The Energy Taxation Directive was approved in 2003 and has needed a revision for several years. As it deals with member states taxation it needs unanimous approval.
A taxation on fossil fuel content is often a cost-effective way to achieve decreased emissions. It has been poorly used, and while many members states, as is the Commission, look at a carbon tax, we have not seen it in practise.
We also note that the revision states: (5) Member States should, however, be able to use the energy taxation of motor fuels, heating fuels and electricity for a variety of purposes not necessarily nor specifically or exclusively related to the reduction of greenhouse gases. This is important, as pay-as-you go will be a strategic tool to support behavioural changes.
We support taxation on energy content, coupled with emissions. Here we would like to see strengthened assessments of emissions from fuels and electricity. Today electricity often has an arbitrary zero emission status, true at “tail pipe” (as they don’t exist on ev’s) but the method of production that determines the carbon content per kWh from a life cycle perspective.
We support taxation on aviation and the maritime sector. While we support an introductory rebate for a new taxation regime, we suggest to quickly move into a standard taxation rate where low emission fuels are taxed lower.
The directive refers to a minimum level taxation. We note that as the Fit for 55 targets are extremely low for transport (-13% GHG compared to 2010), many member states need to go way above the minimum level or increase taxation on “fossil fuels”. With more and more drop in fuels, we will see increased levels of mixing biofuels and fossil fuels, why there should be clear definition on taxation based of de facto GHG reduction life-cycle.
The minimum taxation level as suggested is too high to support biofuels, and too low for fossilfuels. There must be a stronger linkage to the GHG potential of the fuel. Higher taxes on fossil content in the fuel is in line with polluter pays. As most of fossil fuels are imported into the EU this would help to decrease dependency on imports. We are very much against that crop based biofuels by
2033 receive as high tax as fossil fuels. If they have a GHG reduction of 90%, they should be taxed low.
We do not support Electricity should always be among the least taxed energy sources in view of fostering its use, notably in the transport sector. All fuels/types of energy should be treated alike and should be given financial incentives based on their GHG reduction. There should be support for immature technologies, like we see proposed for RFNBO and Advanced biofuels, but on a temporary basis until market development has matured.
We support the introduction of taxation of aviation and maritime fuels over a ten-year period. We also understand, and support that, at least initially, the minimum levels are lower.
Article 2 defines conditions for different fuels. We note that: Biofuels, biogas and bioliquids produced from the feedstock listed in part B of Annex IX to that Directive shall be considered equivalent to advanced products. This is a positive step, expanding the raw material potential to annex B. However, biofuels from raw materials not included on the Annex IX list, for instance crop based biofuels, need to be specifically addressed. These fuels have the largest part (7%) of the RED target to 2030. Low-carbon fuels are mentioned but are limited to low-carbon hydrogen and synthetic gaseous and liquid fuels the energy content of which is derived from low-carbon hydrogen. This is an arbitrary neglect of the major share of biofuels used on the market today.
We note that the term “Sustainable biofuels” remains undefined. We suggest, in line with the definition of sustainable RFNBO, that there should be a life-cycle threshold of 70% GHG reduction and sustainability targets to produce raw material.
The sustainability debate for aviation is quite recent, and it is welcome to see a stronger sustainability focus on aviation. The RefuelAviation Directive is an important step.
The RefuelAviation Directive is one of two new directives with a focus on strategic parts of the transport sector and are developed without any prior directives to “build on”. This opens for opportunities for an innovative and modern view on biofuels. It is therefore strange that the ReFuelEU Aviation directive in the preamble states that crop based fuels per se are inadmissable. They are the most common of all biofuels, and can demonstrate GHG reductions of up to 90%.
It is true that there are biofuels with sustainability concerns, but it is likewise true that there are sustainable biofuels, also from food and feed crops. The directive should, in keeping with a technologically neutral approach, allow for developments of both technology and sustainability.
In the directive the text continues: Research has shown that the scale of the effect depends on a variety of factors, including the type of feedstock used for fuel production, the level of additional demand for feedstock triggered by the use of biofuels and the extent to which land with high-carbon stock is protected worldwide.
