VZCZCXYZ0001
RR RUEHWEB

DE RUEHBS #3268/01 3041405
ZNR UUUUU ZZH
R 311405Z OCT 07
FM USEU BRUSSELS
TO RUEHC/SECSTATE WASHDC
INFO RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUCNMEU/EU INTEREST COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE

UNCLAS USEU BRUSSELS 003268 
 
SIPDIS 
 
SIPDIS 
 
STATE PASS FOR USITC 
USITC FOR L.M. SCHLITT 
 
E.O. 12958: N/A 
TAGS: ECON ENRG ETRD EU
SUBJECT: USITC INFO REQUEST ON BIO-BASED CHEMICAL PRODUCTS 
AND LIQUID BIOFUELS 
 
REF: STATE 133131 
 
 ¶1.  Summary. In response to reftel USITC request, Post 
submits the following overview of activities related to 
bio-based chemicals and liquid biofuels.  The European Union 
has a broad array of programs and organizations dealing with 
the development and adoption of bio-based chemical products 
and liquid biofuels.  The EU is actively supporting the use 
of biofuels and has set a voluntary target of 5.75 percent 
biofuels use for transport by 2010.  In March 2007, EU 
leaders agreed to a 10 percent level of biofuels use in the 
fuel supply by 2020. The EU Common Agricultural Policy 
supports biofuel crop production, including a "Carbon Credit" 
which gives EU farmers 45 EUR per hectare of fuel crops they 
cultivate. EU trade policy does include barriers to imports 
of bio-deisel and ethanol. However, because the EU is the 
largest producer of bio-diesel and many ethanol exporters 
benefit from preferential trade agreements, the overall trade 
impact is minimal.  The EU is also actively encouraging 
research in biofuels and biotechnology.  Under the EU 
Commission's Sixth Framework Programme the EU is currently 
funding a number of biofuel and biomass related projects. The 
Seventh Framework Programme defines the research activities 
the EU will pursue from 2007-2013 and includes funding for 
research on biofuels and biotechnology. 
 
 
EU BIOFUELS POLICY 
------------------ 
 
¶2.  The EU has a voluntary target of 5.75 percent biofuels 
use for transport by 2010.  So far, none of the member states 
are close to reaching this goal. In March 2007, EU leaders 
agreed to a 10 percent level of biofuels use in the fuel 
supply by 2020.  The European Commission is now in the 
process of drafting the directive that would implement that 
decision and it is scheduled to be delivered to the European 
Council and Parliament in January 2008.  There is also a fuel 
quality directive making its way through the Parliament at 
the moment which has biofuels provisions, including ones on 
sustainability. 
 
EU communication establishing 5.75 target: 
http://ec.europa.eu/agriculture/biomass/biofu el/ 
com2006 34 en.pdf 
 
EU AGRICULTURAL POLICY 
---------------------- 
 
¶3.  The EU Common Agricultural Policy (CAP) supports bio-fuel 
crop production. Fuel crops are exempt from set-aside 
requirements and, since 2003, generate incentive payments for 
farmers. The 2003 CAP reform introduced the "Carbon Credit" 
which gives EU farmers 45 EUR per hectare of fuel crops they 
cultivate. With approximately 2.84 million hectares now in 
production, the EU has actually had to cut back on the amount 
they give farmers as the goal of 2 million hectares has been 
surpassed. 
 
EU Commission's "Report from the Commission to the Council on 
the review of the energy crops scheme": 
http://ec.europa.eu/agriculture/biomass/biofu el/ 
com2006 500 en.pdf 
 
¶4. The U.S. Department of Agriculture's Foreign Agricultural 
Service Office at the U.S. Mission to the EU is the lead 
agency on agricultural policy and biofuels. They produce 
numerous reports all of which are published on the Global 
Agricultural Information Network (GAIN). 
 
Highlights from this year's GAIN reports include: 
 
"EU Commission Publishes Assessment of 10 Percent Bio-Fuel 
Obligation, 2007" 
http://www.fas.usda.gov/gainfiles/200708/1462 91987.pdf 
 
"EU Biofuels Annual, 2007" 
http://www.fas.usda.gov/gainfiles/200707/1462 91616.pdf 
 
"EU Agriculture Council Backs Changes in Sugar Restructuring 
Scheme, 2007" 
http://www.fas.usda.gov/gainfiles/200709/1462 554.pdf 
 
"EU-27 Oilseeds and Products Annual, 2007 
http://www.fas.usda.gov/gainfiles/200706/1462 91409.pdf 
 
"EU-27 Sugar Annual, 2007" 
 
http://www.fas.usda.gov/gainfiles/2007 
 
"EU-27 Annual Biotechnology Report, 2007" 
http://www.fas.usda.gov/gainfiles/200706/1462 91311.pdf 
 
EU TRADE POLICIES 
----------------- 
 
¶5.  Currently, there are no specific customs classifications 
for biofuels Bio-diesel imported to the EU is subject to an 
ad valorem duty of 6.5 percent.  However, because the EU is 
the world's largest producer of bio-diesel, the trade impacts 
of this duty are minimal. Bio-ethanol is treated under code 
2207, which applies to both denatured and undenatured 
alcohol. Under this code, import duties of 19.2 EUR/hl for 
undenatured alcohol and 10.2 EUR/hl for denatured alcohol are 
applied. Much of the ethanol imported, however, comes from 
countries that have preferential trade agreements which can 
significantly reduce if not eliminate these tariffs. 
Furthermore, the EU is currently considering instituting 
separate nomenclature codes for biofuels that would allow for 
better tracking of imports and use specific tariffs. 
 
