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A policy framework for transport where all renewable technologies can compete fairly

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There is no “one technology that fits all”

Transport is a complex sector, which makes it difficult to decarbonise. The variety of modes of transport and uses for each of them means that there is no “one technology that fits all”. There is a clear consensus that electrification will become the dominant technology for light-duty vehicles, and that strong policy measures are required to encourage their uptake. But electrified vehicles are not the only way to meet sustainable transportation goals. It is not clear why electrified vehicles should have a technology monopoly. FuelsEurope believes that such a policy decision, whether at EU or national level, is both unnecessary and unwise.

The decarbonisation of transport is fundamentally about the decarbonisation of energy, and an internal combustion engine fuelled with renewable, sustainable fuels has a carbon footprint comparable to that of an electric vehicle. Furthermore, it has the potential, like an electric vehicle, to become climate neutral, or reach net-zero CO2 emissions.

Creating fair competition between technologies has valuable social and economic consequences for the EU. In the case of low-carbon liquid fuels in road transport, it would help the deployment of infrastructure for fully electric vehicles and reduce the pressure on demand for critical raw materials. It will also accelerate the reduction of the carbon intensity of transport by reducing the necessity for fleet renewal and enable existing as well as new vehicles to access low-carbon liquid fuels.

The danger of leaving European citizens behind

Access to diverse technologies would give citizens a choice and allow them to assess which technology will best answer their needs. Restricting consumer choice could put low-carbon mobility beyond the reach of many European citizens. Indeed, millions of EU citizens and businesses, especially in many Central, Eastern and Southern European countries with older vehicle fleets, rely on older, inexpensive and often second-hand vehicles for their family, work or small business transport. These vehicles, which cost a fraction of the price of an electric vehicle, are vital for these European citizens.

The significant scale-up of low-carbon liquid fuels is possible based on proven technologies and the well-evidenced availability of sustainable feedstock. Sustainable biomass from a wide range of agricultural and forestry sources, domestic and industrial waste, and synthetic fuels can collectively harness the global potential of renewable energy. And they can be transported from remote regions using existing infrastructure. European companies are leading technology providers of these solutions and pursuing these solutions would create jobs across Europe - aggregating and preparing the sources of these feedstock. Building and operating the processing plants would create even more jobs. However, the current moves towards full, rapid, and exclusive electrification risks discouraging such developments

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Not recognising biogenic or captured CO2 means that vehicle CO2 policies are not technology neutral

A more inclusive approach to policies for fuels, starting with accurate recognition of their contribution to lowering vehicle emissions and enabling customer level benefits and incentives, can produce greater CO2 savings than an electric vehicle monopoly will deliver. Adding the option for new vehicles to achieve CO2 compliance via renewable sustainable fuels will safeguard jobs in the automotive value chain, making the transition through reskilling and upskilling more manageable. Global industrial strategies and investment plans show that the internal combustion engine has a bright future in most of the other regions. While the EU is the current leader in internal combustion engine technology, this lead, along with the deployment of renewable sustainable fuels, is likely to move to other regions. China in particular China will grasp the opportunity to gain significant market share at the expense of the European car industry.

Europe’s climate ambition needs a strong strategy for renewable sustainable fuels. Within that, the inclusion of road transport may be transitional, but it is additional and strategic in nature. This strategy needs to start with a revision of vehicle CO2 policies to reflect the correct science of net CO2 emissions using biogenic and captured carbon-based fuels.

The Commission’s vehicle CO2 policy is based on a methodology that is inconsistent with other CO2 methodologies, such as the ETS, where biomass combustion is rated as zero emission. It is also inconsistent with a net-zero target for the EU. The lack of recognition of biogenic or captured CO2 in combustion from vehicles means that vehicle CO2 policies are not treating all renewable technologies on an equal and fair approach (technology neutral).

All relevant technology options should compete on an equal basis

As well as being a strategy for the existing fleet, a renewables strategy for road transport is a strategy that will grow the sector for the benefit of the aviation and maritime sectors. Like the early years of wind and solar Photovoltaic renewable power, investments are characterised by higher capital costs. Road transport, with its relatively low energy intensity, lack of carbon leakage risk, and many fiscal and policy tools is able to support a more rapid scale-up of renewable sustainable fuel production. Aviation and Maritime are unlikely to achieve such a rapid scale-up alone, and the transferability of fuels across sectors means a transitional role for road transport is a no-regret strategy, which could lead to greater volume of low-carbon fuels being available later for international aviation and maritime.

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A first critical step should be for the Commission to take the opportunity of the current review of 2030 targets to also review and rectify the incompatible nature of the current vehicle CO2 methodology with respect to the net-zero 2050 objectives. Such a correction can open many opportunities for additional CO2 savings, for jobs, for investments and for many more vehicle users to participate in using renewable energies, in gaseous or liquid form.

We have the opportunity with the revision of a number of regulations to ensure that all relevant technology options can compete on an equal basis and collectively deliver the climate objectives set for the transport sector. Customers, citizens and markets can then decide and, whatever they choose, Europe’s climate ambition will be successful. And not only that - it could progress faster too.