It is true that biofuels produced where tropical jungle is cut down, opening land with high carbon stocks to erosion, has a high direct climate impact. These raw materials are regulated in the high IlUC risk delegated act, and in fact in RED. Those “bad” biofuels should not be used as an excuse to ban good biofuels. The directive discusses this with regards to synthetic aviation fuels in preamble point 19: When produced from renewable electricity and carbon captured directly from the air, synthetic aviation fuels can achieve as high as 100% emissions savings compared to conventional aviation fuel. With renewable electricity and the best form of carbon capture, the emission saving is high. But with coal power electricity, and fossil-based carbon, the synthetic aviation fuel would be a disaster.
To summarize; rather than banning biofuels with a certain terminology, focus on the GHG reduction potential, and set technologically neutral criteria. This is especially important in the aviation industry, that is a R&D intensive industry with potential to catalyse developments. The staff working papers discredits crop based fuels, which happens to dominate the market today, and put strong emphasis on RFNBO’s – that we do not yet have on the market. It would be better to support a GHG reduction quota, and let the market determine which, naturally sustainable, alternatives to pursue. Immature technologies could deserve incentives to get started, but in general a market approach is preperable.
The directive further warns against a biofuel displacement from the road sector towards air transport. The climate does not care where fossil carbon is emitted, and it is important to allow the industry to develop technologies to provide more biofuels, from sustainable sources. This can only be done by R&D and continued production. The market should be allowed to determine the final use of the important role biofuels have to play.
We are disappointed that the European Commission does not opt for a GHG reduction quota as in the Maritime directive. We also see two interesting examples of reduction quotas for aviation in Norway and Sweden. In both countries the policies have been developed in dialogue with the industry and has firm support.
We are not in favour of a blending quota set on volume. The GHG reduction is dependent on the quality of the SAF, and a volume-based targets favour the SAF just above the threshold- not the best SAF.
The Swedish 2030 secretariat is an independent Think tank committed to the decarbonization of the transport sector. We are not looked into any specific technological solution, the GHG reduction is what matters. Rather sooner than later - we cannot wait until electric vehicles dominate the light vehicle market in the mid 2030's.
The introduction of CO2 demands on new cars and vans on the European market has been a success. The staggered demands from 130 grammes/km in 2013 to 95 grammes/km in 2021 is now suggested to be tightened to a reduction from the 2021 value by 37,5% by 2030 and 100% by 2035. Good, providing the emission requirement are set in a technologically neutral way.
Today the emission testing procedure of the European Unions is both outdated and arbitrary. The WLTP that was introduced a few years ago, and is now in full effect, but is already misrepresenting real emissions from cars and vans – sometimes as much as 50%.
But even more harmful is the fact the vehicles driving on biofuels are tested and registered for emissions when running on fossil fuels. It negates the significant gains that sustainable biofuels provide.
The regulation refers to “zero emission” vehicles. This is a vague and indecisive term, and factually incorrect. There are no zero emission vehicles when the while life cycle of the fuel is considered. Probably the vehicle with the lowest emissions today is a cng vehicle running on biogas produced from manure – as the methane emissions from the manure are avoided.
Electric vehicles have a carbon footprint. Just looking at the electricity production in a best-case country would allocate some 4 grammes/km to the vehicle from the production of electricity, the European average is about ten times as high and a coal depending country like Poland has maybe 20 times higher emissions.
CO2 standards are important, but need to be calculated taken a life cycle perspective into account.
Article 7a opens for a review of emissions standards.
‘6a. Where the Commission finds that the provisional data submitted by Member States in accordance with paragraph 2, or the data notified by the manufacturers in accordance with paragraph 5, is based on incorrect data in the type approval documentation or in the certificates of conformity, the Commission shall inform the type approval authority or, where applicable, the manufacturer and request the type approval authority or, where applicable, the manufacturer to issue a statement of correction specifying the corrected data. The statement of correction shall be transmitted to the Commission and the corrected data shall be used to amend the provisional calculations under paragraph 4.’,
We suggest a total overhaul of certification of vehicles, but see a correction factor as a bridging solution.
In the Renewable Energy Directive is suggested that RFNBO (Renewable Fuels of Non Biological Origin) be awarded an emission status depending on the average carbon content of the electricity in the country in question over the past two years. This is a novel approach, that would mean that a CNG car in Sweden would benefit from the fact the methane in the Swedish grid has been 93-94% biomethane over that past two years.
