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RR RUEHAG RUEHAST RUEHDF RUEHHM RUEHIK RUEHKW RUEHLN RUEHLZ RUEHMA
RUEHPB RUEHPOD RUEHROV RUEHTM
DE RUEHBS #1171/01 2121139
ZNR UUUUU ZZH
R 301139Z JUL 08 ZDK
FM USEU BRUSSELS
TO RUEHC/SECSTATE WASHDC
INFO RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUCNMUC/EU CANDIDATE STATES COLLECTIVE
RUCNMEU/EU INTEREST COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE
RHEHNSC/NSC WASHDC

UNCLAS SECTION 01 OF 03 BRUSSELS 001171 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EUR 
DEPT FOR OES 
WHITE HOUSE FOR NSC 
WHITE HOUSE FOR OMB/OIRA 
WHITE HOUSE FOR CEQ 
 
E.O. 12958: N/A 
TAGS: EAGR ENRG EU EUN SENV TPHY TRGY
SUBJECT: EU MOVING QUICKLY FORWARD ON BIOFUELS; WINDOW FOR 
ENGAGEMENT LIMITED 
 
REF: BRUSSELS 117 
 
¶1. (SBU) Summary: The EU-is considering biofuels 
sustainability and greenhouse gas reduction criteria that 
could all but eliminate importation of U.S. and Brazilian 
biofuels to Europe. Representatives from the European 
Parliament, the Brazilian Mission to the EU, and industry 
have all stressed to USEU the importance of U.S. involvement 
in the EU's regulatory process on the biofuels sustainability 
issue to ensure the U.S. and EU do not proceed on divergent 
paths.  The French Presidency is pushing to complete the 
Climate and Energy package by the end of 2008, providing only 
six months for us to influence the outcome of this debate. 
The U.S. and EU have already had one DVC on biofuels 
sustainability criteria; USEU recommends we use Europe's 
August recess to plan how we can substantially step up the 
pace of our engagement, including by placing the issue on the 
agenda of the Fall Transatlantic Economic Council meeting. 
The Parliament and member states remain somewhat divided, so 
the opportunity still exists to engage and influence the EU 
through a combination of tripartite (with Brazil) and 
bilateral forums.  End summary. 
 
----------------------------------------- 
Industry Concerned with Path EU is Taking 
----------------------------------------- 
 
¶2. (SBU) U.S. and European industry representatives have told 
USEU officials they are concerned that the rapid movement of 
the EU's proposed Renewables Directive (reftel), notably the 
biofuels aspect, has the potential to create substantial 
trade barriers between the U.S., EU, and Brazil.  Unlike the 
U.S. Energy Independence and Security Act (EISA), which they 
said sent a strong signal to industry that the U.S. was 
prepared to support biofuels development, the biofuels 
paragraphs of the Renewables Directive do not provide many 
incentives for commercial development in Europe. 
 
¶3. (SBU) Furthermore, industry officials believe that the 
proposed sustainability and greenhouse gas (GHG) reduction 
criteria could all but eliminate importation of U.S. and 
Brazilian biofuels to Europe. For U.S. biofuels, this is due 
primarily to the minimum life-cycle GHG savings requirements 
of biofuels over fossil petrol and diesel. Under the existing 
proposals, corn-based ethanol is not guaranteed to meet the 
EU proposed minimum 35% GHG savings, a number which could be 
increased to as high as 50% initially.  By comparison, the 
U.S. Energy Independence and Security Act (EISA) dictates a 
minimum 20% savings for corn-based ethanol.  For Brazilian 
sugar cane ethanol, which can have over an 80% savings, the 
GHG threshold is not a concern, but the proposed 
sustainability requirements could lead to problems.  The EU, 
specifically through the Parliament, is looking to enforce 
strict biodiversity standards that could eliminate many fuels 
from new Brazilian sugar cane fields. 
 
¶4. (SBU) Even if certain biofuels do not meet EU standards, 
they still can be imported into Europe.  However, they will 
not count toward EU biofuels or renewable energy targets, 
thereby providing a large disincentive to their use.  In 
addition, at least one other proposal suggests that biofuels 
that do not meet EU standards count against GHG emissions for 
the importing country. 
 
--------------------------------------------- -------------- 
European Parliament Still Divided, but Moving Toward Accord 
--------------------------------------------- -------------- 
 
¶5. (SBU) The European Parliament remains divided on the final 
form they would like the biofuels portion of the Renewables 
Directive to take.  The consensus seems to be to back off 
from the Commission's proposed 10% share of alternative fuels 
in transport by 2020, but it is unclear how far.  The 
strongest push seems to be moving toward a 4% share in 2015, 
of which 20% would be from fuels other than first generation 
biofuels, with a Commission review at that point of the state 
of technology.  The review would then advise the EU as to the 
next step, which could mean 8-10% in 2020, of which 40% would 
come from non-first generation biofuels.  However, none of 
this is set, and the Commission will continue to press for 
10%, as they claim anything less would encourage European 
 
BRUSSELS 00001171  002 OF 003 
 
 
industry to back away from biofuels. 
 
