Media Centre

On 17 October, the European Commission released a proposal for a Directive “amending Directive 98/70/EC relating to the quality of petrol and diesel fuels and amending Directive 2009/28/EC on the promotion of the use of energy from renewable sources”. The proposal aims at limiting the risks of emissions resulting from land-use change in connection to the production of biofuels, as well as the potential competition between the usage of crops for food vs. fuel. At the same time, it offers opportunities for the most resource-efficient producers of high value-adding biofuels, among which the pulp and paper industries. Overall, it fits perfectly well with the European Bioeconomy Strategy and Resource Efficiency policies.
The European pulp and paper industry, represented by CEPI, is a significant user of ligno-cellulosic feedstocks from forests both as raw material for the production of goods, and as biomass for the production of heat and electricity. The European pulp and paper sources more than 80% of its raw materials from within the European Union, generates more than 50% of its energy needs from biomass and represents more than 20% of the total biomass-based energy produced within the European Union. Some companies are also investing in efficient conversion of biomass (BTL) into biofuels for transport.

Addressing critical issues…

The European pulp and paper industry welcomes the intentions of the European Commission to address the issue of indirect land-use change (ILUC) and sees the proposal as a useful complement to the proposal for a Decision “on accounting rules and action plans on greenhouse gas emissions and removals resulting from activities related to land use, land use change and forestry” (LULUCF) in order to better secure the climate benefits of the European climate and energy policies and acknowledge the carbon neutrality of certain types of biomass (ligno-cellulosic). CEPI welcomes also the emphasis on greehouse gas savings through efficiency thresholds in biofuels’ use.

… but failing to be fully consistent

Still, CEPI wonders what scientific criteria and reasoning have been used to select and list exhaustively the feedstocks considered to have a double or quadruple contribution as listed in the Annex IX and regrets that some provisions of the proposals create unneeded competition and inconsistencies with other EU policies (resource efficiency, jobs and growth, etc.):

• In the list of “feedstocks whose contribution towards the target referred to in Article 3(4) shall be considered to be twice their energy content” (Annex IX, Part B.), the inclusion of ligno-cellulosic materials does only exclude saw logs and veneer logs. Not excluding “pulpwood (roundwood and chips)” would create unfair competition by implicitely incentivising the use of pulpwood in the form of roundwood and chips (including sawmill chips) for energy, potentially in opposition with the resource efficiency principles of the EU.

• In the list of “feedstocks whose contribution towards the target referred to in Article 3(4) shall be considered to be four times their energy content” (Annex IX, Part A.), the inclusion of the biomass fraction of mixed municipal waste – even with the exclusion of separately collected streams of household waste – is an incentive for municipalities, depending on the conditions, to stop separate waste collection and convert the co-mingled collected waste into energy, thereby refraining from the 2015 target of separate collection of metals, plastics, paper and glass and departing from the waste hierarchy as laid down in the Waste Directive.

• In the list of “feedstocks whose contribution towards the target referred to in Article 3(4) shall be considered to be four times their energy content” (Annex IX, Part A.), the inclusion of the biomass fraction of industrial waste is an incentive for waste producers and municipalities, depending on the conditions, to stop separate waste collection and convert the co-mingled collected waste into energy, thereby refraining from the 2015 target of separate collection of metals, plastics, paper and glass and departing from the waste hierarchy as laid down in the Waste Directive.

• In the list of “feedstocks whose contribution towards the target referred to in Article 3(4) shall be considered to be twice their energy content” (Annex IX, Part B.), the inclusion of non-food cellulosic materials might be an incentive for waste producers and municipalities, depending on the conditions, to stop separate waste collection and convert the co-mingled collected waste into energy, thereby refraining from the 2015 target of separate collection of metals, plastics, paper and glass and departing from the waste hierarchy as laid down in the Waste Directive.

• In the list of “feedstocks whose contribution towards the target referred to in Article 3(4) shall be considered to be four times their energy content” (Annex IX, Part A.), the inclusion of industrial co-products like saw dust and cutter shavings should be extended to co-products which are mostly fit for conversion into biofuels, like black liquor and residues (such as tall oil), which are co-products of the pulp production process.

We therefore urge the Commission to ensure a consistent regulatory approach and an efficient use of resources by:

• adding “pulpwood (roundwood and chips)” in the exception list of ligno-cellulosic materials considered with a two times contribution to the biofuels target (under letter (d) of Annex IX Part B).

• adding “black liquor and similar residues and extractives of the pulp industry” to the list of feedstocks whose contribution towards the target referred to in Article 3(4) shall be considered to be four times their energy content (under letter (n) of Annex IX Part A)

• reviewing the inclusion of municipal waste and industrial waste in the light of the other objectives of the EU in terms of recycling and waste policy (for instance, by adding under letters (b) and (c) of Annex IX Part A: “but not waste subject to separate collection under Article 11(1) of Directive 2008/98/EC of the European Parliament and of the Council of 19 November 2008 on waste and repealing certain Directives”.