Over time, vehicles and fuels should be measured together as the life cycle emissions from the production of the fuel is one component in generating emission. The other is the efficiency of the power train in the vehicle. A Well-to-Wheels approach is more appropriate, as suggested in the FuelEU Maritime Directive (Well-to-Wake).
The progress report suggested in article 14a should prioritize reporting on real emission reduction in the existing vehicle fleet in the member states.
The Swedish 2030-secretariat is an independent Think tank, committed to decarbonization of transport, but not locked into an specific technological solutions. GHG reduction is the target, sooner rather than later.
The maritime sector dominates world trade. It is an energy efficient means of transport, but the scale of operations makes it a large contributor to global emissions. Historically shipping in international waters have been tax exempt.
The European Commission has historically enforced sustainability targets like the introduction of SEKA zones. It has been very successful and has been followed globally in the US and China. This directive is a welcome continuation of this development.
We are encouraged that the directive discusses the transition to renewable and low carbon fuels. We share the belief that we should keep this focus, and incentivize fuels based on the GHG reduction potential. The FuelEU Maritime directive goes even further and recommends a Well-to-Wake approach in preamble point 17: The well-to-wake performance of renewable and low-carbon maritime fuels should be established using default or actual and certified emission factors covering the well-to-tank and tank-to-wake emissions. The performance of fossil fuels should however only be assessed through the use of default emission factors as provided for by this Regulation.
This initiative is extremely important and welcome.
It is therefore a surprise that the directive in preamble 12 suggests: Indirect land-use change occurs when the cultivation of crops for biofuels, bioliquids and biomass fuels displaces traditional production of crops for food and feed purposes… This risk is particularly serious in connection with a potentially large expansion of production determined by a significant increase in demand. Accordingly, no feed and food crop-based fuels should be promoted.
It is true that there are biofuels with sustainability concerns, but it is likewise true that there are sustainable biofuels, also from food and feed crops, with a 90% GHG reduction. The directive should, in keeping with a technologically neutral approach, allow for developments of both technology and sustainability.
In the directive the text continues: Research has shown that the scale of the effect depends on a variety of factors, including the type of feedstock used for fuel production, the level of additional demand for feedstock triggered using biofuels and the extent to which land with high-carbon stock is protected worldwide.
It is true that biofuels produced where tropical jungle is cut down, opening land with high carbon stocks to erosion, has a high direct climate impact. These raw materials are regulated in the high IlUC risk delegated act, and in fact in RED. Those “bad” biofuels should not be used as an excuse to ban good biofuels.
The Aviation directive discusses this with regards to synthetic aviation fuels in preamble point 19: When produced from renewable electricity and carbon captured directly from the air, synthetic aviation fuels can achieve as high as 100% emissions savings compared to conventional aviation fuel.
Absolutely right, with renewable electricity and the best form of carbon capture, the emission savings is high. But the other side of the coin is that with coal power electricity, and fossil-based carbon, the synthetic aviation fuel would be a disaster.
As the scale of maritime transport and its energy consumption is large, the directive rightly states:This requires a long-term strategic approach, tied into the Industrial strategy where suppliers of sustainable biofuels with a high GHG reduction are given opportunities to expand and develop.
We see the opportunity to finance this development through the penalties for non-compliance. We urge the Commission to look at the Norwegian NOx fund, that has for many years steered revenues from high polluting ships (malus) to investments in cleaner ships (bonus).
It is naturally important that there are procedures in place to verify and correct the registration of heavy vehicles, also those used for vocational purposes. It is however more complex, as the vehicle manufacturer in many cases only provide the chassis, and bodybuilders provide the final use of the vehicle.
Trucks should be measured well-to-wheels, and in real life driving, as is being proposed in many revised directives and regulations. We must move past laboratory test certification, and allow users to benefit from using a cleaner fuel.
Also, for vocational vehicles, say garbage trucks. A large part of the energy consumed is from the compressor. Switching it to electric compression decreases the emissions greatly, and decreases emissions of harmful substances and noise. The garbage truck must be measured on the whole functionality of the work it delivers, naturally different from a regular truck with the same engine size.
With more appropriate measuring systems, we see no reason that vocational truck should be exempted from CO2 requirements.
The Swedish 2030-secretariat support that the financial sector takes sustainability seriously and welcome the underlying thoughts behind the taxonomy. But we urge the European Commission to decrease the focus on detail, and instead promote activities that decrease carbon dioxide emissions, independent of technological pathways. In fact, we suggest for the Commission to rewrite, with a broader interaction with society.
