Amended proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the promotion of the use of biofuels for transport (presented by the Commission pursuant to Article 250 (2) of the EC-Treaty)

EXPLANATORY MEMORANDUM

A. Principles

1. In November 2001, the Commission submitted a Proposal for a Directive of the European Parliament and of the Council on the promotion of the use of biofuels for transport (COM(2001)547 final - 2001/0265(COD)) for adoption by the co-decision procedure laid down in Article 251 of the Treaty establishing the European Community.

2. On 4 July 2002, the European Parliament adopted a series of amendments at its first reading. The Commission gave its position on each of these amendments at that time, indicating those amendments it could accept as they are, those that could be accepted in principle and/or with redrafting, those that could be accepted in part and those that could not be accepted.

3. In the light of this, the Commission has drafted this amended proposal.

4. The Commission made three types of amendments with the following justifications.

Firstly, a number of new provisions have been accepted from the first reading by the European Parliament as they are. These amendments serve to improve definitions or to add clarity and elaborate and illustrate points in the proposal.

Secondly, the Commission has accepted some amendments in principle, although with minor redrafting, e.g. to improve consistency with other parts of the proposal or to define more clearly certain conditions, limits or exceptions.

Thirdly, the Commission has taken parts of amendments from the first reading when and where these specific parts were deemed consistent with the purpose of the proposal and provided added value while for the amendment in its entirety, this was not the case.

Moreover, the Commission has introduced some editorial changes in accordance with the guidelines of the Interinstitutional Agreement.

B. Comments as regards the accepted amendments

Recitals

Recital 3

This new recital emphasizes the use of secondary biomass and the parallel production of vegetable proteins.

Recital 4

This amendment recalls the enlargement.

Recital 5

This new recital mentions the White Paper on transport and emphasizes the importance of using alternative fuels such as biofuels.

Recital 7

This amendment is in line with the Communication on alternative fuels.

Recital 8

This new recital touches the biofuels blends and recalls the normal integration of biofuels into the fuel market.

Recital 9

This new recital welcomes an orientation of research on biofuels.

Recital 10

This new recital provides useful information to the customer.

Recital 11

This new recital talks about the development in the future of - more specifically - the hydrogen option, and is in line with the Communication on alternative fuels.

Recital 12

This new recital reminds that a Research policy contributes to the compatibility of biofuels and hydrogen.

Recital 13

This new recital - of which the wording was adapted - concerns the standards for biofuels and constitutes a good mixture of quality exigencies and a reasonable level of flexibility for a new market.

Recital 14

This new recital welcomes harmonised standards, more specifically for bioethanol and biodiesel.

Recital 15

This amendment - which is partially accepted - concerns the contribution of biofuels to the multifunctionality of agriculture.

Recital 17

This new recital concerns objectives set in the Commission's Green Paper on Security of Supply and is also in line with the Communication on alternative fuels.

Recital 18

This new recital clarifies that alternative fuels will have to become more widespread in order to achieve market penetration.

Recital 19

This amendment completes the text of the Parliament Resolution.

Recital 20

This amendment suggests a possible enlargement of actors.

Recital 22

This new recital recalls the normal integration of biofuels.

Recital 24

This new recital - of which the wording was adapted - promotes research on the sustainability of biofuels.

Recital 25

This new recital clarifies and supports Article 4.3 of the Proposal.

Recital 26

This - partially accepted - amendment talks about different biofuels and other, alternative fuels. These types of oils were already included in the general biomass definition.

Recital 27

This new recital contributes to the development of biofuels as it sets provisions for the development of appropriate quality standards.

Recital 28

This new recital reinforces coherent national policies.

Recital 29

This new recital promotes clear information to the customers.

Recital 30

This new recital recalls the creation of a new, agricultural market.

Articles

Article 2

Point 2

Editiorial change in order to stay coherent with the change in the Annex - Part A.

Article 3

Point 2

This amendment introduces a reporting system on the environmental impact and on the costs by Member States to the Commission and is in line with the agreement at the Energy Council.

Point 3

This new - slightly reworded - text allows for the promotion of the technical development of biofuels and stresses the importance of a coherent national policy.

Point 4 - a

This amendment is a recall on existing biofuels with high blends.

