With the publication of the Fit for 55 Package in July 2021, the revision of the Renewable Energy Directive aims at ambitiously driving the decarbonisation of the energy system, including transport. This ambition was reinforced in 2022 by RePowerEU and for the closing of Trilogue discussions. FuelsEurope welcomes the transport target expressed in terms of GHG reduction, as it rewards lower carbon intensity and stimulates the deployment of alternative fuels. This revision proposes the discontinuation of the FDQ/7A and creates the best opportunity to make the Renewable Energy Directive III the primary regulatory instrument to drive an EU-wide effective and efficient decarbonisation of road transport fuels.
Incentives for developing technologies and sustainable feedstock flexibility
Effective regulatory mechanisms should be put in place to allow the development of multiple solutions for the progressive decarbonisation of transport through the adoption of renewable and RED-consistent technologies (e.g. sustainable biofuels, e-fuels/synthetic fuels, renewable and low-carbon hydrogen, renewable electricity, recycled carbon fuels, etc). This requires that during the time needed to develop scale-economy and reduce costs, less technologically mature and relatively expensive solutions can compete with those already established.
Ensuring an inclusive economic development of regions with access to diverse sources of potential sustainable feedstocks, based on criteria established in the framework of the RED, is also deemed essential. It will not only be key to meeting the ambitious decarbonisation goals in transport but will also boost regional development, and job creation and enhance the security of supply across all of Europe.
The transposition of RED III by Member States will play an important role in maximizing these ambitions across the EU.
Support for investments
Regulatory certainty and predictability are essential conditions for investors to engage in high-risk projects: during the time needed to develop a scale economy and reduce costs, less technologically mature and relatively expensive solutions must be able to compete with those already established. Where mandates are used, particular care is required in setting targets that should be realistically achievable. While mandates can create a market for alternative fuels, including low-carbon fuels, and provide a supportive policy framework, they do not necessarily provide on their own an investable framework. For these reasons, local policy makers should now transpose RED III and calibrate local frameworks and investment support mechanisms in support of the Union’s overall objective.
Interaction accros policy instruments and international implications
The Fit For 55 package promotes dedicated measures in marine and aviation legislations that will materialize from ReFuelEU Aviation and FuelEU Maritime. Beyond the current RED II, which recognises renewable fuels used in aviation and shipping to contribute to the transport target, the RED III revision is expanding the scope of the directive toward “all transport modes”. Fit For 55 transport components should permeate beyond the EU borders. Nonetheless, in this context FuelsEurope believes that adverse effects of overlapping policy instruments should be mitigated. Special attention should be given to ensure RED III, ETS2, ETD and CBM articulate an overall economic framework warranting energy in transport remains affordable, tradable and absent of carbon leakage from to the EU economy. RED III and its related Delegated Acts should act as an umbrella for consistency across different pieces of legislation and regulate import and exports from the EU. Their practical implications on the certification of emerging low-carbon fuels will be essential to ensure technical neutrality and foster the level playing field needed for the decarbonization of the transportation sector in the EU and beyond.
Read our Fit for 55 recommendations here.