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In late October the environment committee (ENVI) of the European Parliament voted in favour of changes to the wording of the Renewable Energy Directive II (RED II), which was initially set out by the European Commission in November 2016.
The proposals were only narrowly approved – with 32 votes in favour, 29 against and 4 abstentions – highlighting how contentious a topic bioenergy has become in Europe.
The amendments to RED II sustainability criteria approved by the committee are, in general, more pragmatic than industry initially feared. Early suggestions that countries which are not in the Paris Climate Agreement – namely the United States – would effectively be prevented from supplying biomass to EU consumers, have not made their way into the approved draft. References to ‘forest holding level’ have been replaced with ‘supply base level’, greatly simplifying the fibre tracing and documentation requirements that may be imposed upon wood pellet producers and users.
Meanwhile, the minimum greenhouse gas savings thresholds that will apply to bioenergy plants which begin operating after 2021 have been revised to 70%, or 80% for those which come online after 2026. This contrasts with the 80% and 85% limits set out by the European Commission, and overturns earlier parliamentary proposals to implement mandatory GHG limits on all bioenergy plants, including those which were already operating before the rules were defined. Proposed restrictions on the provision of financial subsidies to biomass power-only projects have remained in the approved text. This means that future European biomass deployment could potentially be restricted to only biomass CHP installations which meet minimum efficiency standards, with plants which generate only power not eligible for support.
However an important exemption to this rule is provided for power plants which are converted from solid fossil fuels to biomass, potentially leaving the door open to Member States who wish support coal to biomass conversion projects. Regarding the implementation of these rules, the ENVI committee proposes that the RED II would include a revision clause in 2023, at which point EU institutions would have the opportunity to amend the sustainability criteria. This aspect was widely criticised by market participants due to the uncertainty that it would introduce, and the relatively short time period (possibly less than five years) prior to the scheduled review. However a concession was made in the text, stating that any amendments agreed at that stage would not be implemented until after 2030.
The ENVI committee also decided to increase the level of renewable energy ambition contained within RED II, increasing the target to 35% by 2030, versus the 27% proposed by the EC. The European Parliament’s industry committee (ITRE) is now scheduled to vote on the policy on 28 November. After this, the proposals will go to a plenary vote in the European Parliament. Meanwhile, the European Council is working in parallel to develop its own second draft of the RED II, with a vote expected in December. Once the Council and Parliament have each finalised their proposals, they will join with the European Commission and enter trilogue discussions before a final RED II is developed and approved by each body.
[NB: This article first appeared in Forest Energy Monitor Issue 79.]
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Market summary and price forecast June 2022
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