Point 6

This new point puts priority on the promotion of biofuels in public transport and is in line with the Commission's policy in transport.

Point 7

This new point gives priority to the promotion of biofuels with a good environmental balance and is in line with the Commission's policy on the promotion of biofuels and on the integration of environmental concerns.

Article 4

Point 1

This amendment specifies more as well as clarifies the reporting system by the Member States to the Commission. It also introduces a date for the introduction of the first report.

Point 2

This new point promotes the possibilities of biofuels to the public and gives information to consumers.

Point 3

This amendment specifies aspects about the Commission's evaluation report to be published every two years and stimulates environmentally-friendly concerns. This is in line with the promotion of biofuels and the integration of environmental concerns.

Point 4

This new point introduces compliance with standard pr EN 14214 of biodiesel end products for fuels and is in line with the existing European standards.

Article 5

Paragraph 3

This new paragraph stresses the importance of environmental criteria.

Paragraphs 4 and 5

These new paragraphs introduce a transitional period (under specific conditions) of maximum 2 years for Member States with special difficulties.

Annexes

Part A - title

This amendment clarifies that Annex A is not a closed list.

Part A - 'biodiesel' definition

This amendment details part of the biodiesel definition and it clarifies the standards.

Part A - 'biohydrogen' definition

This new definition is introduced, as Annex A is not a closed list. The inclusion of this definition follows the view of the Commission's Communication on alternative fuels.

Part B - table

The last column of the table on the blending percentage has been taken and Article 3 has been adapted accordingly.

2001/0265 (COD)

Amended proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the promotion of the use of biofuels for transport

(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 175(1) thereof,

Having regard to the proposal from the Commission [1],

[1] OJ C

Having regard to the opinion of the Economic and Social Committee [2],

[2] OJ C

Having regard to the opinion of the Committee of the Regions [3],

[3] OJ C

Acting in accordance with the procedure laid down in Article 251 of the Treaty [4],

[4] OJ C

Whereas:

(1) The European Council meeting at Gothenburg on 15 and 16 June 2001 adopted a Community strategy for sustainable development consisting in a set of measures, which include the development of biofuels.

(2) Natural resources, and their prudent and rational utilisation as referred to in Article 174(1) of the Treaty, include oil, natural gas and solid fuels, which are essential sources of energy but also the leading sources of carbon dioxide emissions.

(3) However, there is a wide range of renewable biomass that could be used to produce biofuels, deriving from agricultural and forestry products, as well as residues and waste from forestry and the forestry and agrifoodstuffs industry. In addition, it is also possible to obtain by-products which are rich in vegetable protein for animal fodder

(4) The transport sector accounts for more than 30% of final energy consumption in the Community and is expanding - a trend which is bound to increase, along with carbon dioxide emissions. That expansion will be greater in percentage terms in the candidate countries following their accession to the European Union.

(5) According to the Commission's White Paper "European transport policy for 2010: time to decide" [5], CO2 emissions from transport are expected to rise by 50% between 1990 and 2010, to around 1 113 million tonnes, the main source being road transport, which accounts for 84% of transport-related CO2 emissions. From an ecological point of view, the White Paper therefore calls for dependence on oil (currently 98%) in the transport sector to be reduced by using alternative fuels such as biofuels.

[5] COM(2001)370

(6) Greater use of biofuels for transport forms a part of the package of measures needed to comply with the Kyoto Protocol, and of any policy package to meet further commitments.

(7) Increased use of biofuels for transport, without ruling out other possible alternatives to fossil fuels, including automotive LPG (Liquefied Petroleum Gas), is one of the tools with which the Community can reduce its energy dependence and influence the global fuel market for transport and hence the security of energy supply in the medium and long term.

(8) Biofuel production technology is highly advanced with the result that the engines of vehicles currently in circulation in the Community can use a 5% biofuel blend without any problem. The most recent technological develoments make it possible to use higher percentages of biofuel in the blend. Some countries are already using biofuel blends of 10% and higher.

(9) The research policy pursued by the Member States on increased use of biofuels should include, wherever technically possible and safe, the use of biofuels blended with kerosene, especially for air transport.

(10) Captive fleets offer vast potential for research and the gradual introduction of biofuels. They offer the possibility of using a high concentration of biofuels. In some cities, captive fleets are already operating on pure biofuels which help to improve air quality in urban areas. When fuels containing more that 5% biofuel are put on sale, they should be clearly labelled.

