Bursting the Bubble

Fuelling Europe: the case of the alternative fuels

5 June 2014 | by

They are presented as a miracle cure: a solution to reduce carbon emissions, oil dependency, and boost the economy. They are supposed to trigger a shift towards a low carbon society and launch an era of e-mobility. What are these magic products? Alternative fuels.

Currently on the EU agenda with the Directive on the deployment of alternative fuels infrastructure and the discussions around biofuels and indirect land use change, “alternative fuels” is a notion built in opposition to “conventional fuels” (oil, natural gas, nuclear materials) and refers to any other substance that can be used as fuel – to list a few: electricity, hydrogen or biofuels. As such, it encompasses a very diverse range of substances and materials, which do not have the same environmental impact, the same advantages for the consumers, and do not require the same investment in recharging/refuelling infrastructure. However, they have one thing in common – we expect a lot from them. In this article, I try to go beyond their differences and disentangle the reasons why we put so many hopes in alternative fuels and the main barriers to their development.

Why do we need alternative fuels?

Just like many countries, the EU is heavily dependent on oil. 94% of the fuel we use is oil-based and we import 84% of it. This dependence has a painful cost of up to €1 billion per day as well as unfortunate consequences on our external policy and the environment. This is why EU policy objectives in terms of energy for transport have lately been focused on solving these three issues. For instance, to reduce its environmental footprint, the EU has set a series of targets: a 10% reduction of the greenhouse gas intensity of vehicle fuels and a 20% share of renewable energies in transport by 2020 to name but a few. If we want to achieve these objectives on time, it is clear that the development of alternative fuels is essential. This has been confirmed by a Cambridge Econometrics study: the deployment of alternative fuels will lead to a reduction of 64% to 93% of CO2 emissions by 2050.

On top of that, many hopes lie on the ability of alternative fuels to boost employment. The same study calculated that, depending on the speed of development of alternative fuel vehicles, EU total employment will have increased by 500,000 to 1.1 million in 2030, and between 1.9 million to 2.3 million in 2050. Even better, in the impact assessment attached to the proposal for a Directive on the deployment of alternative fuels infrastructure, the Commission hopes that the EU will become a leader in the field and start exporting its technology to developing countries whose energy needs are growing fast.

So, what are we waiting for?

Well, the picture is not that rosy. First, economically, the competition is tough. Even though some European countries such as Germany are quite advanced in the field, many Member States are lagging far behind compared to the United States and China, who have already been investing in these new technologies for several years. It might therefore be quite challenging for the EU to become the leader in the field.

Second, the environmental benefits of some of these alternative fuels promoted by the EU are questionable. Biofuels for example are in the middle of a storm of criticism because the first generation of these fuels is produced from food crops. Hydrogen vehicles are criticised due to the negative energy balance of hydrogen production, while electric vehicles’ impact on the environment depends on whether they have been charged with electricity produced by renewable sources or a fossil-fuel power plants.

Still one of the best solutions to reduce our energy dependency and pollutant emissions

Yet, alternative fuels are so far one of the best solution we have. Despite all these criticisms, they would still very conveniently contribute to the reduction of our oil bill, security of supply, and reducing our CO and other particulates emissions. Besides, researchers have been very active in the field and we can hope that the current disadvantages of alternative fuels will disappear in a few years thanks to the development of cleaner production techniques. It also goes without saying that, refraining from investing in these new technologies now would clear the space for Chinese or American leadership, leaving the EU behind.

This is why it is important to solve the issues that hamper the development of alternative fuels: the uneven deployment of infrastructure across the EU and the insufficient confidence of both investors and consumers. The answer to all this lies with the development of comparative EU standards for the refuelling/recharging infrastructure, alongside EU level planning for their deployment across Member States. Indeed, vehicle producers will only launch their products on the market if they know that there will be consumers willing to buy them, and consumers will only buy these vehicles if they know that there is adequate refuelling/recharging infrastructure.

The clean power for transport package – a weak first step?

To tackle these issues, the Commission has proposed a clean power for transport package. Agreed upon during trilogues in March 2014, the package includes measures aiming at informing and encouraging the consumers to use alternative fuels, setting EU standards and deploying minimum levels of infrastructure. However, it is not clear whether the deal struck by the institutions will be enough. Far less ambitious than the Commission’s proposal, it replaces the binding refuelling/recharging point targets of the original document by an obligation for Member States to develop national plans and install “an appropriate number” for their infrastructure needs.

Now that binding EU targets are out of the agenda, we can only hope that EU standards and consumer information measures will be sufficient and that Member States and private investors will seize the opportunity to develop adequate infrastructure. Otherwise, the road to clean fuels might take a lot more time than expected.

 

What do you think?