Certifying Biofuels: Not a Piece of Cake Yet

By Robert Vierhout | October 14, 2010
Only a few weeks away, Dec. 5 is an important date for biofuels in the EU. After that day, in theory, oil companies will no longer be allowed to use biofuels in the EU unless the biofuel producer can deliver an authorized certificate that sustainably grown crops were used, which will be a major challenge.

The reason? Except for two German-recognized voluntary schemes, there are no EU authorized certification schemes in operation. The consequence? Not enough certified 2010 crop will be available for compliance. Oil companies have started to spread the message that if the law will be upheld, and there is no certified biofuel available, they will declare force majeure, go for the buy-out and pay penalties instead.

I hear you thinking: how can it be possible that almost two years after the EU renenewables law was passed, implementation is still a problem? There are a number of explanations.
First of all, there was a substantial delay at the European Commission level itself. The law required further guidelines on a number of articles which should have been ready by December, but in June only two were released. The third on grasslands is still not out. The guidelines are crucial for member states and economic operators to make the law work.

Partly because of this delay almost all member states are late in having transposed the EU law into national law. Transposition is vital because national laws will set the framework and the implementation rules for economic operators. Without national law, the industry cannot move on. For clarity: EU directives put obligations upon member states and not upon economic operators.

To date there is only one EU member state that transposed the EU law earlier this yearGermany. But here too, problems occurred. Germany had planned to apply sustainability criteria July 1six months before EU compliance was needed. Because Germany opted for a rather technically complicated and very detailed transposition there was no certification scheme available on that short notice that could fulfill the German conditions. Germany decided to delay everything until Jan. 1. There are two certification schemes (ISCC and REDcert), but neither is EU approved.

The high level of complexity of the EU law combined with the fact that EU regulators, national regulators and the economic operatorsfarmers, traders, biofuels producers and oil companiesare confronted for the first time with this kind of legislation is the third reason that time tables have not been met. For most of the member states, this is so complex that they are still learning.

Most of the 2010 crop now in storage cannot be certified due to the absence of national or voluntary schemes. That is irrelevant for oil companies, however. From next month onward, they will buy only the biofuel that has a certificate. Unless immediate action is taken, the consequences of this delay in transposition and implementation will be disastrous. If the oil industry sticks to its guns and will not buy uncertified biofuel, then most biofuel production for the EU market will come to a grinding halt.

The European Commission needs to realize how serious the situation is. The commission has given up hope that most of the member states will be ready by the end of the year. Voluntary schemes could still turn the problem around, but such schemes can be used only if these are EC approved, which takes about six months. Only then can auditing begin, provided there are enough auditors around who can do the job. The commission does not believe it will approve any voluntary scheme before the end of the year. So, from that perspective we cannot expect any progress either.

The only solution I see to this problem is to grandfather in the 2010 crop. The member states could grant such a grandfather clause, but it would require that the commission be lenient and not start an infringement procedure for non-compliance.

The situtation we are facing was more or less to be expected, even if the commission had not been late with its guidelines. Certifying the sustainability of biofuels presents a steep learning curve for all those involved, and leniency is the only way forward in the short term. I am certain that 18 months from now, biofuel sustainability certificates will be business as usual and a piece of cake.

Robert Vierhout is the secretary-general of eBIO, the European Bioethanol Fuel Association. Reach him at vierhout@ebio.org.