(11) Promoting the use of biofuels in transport is just one step towards the more efficient use of biomass which will enable biofuels, and, in particular, the hydrogen option, to be more extensively developed in the future.

(12) The research policy pursued by the Member States relating to increased use of biofuels should incorporate the hydrogen sector to a significant degree and promote it as part of the Sixth Framework Programme of Research and Development.

(13) New types of fuel must conform to recognised technical standards if they are to gain greater acceptance by customers and vehicle manufacturers and hence penetrate the market. Technical standards also form the basis for requirements concerning emissions and the monitoring of emissions. New types of fuel may find it difficult to meet current technical standards which have largely been developed for conventional fossil fuels. The Commission and standardisation bodies should monitor developments and actively adapt and develop standards so that new types of fuel can be introduced, whilst environmental performance requirements are maintained.

(14) Bioethanol and biodiesel, when used for vehicles in pure form or as a blend, should comply with the quality standards laid down to ensure optimum engine performance. Accordingly, the European Committee for Standardisation (CEN) should lay down standards for the Community as a whole.

(15) Promoting the use of biofuels in keeping with sustainable farming and forestry practices laid down in the rules governing the Common Agricultural Policy will create new opportunities for sustainable rural development in a Common Agriculture Policy geared more to the Community market and to respect for rural life and multifunctional agriculture. Cultivation of plants for use in the production of biofuels should be integrated into current cultivation programmes, in accordance with the principle of crop rotation, and should not lead to the creation of single-crop systems. The multifunctional role of agriculture will come into play and create jobs in rural areas. In order to ensure sustainable farming practices, a set of clear environmental criteria for the production of liquid biofuels must be established.

(16) In its resolutions of 8 June1998 [6] and of 5 December 2000 the Council endorsed the Commission's Strategy and Action Plan for Renewable Energy Sources and requested specific measures in the biofuels sector.

[6] OJ C 198, 24.6.1998, p. 1.

(17) The Commission Green Paper "Towards a European Strategy for the Security of Energy Supply" [7] sets the objective of 20% substitution of conventional fuels by alternative fuels in the road transport sector by the year 2020.

[7] COM(2000)769 final

(18) Alternative fuels will only be able to achieve market penetration if they are widely available and competitive.

(19) In its resolution of 18 June 1998 [8] the European Parliament called for an increase in the market share of biofuels to 2% over five years through a package of measures, including tax exemption, financial assistance for the processing industry and the establishment of a compulsory rate of biofuels for oil companies.

[8] OJ C 210, 6.7.1998, p. 215.

(20) The optimum method for increasing the share of biofuels in the national and Community markets depends on the availability of resources and raw materials, on national and Community policies to promote biofuels and on tax arrangements..

(21) National policies to promote the use of biofuels should not lead to prohibition of the free movement of fuels that meet the harmonised environmental specifications as laid down in Community legislation.

(22) Promotion of the production and use of biofuels will contribute to a reduction in energy dependency and in emissions of greenhouse gases. In addition, biofuels may be used in existing motor vehicles and be sold through the existing motor vehicle fuel distribution system. Accordingly, no expensive investment in infrastructure or engine redesign will be necessary.

(23) Since the objective of the proposed action, namely the introduction of general principles providing for a minimum percentage of biofuels to be marketed and distributed, cannot be sufficiently achieved by the Member States by reason of the scale of the action, and can therefore be better achieved at Community level, the Community may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty. In accordance with the principle of proportionality, as set out in that Article, this Directive does not go beyond what is necessary in order to achieve that objective.

(24) Research and technological development in the field of the sustainability of biofuels should be promoted.

(25) An increase in the use of biofuels should be accompanied by a detailed analysis of the environmental, economic and social impact, in order to decide whether it is advisable to increase the proportion of biofuels in relation to conventional fuels.

(26) Provision should be made for the possibility of rapidly adapting the list of biofuels, the percentage of renewable contents, and the schedule for introducing biofuels in the transport fuel market, to technical progress and to the results of an environmental impact assessment of the first stage of introduction. In this connection, consideration should also be given to different biofuels like pure, cold-pressed vegetable oil, such as rapeseed oil, which can be produced in an environmentally friendly way, and whose by-products also contain protein and can be used as animal feed. Other alternative fuels could also be taken into account, such as automotive LPG (Liquefied Petroleum Gas), LNG (Liquefied Natural Gas), DME (Dimithylether) and CNG (Compressed Natural Gas), which are already used in the transport fuel market.

