Opinion of the European Economic and Social Committee on The development and promotion of alternative fuels for road transport in the European Union
Date: 2006-05-17
Institutions: European Economic and Social Committee
Subjects: energy policy, energy technology, natural gas, road transport, substitute fuel

18.8.2006

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Official Journal of the European Union

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Opinion of the European Economic and Social Committee on The development and promotion of
alternative fuels for road transport in the European Union

(2006/C 195/20)

On 14 July 2005, the European Economic and Social Committee, acting under Rule 29(2) of its Rules of
Procedure, decided to draw up an opinion on: The development and promotion of alternative fuels for road trans-
port in the European Union

The Section for Transport, Energy, Infrastructure and Information Society, which was responsible for
preparing the Committee's work on the subject, adopted its opinion on 24 March 2006. The rapporteur
was Mr Ranocchiari.

At its 427th plenary session of 17 and 18 May 2006 (meeting of 17 May ) the European Economic and
Social Committee adopted the following opinion by 82 votes to 2, with 1 abstention:

1. Executive summary and recommendations

1.1
Energy demand is expected to grow dramatically in the
next decades and public concerns are mounting over energy
dependence from outside regions and environmental issue.

The EESC is fully aware of the problem and it has been
1.2
adopting important exploratory or own initiative opinion on
key energy issues (1), while some others are still under discus-
sion (2).

traditional

All the EESC opinions concur on some fundamental
1.3
assumptions. The dominance of
(fossil) energy
sources will continue for the next two or three decades. At the
same time the contribution from renewable energies will defi-
nitely grow but not at a rate above that of energy consumption.
Their share in the energy supply will stay 15 % to 20 % of
energy consumption. Nevertheless renewable energy sources
have a preferential role to play and must be promoted and
supported.

1.4
The same occurs for the road transport sector which is
practically fully depending on oil (gasoline and conventional
diesel). The present opinion therefore intends to make a contri-
bution to the European Commission challenging objective of a
20 % substitution of traditional fuels by alternative ones before
the year 2020.

1.5
The Commission plan entrusts biofuels, Natural Gas
(NG) and Hydrogen (H2) with the task of displacing petroleum-
derived fuels. As a matter of fact because of its fossil origin NG
should not be considered as a full alternative fuel as it is not a
renewable source, nevertheless its contribution to the Commis-
sion objective is of paramount importance, because of its large
availability and environmental benefits. None of the two first
is perfect, entirely free of adverse
options (biofuel and NG)

(1) Promoting renewable energy: Means of actions and financing instru-
ments (OJ C 108, 30.4.04); Nuclear fusion (OJ C 302, 7.12.04);
Prospects for traditional energy sources (OJ C 28, 3.2.06); Renew-
able energy sources (OJ C 65, 17.3.2006); Energy efficiency (OJ C
110, 9.5.2006).

(2) Energy supply of the EU: strategy for an optimal energy mix (CESE

TEN/227).

effects on the environment, and on energy efficiency. Hydrogen
seems to be the correct answer but much more R&D is
required to come up with a safe and cost-effective ‘Hydrogen
Economy’.

Biofuels bring about environmental benefits because as a
1.6
rule they have a much lower impact on the climate and ideally
have no impact at all. Since crop-based fuels such as bioethanol
and FAME (Fatty Acid Methyl Ester) are available in quantities
which are commensurate with the crop itself, blending of
bioethanol into the gasoline pool and of FAME in the diesel
pool is an effective and environmentally sound strategy.

1.7
Blending components must comply with the specifica-
tions issued e.g. by CEN (Comité Européen de Normalisation)
in order to preserve the proper functioning of the engine and
to prevent that fuel consumption and exhaust emission deterio-
rate. Higher concentration of FAME in diesel
fuel requires
specific vehicle adaptation. This is a possibility in case of dedi-
cated fleet e.g. city buses.

1.8
The Commission issued the Directive 2003/30/EC to
promote the use of biofuels while regarding NG no specific
initiatives were taken to date, but the possibility of tax reduc-
tion is the same as for the biofuels: yet it expects from NG the
largest single contribution to the 2020 objectives. Apparently
the European Commission wanted to see how things were
going to develop for NG as the result of the tax advantage.