--------------------------------------------- --------------- 
Member States Generally in Agreement, but Details Unresolved 
--------------------------------------------- --------------- 
 
¶6. (SBU) Generally, it appears many Member States support 
amending the Commission proposal to change the biofuels 
targets and criteria, though there remain divisions over some 
of the details.  The majority of countries agree with the 
proposal that would initially require biofuels to deliver a 
35% life-cycle greenhouse gas savings over fossil fuels, with 
this threshold increasing to 50% in 2015. However, Denmark, 
the Netherlands, and the UK consider these targets to be too 
low (and in many cases their MEPs have expressed similar 
views); whereas Spain and Romania see the values as too high 
and France, Latvia, Hungary, and Poland wish to push the 
increase to 50% to 2018.  (Note: This idea to have a stepwise 
increase appears to derive from EISA .  MEPs, in particular, 
have referenced EISA when discussing the GHG savings 
thresholds.  Under EISA, GHG savings are divided by 
technology, with 1st generation biofuels requiring a 20% 
savings, 2nd generation a 50% savings, and cellulosic 
biofuels a 60% savings.  End note.) 
 
¶7. (SBU) In particular France, the current Presidency of the 
EU, has begun to make stronger statements in recent weeks 
calling for increased focus on sustainability and social 
criteria for imports from non-EU countries.  Specifically, 
France has reinvigorated discussion requiring third countries 
to have ratified several treaties, the Kyoto Climate Change 
Protocol among them, for those biofuels to count toward the 
EU targets.  The Commission has fought strongly against these 
proposals, claiming they would conflict with WTO rules. 
Currently, the proposal simply states that the Commission 
will review every two years how biofuels producing countries 
stand on various social criteria, and then make 
recommendations as to how the EU should proceed. 
 
¶8. (SBU) Germany, on the other hand, has been blamed by both 
MEPs and Commission officials for inhibiting the process. 
MEP Anders Wijkman, Rapporteur for the Renewables Directive 
in Parliament's Environment Committee (ENVI), explained that 
in his opinion, Germany "does not believe in climate change," 
instead arguing that climate change policies are going to 
adversely affect economic growth.  An official from DG-TREN 
echoed this sentiment, detailing his belief that the German 
members of the European People's Party-European Democrats 
(EPP-ED), the largest political party in the Parliament, have 
been working to derail the negotiations to try to push back 
the timeline. 
 
--------------------------------------------- ---------------- 
Brazil Leading Developing Country Opposition, Looking to U.S. 
--------------------------------------------- ---------------- 
 
¶9. (SBU) Brazil is very concerned with the direction EU 
legislation is moving, afraid that sustainability and social 
criteria will put a halt to Brazilian ethanol imports into 
Europe.  Brazil's concerns do not stem from the GHG savings 
threshold-Brazilian sugar cane ethanol currently offers 
approximately an 80% GHG savings over fossil fuels-but more 
from questions over deforestation and labor situations in 
supplying countries.  Brazil, supported by Argentina, 
Indonesia, Malawi, Malaysia, Mozambique, and South Africa, 
sent a letter to MEPs calling for maintaining the 10% target 
as well as using science-based approaches to develop criteria 
related to sustainability, biodiversity, and indirect land 
use change. 
 
--------------------------------------------- ---- 
Support for U.S.-EU-Brazil Tripartite Discussions 
--------------------------------------------- ---- 
 
¶10. (SBU) Industry, Parliament, and Brazil have recommended 
to USEU that the USG initiate a tripartite U.S.-EU-Brazil 
discussion to discuss sustainability requirements, 
methodologies, and the path forward, an approach that we have 
successfully used to work toward compatible biofuels 
standards (on which the three released a white paper last 
January).  We have already begun a bilateral conversation on 
 
BRUSSELS 00001171  003 OF 003 
 
 
sustainability methodologies with the EU with a successful 
DVC in the spring, which included all relevant Commission DGs 
and EPA, DOE, USDA, State, and others from the U.S. side. 
The EU participants appreciated the effort and have asked to 
continue the discussion. 
 
¶11. (SBU) MEP Wijkman believes there needs to be close 
trans-Atlantic cooperation on biofuels.  He is concerned the 
U.S. has not been as engaged as it should be in the European 
discussion on these issues.  The Commission is also very 
interested in close cooperation.  It supports the concept of 
tripartite discussions, but has explained that the current 
timeline prevents it from starting the effort itself. 
Instead, a DG TREN official explained that if the U.S. or 
Brazil were to start the conversation, the Commission would 
very happily come to the table. 
 
--------------------------------------- 
TEC as a Potential Forum for Discussion 
--------------------------------------- 
 
¶12. (SBU) Comment:  The EU lags the U.S. in developing 
scientific methodologies for determining biofuels greenhouse 
gas savings and "sustainability/land use" criteria.  This, 
combined with the pressure France is applying to complete the 
legislative process by the end of the year, increases the 
chance the EU will regulate by sentiment rather than science. 
 Parliament, in particular, appears to be relying on the work 
done by Tim Searchinger, which has been criticized by 
scientists from both sides of the Atlantic. 
 
¶13. (SBU) USEU believes the USG must significantly step up 
our engagement with Brussels on biofuels sustainability 
criteria to ensure we adopt compatible standards.  This issue 
was discussed in the April U.S.-EU High level Regulatory 
Cooperation Forum, and we have had the DVC, but have no 
concrete plans for additional follow-up, including with the 
European Parliament.  We recommend the interagency use the 
August lull to discuss possible next steps. These could 
include working now to schedule a follow-up DVC in 
mid-September (with an eye to additional DVCs, as necessary); 
a subsequent demarche to EU member states; visits in 
September and October by ranking Administration officials to 
discuss the issue with the European Parliament and member 
state representatives; and placing the issue on the agenda of 
the October Transatlantic Economic Council meeting.  We 
should also consider using the tripartite format to buttress 
these bilateral efforts, and we will in any event want to 
develop a caucus of third countries we should work with to 
influence the policy deliberations in Brussels.  USEU is 
willing to assist in whatever ways necessary.  End Comment. 
 
SILVERBERG 
.