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Renewable Energy and Fuel Quality Directives
In Europe the Renewable Energy and Fuel Quality directives (2009/28/EC and 2009/30/EC respectively) will be the main drivers for changes in the fuel and ether market for the foreseeable future.
Renewable Energy Directive: The European biofuels story basically begins in 2003 with the issuing of the Biofuels Directive 2003/30/EC. This piece of legislation had three aims: the reduction of CO2 emissions, an increase in security of supply and support for the rural economy. The directive required that all Member States set indicative national targets for the proportion of biofuels in all gasoline and diesel fuels sold on their market, and proposed as reference values a 2% minimum share by the end of 2005 and 5.75% by 2010.
The 2003 legislation was accompanied by Directive 2003/96 on the taxation of energy products. This allowed Member States to introduce tax incentives to encourage the production and use of biofuels, such as ETBE and ethanol. Consequently, a large number of MTBE producers switched to making ETBE. These tax incentives have now virtually disappeared, but the mandatory requirement in the RED to use biofuels will ensure their rapid growth.
By the end of 2010 the successor of the Biofuels Directive, the Renewable Energy Directive 2009/28/EC (RED) will come into force across the EU. Under the new directive, the minimum share of renewable energy in the transport sector rises to 10% by 2020. Each EU member state will need to set obligatory targets on biofuels use in gasoline and diesel. Please consult the Library/National Legislation section for the transposition of the RED into national legislation.
Before the adoption of the RED Member States were required to report to the Commission before 1 July of each year on the measures taken to promote the use of biofuels or other renewable fuels to replace diesel or petrol.
Fuel Quality Directive (FQD): The purpose of the FQD is to deliver cleaner fuels to enable the use of more environmentally friendly vehicles to meet air quality and greenhouse gas reduction goals. The FQD requires Member States to ensure fuel suppliers reduce the life cycle greenhouse gas emissions per unit of energy from fuel and energy supplied by a minimum of 6% by 31 December 2020. Bio-ethers have been shown to provide additional greenhouse gas savings compared to the ethanol used in their production.
Further reading:
Legislation: Drivers for change of the fuel ether market