Five years after the Commission communication and
1.9
three years after the Directive on alternative fuels, progresses
are below expectations because Member States are not on track
to meet the scheduled targets. This is possibly one of the
the European Commission recently issued a
reasons
Communication on ‘Biomass action Plan’ (3).

that

(3) COM(2005) 628 final on 7 December 2005.

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1.9.1
The plan refers to biomass use in transport, electricity
and heating. Main action proposed on the transport sector are:
i) new EU legislation on the use of renewable energies;
ii) a
possible revision of biofuels directive, during 2006, which may
set national targets for the share of biofuels and would compel
fuel suppliers to use biofuels;
iii) Member States national
biomass action plans;
research into second generation
biofuels (from wood and waste).

iv)

1.9.2
According to the Commission expectations the plan
should reduce oil imports by 8 %, prevent greenhouse gas emis-
sions of 209 million tonnes CO2-equivalent with a direct cost
of EUR 9 billion per year. Six billions out of nine will be
devoted to transport biofuels, which are much more expensive
than petroleum derived fuels (e.g. to be competitive biodiesel
needs an oil price of about $95/barrel while bioethanol needs a
price of about $115/barrel (4)).

1.9.3
The EESC warmly welcomes the Action Plan because
it is in line with the present opinion aiming to spur the other
European Institutions and Member States into giving more
impulse to appropriate measures for the promotion of alterna-
tive fuels.

The EESC also welcomes the latest communication of
1.9.4
the Commission on ‘An EU strategy for biofuels’ (5) urging new
drive to boost biofuels production.

2. Reasons

In November 2001 the European Commission issued a
2.1
communication concerning alternative fuels for road trans-
port (6) which followed up on the Green Paper Towards a Euro-
pean Strategy for the Security of Energy Supply (7) and on the
for 2010 (8). The
White Paper European Transport Policy
November 2001 communication contained an action plan in
two points.

The first point aimed at expanding the use of biofuels
2.2
following a twofold approach. On the one hand it envisaged to
put on the market an ever increasing quantity of biofuel
blended gasoline and diesel
in order to pave the way to a
mandated biofuels blending. On the other hand it proposed tax
incentives in order to make biofuels financially attractive, also
including NG in this proposal. The EECS expressed its opinion
on this first point on 25 April 2002 (9). Eventually both propo-
sals were adopted (10).

2.3
The second point called for an Alternative Fuels Contact
Group whose charter was to give the Commission advices on
market development of alternative fuels at large, and of Natural
Gas (NG) and hydrogen (H2) in particular. The Contact Group's
study was to cover the next 20 years in line with the Commis-
sion's objective that is to grow the alternative fuels market to
the extent that by 2020 they can substitute for one fifth (20 %)
of the petroleum derived fuels.

In December 2003 the Contact Group issued a thorough

2.4
and factual report (11).

1.10
As a matter of fact, whilst biofuels and NG can expand
on the market thanks to engine technology and fuel distribu-
tion system, and this expansion makes it possible to displace
long term
petroleum-derived fuels to the envisaged extent,
alternatives such as hydrogen are the object of development
efforts: in other words, biofuels and NG are a bridge to the
sustainable fuel mix of the 2020 and beyond.

3. The 2020 scenario and how to get there

In the Commission's plan biofuels, NG, and H2 are the
3.1
three alternative fuels which are expected to play the major
role in meeting the 20 % substitution objective as follows:

1.11
The EESC recommends that binding measures are
adopted by the European Commission in case the revision of
Biofuel directive foreseen in 2006 shows that Member States
action was not sufficient to attain the expected targets both for
biofuels and for NG.

1.12
The EESC recognises that greater use of NG as an auto-
motive fuel is a sensible alternative to petroleum until such a
time as hydrogen technology is applicable. The European
Commission and the Member States should therefore make
repeated references in their communication strategies to this
technology — which is already economically viable now —
and also set a good example when they acquire vehicles them-
selves.

(4) Footnote No 16 of ‘Biomass action Plan’ COM(2005) 628 of 7

December 2005.

(5) COM(2006) 34 final of 7 February 2006.

Year

Biofuels

Natural gas

Hydrogen

Total

2005

2010

2015

2020

2

6

7

8

2

5

10

2

5

2

8

14

23

(6) COM(2001) 547.
(7) COM(2000) 769.
(8) COM(2001) 370.
(9) OJ C 149, 21.6.2002.
(10) Directives 2003/30/EC (OJ L 123/42 of 8 May 2003) and

2003/96/EC (OJ L 283/51 of 27 October 2003).

