The Impact of the EU Biofuel Policy on the Feedstock Markets in the EU and Worldwide

Stephan Hubertus GayEuropean Commission, DG Agriculture and Rural Development

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EU Biofuel policy• EU renewable energy directive (RED) mandate (10%,

double counting of waste and 2nd 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

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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 2nd gen.• 2nd 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

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

55

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

66

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

77

Ethanol production by feedstock (million litres)

88

Biodiesel production by feedstock (million litres)

99

Importance of biofuel use in feedstock use

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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 2nd generation biofuels• biofuel policy development

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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

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Monthly fuel consumer prices in Germany (EUR/100 l), 2005-2012

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Monthly use of diesel-type biofuels in Germany ('000 tonnes), 2007-2012

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Production of rapeseed by EU Member State in million tonnes, 1993-2012

1515

Cumulative changes in area and yields by crops between 1996-2000 and 2008-2012 in the EU

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Monthly vegetable oil prices in EUR/t, 1999-2012

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

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Baseline and scenarios• The baseline (BASE):

Continuation of existing policy measures for the period 2012-2022. Macroeconomic assumptions as in DG AGRI Prospects 2012. 10% renewable energy in transport target is met by 2020.

• 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

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EU-27 biofuels energy shares in liquid fuels, 2020 (%)

BASE 80% man. EC's proposal

No policy

Biofuels (in fuel use) 9.2 7.2 6.1 2.01st gen. 8.5 6.3 5.0 1.9

based on waste oils 0.7 0.7 0.9 0.1

other 2nd gen. 0.1 0.1 0.2 0.0

Ethanol (in petrol use) 12.2 7.8 5.7 3.2

Biodiesel (in diesel use) 8.0 7.2 6.2 1.5

Biofuels in fuel use (RED)

10.0 8.0 7.5 2.1

2020

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

Ethanol Biodiesel

2121

Impact on EU Feedstocks (% change vs. BASE in 2020)

Use for BF production Producer prices

2222

Impact on Feedstocks

% change in WORLD PRICES vs. BASE in 2020

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Impact on land use% change in harvested area in 2020cereals, oilseeds, sugar crops and palm oil

BASEmillion ha

80% man.

EC's proposal

No policy

EU-27 70.0 -0.1% -0.1% -0.4%

Brazil 59.7 -0.6% -0.9% -1.6%

Argentina 34.1 -0.4% -0.6% -1.6%

Canada + USA 119.2 -0.1% -0.1% -0.3%

Indonesia 12.0 -0.9% -1.4% -3.6%

Other Asia 274.8 -0.2% -0.2% -0.6%

Africa 119.0 -0.3% -0.4% -1.0%

WORLDmillion ha 850.0 -1.8 -2.7 -5.9

%   -0.2% -0.3% -0.7%

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

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Thank you!• http://ec.europa.eu/agriculture/markets-and-prices/medium

-term-outlook/index_en.htm

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% change vs. BASE in 2020

Production Consumption

Impact on EU Feedstock

2727

% change vs. BASE in 2020

Imports Exports

Impact on EU Feedstock