IN THE SPANISH BIOFUELS SECTOR APPA BIOCARBURANTES National - - PowerPoint PPT Presentation

LATEST DEVELOPMENTS IN THE SPANISH BIOFUELS SECTOR

APPA BIOCARBURANTES

National Biofuels Associations Network 14 March 2012 Barcelona

Presentation Outline

I. Update on the Spanish biofuels market

1. Production 2. Consumption & blending mandates 3. National RES-T targets for 2020 4. Fiscal incentives 5. Imports & Exports 6. Measures to prevent disloyal imports 7. Higher biofuels blends (technical specifications and use): B10, B20, B30, E10, E85 8. HVO & Other biofuels 9. Feedstocks

II. Main regulatory developments

1. Implementation of the RED sustainability requirements 2. Double-counting

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• I. Update on the

Spanish biofuels market

I.1. Production: Biodiesel

1.000.000 2.000.000 3.000.000 4.000.000 5.000.000 mt

Evolution of the annual biodiesel production in relation to installed capacity

Production (mt) 148.777 242.585 611.271 1.203.050 647.199 Capacity (mt/y) 815.190 2.070.020 4.110.400 4.371.400 4.589.400 2007 2008 2009 2010 2011

Source: APPA Biocarburantes & CORES & AEAT

18% 12% 15% 28% 14%

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I.1. Production: Bioethanol

100.000 200.000 300.000 400.000 500.000 mt

Evolution of bioethanol production in relation to installed capacity

Production (mt) 284.131 273.377 366.892 371.980 365.689 Capacity(mt/y) 456.000 456.000 464.058 464.058 464.058 2007 2008 2009 2010 2011

Source: APPA Biocarburantes

62% 60% 79% 80% 78% 5

I.2. Consumption: Biodiesel

* Figures for 2011 include the consumption of HVO

500.000 1.000.000 1.500.000 2.000.000 mt

Evolution of annual consumption of biofuels in diesel in Spain

Biofuels in diesel cons. (mt)* 62.909 292.646 588.402 1.028.407 1.349.538 1.632.782 2006 2007 2008 2009 2010 2011

Source: APPA Biocarburantes & CORES

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I.2. Consumption: Bioethanol

100.000 200.000 300.000 400.000 mt

Evolution of annual bioethanol consumption in Spain

Bioethanol consumption (mt) 144.157 236.240 361.584 356.199 2008 2009 2010 2011

Source: CORES

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I.2. Mandatory biofuels consumption targets

2011 2012 2013

Overall target*

6,2% 6,5% 6,5%

Biofuels in diesel target*

6,0% 7,0% 7,0%

Biofuels in petrol target*

3,9% 4,1% 4,1%

*In energy content Limited flexibility as regards the type of biofuel to use to reach the global targets

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 Spain set a relatively high

target compared to other MS: 13,6% RES in transport in 2020 → 4.322 ktoe

 More than 87% would come

from biofuels

 Electric vehicles (EV):

modest share despite

• verly optimistic estimate

(2,5 million in 2020)

 Negligible contribution of

biofuels other than biodiesel and bioethanol



Targets and trajectories for biofuels in the Spanish National Renewable Energy Action Plan (NREAP):

I.3. National RES-T targets for 2020

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

Targets and trajectories for biofuels in the Spanish Plan for Renewable Energies 2011-2020:



The target is reduced compared to the NREAP: 11,3% RES in transport in 2020 → 3.651 ktoe



81% of the target will come from biofuels:



2.313 ktoe biodiesel – 200 ktoe 2nd generation



400 ktoe bioethanol – 52 ktoe 2nd generation

Although certain measures to develop higher blends are considered, the biofuels consumption targets are unjustifiably reduced and insufficient.

I.3. National RES-T targets for 2020

I.4. Fiscal incentives

 Tax exemption for all types of biofuels incorporated into

diesel and gasoline until 31 December 2012

 It is highly likely that this tax exemption will not be

extended beyond this date

 APPA Biofuels has repeatedly asked the government to

extend this fiscal incentive until 31 December 2018, at least for higher blends and second generation biofuels

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I.5. Imports: Biodiesel (1)

* Figures for 2011 include the consumption of HVO

500.000 1.000.000 1.500.000 2.000.000 mt

Evolution of the consumption of biofuels in diesel in Spain by origin

Biodiesel imports (mt) 149.720 369.584 610.044 837.915 1.211.397 Rest of national cons. (mt)* 62.909 142.926 218.818 418.363 511.624 421.386 2006 2007 2008 2009 2010 2011

Source: APPA Biocarburantes & CORES&AEAT

0% 51% 63% 59% 62% 74%

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I.5. Imports: Biodiesel (2)

200.000 400.000 600.000 800.000 mt

Evolution of pure biodiesel imports from Argentina and Indonesia

2008 85 72.832 2009 197.368 36.009 2010 442.591 198.185 2011 719.473 325.470 Argentina Indonesia