(11) Report of the Alternative Fuels Contact Group, Market Develop-

ment of alternative fuels, December 2003.

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3.1.1
Biofuels are to contribute by 2 % since 2005 and then
they are to continue growing up to 8 % by 2020. Any fuel
derived from biomass is known generically as a biofuel. The
main candidates for transport are currently:

3.4
In the November 2001 communication the Commission
entrusted NG with the largest single contribution to the alterna-
tive fuels 2020 objective. The Contact Group concurred for the
following reasons:

Bioethanol, that is ethanol (EtOH) also known as
3.1.1.1
ethyl alcohol, made from starchy materials like cereals and
sugar beet by fermentation. It is used either neat as gasoline
substitute, e.g. Brazil, but then it requires dedicated engines; or
it is added to the gasoline pool either neat or under the form
of
the synthetic chemical ETBE (Ethyl-Tertiary-Butyl-Ether).
According to the specifications which define the gasoline
grade, ethanol can be mixed with gasoline up to 5 % without
any engine modification.

3.4.1
NG meets the need for improved security of supply
not only through fuel diversification, because it is not oil-
dependent, but also because the demand is not limited by
the expansion of biofuel could
primary supply. Whereas
become supply-limited eventually, a share of 10 % in road
transport,
the Commission's objective for 2020, would
represent about 5 % of the EU total NG consumption expected
at that time. This remark emphasises the need of a synergistic
development for all three alternative fuels.

i.e.

3.1.1.2
Biodiesel, a diesel alternative made from a range of
vegetable oils by transesterification and known as FAME (Fatty
Acid Methyl Ester). The most widely used biodiesel in Europe is
rape-seed methyl ester (RME). The CEN (Comité Européen de
Normalization) defined a FAME standard and product meeting
the CEN specifications is accepted up to 5 % in diesel vehicles
already. Production of FAME from crop-based sources such as
rape-seed has until recently been sufficient to meet demand,
taking advantage of specific fiscal incentives. In the November
2001 communication the Commission expressed concerns with
respect to large-scale production of crop-based fuels and its
feasibility (12).

3.4.2
NG helps to achieve the strategic objective of reducing
GHG emission. It is obvious from the chemical structure of
methane (CH4) that NG contains less carbon than other fossil
fuels, e.g. gasoline and diesel. The WTW analysis demonstrated
that GHG emission from a Compressed Natural Gas Vehicle
(CNGV) are below those of a gasoline fuelled vehicle and, with
today's technology, comparable to those of a diesel vehicle. It is
expected that as a result of progresses in CNGV engines tech-
nology, GHG emission will be better than diesel in 2010 and in
the years after.

3.1.1.3
Biogas, i.e. methane rich gas produced from organic
matter including manure, waste-water sludge, or municipal
solid waste by anaerobic fermentation, is akin to NG. Biogas
has to be upgraded to NG quality in order to be used in
normal vehicles designed to use NG. There are more than
5 000 vehicles in Sweden running on biogas. The Swedish
experience shows that methane, either biogas or NG,
is an
economical sustainable fuel with the potential to drastically
reduce emissions in urban transport.

3.2 With respect to Natural Gas the European Commission
was not so active as the NG contribution to the 2020 target
would have requested and no specific proposal was presented
to date.

The lack of Commission's initiative is

3.3
troublesome
insofar as the Report issued by the Commission appointed
Alternative Fuels Contact Group, based on a thorough Well-to-
Wheels Analysis (WTW)of alternative fuels, came to the conclu-
sion that: ‘natural gas is the only alternative fuel with potential
for significant market share well above 5 % by 2020 which
could potentially compete with conventional fuels in terms of
the economic of supply in a mature market scenario’.

Besides GHG emission, NG as a motor vehicle fuel
3.4.3
brings about additional environmental benefit
in terms of
exhaust emissions. NG vehicles in use today have very low
emissions of Nitrogen Oxides (NOx) and do not contribute to
produce Particulate Matters (PM) which are a critical
issue.
Stringent European Union limits on airborne particles are
accordingly a good thing for NG fuelled vehicles. NG fuelled
city buses have proved to be a viable form of urban transporta-
tion and the European Commission has helped to boost the
introduction of model vehicles by providing financial support.
The urban environment could easily be improved by enforcing
the use of NG in bus fleets ad garbage collection trucks, as part
of a sound ‘green procurement plan’.

