 ExCo 61 14 May 2008, Oslo | 7 Biofuels sustainability – Criteria Greenhouse gas impact Land use/ carbon stock Biodiversity Environmental requirements for agriculture

8. | 8 ExCo 61 14 May 2008, Oslo | 8 Approach taken for the design of the criteria To be applied to each consignment of biofuel Legally meaningful, quantifiable, and verifiable – important for legal clarity and certainty Proportionate: limite burden of verification Based on international trade law

9. | 9 ExCo 61 14 May 2008, Oslo Greenhouse gas impact »Minimum requirement for GHG saving, relative to fossil fuel, of at least 35% »Waiver until April 2013 for current plants (Art. 15.2) »Rules for calculation of GHG saving Biofuel producers can choose to … »Use default values given in the directive (Annex VII.A); or »Show actual values that are better (Annex VII.C) | 9 Sustainability criteria – Greenhouse gas impact

10. | 10 ExCo 61 14 May 2008, Oslo Rules for calculation of GHG savings – Default values Can be obtained by (Art. 17.1) : »Using default values »Calculation of actual values »A combination of both ‘Conservative’ default values calculated from ‘typical’ values by 40% penalty on processing Use of default values not allowed for areas in the EU land liable to high N 2 O emissions from cultivation (Art. 17.2 and 17.3) 10

11. | 11 ExCo 61 14 May 2008, Oslo Rules for calculation of GHG savings – Methodology Includes all process steps (life-cycle) (Annex VII.C) End-use efficiency may be taken into account Land use change has to be taken into account Carbon capture and storage/ replacement Co-products by energy allocation, except: »agricultural crop residues (not counted) »surplus electricity from CHP (special rule) Special rule for biofuels from wastes/ residues Comparison with EU average for petrol & diesel 11

12. | 12 ExCo 61 14 May 2008, Oslo | 12 Sustainability criteria – GHG impact

13. | 13 ExCo 61 14 May 2008, Oslo No conversion of wetland or “continuously forested area” (Art. 15.4) Other land use change is counted in greenhouse gas calculation (Annex VII.C.7) Specific incentive for crops from “idle lands” and desert (Annex VII.C.8) | 13 Sustainability criteria – Land use criteria/ carbon stock

14. | 14 ExCo 61 14 May 2008, Oslo No raw material from forest undisturbed by significant human activity or from highly biodiverse grassland (Art. 15.3) No raw material from nature protection areas unless compatible with nature protection (Art. 15.3) | 14 Sustainability criteria – Biodiversity

15. | 15 ExCo 61 14 May 2008, Oslo | 15 Sustainability criteria – Environmental requirements for agriculture Environmental requirements for agriculture (EU only) »All biofuel production must comply with the “cross compliance” rules already applied under the CAP (Art. 15.5)

16. | 16 ExCo 61 14 May 2008, Oslo | 16 Biofuels sustainability – One European scheme One European sustainability scheme (Art. 15.6) »Member States must apply the criteria laid down in the Directive »Member States may not lay down criteria that go further

17. | 17 ExCo 61 14 May 2008, Oslo | 17 Biofuels sustainability – Penalties and verification Penalties for not fulfilling the criteria (Art. 15.1) »Biofuels do not count towards EU targets »Biofuels do not count towards national biofuel obligations »Biofuels may not benefit from tax exemptions and similar financial support

18. | 18 ExCo 61 14 May 2008, Oslo Member States have primary responsibility for verification (Art. 16.1) MS shall require economic operators to arrange for an adequate standard of independent auditing of the information they submit, and to provide evidence that this has been done The auditing shall verify that the systems used by economic operators are accurate, reliable and fraud- resistant (Art. 16.3) | 18 Biofuels sustainability - Verification

19. | 19 ExCo 61 14 May 2008, Oslo For most consignments, two items of data will be needed: »What the biofuel was made from »Where the raw material was cultivated Operators must track consignments using the “mass balance” method (Art. 16.1) Reporting requirement of the Commission to European Parliament and Council in 2010 and 2012 on the operation of the mass balance verification method and on the potential to allow for other verification methods in relation to some or all types of raw material or biofuel (Art. 16.2) | 19 Biofuels sustainability - Verification

