VZCZCXRO6094
RR RUEHIK
DE RUEHBS #1517/01 3160616
ZNR UUUUU ZZH
R 120616Z NOV 09 ZDK CTG NUMEROUS SVCS
FM USEU BRUSSELS
TO RUEHC/SECSTATE WASHDC
INFO RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUEHRC/USDA FAS WASHDC
RUCNMUC/EU CANDIDATE STATES COLLECTIVE
RUCNMEU/EU INTEREST COLLECTIVE
RUCNMEM/EU MEMBER STATES COLLECTIVE

UNCLAS SECTION 01 OF 02 BRUSSELS 001517 
 
FAS/OA MICHENER, 
FAS/OCRA/SNENON, 
FAS/OFSO/DYOUNG 
FAS/OGA RSCHWARTZ, ECARTER 
USTR/LYANG 
GENEVA FOR MIN COUNSELOR DMILLER 
BERLIN FOR AG COUNSELOR BRICHEY 
PARIS FOR AG COUNSELOR DBREHM 
ROME FOR AG COUNSELOR JDEVER 
THE HAGUE FOR AG COUNSELOR SHUETE 
WARSAW FOR AG ATTACHE EWENBERG 
MADRID FOR AG ATTACHE PTHURSLAND 
LONDON FOR AG COUNSELOR SMCSHERRY 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EAGR ENRG EUN SENV TPHY TRGY
 
SUBJECT:  DG TREN seeks Bilateral Biofuel Discussions in the U.S. EU 
Energy Council 
 
Ref: Brussels 936, 559, Brussels 2008 117 
 
BRUSSELS 00001517  001.2 OF 002 
 
 
¶1. (SBU) Summary: In meetings October 15, 2009, Paul Hodson at the 
Energy and Transport Directorate General outlined his reasons for 
desiring bilateral discussions with the United States on what he 
called the technical aspects of biofuel legislation and which topics 
he thought the United States and the EU could most likely find 
convergence on. Once agreement between the EU and United States were 
reached, then the results would likely be accepted by other 
countries. The Brazilian Embassy expressed concerns that the goal of 
the EU is to build regional markets for biofuel, not world markets. 
Both he and the Brazilians expressed concerns about the end results 
of the negotiations under the Global Bioenergy Partnership. End 
summary. 
 
Potential Topics fr Discussion 
------------------------------- 
¶2. (SBU) A visit on October 15, 2009 by FAS Senior Economist Ernest 
Carter provided an opportunity to meet with Paul Hodson, the Deputy 
Head for the Energy and Transport Directorate General's (DG TREN) 
Regulatory Policy and Promotion of Renewable Energy Unit. Mr. Hodson 
has been an advocate of bilateral discussions with United States on 
what he calls technical issues regarding biofuel legislation and is 
responsible for the EU Renewable Energy Directive. 
 
¶3. (SBU) Mr. Hodson mentioned that he would like to see biofuel 
added to the topics for the U.S. EU Energy Council to facilitate 
bilateral discussions. He feels that discussions should start with 
technical issues because it will be easier to get convergence. He 
recommended that the discussions begin by comparing the progress in 
the United States and the EU to identify potential topics for 
consideration. Some of the topics he felt might show potential for 
convergence included: 
 
--  Data and methodology for calculating greenhouse gas emissions. 
Data sources would be a good area for discussion but methodology 
less so. Mr. Hodson expressed concerns that the United States moved 
too fast on developing solutions to the problems identified on 
greenhouse gas emission calculations. Some within the Commission 
like the U.S. approach, but the Commission has not reached agreement 
among the Directorate Generals. 
 
--  Voluntary schemes. EC is looking at voluntary schemes but he 
feels that if there could be convergence with the United States 
before the EU reaches a decision, then it would be easier to include 
the U.S. approach in the voluntary schemes accepted by the EU. 
 
--  Indirect land use change. The EU has identified partial and 
general equilibrium models from OECD and IFPRI that they published 
in a pre-consultation document. At this time, they have the option 
of accepting one of these or finding a new one. Neither of the two 
has been good for Brazil, but the IFPRI model may be able to leave 
room for an adjustment. 
 
--  Grassland biodiversity has not been defined yet but they hope to 
publish a definition in March 2010. 
 
--  Reporting by companies on 17 social and other environmental 
criteria, such as water use, pollution, and trade union recognition. 
They haven't decided how they will implement the reporting criteria 
required in legislation. Once a decision is reached, he did not know 
if they would publicly consult before publishing the decision. 
 
--  Baseline report. The data in the baseline report would be used 
for a report on the impact of Commission@ the 
world. 
 
--  Locala. They are consideringnvironmental issues to dl. 
 
¶4. (SBU) He indis cut off levels, carboniversity criteria, and chaBT 
 
BRUSSELS 00001517  002.4 OF 002 
 
 
not be included in the U.S. EU Energy Council discussions. 
 
Reasons for Bilateral Dialogue 
------------------------------ 
¶5. (SBU) Mr. Hodson is facing challenges from internal and external 
sources. For example, he says DG TREN has not been able to get the 
data provided by U.S. industry from the Joint Research Center in a 
timely manner. He also expressed concerns that the numbers are 
coming from unofficial sources. In addition, the Environment 
Directorate General and DG TREN are having difficulty agreeing on 
methodology. They had hoped to reach consensus on a model for 
indirect land use change by the end of September 2009, but there is 
still no resolution. They are discussing increasing their meetings 
to twice a week. 
 
¶6. (SBU) Mr. Hodson said that the EC is looking at becoming a member 
of GBEP because they believe this is where the discussions should 
start. However, he believes Brazil doesn't want to formally engage 
now because they want to reserve the right to go to the WTO. He sees 
value in bilateral discussions with the United States because if the 
EU and the United States find convergence on some issues, then he 
believes Brazil will likely go along with what is agreed. 
 
Brazil Mistrusts the EU, Too 
---------------------------- 
¶7. (SBU) The mistrust appears to be mutual. During meetings the same 
day, Marcos Savini from the Brazilian Embassy expressed concerns 
that the goal of the EU is to build regional markets for biofuel, 
not world markets. He said that in Brazil, there is no link between 
sugar cane expansion, and therefore ethanol production, with 
deforestation. Ethanol production is largely for the domestic 
market; less than 10 percent is exported. He is concerned that even 
though there is no link between the expansion and deforestation, 
Brazilian exports could be disrupted because of the methodology the 
EU chooses. Though there could be issues with biodiesel exports, the 
Brazilian industry is not targeting export markets yet. 
 
¶8. (SBU) Comment. Mr. Hodson is eager to engage in discussions with 
the United States but evidently has the impression that the United 
States does not want to engage. Hence, he seems to be talking to as 
many folks as he can from the U.S. government that will listen. He 
appears to be taking a long-term view, including preparing a 
potential EU negotiating position in the event that developing 
country biofuel exporters bring a complaint against the EU in the 
WTO. At this early stage, whether the United States sees value in 
engaging bilaterally may depend on how much the United States has in 
common with the EU position. However, the opportunity to influence 
EU legislation will be lost once all decisions have been made. End 
Comment.  Murray