EU may miss biofuels production targets because of regulatory uncertainty, which is making investors reluctant to begin new projects, finds report

LONDON , December 9, 2013 () – Regulatory uncertainty in the European Union means production of biofuels in the bloc may miss targets as investors are reluctant to take up new projects, Agra CEAS Consulting Ltd. said in a report today.

There’s been a “dramatic slowdown” in biofuel project investment in the EU, according to the e-mailed report from Agra CEAS, a joint venture between Imperial College London and Informa Plc. Ten percent of fuel used for transportation should come from renewable sources by 2020, according to an EU mandate set in 2009. The European Commission last year proposed to cap the use of first-generation biofuels made from food crops including grain and sugar at 5 percent, with the rest of the mandate fulfilled by so-called advanced biofuels made from inedible products including corn stalks and other crop waste.

Discussion on changes to the mandates within the European Council and European Parliament have been “highly polarized and hitherto inconclusive,” discouraging investors from building new plants, according to Agra CEAS, which has offices in the village of Wye, southeast of London, and in Brussels. There are 35 first-generation biofuel projects in planning stages in Europe, with none under construction, compared with 343 projects being planned or under construction in 2008, Agra CEAS said. There are 25 “relatively small-scale” advanced biofuel projects under development with one in construction, Agra CEAS said, citing F.O. Licht, a unit of Informa.

“Given the current investment climate, and as history has shown, it is highly unlikely that these could all be expected to come on stream by 2020,” according to the report.

“The reason that biofuels capacity is no longer being built in line with projected 2020 mandated demand is primarily linked to the continued investment uncertainty within the sector resulting from regular changes in policy direction and a lack of clarity as to what policies are going to be in place going forward,” Agra CEAS said.

--Editors: Sharon Lindores, Nicholas Larkin

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