• adding “waste subject to separate collection under Article 11(1) of Directive 2008/98/EC of the European Parliament and of the Council of 19 November 2008 on waste and repealing certain Directives ” in the exception list of non-food cellulosic materials considered with a two times contribution to the biofuels target (under letter (c) of Annex IX Part B).

• including in the CAP support measures to increase the relevant biomass potential and the sustainable mobilisation of feedstocks needed to fulfil the targets.

For more information, please contact Daniela Haiduc at d.haiduc@cepi.org mobile: +32 473 562 936

Note to the Editor

CEPI aisbl - The Confederation of European Paper Industries
The Confederation of European Paper Industries (CEPI) is a Brussels-based non-profit organisation regrouping the European pulp and paper industry and championing industry’s achievements and the benefits of its products. Through its 18 member countries (17 European Union members plus Norway) CEPI represents some 520 pulp, paper and board producing companies across Europe, ranging from small and medium sized companies to multi-nationals, and 1000 paper mills. Together they represent 25% of world production.

Website: http://www.cepi.org/       mail@cepi.org
 

The increase in ETS prices targeted by the Commission through short-term intervention will further increase energy prices and by the same token, competitive imbalance between EU and overseas Energy Intensive Industries. The revision of the EU ETS Directive, which would leave more room for the Commission to intervene in the timing of auctions, also induces greater uncertainty for industry. Therefore, the Alliance of Energy Intensive Industries urges Members of the Parliament and Member States’ representatives to reject this proposal, which will alter the nature of the EU ETS. If approved, this proposal will not prevent industry closures and carbon leakage but rather relocate investments in manufacturing industry outside Europe.

Following the fundamental divergence of views between the Industry Committee and the Environment Committee of the European Parliament, all Members of the European Parliament will be asked to vote on the Commission proposal amending the EU ETS Directive, which should lead to a change in the timing for auctioning emission allowances (so-called “back-loading”).

The Alliance of Energy Intensive Industries, currently representing more than 30.000 enterprises and directly employing more than 2.5 Million people in the EU, urges the European Parliament and Member States to reject the Commission’s proposal on the following ground:

• Increase in ETS costs will push up operating costs for manufacturing industries that emit CO2 directly. Despite partial relief through free allowances, this will affect competitiveness;
  
• An artificial rise in ETS prices will push up electricity prices. Costs imposed on electricity providers will inevitably be passed on to private and industrial consumers through higher power prices. In the case of industrial energy consumers, recent Commission analysis highlighted that energy costs (electricity) in the EU are twice as expensive as in competing regions such as the US, Korea or Canada. Short-term intervention with the overt intention to artificially increase ETS costs will further add to this competitive disadvantage, as European industry cannot offset these additional costs.
   
• Increasing uncertainty for investors will also further delay economic recovery. In the face of recent plant closures, restructuring and lay-offs throughout the whole value chain of European manufacturing industry, the EU should avoid intervention that would add to the cost burden of its economic base and make climate policy less predictable. The European industry has been struggling for almost four years with recession conditions brought about by the financial and economic crisis. Unemployment has climbed to 25.9 million or 10.7 per cent in the EU 27 in December 2012, a historically high level. Investments are much needed to reinvigorate industrial production and reestablish growth but the Commission proposal to intervene in the market would create a framework which no longer provides legal certainty.
  Any structural adjustment of the ETS should be the outcome of a thorough review of longerterm objectives, taking a broader view of climate, energy, industrial factors (i.e. technical and economic feasibility), while taking into account the global situation.
   
• The proposed amendment of the ETS is unnecessary as the EU’s climate objectives will be met anyway. The EU’s carbon emission reduction objective for 2020 will be reached even at low price due to the limited number of allowances representing the overall cap of the EU ETS. Currently, the carbon price reflects the economic downturn exactly as it should do.
   
• Energy Intensive Industries stand fully behind the ETS as a major instrument for Europe’s climate ambition. By rejecting back-loading, the Alliance wants to ensure that the EU-ETS stays as initially foreseen a cost-effective and market-based instrument and that its nature is not altered. The revision of the EU ETS Directive as proposed by the Commission would give additional and unjustified discretionary power to the Commission.

Energy Intensive Industries are ready to participate in establishing a framework for EU ambitions beyond 2020 which will address the longer-term picture.

For further information please contact: Daniela Haiduc, CEPI Communications and Public Affairs Manager d.haiduc@cepi.org or 0032 26274915.