Analysis of biofuel support policies

May 2007

The progress in introducing biofuels remains low on an EU average. Biofuels consumption merely reached 1% of all transport fuels consumed by the end of 2005, half of the indicative target of 2% set by the EU.
This shortcoming is due to the fact that biofuels production and consumption are concentrated on a limited number of Member States, with other Member States only slowly building up a domestic support policy.
In 2005, more than 80% of overall EU biodiesel was produced in only three Member States – Germany, France and Italy. Likewise, Spain, Sweden, Germany and France contributed to 80% of EU's bioethanol production. Assessing the measures and market conditions related to the successful introduction of biofuels in a selected number of Member States can thus deliver important insights into how to further accelerate the deployment of alternative motor fuels in the EU. This is the focus of the PREMIA project, a specific support action funded under the sixth RTD framework programme. In this paper, the preliminary results of the analysis of a variety of biofuel support measures and technologies will be presented, combining scenarios evaluating different future policy options with the historic assessment of biofuel policies that were carried out as part of the PREMIA project.
Bearing in mind that the 10% biofuel target implies a 10-fold increase in consumption levels between 2005 and 2020, a future biofuel policy will need to be efficient and effective at the same time. On the other hand, larger markets and increasing numbers of biofuel production pathways with different characteristics in terms of greenhouse gas emissions, production costs and potentials allow for a differentiation of the market.
Member States may decide to favour a certain biofuel strategy (e.g. with regard to imports, production pathways) in order to better serve the objectives underlying their biofuel support policy, i.e. increasing supply security, reducing GHG emissions and supporting the agricultural sector. It is thus of interest to analyse complementary policies and measures for their suitability to provide such steering. The results of this analysis are presented in chapter five of this paper.
Chapter two introduces the PREMIA biofuel model, followed by an overview of the scenarios produced. As the choice of some hypothesis and input parameters largely determines the scenario outcome, they are explained in detail in chapter four, complemented by the assessment of the response of the model to changes in key parameters. After the assessment of policies and measures, conclusions are provided.

By: T. Wiesenthal, B. Schade, P. Christidis, G. Leduc, L. Pelkmans, L. Govaerts

 
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