(27) Provision should be made for rapidly developing the quality standards for biofuels to be used in the automotive sector, both as pure biofuels and as a blending component in conventional fuels. Although the biodegradable fraction of waste is a useful source of biofuels, the quality standard should take account of the possible presence of contaminants in the waste to preclude the risk of specific components damaging the vehicle and/or causing higher levels of emissions.

(28) Encouragement of the promotion of biofuels should be consistent with security of supply and environmental objectives and other related policy objectives, as well as with any measures taken within each Member State.

(29) Since the use of biofuels above a certain concentration requires special adaptation of vehicles to avoid technical and safety problems, pure biofuels or blended fuels with a concentration of biofuels exceeding the maximum limit which can be tolerated by existing vehicles should be clearly and visibly labelled at the point of delivery.

(30) The demand for biofuels in the Community and thus in other countries could open up a new market for innovative agricultural products.

(31) Since the measures necessary for the implementation of this Directive are measures of general scope within the meaning of Article 2 of Council Decision 1999/468/EC of 28 June 1999 laying down the procedures for the exercise of implementing powers conferred on the Commission [9], they should be adopted by use of the regulatory procedure provided for in Article 5 of that Decision,

[9] OJ L 184, 17.7.1999, p. 23.

HAVE ADOPTED THIS DIRECTIVE:

Article 1

This Directive sets a minimum percentage of biofuels to replace diesel or gasoline for transport purposes in each Member State.

Article 2

1. For the purpose of this Directive, the following definitions shall apply:

(a) "biofuels" means liquid or gaseous fuel for transport produced from biomass;

(b) "biomass" means the biodegradable fraction of products, waste and residues from agriculture (including vegetal and animal substances), forestry and related industries, as well as the biodegradable fraction of industrial and municipal waste;

(c) "energy content" means the lower caloric value of a fuel.

2. Shall be considered biofuels in particular the products listed in Part A of the Annex.

Article 3

1. Member States shall ensure that the minimum proportion of biofuels sold on their markets is 2%, calculated on the basis of energy content, of all gasoline and diesel sold for transport purposes on their markets by 31 December 2005 and that this share increasesin accordance with the schedule set out in Part B of the Annex.

2. The Member States shall submit to the Commission a detailed report on the environmental impact of the planned measures and a breakdown of the costs. The report shall cover at least the following :

a. land use,

b. degree of intensity of cultivation

c. use of pesticides,

d. protection of watercourses,

e. energy efficiency,

f. potential emission of greenhouse gases,

g. combustion behaviour.

The report shall be made available to the public.

3. Member States may promote the technological development of biofuel production and of the companies involved in its production using financial instruments for research, the environment and regional development.

4. Biofuels may be made available in any of the following forms:

(a) as pure biofuels or at high concentration in mineral oil derivatives, in accordance with specific quality standards for transport applications;

(b) as biofuels blended in mineral oil derivatives taking into account the appropriate European norms describing the technical specifications for transport fuels (EN 228 and EN 590);

(c) as liquids derived from biofuels, such as ETBE (ethyl-tertio-butyl-ether), where the percentage of biofuel is specified in the Part A of the Annex.

5. Member States shall monitor the effect of the use of biofuels in diesel blends above 5% by non-adapted vehicles and shall, where appropriate, take measures to ensure compliance with the relevant Community legislation on emission standards.

6. Member States shall give priority to promoting the use of biofuels in public and collective transport.

7. In the measures that they take, Member States shall consider the overall environmental balance of the various types of biofuels and give priority to the promotion of those biofuels with a very good environmental balance.

Article 4

1. Member States shall report to the Commission, before 1 July each year, on the measures adopted to ensure compliance with the targets laid down in Article 3 and in Part B of the Annex, on the total sales of transport fuel and the share of biofuels in such sales for the preceding year. The first report shall be submitted by 30 June 2004.