Source: AEAT

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I.5. Imports: Bioethanol

100.000 200.000 300.000 400.000 mt

Evolution of annual bioethanol consumption in Spain by origin

Imports (mt) 67.685 164.424 158.942 National production (mt) 168.555 197.159 197.257 2009 2010 2011

Source: APPA Biocarburantes & CORES

29% 45% 45%

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I.5. Exports: Biodiesel

100.000 200.000 300.000 400.000 500.000 600.000 700.000 mt

Evolution of Spanish biodiesel exports

Exports (mt) 23.767 192.908 691.426 225.813 2008 2009 2010 2011

Source: AEAT

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I.5. Exports: Bioethanol

100.000 200.000 300.000 400.000 mt

Evolution of Spanish bioethanol exports

Exports (mt) 94.241 91.663 198.661 180.155 166.861 Spanish market (mt) 198.658 177.303 168.555 197.159 197.257 2007 2008 2009 2010 2011

Source: APPA Biocarburantes

32% 34% 54% 48% 46%

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74% of all biodiesel consumed in Spain in 2011 was imported, mostly from Argentina (59%) and Indonesia (27%)

 Draft ministerial Order to

prevent disloyal competition from third countries:

 Allocation of biodiesel

quantities to approved EU production plants to achieve national objectives

 The quantities to be

allocated are twice higher than the national biodiesel demand → fair competition is ensured

 The system would run for an

initial period of 2 years, may be extended to 2 more

Urgent measures against unfair biodiesel imports are necessary

I.6. Measures to prevent disloyal imports (1)

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 Strong pressures from Argentina have led to a very long

delay in the adoption of this Draft Ministerial Order

 Many of the 51 biodiesel plants had to either stop their

production or go into liquidation.

 Investments of 1.400 million euros and 4.000 qualified

jobs are currently at risk

 Possible solutions at EU level?

I.6. Measures to prevent disloyal imports (2)

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I.7 Higher biofuels blends (1)

 Technical specifications in Spain:

 There are currently no technical specifications for

higher biofuel blends (B20, B30, E85)

 However, one of the key measures proposed by the

Spanish Renewable Energy Plan 2011-2020 was to adopt national technical specifications for these blends, given the little progress achieved in CEN and the need to boost their consumption in Spain

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I.7 Higher biofuels blends (2)

 Technical specifications: the CEN work

 CEN is working on the development of EN 590 –diesel

specifications– to allow up to 10 % (V/V) FAME, following the Commission Mandate to CEN in 2006.

 Some vehicle manufacturers have claimed that certain types of

diesel particulate filters (DPF) systems are unable to use more than 7% (V/V) FAME due to increasing engine oil dilution and proposed to the Commission not to develop the B10 specification in EN 590 and to create a separated standard.

 Enquiry period of EN 590 that introduces 2 tables (B7 and B10)

finished on 6 March 2012. The result of the vote was 20 Yes, 3 No (Austria, Germany and Sweden) and 7 abstentions. Technical and editorial comments have been submitted.

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 Use:

500.000 1.000.000 1.500.000 2.000.000 mt

Consumption of B100 in Spain

B100 (mt) 100.161 41.225 40.839 25.520 In blends (mt)* 488.240 987.182 1.308.699 1.607.263 2008 2009 2010 2011

Source: CORES

96% 97% 83% 98%

I.7 Higher biofuels blends (3)

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* Figures for 2011 include the consumption of HVO

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390 petrol stations sell higher biodiesel blends (Source: MINETUR, March 2012) 34 petrol stations sell E85 in Spain (Source: Abengoa Bioenergía)

PETROL STATIONS

1 1 1 2 1 6 1 3 1 6 3 3 2 2 1

I.7 Higher biofuels blends (4)

 Use:

 Due to statistical limitations it is very difficult to estimate the exact

consumption of higher biodiesel and bioethanol blends.

 The number of petrol stations offering higher biodiesel blends

decreased by 16% between October 2010 and March 2012

 The modest use of these blends could be attributed to the following

reasons:

 The price difference between higher blends/diesel or gasoline is

not attractive enough for consumers

 No incentives for consumers and car manufacturers  Lack of information on the cars which could run on higher

blends and on the benefits of higher blends in general

I.7 Higher biofuels blends (5)

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 APPA Biofuels believes that several tools need to be

established to incentivize the wider use of higher biodiesel blends:

 Mandatory use of higher blends in all public transports

fleets.

 Gradual introduction of higher blends in all petrol stations.  Incentives for vehicle manufacturers to guarantee their

vehicles for the use of higher blends.

 Encourage the acquisition of these vehicles by establishing

exemptions in car taxes (registration…) and direct purchase subsidies.

