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R 171157Z SEP 08
FM USEU BRUSSELS
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INFO RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
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UNCLAS SECTION 01 OF 04 BRUSSELS 001439 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EUR 
DEPT FOR EEB 
DEPT FOR OES 
WHITE HOUSE FOR SC 
WHITE HOUSE FOR OMB/OIRA 
WHITE HOUSE FOR CEQ 
 
E.O. 12958: N/A 
TAGS: KGHG EAGR SENV ENRG TRGY EUN
SUBJECT: EU: PARLIAMENT AGREES ON RENEWABLES DIRECTIVE; 
DEBATE WITH COUNCIL AND COMMISSION STILL TO COME 
 
REF: A. BRUSSELS 1171 
     ¶B. BRUSSELS 117 
     ¶C. STATE 98110 
 
¶1. (SBU) Summary: The European Parliament,s Industry 
Committee on September 11 reached an agreement on a set of 
compromise amendments during the first reading on the 
Commission,s proposed Renewable Energy Directive.   However, 
this only represents the EP,s negotiating position, and it 
is likely that the Council and Commission will make several 
changes to the text over the next few months.  The French 
Presidency remains determined to complete this directive by 
December, as part of the Climate and Energy Package, and the 
Parliament has indicated it is working to fulfill that 
objective.  The major agreements from the compromise are: 
 
-- At least 20% of all energy generated in the EU in 2020 
must come from renewable sources.  In addition, to achieve 
these goals, the Parliament added mandatory interim targets 
for each member state on which the Commission can impose 
penalties for non-compliance; 
 
-- The Parliament allowed for the statistical transfer of 
renewable energy from a state exceeding its targets to one 
which is falling short, as well as the possibility for member 
states to combine their targets and work together jointly to 
achieve a new collaborative target.  However, each of these 
avenues are subject to extensive review and oversight by the 
Commission; 
 
-- The 10% target for the use of alternative fuels in 
transport for 2020 was maintained (frequently referred to as 
the biofuels target, but which includes electric vehicles and 
hydrogen fuel cells), but added that at least 40% of this 
value must come from sources other than first generation 
biofuels.  Also, a 5% interim target for 2015 and a 
technological review in 2014 were added, both of which have 
the aim of allowing the EU to back off of the 10% target if 
new technologies are not yet commercialized; and 
 
-- The threshold for greenhouse gas emissions improvements of 
biofuels over fossil fuels was increased from the 
Commission,s proposed 35% to 45% with an increase to 60% in 
¶2015.  The Council, the Commission, and the largest political 
party in Parliament, the EPP-ED, are in disagreement with 
this change and should press to move back to the original 
numbers.  End Summary. 
 
------------------------------- 
Renewables Directive background 
------------------------------- 
 
¶2. (SBU) Released as part of the Commission,s Climate and 
Energy Package in January, 2008, the Renewables Directive has 
been contentious primarily for its treatment of biofuels. 
There have been few major objections to the EU,s objective 
of 20% of total energy supply to come from renewable by 2020. 
 To achieve this target, each member state was given an 
individual target, ranging from Malta at 10% to Sweden at 
49%, based upon current use of renewables and expected future 
performance.  A few member states have voiced concerns that 
their targets are too high, but there has been no real push 
to change the targets.  The Commission originally proposed a 
firm 10% target for the use of alternative fuels in 
transport.  This has been referred to as the biofuels target, 
despite encompassing electric cars and hydrogen fuel cells. 
Given recent negative press coverage on and the NGO campaign 
against biofuels, this aspect of the Directive has received 
the most scrutiny.  (Note: The Commission has been quick to 
admit it was originally poorly written.  End note.) Thus, 
Parliament has worked over the past several months to soften 
the target, and Member of European Parliament (MEP) Claude 
Turmes (Lux, Greens), the Rapporteur for the Directive, 
originally attempted to eliminate the target completely. 
 
--------------------------------------------- --------- 
 
BRUSSELS 00001439  002 OF 004 
 
 
20% by 2020, but several possible avenues to get there 
--------------------------------------------- --------- 
 
¶3. (SBU) Parliament reinforced the Commission,s proposal of 
20% share of renewables across the EU by 2020, but added in a 
set of mandatory interim targets.  These interim targets are 
designed to ensure that each member state is on track to 
reach its final 2020 target.  The EU does not want to choose 
the technologies used to meet the targets, so each member 
state can select the mix best suited to its particular 
situation.  However, the Commission still maintains some 
level of oversight, and each member state is required to 
submit its national action plan to the Commission for review 
by 31 March 2010.  To ensure enforcement, the Parliament 
added a direct penalty mechanism in which the Commission has 
the power to fine member states for non-compliance.  No 
specific levels were indicated, but the text stated that the 
levels should be sufficiently steep so as to provide a strong 
incentive to meet the goals.  (Note: This often is a 
contentious issue in the EU, as most legislation, 
particularly as applied to climate and energy issues, is not 
&binding,8 in that there frequently are no penalties for 
failure to meet the terms of the legislation.  End note.) 
 