One important step in this direction could be done
3.4.4
with the recently proposed directive on the promotion of clean
transport vehicles (13). Once approved,
this directive will
compel Member States to reserve each year a 25 % quota of
the heavy duty vehicles (above 3.5 t) purchased or leased by
public bodies, to vehicles fuelled with alternative fuels meeting
the EEV standards (14) The EEV (Enhanced Environmentally
friendly vehicles) standards apply to vehicles fuelled with
biofuels, CNG, LPG, hydrogen as well as to hybrid and electric
vehicles.

(12) COM(2001) 547: Heading Agriculture policy under paragraph 2.2.

(13) COM(2005) 634 final of 21 December 2005.
(14) See directive 2005/55/EC.

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Hydrogen does not exist in nature in free form. What
3.5
exist
in nature are chemical compounds which comprise
hydrogen, e.g. water and hydrocarbons. Water (H2O) is made
up with 11 % H2 by weight (2/18). Gasoline and diesel fuel are
a mixture of hydrocarbons. Methane, a hydrocarbon,
is the
main constituent of NG and of biogas.

Since H2 does not exist in nature, it must be made. Indeed it is
commercially produced for use in the chemical, petrochemical,
petroleum refining and other industries.

3.5.2
In summary alternative fuel H2 offers a twofold chal-
lenge: i) the fuel distribution; and ii) the power train. It makes
sense that an ever-increasing amount of R&D money has been
invested by the EU in hydrogen and fuel cells by way of FP5
and FP6. Currently, under the FP6, hydrogen and fuel cells
research is placed within the sustainable energy system sub-
priority, with a total budget of EUR 890 million. The European
Parliament during the current discussions on the next FP7 is
proposing to reposition the issue in a new key thematic
priority on ‘all existing and future non CO2 emitting energy
sources’ with even larger resources. The environmental benefits
resulting from the fact that water and water only is produced
during the oxidation of H2 in a fuel cell, justify the effort.

In order to produce hydrogen, e.g. from water by electrolysis
or from NG by steam-reforming, energy needs to be applied,
namely electricity in electrolysis and heat in steam-reforming.

WTT (Well To Tank) analysis is instrumental in ranking the
pathways from feedstock to H2 according to energy consump-
tion and GHG emission.

For a long time H2 is an industrial commodity which is
produced and marketed by the industrial gases' companies or is
produced for captive use in oil refineries. However its use as
transport fuel is in its infancy. For this reason the objective of a
2 % substitution in 2015 with further growth to 5 % by 2020,
is quite challenging.

3.5.1
The Contact Group identified several
respect to an expanded use of H2 as transport fuel, such as:

issues with

i) liquid H2, i.e. at 252°C below freezing, in cryogenic tanks,
e.g. aboard an Internal Combustion Engine (ICE) vehicle, or
gaseous H2 e.g. compressed in bottles at 700 atmospheres
aboard a fuel-cell vehicle;

ii) centralised H2 production in large capacity units which can
to energy consumption, or

be optimised with respect
distributed production in small units at the filling station;

iii) as fuel-cell vehicles show their best efficiency in the mid-
power range, perhaps it would be advisable to distinguish
between fuel-cell vehicles for operation, at reduced power,
e.g. urban traffic, and ICEs for long haul, i.e. long intervals
in which the engine has to deliver full power;

iv) other points of concern pertain to the technology of the
fuel cell itself, i.e. the device in which H2 releases the elec-
trons flow that is the electrical current which drives the
electrical motor which in turn causes the revolution of the
wheels. These subjects are beyond the scope of
this
opinion.

4. Conclusions

4.1
The European Commission's November 2001 objective,
namely 20 % alternative fuels by 2020, rests on two established
technologies/products: biofuels and NG, and on one promising
development, i.e. H2 and fuel cells.

4.2
Biofuels and NG — notwithstanding some hurdles —
are available here and now and have the qualities to take on
the challenge both with respect to fuel distribution know-how
and with respect to engine technology.

