European Commission's proposed changes to biofuel legislation support Neste Oil's continuous efforts to extend raw material portfolio

The European Commission has today published information on its proposal for updating biofuel legislation in the EU. The Commission is proposing that the EU-level mandated bio content contained in the current Renewable Energy Directive should be maintained at its current level, requiring 10% of the energy content of traffic and transport fuels to come from renewable sources by 2020. Neste Oil considers the Commission’s proposal to be a balanced one and sees the ongoing commitment to mandated bio content as a clear message of support for sustainably produced biofuels, which represent the most effective means available for reducing traffic- and transport-related greenhouse gas emissions. It will also secure existing investments and jobs.
The proposal includes splitting the EU’s requirement for 10% mandated bio content in 2020 into two components, with biofuels produced from food crops limited to providing 5% of total traffic and transport fuel consumption in 2020, and the other 5% required to come from fuels produced from waste, residues, or completely new types of raw materials.
Thanks to its NExBTL technology, Neste Oil can produce premium-quality renewable fuel from a wide range of raw material inputs. Neste Oil has extended the range of raw materials that it uses in recent years, increased its use of waste and residues, and invested in R&D on new raw materials. In 2011, already 41% of Neste Oil’s raw material inputs consisted of waste and residues. The Commission’s proposal is in line with Neste Oil’s strategy of steadily extending the range of its raw material inputs. Neste Oil’s diverse raw material base gives the company a competitive advantage compared to other biofuel producers that use food crops as their prime raw material.
Neste Oil considers the 5% ceiling on the use of food crop-based inputs an effective and sufficient way of managing the risks associated with indirect land use change (ILUC) related to biofuels. As a result, the demand for food crop-based inputs for producing biofuels is likely to remain at roughly current levels.
Neste Oil believes, however, that the double or quadruple valuation given to certain raw materials for establishing compliance with mandated bio content contained in the Commission’s proposal would undermine efforts to meet greenhouse gas emission reduction targets. The use of this type of valuation would reduce the use of waste and residues by the biofuel industry in absolute terms, even though the greatest possible use of these materials would achieve the largest savings in terms of these emissions as measured over biofuels’ entire life cycle. The Commission’s proposal in respect of residues also needs to be further clarified.
A capital-intensive industry such as the biofuel sector needs a consistent and stable legislative environment that promotes the implementation of the EU’s internal market and free trade. Establishing EU-level targets post-2020, together with clearer harmonization regarding which renewable raw materials are considered acceptable, would further support the EU’s internal market for biofuels and free trade generally.
Neste Oil Corporation