¶4. (SBU) Parliament, in its effort both to meet the EU-wide 
20% target and to encourage cooperation, added two clauses; 
one to allow statistical transfer of renewable energy credits 
between member states and one to allow for member states to 
pool their collective resources and work toward a combined 
target.  In the first instance, the Parliament recognized 
that there may be circumstances where a country anticipates 
falling short of its target for some reason.  In cases such 
as this, Parliament has allowed for the statistical transfer 
of renewable energy credits from one state exceeding its 
target to one which is coming short (the terms of the 
transfer will be up to the states involved).  In the second 
instance, Parliament looked to take into account efforts by 
member states to develop joint projects which may extend to 
truly joint efforts to meet the targets.  In this case, the 
two or more member states can apply for a new joint target 
which will be calculated by the Commission.  If this occurs, 
all member states involved are accountable for success or 
failure of the new target. 
 
--------------------------------------------- --- 
Biofuels targeted, but more supporters appearing 
--------------------------------------------- --- 
 
¶5. (SBU) MEP Turmes succeeded in strengthening some aspects 
of the renewables in transport provisions, but was unable to 
go as far as he would have liked given fairly strong 
opposition, notably from the EPP-ED, the largest political 
party in the Parliament.  One key issue which remains, and 
was reinforced, is that the biofuels provisions apply to 
biofuels produced anywhere in the world.  Turmes, efforts to 
eliminate the 10% target for 2020 failed, but he was able to 
incorporate an unambitious interim target of 5% for 2015. 
Given that the EU previously committed to a 5.75% share of 
biofuels in 2010, this is a large step back.  In addition, 
both the 2015 and 2020 targets have stipulations that a 
certain percentage come from sources other than first 
generation*from food sources*biofuels; 20% of the 2015 
target and 40% of the 2020 target.  (Note: the Energy 
Independence and Security Act (EISA) in the U.S. has a 
similar stipulation; 21 billion gallons of the mandated 36 
billion gallons of biofuels in 2022 must come from advanced 
biofuels. End note.)  Additionally, Turmes incorporated an 
impact assessment requirement for 2014  to evaluate the state 
of technology, the consequences for food security, the 
greenhouse gas emissions, and the sustainability criteria for 
all fuels used in all forms of transport (maritime and 
aviation included).  This assessment can then be used to 
determine if the 2020 target should be modified. 
 
¶6. (SBU) Turmes also succeeded in raising the threshold for 
greenhouse gas emissions savings over conventional fossil 
 
BRUSSELS 00001439  003 OF 004 
 
 
fuels from 35% to 45%, an increase to 60% in 2015, and 
existing plants having until 2013 to comply.  Unlike the 10% 
target, this was not as widely supported, with the EPP-ED 
proposing a counter-amendment keeping the current threshold 
at 35% and then increasing to 50% in 2015.  (Note: EISA also 
has a step system for GHG emission savings thresholds, which 
is defined by technology, not by date.  Conventional, 
corn-based bioethanol is required to have a 20% GHG savings, 
advanced biofuels 50% savings, and cellulosic biofuels 60% 
savings. End note.)  To calculate the GHG savings, the 
Parliament added a term for indirect land use change.  Until 
31 December 2011, there will be no counting of indirect land 
use change, providing a buffer for the Commission to proceed 
with the calculations.  By 1 January 2012, if the Commission 
has not made a satisfactory decision for how to incorporate 
indirect land use change, a default value of 40 g of CO2 
equivalent per megajoule of energy produced will be used. 
 
¶7. (SBU) In an effort to strengthen wording related to 
sustainability criteria for biofuels, the Parliament added 
several clauses pertaining to land use and social criteria. 
Originally, the Commission called out several types of 
&no-go8 land, including undisturbed forest, areas 
designated for nature protection, and highly biodiverse 
grassland, using January 2008 as the baseline for 
determination.  Parliament has pushed that date back to May 
2003 (Turmes tried to move it to 1990), and has added areas 
that provide basic ecosystem services such as watershed 
protection and erosion control; strengthened language on 
areas designated for nature protection that contain rare, 
threatened, or endangered ecosystems; areas with a 
substantial concentration of rare, threatened, or endangered 
species; and wetlands, peatlands, and savannah, all of which 
contain a high carbon stock.  Additionally, Parliament 
incorporated social criteria which demand that effctive 
measures be taken to ensure that the prduction of raw 
materials do not involve child or forced labor as under the 
International Labor Organization conventions and that comply 
with the Convention on International Trade in Endangered 
Species of Wild Fauna and Flora, the Convention of Biological 
Diversity, the Cartagena Protocol on Biosafety, and the 
United Nations Framework Convention on Climate Change and its 
related Kyoto Protocol.  (Note: While this is a step back 
from the original proposal that demanded that biofuels 
producing countries be a signatory to all of the above 
treaties and conventions, the Commission still remains 
unconvinced that these clauses will stand up in the WTO. End 
note.) 
 
