With a view to deliver climate neutral transport by 2050, we call on EU policymakers to launch a high-level dialogue, in order to create a policy framework that enables to build the necessary market demand and roll out our investments as soon as possible.
The following five policy principles are essential to delivering our climate-neutral ambition and should serve as a starting point for discussion.
The creation of a lead market for low-carbon fuels, with a significant carbon-price signal, is a prerequisite to unlock investments. In road transport, this could be achieved through: either a dedicated cap and trade mechanism on emissions from road fuels, with biogenic and recycled CO2 counting as zero, with the fuel supplier as obligated party; or a Well-to-Wheel (WTW) carbon intensity standard for fuels – whereby carbon emissions are assessed throughout a fuel’s full life cycle – with the fuel suppliers as obligated party and the possibility to trade credits between them.
The CO2 standards in vehicles must be amended in such a way that the actual Tank-to-Wheel (TTW) approach currently in place – whereby emissions are only assessed at point of use of a vehicle – is corrected by embracing the CO2 footprint of fuels. The responsibility of Original Equipment Manufacturers (OEMs) and of fuel suppliers should remain separate on the respective targets, but the overall CO2 reduction in road transport should be a combination of the two. This would enable internal combustion engine to contribute to climate-neutral mobility and consumers to access a more accurate representation of the CO2 intensity of their mobility choices.
All overlapping fuel policies should be reformed or simplified, such as the Fuel Quality Directive, which regulates the greenhouse gas intensity of fuels brought into the market, and the Renewable Energy Directive, which mandates a share of renewable content in transport fuels.
Fuel taxation should be revised by accounting for carbon intensity, with a view to incentivise investments in advanced renewable fuels. Zero or very low tax for low-carbon fuels would achieve the double objective of keeping fuel prices socially acceptable and making a business case for investments.
Investors should be put in the best conditions to risk their capital, by:
Ensuring regulatory stability for the economic life-time of their investment. This can be achieved by adopting robust, science-based sustainability criteria for feedstocks and processes. When, however, new regulations come into force, investments already in place must be protected from detrimental effects through grandfathering measures.
Protecting the investments from carbon-leakage, resulting from competition with less regulated non-EU industry.
Allowing access to public and private funds for climate-related investments. This implies that the future EU taxonomy for sustainable activities should adopt a transitional, evidence-based approach, which reflects technological development, available renewable and low-carbon solutions, energy mixes and existing infrastructure.
The EU refining industry stands ready to collaborate with multiple industries, as well as with EU policymakers, to take bold climate actions together.
Companies, large and small, in industries such as agriculture, chemicals, forestry, waste and recycling, will play a major role in building the necessary value chains and assets. Policymakers, NGOs and academia, car and truck industries, aviation and maritime, customer groups, will all have a role in developing markets with the right definitions and parameters. Finally, civil society at large, must be engaged through an open, fact-based dialogue.
The EU refining industry is ready to keep driving the development of the necessary technologies that will allow to deploy low-carbon liquid fuels at scale, but we will not be able to achieve this alone.
Do you have a role to play in the low-carbon liquid fuel value chains? Are you looking for partners? Do you have ideas for this emerging sector? Are you an NGO, an academia, a consumer group, a policymaker, eager to contribute to our climate neutrality ambitions, or simply curious to know more?