20. | 20 ExCo 61 14 May 2008, Oslo The Commission can decide that “certification schemes” comply with the criteria (Art. 16.4): »bilateral and multilateral agreements between the Community and 3rd countries to demonstrate compliance with environmental sustainability criteria in paragraphs 3 or 4 of Article 15 »voluntary national or international schemes to demonstrate compliance with Article 15(2) or with environmental sustainability criteria in paragraphs 3 or 4 of Article 15 »national, multinational or international schemes to measure GHG savings to demonstrate compliance with Article 15(2) If so, all Member States must accept the evidence these schemes provide (Art. 16.7) | 20 Biofuels sustainability - Verification

21. | 21 ExCo 61 14 May 2008, Oslo | 21 Biofuels sustainability – Review Member States report every two years on (Art. 19.1): »Developments in the availability and use of biomass resources for energy purposes »Prices and land use effects of biomass use »Impacts of biofuel production on biodiversity, water resources, water quality and soil quality

22. | 22 ExCo 61 14 May 2008, Oslo | 22 Biofuels sustainability – Review Commission reports every two years on (Art. 20.5): »Environmental costs and benefits of different biofuels »Impact of increased demand for biofuels on sustainability »Impact of EU biofuel policy on the availability of foodstuffs in developing countries »Impact of increased demand for biomass on biomass-using sectors

23. | 23 ExCo 61 14 May 2008, Oslo | 23 State of play of sustainability discussion on EU level – Background Proposed Renewables Directive and Fuel Quality Directive will both lead to increased use of biofuels; it is common ground among the institutions (EC, Council, EP) that these biofuels should comply with sustainability criteria, and that the sustainability criteria should be the same for the biofuels used to comply with each Directive's requirements Slovenian presidency hopes to achieve a 1st reading agreement on Fuel Quality Directive during its time in office (EP Plenary vote would be 7th July)

24. | 24 ExCo 61 14 May 2008, Oslo | 24 State of play of sustainability discussion on EU level – Background To get sustainability criteria ready in time for this, COREPER decided in February that the relevant provisions of the Renewables Directive should be considered by an ad hoc working party of the Council If agreement can be reached on these provisions, and if the SL-presidency is able to obtain a 1st reading agreement on Fuel Quality Directive, these provisions of the Renewables Directive would be "frozen" and equivalent provisions would be included in Fuel Quality Directive COREPER initially asked the ad hoc working party to finish this work by 4th April; deadline was then extended to 7th May

25. | 25 ExCo 61 14 May 2008, Oslo | 25 State of play of sustainability discussion on EU level – Situation in Council Good progress has been made; however, some major issues are unsettled; it remains to be seen whether these will be solvable in the working party meetings on 5th May or at COREPER itself: 1.Level and date of application of the minimum GHG saving requirement, Art. 15(2): „2-step“ approach (2015)? 2.Reference date for LUC, Art. 15(2): January 2008 or earlier? 3.Definitions of „undisturbed forest“, Art. 15(3) 4.Binding criteria, reporting requirements or monitoring for environmental and social impacts of biofuels production in 3rd countries 5.Certain elements of GHG methodology (Annex VII), particularly regarding ILUC, calc. default values, co-product treatment

26. | 26 ExCo 61 14 May 2008, Oslo | 26 State of play of sustainability discussion on EU level – Situation in Parliament Parliament has informed SL-presidency and Commission that it will be ready to negotiate the sustainability criteria for biofuels with Council after the ENVI committee votes on the relevant provisions of the Renewables Directive; vote expected to take place on 23rd June

27. | 27 ExCo 61 14 May 2008, Oslo What‘s next on the overall package? First debate in the Energy Council on 28 February and in the European Council on 13 -14 March on the entire energy and climate package: positive reactions An ambitious further timetable: »Agreement under French Presidency end of 2008 and adoption 2009 »Entry into force: March 2010

28. | 28 ExCo 61 14 May 2008, Oslo Thank you for your attention! For more information: http://ec.europa.eu/energy/climate_actions/index_en.htm Alexandra.Langenheld@ec.europa.eu Kyriakos.Maniatis@ec.europa.eu

29. | 29 ExCo 61 14 May 2008, Oslo One piece of information……. FP7…… 2008 Call……. Lignocellulosic ethanol- demonstration projects – DG TREN… Info Day: Thursday June 5, 2005; Brussels Call Info day: Friday June 20, 2005.