The European Union’s industry committee has voted to half its biofuels target for 2020, reducing it from 10% to 5% of total road fuel in energy terms. Given the large differences in the consumption of biofuels across Europe, the effect of this change, if implemented, would differ greatly between markets.

Against all expectations, the EU’s industry committee has voted to reduce its biofuels target by 50% which, remarkably, would leave the 2020 target lower than the 5.75% target for 2010. The parliamentary committee’s vote follows a plethora of bad publicity for biofuels, with the main criticism being that its production has diverted crops away from food, thereby pushing up prices. It has also been argued that forests have been destroyed in order to make way for the cultivation of biofuels crops.

It should be noted, however, that the EU is famous for long drawn-out legislative processes, leaving it highly possible that this vote will be thrown out at the next stage. The amended bill will now revert to the European Parliament for a vote before individual governments will negotiate the proposal further.

If the proposal is accepted, it would have a significant effect on national biofuels consumption and targets. These effects would vary between markets: for example, some markets, such as Germany and Austria, are close to or surpassing the current 2020 target; while others, such as Italy and Spain, would still struggle to meet the goal.

In 2007, biofuels accounted for 6.8% and 3.4% of total road fuel in Germany and Austria, respectively. Furthermore, both countries are strong proponents of biofuels and, as such, should not have significant problems in honouring either the 5.75% goal by 2010 or the 10% target by 2020. A reduction in the 2020 target would essentially allow fuel retailers to scale-back their plans to increase the proportion of biofuels that they blend into their petrol and diesel.

At the other end of the scale, Italy and the UK may not even meet the revised target; in these markets, biofuels account for 0.4% and 0.8% of total road fuel, respectively. This means that the consumption of biofuels would have to increase tenfold in Italy and six-fold in the UK by 2020.

Although not ratified, the vote by the EU’s industry committee marks an important change in Europe’s renewable strategy, opening the possibility on an official level that the EU may renege on a core aspect of its energy policy. However, while this will allow some markets to scale-back plans to sell more biofuels, for others, even the reduced target will remain a challenge.

Related Research:

The Political and Environmental Landscape for Biofuels in the EU Transport Sector

The Biofuels Market Outlook: Market drivers, growth opportunities and regulatory change