EU ELECTIONS: 'Marginalized' ethanol industry seeks greater role in EU’s decarbonization strategy

With elections to the European Union now underway, Fastmarkets has spoken with major industry groups representing ethanol and biodiesel to understand their expectations for the bloc’s incoming governments.

At a time when the EU’s governments have laid out a clear path to decarbonize the bloc, aiming to reduce emissions by 55% versus the 1990 baseline by 2030 and striving to be net zero by 2050, efforts to reduce emissions have been caught up in populist politics.

In an interview with David Carpintero, director general of the Brussels-based ethanol industry group, ePure, Fastmarkets asked what the primary challenges, expectations and outlook is for the biofuel.

EU elections and policy
The elections come while the European ethanol sector finds itself in an awkward position — arguably more exposed to the EU requirement to phase out the use of crop-based feedstocks and besieged by policies that give electric vehicles (EVs) the upper hand.

However, the industry is also in a position as a well-established, highly successful biofuel that is already embedded into the mandates of many countries and could benefit from an apparent increasing preference from motorists and car makers for hybrid powertrains over full EVs.

And that’s without getting into sustainable aviation fuel (SAF), where ethanol has been the beneficiary of increasing expectations around the alcohol-to-jet (AtJ) pathway.

“Something interesting is happening,” Carpintero told Fastmarkets, comparing the outgoing EU parliament’s view on the rise of EVs.

“Full electrification was not being contested,” across the bloc until, he said, “a French commissioner raised his hand and asked ‘are we going in the right direction?’”

“Energy transition is needed, but the discussion is how we get there. How we in Europe need to care about Europe’s autonomy,” Carpintero said.

While ePure is clear that they welcome electrification as part of the energy transition coaxing European transportation away from oil, they believe that biofuels still have a large role to play.

Despite ambitious electrification goals, infrastructure gaps, especially in Eastern Europe, pose significant challenges, ePure told Fastmarkets, and biofuels will play an essential role in the EU’s decarbonization efforts.

"Currently, only 12% of new car sales are purely electric, with the rest having internal combustion engines (ICE). Renewable fuels can significantly reduce emissions from these vehicles," Carpintero said, with some new car sales data suggesting the pace of EV buying is slowing.

That elevates the strategic need to use biofuels from the current 7-9% of all fuels to 30% by 2030 as part of the ongoing EU-backed efforts to decarbonize.

“The problem is not the engine, the problem is what you run in the engine. You can also have internal combustion engines that are running with clean fuels. Somehow, we have made the focus the electric engine,” Carpintero said.

That has led to inconsistencies, with inordinate scrutiny applied to biofuel feedstocks and no commensurate scrutiny on where the power for EVs is coming from — an issue ePure would like to see addressed by the new commission.

“The next commission should be inclusive of all carbon-neutral fuels. Our contribution is not being considered, and we are being marginalized,” Carpintero said.

A second major policy is to mutualize current biofuel targets — accept that some member states cannot or will not meet the current mandates and allow those countries that can meet — or exceed current targets — to offset those countries.

Another issue to be addressed is the taxation of crop-based biofuels in the maritime sector on the same level of fossil fuels — a situation that makes no sense to Carpintero.

“We are shooting ourselves in the foot,” he said, calling for a mutualized 7% EU-wide mandate that would allow other, potentially bigger players, to compensate for those who are struggling to reach their target.

The health of the ethanol industry
Despite being a mainstay of both Europe and the world’s biofuel supply chain for over 20 years, the sector is facing headwinds.

Up to 80% of European ethanol production heads to the fuel supply, with the rest largely to industrial use, and the sector is providing a stable supply to stable demand.

But there have been setbacks, Carpintero acknowledged, including the ultimate failure and closure late last year of Clariant’s cellulosic ethanol plant in Romania, and news earlier this year that Ineos is mulling the closure of its ethanol plant in Scotland.

That is at odds with the position of ethanol as “leaders in the world of reducing emissions,” Carpintero said, with investment ongoing to boost the fuel’s greenhouse gas emissions credentials.

“A liter of ethanol that offers you 50% reduction, is not the same as a liter that saves you 80%,” he acknowledged, and investments continued to flow into that area.

Inevitably, the question of using food to produce biofuels remains high on the EU’s red line list, and how the industry counters that claim could be key.

“The total amount of agricultural products that we use [to make ethanol] corresponds to around 2.2% of total equivalent land used for production. If you focus on the food and feed, it currently focuses on just 1% land equivalent. Even tripling it would only take 3%,” Carpintero said.

That, he said, is less than the land farmers set aside under EU land use requirements, and the role of biofuels in the food crops business has always gone hand in hand with increased production.

“Whenever we use maize, wheat or sugar beet, we are producing both feed and energy — food, feed and fuel,” he said, and that makes it a strategic relationship for the bloc.

“Our demand for grains creates a flexible supply that can be redirected in times of need. If we’re facing a huge crisis in Europe, we could use [grains supply] for other uses as well," he said.

Carpintero said: “We see the future is stable, but we see the need to grow the supply within strong sustainable terms.”

Sustainable aviation fuel
The final hot topic is the role of SAF and its potential significance for the ethanol world.

Until relatively recently, the path towards decarbonizing aviation was largely trod by vegetable oil and waste-based used cooking oil and animal fats — but recent developments in Brazil have refocused expectations on ethanol.

Brazil’s Raizen broke the mold when its ethanol, produced from waste sugarcane feedstocks, was approved for use as a feedstock into AtJ aviation under Corsia guidelines — a key compliance model that confirmed it carried strong enough emissions savings credentials to be used to make SAF.

That has caused US corn-based ethanol producers scrambling to improve their emissions credentials in a bid to open the pathway to their huge sector, but Europe remains constrained by the EU’s determination to cut crop-based feedstocks out of the loop.

“We are seeing discrimination in the field of aviation… we need to see a more coherent, more consistent approach,” Carpintero said describing the current list of feedstocks as “very restrictive,” and calling for it to be expanded to include crop-based ethanol.

“AtJ could be one of the best pathways to SAF… we need to open as many options as possible — we need every solution that works and is sustainable; eFuels should also play a role,” Carpintero said, but acknowledged that only crop fuels that meet the sustainability criteria in the EU’s Renewable Energy Directive (RED) should be included.

“That should also apply to all sources of transportation — road, maritime and aviation,” he concluded.

With the right support, renewable fuels like ethanol can play a pivotal role in a sustainable and resilient energy future for Europe, ePure said.

The 2024 European elections span June 6-9 and give all voters in all EU member states the ability to vote in their local member of the European parliament (MEP) for a five-year term.

All 720 seats in the parliament are up for election, with the body being the main vehicle for the drafting of legislation initiated by the European Commission and covering everything from developing the bloc’s economy through to fighting climate change.