Earlier in February, a joint statement signed by 73 leaders representing nearly 20 sectors was sent to the Belgian Prime Minister Alexander De Croo and the President of the European Commission, Ursula von der Leyen. The signatories agreed that the green energy transition can only be effective and successful if Europe’s competitiveness is maintained. Following what was called the Antwerp Declaration, as it was signed during the industrial summit in Antwerp, we spoke with Liana Gouta, the newly-appointed Director General of the European Fuel Manufacturers Association (FuelsEurope).
We began our discussion by underlining the role that renewable fuels can play in addressing and accelerating sustainability, which Ms Gouta defines as critical.
“Firstly, because of their energy density, ease of storage and transport, existing infrastructure, renewable fuels are the main sustainable option for hard-to-abate sectors such as aviation or maritime,” she begins. “Secondly, renewable fuels in road transport could continue playing a critical role in both light-duty vehicles (LDVs) as heavy-duty vehicles (HDVs), in particular for uses where liquid energy offers more flexibility for the users. They are an important complement to electrification and could even accelerate the decarbonisation of road transport. Last but not least, renewable products that serve as feedstock for industrial uses will have a key role in the decarbonisation of critical industrial sectors and industrial products.”
With regards to the security of supply, she says that it is very important to understand that successfully delivering the Green Deal and its climate neutrality goals will require the inclusion of renewable fuels in the energy options.
“Renewable fuels will be absolutely necessary to decarbonise hard-to-abate sectors, such as the aviation and maritime sectors, as well as the industrial value chain,” she states. “This is the reason why EU legislation, through its Fit for 55 package, has set ambitious targets starting from 2025 and gradually increasing by 2050. Given the importance that has been given lately to the European industry, these renewable fuels have to be developed and produced by the European industry through the investments that will have to be implemented.”
“The question is whether legislation creates the business case for these investments in Europe and whether competitors in other areas of the world will take the lead in the renewable fuels’ production, leaving Europe behind to rely on imports.”
Ms Gouta mentions that, based on the current regulatory framework, the market projections, for liquid fuels needed in transport show an 80 per cent reduction of demand by 2050.
“The EU legislation, in fact, assumes that liquid fuels will be used in aviation and maritime, transport and only marginally in road transport,” she points out. “This will significantly impact the size of the industry, its competitiveness and viability and finally its investment potential. In the end, such a shrinkage of the liquid fuels market might accelerate the progressive disengagement of the fuels’ industry out of the EU, requiring to meet market demand by imports.”
Furthermore, renewable fuels have an important role to play in the circular economy leveraging domestic feedstock and production for both bio-based and synthetic fuels. This fosters the creation of new value chains, boosts local and regional economies, establishes fresh industrial hubs and stimulates job growth.
“Our industrial assets traditionally produce fuels based on fossil imported crude oil,” Liana Gouta explains. “During the last few years, this has gradually been changing with part of our conventional fossil feedstock being replaced by sustainable raw materials, reducing thus our carbon footprint and producing renewable fuels and other products. Collection of this new feedstock will require the establishment of new value chains. This means that these new technologies will not only support decarbonisation of liquid fuels and products but will also foster circular economy, decentralised production of fuels and a new energy growth model across Europe.”
In signing the Antwerp Declaration, FuelsEurope called for an EU Strategy for the Transition of Liquid Fuels and Products.
“A long-term strategy for renewable fuels and products would meet a two-fold objective,” Ms Gouta tells us. “First of all, in continuity with the Green Deal, it could accelerate the energy transition and in particular advance the progressive replacement of fossil molecules with renewable ones. This would contribute to the decarbonisation of all transport sectors while reducing the carbon footprint of industrial operations. Some conventional refineries in Europe have already been converted into biorefineries, replacing petroleum with 100 per cent sustainable biomass.”
