The European Commission has proposed a coherent strategic approach and strong policy framework to meet the targets of the EU Climate Law. However, technical details for biofuels risk undermining the overall goal of a 55% reduction in greenhouse gas emissions.
Ylwa Alwarsdotter is Vice President of Business Development for Sekab BioFuels & Chemicals AB.
Sekab is a renewable biofuel and biochemical company, based in Sweden and operating at the heart of the EU sustainability agenda. Born from the need to find readily available alternatives to fossil-based transport fuels, we use sustainably harvested crops and undesired forest residues to produce fuels that dramatically reduce greenhouse gas emissions.
For this reason, we welcomed the publication of the European Green Deal, the Climate Law and the Fit for 55 Package. Our view is that thanks to these policy interventions, Europe has the right strategic approach and policy framework to ensure we become the world’s first carbon-neutral continent and reach the targets of the Paris Agreement.
However, in trying to regulate more granular aspects of the bioeconomy and biofuel sector, the European Commission risks undermining the natural circular economy of our forests, disrupting investment in a key enabler of GHG reductions and thus sacrificing our carbon reduction efforts.
The potential of the bioeconomy
Forests are a vital agent in our fight against climate change. They have a dual role in carbon mitigation as they both absorb carbon dioxide from the atmosphere and convert it into tree trunks, roots, branches and leaves; as well as providing us with renewable, non-fossil, fuel sources where residues are produced.
Careful forest management, therefore, has the potential to both increase employment for the European bioeconomy, and to meet our objective of moving towards climate neutrality. The Commission has recognized this with RED III creating an increased advanced biofuel mandate and the Bioeconomy Strategy recognizing the value of the sector in providing renewable energy solutions, construction, oils, binders, and more.
In applying the circular economy approach to forest management, our industry has found a way to use waste and residues and use it as an energy source. For example, SEKAB has invested significantly in transforming forest industry residues, such as sawdust from sawmills, into advanced fuels and chemicals. With a €500 million investment, we are planning to build a plant producing 100,000 m3 of advanced ethanol, 55,000 tonnes of marine fuel, 5,000 tonnes of LBG, and to use lignin as a bitumen replacement in asphalt.
Classifications of Waste
What can and cannot be considered as a “waste or residue” for advanced biofuels under Directive (EU) 2018/2001 (RED II), will be laid out in an Implementing Regulation on rules to verify sustainability and greenhouse gas emissions saving criteria and low indirect land-use change-risk criteria. Whereas the previous list under RED II included all types of waste from the forestry sector, including bark, branches, precommercial thinnings, sawdust and black liquor, the new list under the Implementing Regulation only includes ‘tall oil’.
In practice, this does not mean that residues would not be produced anymore, merely that they would not be used for renewable energy purposes. In addition to risking achieving our carbon reduction targets under the Climate Law, this risks future investment in the EU bioeconomy sector and may risk future supply of biofuels to the European sector.
In a similar manner to the natural circular economy which exists in our sector, a naturally occurring cascading use principle has long been in practice by forest owners. Price is the key driver of this cascading use principle given that stem wood is approximately x20 the price of low-grade wood on the market, while the pulp is approximately x8 the price of low-grade wood. Biomass and biofuels are therefore largely made from scrap lumber, treetops, and sawmill waste.
We know that just 0.7% of the biomass used to produce heat and energy, for example, could otherwise have been used for more long-lasting purposes. This means that the bioenergy sector already uses biomass like the cascading use sector would demand, only it provides for flexibility in a complex supply chain whereas the principle would increase administrative costs, and reduce this flexibility.
Through the application of the cascading use principle to biomass, as is proposed by RED III, and the need for audits against sourcing and production, this presents an unprecedented risk for our sector. Were this to require annual audits to ensure that the feedstock had been subject to a cascading use, it will be impossible for our sector to invest. It is therefore imperative that the cascading use audits are valid for no less than 15 years for the use of biomass feedstock.
The European Commission has made a compelling case for urgent climate action. Through its Green Deal, it has adopted a coherent strategic approach and with the EU Climate Law and Fit for 55 Package, we are on the right track towards a robust framework of legislation.
However, the details of the regulations betray a misunderstanding of the market forces of the forest sector and may ultimately come at the expense of reaching our GHG reduction targets.
The Commission must now urgently engage with members of the forestry and biofuels sector to ensure that an opportunity is not wasted by a restriction of what can be considered forest residues and to give the sector long-term predictability should the cascading use principle become a legal obligation.
Otherwise, as we say in Sweden, the European bioeconomy may barka åt skogen.