We recommend:
Less focus on detail
Less focus on today’s solution, set CO2eq targets on activities to ensure technological neutrality and allow for innovation
More focus on long term development, investments typically have a one-to-two-decade span
Behavioural change is neglected. Investment in changed behaviour is probably the greenest of all investments – but we see very little mention of it.
The report notes “finance is a critical enabler of transformative improvements in existing industries in Europe and globally”. Financial investment has a long term focus. The investment decision could come several years before production starts, and the investment could need 10-15 years pay off time. Most of the recommendations in the annex are made with todays’ technology in mind, and recommendations tied to current technologies could nudge in the wrong direction.
The recently presented Sustainable and Smart Mobility Strategy indicates that we will have 30 million chargeable cars in Europe in 2030 but the strategy, nor the taxonomy, offers means for climate mitigation from the 300 million other existing cars. The taxonomy sees biofuels as a transient solution and will redirect investment away from low carbon fuels. The taxonomy must both allow todays’ technologies and the incoming technologies to work in tandem. That is not the case today.
For the transport sector our comments in summary are:
-For vehicles, tail pipe emissions are an outdated measurement, move on to Well-to-wheels and climate footprints. With the introduction of electric vehicles a part of the life cycle environmental burden is moved to production. For heavy vehicles the Taxonomy refers to a more neutral limit; Low-emission heavy-duty vehicles with specific direct CO2 emissions of less than 50% of the reference CO2emissions of all vehicles in the same sub-group. However WtW should be the standard, combined with actual emissions, beyond WLTP.
-Biofuels could be said to be transient for light vehicles, but with 300 million combustion engine cars on European roads in 2030, it is critically important tool for the next 20 years. Classifying biofuels as only transitional activity is ill-suited. Several Member States will be relying on significant greenhouse gas emission reductions from the use of biofuels in transport when aiming for carbon-neutrality by 2050.
The requirements for public transport are destructive. A zero emission target from 2026 will be counterproductive for the development of public transport.
-Electricity production is equally important, a fuel among many. The TEG suggests “An overarching, technology-agnostic emissions intensity threshold of 100g CO2e / kWh”. This is obviously too high, as the taxonomy deals with investment in new technologies. It is much higher than emissions from electricity generation in several countries in Europe.
-In general, new fuels, for instance the development of Hydrogen fuels and so called electrofuels like Recycled carbon fuels (RCF) and Renewable fuels of nonbiological origin (RFNBO) we encourage the introduction of a CO2eq value per produced entity, again taken the life cycle aspects into account.
We want to end by encouraging the Commission to review the Taxonomy carefully, if necessary, rewrite the proposal. We need to have policies in place that allows innovation in industry and to allow invest in a wide range of technologies.
The State Aid Rules is an important part of interaction between member states in a union. Without such rules the cooperation would quickly trickle to a minimum.
When the State aid guidelines for environmental protection and energy (EEAG) are to be revised, we need to note that the European Commission is in the midst of a overhaul. The climate goals for the commission will become more ambitious, it remains to be seen whether the ambition will increase by 37,5 or 50 percent. A huge increase, that will impact a long series of directives.
For that reason, we suggest to following:
• Continue to allow state aid to all sustainable biofuels
• Do not discriminate technologies based of substrate pathways, see to overall greenhouse gas reduction
• Recognize the important role of biofuels and the role their development plays in establishing a competitive world class European industry
• New technologies are developing quickly, but those emerging biofuel pathways are generally more expensive and should be allowed more financial support
More and more organizations note that we need a multitude of technologies to reach the climate goals. The International Energy Agency writes in the recent AIE-AMF report that :
Bringing down the GHG emissions of the road transport sector to zero by 2050 cannot be achieved by one measure alone.
Countries that deploy a set of different measures such as reducing transport demand, improving vehicle efficiency, and adding renewable energy carriers such as biofuels, e-fuels,renewable electricity and renewable hydrogen have the best chances to meet ambitious decarbonization goals.
As the climate ambitions are strengthened the Commission will have to rely more on biofuels, at least in the transition phase to electricity. In the recent publication of the JRC on Well-to-Wheels emissions from a large number (>1600 pathways) of fuels it was clear that biofuels almost always were significantly better than fossil gasoline, diesel or natural gas. This must be reflected in the EEAG.
