Fuel Quality Directive (FQD)
EU fuel supply industry will contribute significantly to EU GHG intensity reduction goals in a balanced way under the adopted implementing measure for Article 7a of FQD.
Transport fuel quality is a very important challenge for the oil industry and the refining industry has continually upgraded the quality of all transport fuels allowing major leaps in vehicle performance and emissions reductions. In 2009 the EU decided to add a 6% reduction in the GHG content of road fuels by 2020 from their 2010 levels to the usual quality specifications of these fuels.
The refining sector is governed by the ETS for its refining emissions; use of sustainable biofuels can also contribute to the 6% reduction through dilution of the fossil fuel content of transport fuels.
For the upstream part of emissions reduction – mostly international since the EU imports most of its crude – the oil industry has been active in reducing CO2 emissions in upstream operations. The Global Gas Flaring Reduction (GGFR) partnership, a World Bank-led initiative launched at the August 2002 World Summit on Sustainable Development, of which many FuelsEurope companies are members, has successful programmes to address gas flaring.
A public-private partnership, GGFR brought together representatives of oil-producing country governments, state-owned companies and major oil companies. They can thus share global best practices to develop and implement country-specific programmes, promote effective regulation and tackle constraints on gas utilisation. Such constraints can consist of insufficient infrastructure and poor access to energy markets – a particular problem in developing countries.
These efforts cut global flaring by nearly 20% between 2005 and 2011, reducing CO2 emissions by the equivalent of more than 270 million tonnes – roughly the same as taking 52 million cars off the road. The World Bank aims to cut flaring by 2017 by another 30% – the equivalent of 60 million fewer cars on the road.
These programmes illustrates the only effective way of reducing upstream emissions: through cooperative industry and national efforts in producing countries. The EU is not in a position to regulate upstream emissions through a Directive on fuel quality only in the EU. This will not be effective in reducing worldwide CO2 emissions and simply increase costs for the EU. The details are laid out below.
The FQD [Directive 2009/30/EC] was adopted in April 2009 and sets technical standards for road transport fuels. In particular, Article 7a requires suppliers to reduce the greenhouse gas (GHG) intensity of automotive fuels that they market in the EU. By the end of 2020, fuels suppliers are obliged to reduce these fuels’ lifecycle GHG intensity by at least 6% compared to 2010.
However, since the adoption of the Directive and up until 2014, the implementation measures remained under discussion; in particular Article 7a of the directive, which spells out the methodology to calculate lifecycle GHG intensity of refinery fuels was the focus of an intense policy debate. Eventually, the Commission proposal published in October 2014 outlined a calculation methodology based on EU wide GHG intensity default values until 2020, one for gasoline, one for diesel; and a reporting obligation of the feedstock origins to monitor the evolution of the mix coming into the EU over time.
The proposal was approved by the Council in October 2014, and by the European Parliament in December 2014, finally giving fuel suppliers a clear basis on which they can comply with. This decision provides a balanced and workable methodology to comply with the 6% GHG reduction target by 2020 and puts an end to five years of debate, allowing Members States to implement the measures with minimal administrative burden and hundreds of fuels suppliers to plan how they comply.
Any other methodology based on a feedstock differentiation would have not yielded any GHG reduction on a global scale. In fact, crude oil and refined products would have had to be moved around more, producing higher global GHG emissions. It would have also damaged the competitiveness of EU refining and required both burdensome and very unreliable reporting.
FuelsEurope believes that the EU fuel supply industry will contribute significantly to EU GHG intensity reduction goals in a balanced way under the adopted implementing measure for Article 7a of FQD. The competitiveness of EU refineries and the EU security supply will not be further compromised as the approved methodology has the merit of being both verifiable and with the least administrative burden. It allows fuel suppliers to achieve this through the use of biofuels; lower-GHG fuels such as natural gas, LPG and possibly electricity. Fuel suppliers can also make efforts to reduce the GHG emissions from energy used or GHG emitted during the crude oil extraction.