4.2.1
Because of its fossil origin, i.e. it is not ‘renewable’, NG
should not be considered as a full alternative fuel; nevertheless
today it represents one of the most realistic options to replace
fuels derived from crude oil, indispensable to meet the 20 %
substitution in 2020. The reasons why NG may play a major
role as alternative fuels are:

— reserves of NG are ample and will last more than crude oil;

— In spite of recent troubles geo-political distribution ensures

a relatively stable market by comparison with oil;

— it has the highest H/C ratio in hydrocarbons with the

lowest CO2 emission;

— NG can be a pathway to Hydrogen.

A strong NG grid will act eventually as facilitator to local small
scale Hydrogen facilities. The present barriers to the diffusion
of NG vehicles are mostly due to the insufficient and not
uniform distribution network.

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The European Commission should get

4.5
together with
industry to consider why the measures adopted until now are
not sufficient for the diffusion of NG as an automotive fuel. In
our opinion a minimum target should be established by each
Member State, taking into account the specific national situa-
tion.

4.6
This proposal should also review the technical and
safety requirements for CNG filling stations. In many cases this
requirements are quite old and do not take into account recent
developments. Such a revision may definitely help a wider
diffusion of CNG filling stations, together with the simplifica-
tion of bureaucratic procedures. Very often the authorisations
for building a CNG filling station are unnecessary complex and
time consuming.

4.7
As already mentioned in point 4.2.1 above, such a
programme will also facilitate the transition to Hydrogen Vehi-
cles tomorrow. As a matter of fact, technology advances with
respect
for
compressed Hydrogen too. The same is true for Hydrogen fuel-
ling, metering and station design. Any investment in NG tech-
nology is a step forward for Hydrogen too.

to on board fuel storage will be instrumental

4.8
The prompt development of the commercially proven
alternative fuels can provide a fallback position in the event
that an unforeseen delay hits the ambitious H2 development
schedule.

4.9
Last but not least, EESC reiterates once again that a real
progress towards greener cars with lower fuel consumption is
not only linked to the development of alternative fuels but can
also be obtained by fighting congestion with better infrastruc-
tures, promoting collective transport, and, even more impor-
tant, changing consumer's behaviour. The present SUVs (Sport
Utility Vehicles)
fad shows the consumers are not ready to
change. Most of these vehicles use up large amounts of fuel
and CO2 emissions are commensurate to fuel consumption.
The raising demand for such cars makes it difficult for car
makers to commit towards greener cars.

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND

4.2.2
Regarding biofuels they combine the positive environ-
mental performance of NG with the benefit of being a renew-
able energy source, reducing the dependency from the fossil
fuels. Moreover, even if it is not clearly proven, a real chance
exists to increase or at least not to lose further jobs in the agri-
cultural sector. Forestry resources can contribute to biofuels
production, e.g. by way of black liquor gasification and by
fermentation of ligno-cellulosic biomass. Both technologies are
now at the pilot plant stage and their contribution to biofuels
production will make itself felt in the medium-term future.
However, having in mind the current demand of fuel for trans-
port needs (15), a huge increase of biofuels use must be evalu-
ated in the light of collateral environment effect:

— Crops for biodiesel represent a niche production, unable to

cover the EU demand of fuel.

— In order to meet the 2010 target of 6 % share, up to 13 %
of the total agricultural area in the EU 25 will need to be
devoted to biofuel crops. This could lead to onerous
measures in order to protect lands, groundwater and biodi-
versity, as well as to prevent further greenhouse gases emis-
sions (16). Imports would only move the problem to other
countries, increasing maritime traffic.

if

It appears as

4.2.3
the Commission Communication
issued on 7 February 2006 intends to tackle these problems
and uncertainties (17). Several measures to promote and support
the production and use of biofuels both in EU and non EU
countries have been pulled together. The EESC will follow with
great interest the implementation of the announced strategy.

4.3 Meeting the 2020 alternative fuels objective requires a
synergistic approach, namely all three fuels have to receive
attention simultaneously.

4.4
It is a reasonable expectation that the effort related to
the market development of those alternative fuels which are
commercially proven is going to meet fewer hurdles because
both know-how and technology are available here and now.

Brussels, 17 May 2006.

(15) Biofuels currently represent around 0.6 % only of diesel and gaso-

line consumption in EU.

(16) European Environment Agency (EEA 2004/04). Further studies are
trying to assess how much biomass can Europe use without
harming the environment.

(17) ‘An EU strategy for biofuels’ COM(2006) 34 final.