“On the other hand,” she continues, “the strategy could respond to geopolitical challenges, taking into account the international circumstances and new potential crisis (for example, energy shortage, border tensions, interruptions in the global supply chains).”
“A long-term strategy could promote the EU leadership in innovation on advanced biofuels and synthetic fuels and enhance Europe’s open strategic autonomy. As a primary vehicle of innovation, the strategy could contribute to the security of the energy supply and protect the EU-based, globally competitive, industry.”
According to FuelsEurope, such a strategy should look at all the components of the supply chain. It should start from the feedstocks, analysing the logistics of their collection and transport. It should then focus on the production facilities and finally, it should look at the use of these fuels and products, especially in transport.
“It should also identify the enabling conditions and a suitable regulatory framework to unlock investments in renewable fuels and provide access to finance and funding, ensure the adequacy of the necessary workforce skills and protect the international competitiveness of the industry,” Ms Gouta adds. “We believe that a long-term EU strategy for the transition of liquid fuels and products should be a priority for the next Commission, in the institutional cycle 2024 – 2029, ensuring that the EU industry can lead the way.”
Recently, the European Commission has recommended a 90 per cent net greenhouse gas emissions (GHG) reduction by 2040 compared to 1990 levels, launching a discussion with all stakeholders. Whereas FuelsEurope welcomed a “good” vision to make Europe a sustainable and competitive economy, capable of attracting investments, offering quality jobs and leaving no one behind, it considered that the Recommendation falls short of offering a new strategic approach leading to ground-breaking policies.
“We strongly agree that security of energy supply and resilience against future global crises are crucial to guarantee success on the journey to climate neutrality,” the Director of FuelsEurope says. “We believe that a new strategic approach leading to ground-breaking policies is essential if we do not want to repeat the mistakes of the past which have significantly affected the competitiveness of energy-intensive industries.”
According to her, in fact, this communication does not convincingly demonstrate how existing and new policies will enable the EU to retain global climate leadership while allowing the economy to thrive.
“Technology openness, inclusivity instead of bans, incentives instead of penalties, competition of all carbon reduction technologies based on a life cycle analysis, leverage of private investments by creating lead markets and business cases, assessment of new dependencies created by new technologies, alternative options to European citizens to support decarbonisation to the extent they can afford, could be some of the new elements that the EU should take into account on its journey towards 2040 and beyond,” she highlights.
If we keep the current regulatory environment in this new global context there are some major risks, including the loss of international competitiveness and the associated risk of disinvestments in the EU.
“Energy Intensive Industries are the backbone of the industry and Europe might end up being highly dependent on third countries for essential products such as steel, chemicals, or fuels,” recalls Ms Gouta, quoting the Belgian Prime Minister who said that Europe’s goal is to de-carbonise and not to de-industrialise.
Thus, what exactly is needed for Europe to keep its leading position in clean and low-carbon technologies?
“A competitive industry is one that, thanks to a favourable framework creating clear incentives for early and large investments, can continue developing R&I projects, maintain and eventually extend its technological leadership and can compete on international markets.”
“To do so, the EU has to ensure that the CBAM is effective in protecting EU industry from imports from countries with less environmental and climate regulations, but also ensure that its exports remain competitive. A continued extension of the CBAM to more sectors, addressing both imports and exports, is therefore critical,” notes Liana Gouta.
Finally, speaking of the priorities after the EU elections in June, FuelsEurope believes that all regulations from the Fit for 55 Package should be carefully implemented and that the review clauses foreseen are carefully performed and impact assessed.
“The EU has also to ensure that citizens have access to sustainable and affordable energy when and where they need it and that critical infrastructure relies on an uninterrupted – and affordable – supply of energy,” Ms Gouta concludes. “European industry will have to be the locomotive of new clean technologies and net-zero products by implementing huge investments. Therefore, an ambitious EU industrial strategy will be crucial to ensure that Europe remains attractive for investments, internationally competitive, innovative, sustainable and creating wealth for all its citizens.”