2. Member States shall inform consumers through public bodies about the possibilities of using biofuels.

3. By 31 December 2006 at the latest, and every two years thereafter, taking into account the reports referred to in Article 3(2), the Commission shall draw up an evaluation report for the European Parliament and for the Council on the progress made in the use of biofuels in the Member States, on the economical aspects and on the environmental impact of the current situation and of further increases in the share of biofuels.

To this end, the Commission shall devise a specific environmental impact assessment incorporating a comprehensive life-cycle analysis of the use of biofuels. In that report, the Commission shall pay particular attention to environmental aspects, in particular variations in water quality, soil erosion, use of inputs and pesticides, the preservation of natural habitats, flora and fauna and to the consequences of the changes caused by the biofuels connected with the production of biomass.

The report may also consider the possibility of introducing a selective tax on the various biodiesels, on the basis of environmental criteria. On the basis of the report, the Commission shall propose, to the European Parliament and the Council, where appropriate,new targets for biofuels as laid down in Article 3 and in Part B of the Annex, possibly by introducing a minimum blending percentage.

4. Biodiesel end products intended for fuel and produced through esterification or fatty acids shall comply with standards pr EN 14214 of the European Committee for Standardisation on fatty acid methyl esters (FAME) for diesel engines.

Article 5

The Annex may be adapted to technical progress in accordance with the procedure referred to in Article 6(2).

The schedule in Part B of the Annex may be adapted in accordance with the procedure referred to in Article 6(2), on the basis of technical development of biofuel technologies, market penetration and applications in means of transport.

When the Annex is adapted pursuant to the first and second paragraph, environmental criteria shall be set for the use of biofuels.

On the basis of the information provided by the Member States pursuant to Article 4(1), the Commission may exempt from the targets laid down in Article 3 and in Part B of the Annex, those Member States which have particular difficulties in meeting them and which so request. Such exemptions may not exceed two years.

As a condition of obtaining such an exemption, Member States shall provide the Commission with an action plan demonstrating how they will meet scheduled targets as they will apply at the time of the expiry of the exemption. A Member State may be granted an exemption only once.

Article 6

1. The Commission shall be assisted by the committee instituted by Article 4(2)of Council Decision 1999/21/EC Euratom [10].

[10] OJ L 7, 13.1.1999, p. 16.

2. Where reference is made to this paragraph, the regulatory procedure laid down in Article 5 of Decision 1999/468/EC shall apply, in compliance with Article 7 and Article 8 thereof.

3. The period provided for in Article 5(6) of Decision 1999/468/EC shall be three months.

Article 7

1. Member States shall bring into force the laws, regulations and administrative provisions necessary to comply with this Directive by 31 December 2004 at the latest. They shall forthwith inform the Commission thereof.

When Member States adopt those provisions, they shall contain a reference to this Directive or be accompanied by such reference on the occasion of their official publication. Member States shall determine how such reference is to be made.

2. Member States shall communicate to the Commission the provisions of national law which they adopt in the field covered by this Directive.

Article 8

This Directive shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Communities.

Article 9

This Directive is addressed to the Member States.

Done at Brussels,

For the European Parliament For the Council

The President The President

ANNEX

A. Examples of possible biofuels and percentage of renewable contents

"Bioethanol": ethanol produced from biomass and/or the biodegradable fraction of waste, to be used as biofuel;

"Biodiesel": a diesel quality liquid fuel produced from biomass, including animal fats and tallow from rendering plants or used fried oils in compliance with the pr EN 14214 standard for FAME (Fatty Acid Methyl Ester) to be used as biofuel;

"Biogas": a fuel gas produced by the anaerobic fermentation of biomass and/or the biodegradable fraction of waste that can be purified to natural gas quality, to be used as biofuel;

"Biomethanol": methanol produced from biomass and/or the biodegradable fraction of waste, to be used as biofuel;

"Biodimethylether": dimethylether produced from biomass and/or the biodegradable fraction of waste, to be used as biofuel;

"Biohydrogen" : hydrogen produced from biomass and/or the biodegradable fraction of waste, to be used as a biofuel.

"BioETBE (ethyl-tertio-butyl-ether)": ETBE produced on the basis of bioethanol.

The percentage of volume bioETBE that is calculated as biofuel is 45%.

B. Minimum amount of sold biofuel as a percentage of sold gasoline and diesel

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