¶8. (SBU) To ensure compliance of all of the above, the 
Commission is required to submit a report to the Parliament 
and the Council every two years beginning in 2012. 
Parliament strengthened the requirements of this report, 
requiring the Commission to report on the effects of the 
biofuels policy.  Specifically, the Commission is asked to 
analyze the relative environmental and social effects of 
biofuels; the effects on food prices, focusing on Low Income 
Food Deficit Countries and Least Developed Countries; the 
impact on direct and indirect land use change; and the 
availability of advanced biofuel technologies.  If the 
Commission deems that any aspect of the policy is harmful to 
global concerns, the Commission then is asked to propose 
corrective action.  There is little information as to how 
binding these reports will be or how the Parliament and 
Council will treat them. 
 
--------------------------------------------- ------ 
Initial reaction from industry insider not positive 
--------------------------------------------- ------ 
 
¶9. (SBU) In conversations, one industry representative 
expressed concern with the decisions taken during the vote, 
but indicated that there will still be movement on the final 
text.  The maintenance of the 10% target is supported, but 
the interim 5% target was considered too low, highlighting 
the 2010 commitment of 5.75%.  However, there was belief that 
 
BRUSSELS 00001439  004 OF 004 
 
 
member states will not be willing to adopt an interim target. 
 Additionally, the representative claimed that the 60% 
threshold is unlikely to be achieved with anything other than 
Brazilian sugar cane, so 50% with incentives for exceeding 
performance would be more effective.  The indirect land use 
change amendment was strongly contested, given that the 
scientific understanding still is not complete and therefore 
not ready to develop a methodology.  Using a single value 
also is considered highly problematic given differences in 
global environments, and the use of 40 gCO2eq/MJ was 
questioned, as a current crop based biofuel could be required 
to deliver over 100% GHG emission savings. 
 
--------------------------------------------- ------------ 
Debate to continue, though press not always mentioning it 
--------------------------------------------- ------------ 
 
¶10. (SBU) Comment: The amendments presented in this vote, 
while overwhelmingly approved in ITRE (50-2 in favor), do not 
represent the final text of the Directive.  In addition to 
EPP-ED opposition to several of the amendments, the member 
states and the Commission also have expressed major 
reservations.  Notably, the Council tentatively agreed in 
August to support a 35% GHG emissions reduction threshold, 
with an increase to 50% sometime after 2015 (2017 is often 
mentioned), and both the Commission and the EPP-ED support 
this strategy.  There are also indications member states will 
not accept any interim targets on renewables, including 
biofuels.  Effectively, this vote sets forth the 
Parliament,s negotiating position, and we expect several 
meetings between Parliament, Council, and Commission 
representatives to work out an agreement.  However, the 
European press has not always been quick to make this clear. 
The press has been one of the largest detractors of biofuels, 
and many press reports have implied that this set of 
amendments will form the final text. 
 
¶11. (SBU) Given the mixed opinions on the biofuels aspects of 
the Directive, there remains an opportunity for U.S. 
engagement.  The text as written provides a few instances in 
which the Commission is afforded a few years (indirect land 
use change calculations is one) to develop an implementing 
scheme.  Given that the Parliament is amenable to this 
approach in at least one issue, the opportunity exists to 
extend this to calculations of the GHG reductions and 
development of sustainability criteria, thereby allowing the 
U.S. and the EU to cooperate on developing compatible 
criteria.  The French Presidency continues to press for this 
legislation, as part of the Climate and Energy Package, to be 
completed by the December Council.  However, Poland has 
expressed displeasure with the emissions reduction 
requirements in the emissions trading scheme and is not 
convinced it will be able to meet the renewables targets set 
for it by the Commission.  To that end, the Polish European 
Affairs Minister recently stated that it may look to delay 
passage of the Climate and Energy Package until March or 
April 2009.  If successful, Parliament may no longer see the 
pressure to complete negotiations by the end of the year, 
providing an extra three to four months of discussions.  End 
comment. 
 
SILVERBERG 
.