At the 4th Energy Transition Forum, Redexis, Repsol, Reolum, Exolum, Axpo Iberia and Moeve outlined the reasons why both renewable fuels and hydrogen are struggling to take off.
- Lack of regulatory certainty: Investors and companies require stable, swift and clear rules (such as the final transposition of European directives). Without this security, companies delay the final investment decision necessary to build production plants.
- Absence of long-term contracts: For a production project to secure funding, clients must commit to supply off-take agreements with a horizon of around 10 years. Many consumers are not yet accustomed to working within these timeframes, which acts as a hindrance when seeking financing.
- Penalising taxation: The sector demands “tax neutrality”. Currently, metrics often solely penalise what comes out of the vehicle’s exhaust pipe, without taking the full lifecycle into account. They request that renewable fuels receive the same fiscal and regulatory treatment as electricity.
- Immature waste chain: Although there is sufficient feedstock (organic waste) to produce these fuels, the entire logistics of collecting and managing this waste has yet to be consolidated in an industrial and efficient manner.
- Technological fragmentation in key sectors: In areas such as maritime transport, the market is fragmented, testing multiple alternatives simultaneously (methanol, ammonia, bioLPG). This creates uncertainty and prevents the standardisation of infrastructure in the short term.
At times like this, amidst the most severe supply crisis, renewable fuels could gain competitiveness and strategic autonomy. They are the necessary complement to electrification. Transport is the leading emitter of greenhouse gases, and branches such as heavy-duty commercial transport or shipping have no option to fully electrify. Yet, this is not happening.
For the industry, the RED III directive is a good framework of intentions, albeit insufficient. Whilst it mandates the consumption of renewable fuels, it does not guarantee funding. It does establish what percentage of energy must be green, but it does not regulate taxes, nor can it tackle the administrative limbo. A European directive requires transposition into the national laws of each country. Until the final regulation comes into force with its completed technical rules, investors are freezing their capital. Finally, there are the waste traceability and certification requirements that the RED III directive imposes on European producers, which are rendered useless when the import of biofuels or green molecules from third countries is permitted without demanding the exact same rigour, thereby creating unfair competition.
The current scenario requires giving a boost to the organic waste collection and management industry; focusing efforts on the technological development of production processes and achieving regulatory stability would provide certainty to the industry.
