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At a meeting in Japan last weekend, the environment ministers of the G7 countries gave Italy’s big biofuels industry a boost.
The EU last month passed decade-in-the-making legislation to ban combustion-engine cars from 2035, including those running on biofuels made from plant or animal waste. The goal is to make all European cars run on non-polluting electric engines, a blow to Italian and German makers of cars and components as well as companies investing heavily in fuels made from renewable energy sources.
But Italian hopes of securing an exception to the ban for cars run on biofuels have been raised by the statement from G7 ministers in Japan that mentioned both e-fuels and biofuels as a climate-friendly alternatives to petrol and diesel.
Already one big exception has been made by the EU. After a last-minute negotiation, Brussels and Berlin struck a controversial deal to exclude from the ban cars running on electrofuels — synthetic fuels created by combining hydrogen extracted from water with carbon taken from the air.
German carmakers, such as Porsche, have heavily invested in e-fuels following the industry’s diesel emissions scandal. The last-minute compromise meant Brussels could finally pass the emissions legislation with Germany’s support, despite opposition from a group of countries, including Italy.
The exception obtained by Berlin has drawn criticism in Italy that it was made to help German companies. “It is simply intolerable,” said Italian lawmaker Luca Squeri, of Silvio Berlusconi’s Forza Italia party. One veteran Italian car executive added: “Germany is hawkish when it comes to EU rules implementation unless the rules have the potential to negatively impact their own economic interests.”
But some Italian autos and energy executives see the EU’s e-fuels decision as good news because it “effectively opens the door to exceptions”. Readily available biofuels, which are also cheaper than e-fuels, can be another such exception, they say.
Neither e-fuels nor biofuels are technically compliant with the EU’s zero emissions legislation. And there’s an open debate between scientists and experts as to whether e-fuels and biofuels can be considered carbon-neutral.
But Italian sector experts have long championed the principle of “technological neutrality” when it comes to climate targets, under which the EU should limit itself to setting the targets, leaving member states free as to how to achieve them.
“It is mandatory to strongly defend the principle of technological neutrality based on which emission targets can be achieved through biofuels too . . . we need a scientific and non-ideological approach,” said MEP Carlo Fidanza, who heads the Brothers of Italy — the senior coalition partner in the Italian government — delegation at the European parliament.
Italian energy group Eni currently produces 1.1mn tonnes of biofuels per year, after having converted two of its domestic oil refineries into biofuels makers. Another bio-refinery is being built. Eni has also vertically integrated its supply chain by importing vegetable oils (excluding palm oil) for biofuel production from its African plants.
The group said it aimed to ramp up production to reach 5mn tonnes per year by the end of the decade. Eni is also the leading European producer of hydrotreated vegetable oil, or HVO, a type of diesel entirely produced from renewable energy sources.
Industry experts say Berlin sees e-fuels as a potential option to avoid having to convert its whole car industry, Europe’s largest, to electric vehicles. But analysts and lawmakers described the Commission’s concession as a red herring. A paper published by the Potsdam Institute for Climate Research says e-fuels are likely to be in short supply for a long time to come. “Even if the market ramp-up happens . . . the global supply in 2035 would not even be sufficient to cover the indispensable German needs for aviation, shipping and chemicals,” said researcher Falko Ueckerdt.
After next year’s European parliament elections, officials in Rome and Milan are hoping to reopen the negotiations with a new Commission following the e-fuels concession. Italy’s environment minister Gilberto Pichetto Fratin said at the weekend: “We must restart the dialogue with European countries to reach the best data-based solutions [to meet emissions targets].
“Biofuels will be able to replace petrol and diesel and save Italy’s automotive industry.”
silvia.borelli@ft.com
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