I.7 Higher biofuels blends (6)

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I.8 HVO & Other biofuels

 The consumption of HVO in Spain started in July 2011,

after the energy content of this biofuel (0,8121 toe/m3) was included in the Ministerial Order that establishes the mechanism of biofuels obligations.

 HVO is co-processed in several Spanish oil refineries

(CEPSA and REPSOL) and also imported.

 In 4 months (from July to October 2011) the HVO

consumption in Spain reached 45.000 m3 (approx. 35.000 tons), which represents around 6% of the biofuels consumed in diesel.

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I.9. Feedstocks (1)

Feedstocks of the biodiesel produced in 2010 (Source: CNE, 2012)

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I.9. Feedstocks (2)

Feedstocks of the biodiesel consumed in 2010 (Source: CNE, 2012)

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I.9. Feedstocks (3)

Feedstocks of the bioethanol produced in 2010 (Source: CNE, 2012)

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I.9. Feedstocks (4)

Feedstocks of the bioethanol consumed in 2010 (Source: CNE, 2012)

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• II. Main regulatory developments



The RED sustainability criteria will be transposed via:



Royal Decree 1597/2011 published on 5 November 2011



Additional legal acts to be adopted in 2012



Shared responsibility of the Ministry of Industry, Energy and Tourism (MINETUR) and the National Commission for Energy (CNE)



Royal Decree 1597/2011on Biofuels Sustainability



Literal transposition of the sustainability criteria in the RED



Compliance with sustainability criteria required as of 1 January 2013



Three mechanisms to show compliance: national systems, voluntary schemes, bi/multilateral agreements

II.1. Implementation of the RED sustainability criteria (1)

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II.1. Implementation of the RED sustainability criteria (2)



The national system will be integrated into the current certification system for the biofuel consumption targets, managed by the CNE



Transition system until the approval of all necessary legal acts and the accreditation of the first confomity assessment bodies



During the transition system, all economic operators (from the farmer to the obligated party) need to sign self-declarations which will be passed on to the obligated party, who reports to the CNE



“Final” system: regular checks throughout the year by accredited conformity assessment bodies

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II.1. Implementation of the RED sustainability criteria (3)

 To be defined:  The rules for the implementation of the mass balance

system (reference period, definition of “site”, information allocation to outgoing consignments etc.)

 Frequency of reporting to the CNE  Content of self-declarations, provision of additional proofs  Treatment of consignments certified under voluntary

schemes

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 7 voluntary schemes have been recognized by the EC in July 2011  Next schemes to be approved possibly in July 2012  Most Spanish biofuel producers have chosen to obtain certification

from ISCC, 2BSvs and RBSA

 The mutual recognition between national systems-voluntary schemes

and between voluntary schemes themselves is still very problematic

RBSA

II.1. Voluntary schemes to certify biofuels sustainability

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II.2. Double-counting (1)

 Even though the Royal Decree 1597/2011 transposes article 21(2) of

the RED, it provides no details on the following essential aspects:

 Definitions wastes and residues  The feedstocks eligible for double-counting  The start date of double-counting  Traceability mechanism of double-counting biofuels

 The Secretary of State for Energy will adopt a definition or/and a list

• f eligible feedstocks during the course of this year

 The CNE is responsible for defining an adequate traceability

mechanism

 the Royal Decree mentions explicitly that the UCO producers are part of

the chain of custody

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II.2. Double-counting (2)

 List of eligible materials for double-counting purposes:

 It is difficult to elaborate objective criteria on the basis of which to

differentiate between “waste”, “residue” and “coproduct” and to decide whether a certain feedstock is a residue or not

 Different lists for different purposes (GHG, land-use criteria,

double-counting)?

 Lignocellulosic and cellulosic materials - not that controversial

(yet)

 Wastes: UCO? (definition of UCO?) – an agreement in more or

less all countries which have implemented double-counting that this is an eligible feedstock

 More controversial materials:

 Animal fats (category 1, 2 or 3?)  Oleins, PFAD, acid esters from glycerol treatment?  Marcs and wine lees? 36

II.2. Double-counting (3)

 Limits of consumption of double-counting biofuels?

 The implementation of double-counting has caused significant

reductions in the volumes of biofuels incorporated:

 E.g. The Netherlands: biofuels market share decreased from 3,5% in

2009 to 2% in 2010 (in energy terms). The largest part of the biofuel mandates were fulfilled by using UCOME

 Some countries have chosen to impose limits on the quantities of

double-counting biofuels which could be incorporated into the market:

 France: 0,35% of diesel consumed in 2012 for UCOME and TME ->

5% of the 7% target (in energy terms); TME counts 1,5 times.

 To what extent is this in line with the RED? Is this the best

solution to prevent the shrinking of the EU biofuels market (esp. biodiesel)?

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Thank you for your attention!

P.S.: check out our new Twitter account @appabiocarbur

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