The EEAG limits in paragraph 113 state aid to the most common of biofuels, those with established biofuel pathways, after 2020. The paragraph refers to food-based biofuel.
We believe that all biofuels should be defined on neutral criteria, rather than origin or technology. It is important for the EEAG to promote the technologies reducing greenhouse gas emissions most effectively. Thus, the EEAG should judge potential of state aid based on GHG reduction.
We also firmly believe that biofuels, being new technologies and more expensive to produce than fossil fuels, need financial support. Biofuels contribute greatly to the overall European climate goals. Emerging biofuel pathways need several years to reach financial break even and will need additional support.
We also note that the debate from the early 2000's on food vs fuels has been debunked, and is now formulated as food and fuel. Indeed, rape seed production one year leads to better wheat harvest the next. We have much to learn, and the concept of positive Land Use Change will be a strong contributor.
We also note that while electrification is a major strategy for light vehicles in the EU, the recent Sustainable and Smart Mobility Strategy estimated we will have 30 million electric vehicles in EU27. This is less than 10 percent of all cars - unless we have biofuels to decrease emissions from 90% of the car fleet we will be faced with a shameful result. The EEAG has the potential to support technologies needed to reach the target set in Paris in 2015.
The Forest is an important CO2 sink, and should be fully incorporated in the climate ambitions of the European Community. However, this does not mean a stop to forestry as the forest is an important source of raw materials for building, paper, chemicals and energy. The forest is both a sink, a source for substitution and naturally a sequestration. These three benefits must be balanced with biodiversity. We are critical towards focussing too much on the period to 2030, the forest has a longer life cycle and the climate crises also reaches beyond 2030. Let’s think long term.
We support the LULUCF ambition to have national plans where "Member States must ensure that their carbon sink will not be smaller than the one that will occur if current management practices are continued". It is, however, is important to see the forest as a large stand, where there is felling in some areas, while the forest is left to grow in others. A well managed forestry will enhance carbon dioxide uptake, while providing products.
While it is prudent to set a financial penalty on increasing emissions, for instance through unsustainable forestry, we also beleive there should exist a financial benefit from increased sequestering of carbon. Forestry, as all land use, has the potential for developing methods that target CO2 sequestering on top of production and sustainability targets. A financial benefit of positive Land Use Change (LUC) would incentivize enhanced efforts to increase the sequestration of carbon over the coming years.
The roadmap refers to combining the forest sector greenhouse gas balances with agriculture and other Effort Sharing Regulation sectors (options 2 and 3). If at all, this would have to be done very carefully. The forest sector should have its own objectives and neutrality/negative target. Forests’ role should not be to offset the emissions of the other sectors. But land use is land use, and we have a lot to gain by promoting incentives for carbon dioxide sequestration. The key to defining which solution is the most suitable is if there is a mechanism to incentivize "positive Land Use Change".
In the Inception Impact Assessment it says: The failure to put a price on carbon/climate externalities is equivalent to subsidising polluting activities. This is at the core of the challenge.
The Swedish 2030-secretariat was formed to be a collected voice, a coalition of the willing - of business and business groups wanting to see a fast decarbonization of the transport sector. The political goal in Sweden is 70% carbon dioxide reduction in the transport sector by 2030. An ambitious goal, but with widespread support.
In order to reach this goal, we need comparative condition for all mobility option, from digital meeting to air travel. All means of communication are needed, but we need transparency to be able to prioritize.
The sooner the aviation sector is properly prized the better. We are in favour of a fast approach (Swift phase out), but we are also aware that we need a conform system throughout Europe. We are keen to ensure that there are no loopholes for certain airlines to be exempted, thus the EU ETS full legal scope makes sense.
The reduction quota is taking hold in many countries and seem to be catalysed by the post covid restructuring. Austria is a good example of both limitations on domestic flights, as well and an increased share of sustainable aviation fuels.
We also note that only integration under the ETS will not suffice. Sustainable aviation fuels, incentives for technological development, planning the airspace are important parts of the solution, but also limiting short domestic or flights between neighbouring countries where public transport is available.
Even if the airline industry is a huge industry, the Commission must see it as part of a mobility system where many means of transport meet – digital transport not the least.