More information about the EU's trade policies with regards 
to biofuels can be found in the EU Commission's 2006 
Communication: "An EU Strategy for Biofuels." 
http://ec.europa.eu/energy/res/biomass action plan/doc/ 
2006 02 08 comm eu strategy en.pdf 
 
RESEARCHQTHE SIXTH FRAMEWORK PROGRAMME 
---------------------------------------- 
 
¶6.  The EU is also actively encouraging research in biofuels 
and biotechnology.  Under the European Commission's Sixth 
Framework Programme (FP6), the belQprojects fall under the 
USITC request.  This list is representative, but not 
necessarily exhaustive of the projects included under FP6, 
 
-- Pre-normative research on solid biofuels for improved 
European standards.  Website: 
http://cordis.europa.eu/fetch?CALLER=FP6 PROJ&ACTION=D& 
DOC=6&CAT=PROJ&QUERY=11921068106389&RCN=81405 
 
-- Biofuels Technology Platform Secretariat.  Website: 
http://cordis.europa.eu/fetch?CALLER=FP6 PROJ&ACTION=D& 
DOC=10&CAT=PROJ&QUERY=1192106810639&RCN=73983 
 
-- New Burner Technologies for Low Grade Biofuels to Supply 
Clean Energy for Processes in Biorefineries.  Website: 
http://cordis.europa.eu/fetch?CALLER=FP6 PROJ&ACTION=D& 
DOC=11&CAT=PROJ&QUERY=1192106810639&RCN=73984 
 
-- Increased renewable energy recovery from biomass by highly 
efficient disruption process.  Website: 
http://cordis.europa.eu/fetch?CALLER=FP6 PROJ&ACTION=D& 
DOC=5&CAT=PROJ&QUERY=1192106810639&RCN=81636 
 
 
RESEARCH - THE SEVENTH FRAMEWORK PROGRAMME 
------------------------------------------ 
 
¶7.  The European Commission's Seventh Framework Programme 
(FP7) defines the research activities the European Union will 
pursue from 2007-2013. FP7 earmarks EUR 2.35 billion for 
energy research covering a broad range of technologies, 
including renewable fuel production.  The renewable fuel 
activity is subdivided into seven areas: first generation 
biofuel from biomass; second generation fuel from biomass; 
biorefinery; biofuels from energy crops; alternative routes 
to renewable fuel production; biofuel use in transport; and 
cross-cutting issues. 
 
More information on the renewable fuel production activity 
can be found at: 
http://cordis.europa.eu/fp7/energy/about3 en.html 
 
¶8.  FP7 also dedicates EUR 1.9 billion for research on "Food, 
Agriculture and Fisheries, and Biotechnology."  The 
biotechnology portion will focus on: 
 
-- Improvement of raw materials and biomass:  research for 
improved crops, forest products, feed-stocks, marine products 
and biomass for energy, the environment and high yield 
products. 
 
-- Bioprocesses and products based on renewables:  novel 
farming systems, bio-process and biorefinery concepts, and 
 
bio-catalysis; new and improved micro-organisms and enzymes; 
and forestry and forest-based products and processes. 
 
-- Environmental biotechnology:  utilization of 
agro-industrial wastes and byproducts, environmental 
bio-remediation and cleaner bioprocessing. 
 
The FP7 home page is available at: 
http://ec.europa.eu/research/fp7/index en.cfm 
 
More information on biotechnology related issues in FP7 can 
be found at:  http://cordis.europa.eu/fp7/kbbe/home en.html 
 
 
ADDITIONAL RESEARCH/REPORTS 
--------------------------- 
 
¶9.  Additional academic research, industry reports, and 
government publications on EU policies relating to the 
development and adoption of bio-based chemical products and 
liquid biofuels published since 2004 include: 
 
-- Council of Ministers endorsed the EU Life Science and 
Biotechnology Strategy, May 21, 2007.  Available at: 
www.consilium.europa.eu/ueDocs/cms Data/docs/pressData/en/ 
intm/94184.pdf 
 
-- EuropaBio (The European Association for Bioindustries) web 
page on the Mid Term Review of the EU's Life Science and 
Biotechnology Strategy.  Website: 
www.europabio.org/eu strategy.htm 
 
-- Energy Charter Secretariat "Driving Without Petroleum?  A 
Comparative Guide to Biofuels, Gas-to-Liquids and 
Coal-to-Liquids as Fuels for Transportation."  Available at: 
http://www.encharter.org/index.php?id=229 
 
-- European Commission Joint Research Centre "Consequences, 
Opportunities and Challenges of Modern Biotechnology in 
Europe,"  2007.  Available at: 
http://bio4eu.jrc.es/documents/ 
Bio4EUsynthesisreportEUR22728EN.pdf 
 
 
LEADING FIRMS AND ORGANIZATIONS 
------------------------------- 
 
¶10. A number of firms and organizations throughout the EU are 
active in the fields of bio-based chemical products and 
liquid biofuels.  Below is a representative list of firms and 
organizations with a broad European or EU-wide focus: 
 
European Commission, Directorate General for Energy and 
Transport (DG-TREN) 
website: 
http://ec.europa.eu/dgs/energy transport/index en.thml 
 
EU Biofuels Technology Platform 
website:  http://www.biofuelstp.eu 
 
EuropaBio (The European Association for Bioindustries) 
website:  http://www.europabio.org 
 
BioFuels Europe Ltd. 
website:  http://www.biofuels-europe.com 
 
 
USEU POC 
-------- 
 
¶11.  USEU/ECON contacts for further USTIC information 
requests are Richard Frost (biofuels), FrostR@state.gov, 
32-2-508-2018 and Rob Dollinger (biotech and bio-research), 
DollingerRA@state.gov, 32-2-508-2637.  USEU/FAS contact for 
further USTIC information requests is: David Leishman, 
david.leishman@fas.usda.gov, 32-2-508-2760 
 
Gray 
.