Getting the Label Right

By Robert Vierhout | May 11, 2012

Just over one year ago I wrote about the E10 hysteria in Germany. I mentioned how the oil and car industries were rather successful in causing serious problems around the introduction of 10 percent ethanol in gasoline, whereas in France the process went smoothly and without any public outcry. Fourteen months later, the German E10 market is still like a stuttering engine, with only 13 percent share of the biggest gasoline market in all of Europe (there are three gasoline grades in Germany). In France, however, it is already at 20 percent. I am certain, though, that the share will increase especially now that gasoline prices are at record heights. The consumer tends to forget quickly all his concerns about (the never proven) food, sustainability and engine damage once the gasoline price is €1.70 per liter ($8.40 per gallon!) as it is now.

The European energy commissioner, German national Günther Oettinger, received many letters from concerned fellow countrymen a year ago (mainly NGOs members) on the E10 problems mainly related to environment and food. Plus, being a former president of the state, where the German car industry is seated he is taking the issue of potential engine damage seriously. Recently he launched an initiative to get the discussion going on (bio)fuel labelling by organizing what is nowadays very common in Brussels’ regulatory circles—a stakeholder meeting. The commission more or less justifies the initiative by stating that for consumers the fuel market has an even worse reputation than the secondhand car market, which is already quite bad. Well, for sure that is one way of getting all interested parties around the table.

Certainly, one can make jokes about this, but the commissioner is absolutely right that some action is needed for several reasons. First, fossil fuel can be traded freely throughout the EU; that should also apply to fossil fuel with a bio component. Second, it can be beneficial for the biofuel industry’s marketing efforts if a label clearly states that there is a sustainable biofuel in the fossil fuel. Third, by having identical fuel labels everywhere in the EU, consumers feel more secure that the fuel is safe to be used (even if they cannot read Polish or Hungarian).

There are some difficult questions to be resolved before we will have a uniform labelling system in the EU, starting with what type of actions are necessary, possible and by when. Once that is agreed upon, the next big step is to get agreement among all stakeholders whether action should be taken at the EU level via a law or at the member state level through coordination among countries, or at the fuel/biofuel/car industry level through voluntary measures.

I think that answering the first questions will not be too difficult. Getting agreement on the type of label and the information is after all not rocket science. In France, the ethanol industry has already done some detailed work that could be easily considered a ready-to-copy best practice. Good work has also been done in the U.S. by the Renewable Fuels Association. Its E15 Retailer Handbook could certainly be used to showcase how detailed and professional information can be provided to retailers once they have to handle midlevel blends.

The level at which action should be undertaken will be more controversial. Most likely the oil industry will opt for voluntary actions and measures, assuring that they can become the master of the game. For the rather small biofuels industry, a harmonized regulatory initiative in the EU would be much better to guarantee a balance of power among market operators. The price to pay for that, however, is that the process will take more time before the stickers can be glued to the pump.

For the ethanol industry, it is critical that this whole process should not take too long. As more countries move towards E10, a certain urgency is needed. Having the customers’ confidence that an E10 fuel is a good and reliable fuel is crucial in building, maintaining and even going beyond this market.

We better get the label right, and soon.

Author: Robert Vierhout
Secretary-general, ePURE