“Biofuels will be the biggest contribution to decarbonization in road transport. It will evolve in maritime, aviation sector” – Elmar Baumann, VDB’s Managing Director
The Energy Republic talks to Elmar Baumann, Managing Director of the Association of the German Biofuel Industry (VDB), about the role of biofuel in decarbonising the transportation sector and the related climate change impact in the energy industry.
Interview by: Ndubuisi Micheal Obineme
For over 15 years, Elmar Baumann has been working for the association. He began his professional career as a technical officer and in 2009, he became the managing director of VDB. Excerpts:
TER: What’s VDB’s main interest in the energy industry?
Baumann: VDB stands for Association of the German Biofuel Industry and our members are producers of biodiesel and biomethane. Today, biofuels are mainly used in road transport. We represent the interests of our members in Berlin and Brussels.
VDB also represents the interests of German biofuel producers at the national and European levels. Its current 15 ordinary and 3 extraordinary members produce about 2.4 million tons of biodiesel (and 900 GWh of biomethane) which represents 60 percent of German biodiesel production.
VDB stands for the present and future of sustainable mobility in Germany. The VDB’s main objectives are: to help shape competition-oriented framework conditions for biofuel development
and to represent the industry externally.
We are dealing with European legislative processes as well as German ones.
We give information to politicians in the Parliament and the administration on what kind of framework our members need to have and we inform our members about new developments for example the Fit-for-55 package from Brussels, RED III, and a separate ETS for road transport.
On the German level, there have been serious disputes with German ministries this year about possible changes in the legislative framework and that’s where we articulate our position to politicians and the public to lobby for the interest of our industry.
Our member companies are based in several parts of Germany.
TER: How is VDB developing innovative solutions for biofuel development; Are there new trends or new technology that your member companies have been able to produce so far?
Baumann: Our members are developing and optimizing their technical processes for biofuel production. As an association, we’re not involved in the technical development but inform them about the legal framework.
We represent a huge production volume for crop-based biofuels. The biggest biofuel in Germany and Europe is biodiesel because Germany and Europe are diesel markets. As there’s a lack of diesel fuel produced in German and EU mineral oil refineries, we import quite a bit of diesel fuel, mainly from Russia. The imports of Russian mineral oil and diesel fuel will be stopped at the end of this year. Biodiesel is a substitute for fossil diesel, it helps to compensate for the diesel shortage and reduces GHG emissions.
The most important feedstock for German biodiesel production is rapeseed oil.
In second place is used cooking oil and tallow. So the second most important feedstock for German production is waste and residues. Soybean oil and palm oil are also used in German biodiesel production but to a lesser extent.
Most of the agricultural feedstock is growing here and in Europe. The categorization of feedstocks for biofuel production is carried out according to the European “Renewable Energy Directive”, abbreviated as RED – today, the RED II is in place, and RED III will be approved before this summer. There are three categories: crop-based biofuels like biodiesel made from rapeseed oil or bioethanol from cereals, waste, and residue-based biofuels according to annex IX-part b from used cooking oil or animal fat and advanced biofuels as per annex IX-part a like biomethane from straw.
Current investment activity in Germany and Europe is partly about optimization for existing facilities such as energy consumption, yields, and adaptation to new feedstocks, and partly about constructing new facilities for advanced biofuels.
TER: You have talked about the various application processes of biofuel production. Moving forward, how have biofuels particularly in transportation developed over the past years?
Baumann: Their market development has not been without problems, caused by multiple legislative changes on the European as well as on the national level. For example, in Germany in 2009, we had a decrease in the biofuel mandate which was set up retrospectively. Then we had the debate on indirect land use change (iLUC) starting in 2011, culminating in the iLUC-directive adopted in 2015, an amendment to the RED I.
We managed to escape the threat of crop cased biofuels being phased out by 2016.
Then the European Commission prepared the RED II, a continuation of the RED with a 2030 perspective. Our industry was interested in having a 2030 target for transport and sufficient demand for crop-based biofuels. The RED II was approved end of 2018 – two years before the RED I expired -, and the outcome was acceptable: no phasing out or displacement of crop-based biofuels. And then, as you probably know, member states had to integrate this directive into national law which Germany did last year in 2021. Yes.
The national transposition of the RED II gave us an excellent pathway for 2030. This was an achievement of two years of work on the German level. Half a year later, three ministers of the new government started criticizing the use of crops for biofuel production. They started their initiative against biofuels on the occasion of the war in Ukraine claiming that food is in short supply. Indeed there was uncertainty about food deliveries from Ukraine. But the real cause is the negative position of the Green party concerning biofuels and the political dispute with the Liberals.
The discussion about reducing the contribution of biofuels and phasing them out until 2030 is still ongoing, which creates uncertainty in the biofuels market. So it’s not exactly what we need when the industry is preparing for investments to secure the achievement of new targets, and it’s difficult.
On the other hand, there’s sort of a parallel world in Brussels: The European Commission
does not provide the necessary detailed regulations which the biofuel industry needs.
Those detailed regulations are still missing for the RED II, which was passed in 2018 and is now amended to become the RED III in 2023. Four years after the adoption of the directive, the Commission did still not deliver important specifications. This makes it quite difficult to keep the overview, pursue a clear pathway, and make investment decisions.
Another example: the European Commission has still not finished the process of extending the list of feedstocks in Annex IX Part A and B.
As you can imagine, if you build a facility to process a certain feedstock, you need to know to which category your feedstock belongs, and does your product count as advanced biofuel or waste-based fuel. This is crucial for your marketing.
And if there are changes, then this makes your calculation invalid because you thought of a certain market for waste-based and advanced biofuels but now with more feedstocks, the framework conditions change. And all this is uncertain at the moment. The choice of feedstock is decisive for your process or how easy or how hard is it to process this feedstock.
TER: Based on your perspective, What would you recommend as an appropriate legal framework to boost biofuel development in Germany and the European energy industry?
Baumann: It’s quite easy. The RED2 transposition into German law with the amendment of the GHG mandate was perfect. So we worked quite hard to get good framework conditions for the German biofuel industry. The regulation for advanced biofuels according to annex 9 part A provides a strong incentive to use those biofuels and to invest in production facilities as volumes above the sub mandate count twofold. This means that even when mineral oil companies have fulfilled their sub mandate for advanced biofuels, the market can still take these biofuels at relevant prices. This makes the German market a magnet for advanced biofuels.
Most of the agricultural feedstock is growing here and in Europe. The categorization of feedstocks for biofuel production is carried out according to the European “Renewable Energy Directive”, abbreviated as RED – today, the RED II is in place, and RED III will be approved before this summer. There are three categories: crop-based biofuels like biodiesel made from rapeseed oil or bioethanol from cereals, waste, and residue-based biofuels according to annex IX-part b from used cooking oil or animal fat and advanced biofuels as per annex IX-part a like biomethane from straw.
Current investment activity in Germany and Europe is partly about optimization for existing facilities such as energy consumption, yields, and adaptation to new feedstocks, and partly about constructing new facilities for advanced biofuels.
TER: You have talked about the various application processes of biofuel production. Moving forward, how have biofuels particularly in transportation developed over the past years?
Baumann: Their market development has not been without problems, caused by multiple legislative changes on the European as well as on the national level. For example, in Germany in 2009, we had a decrease in the biofuel mandate which was set up retrospectively. Then we had the debate on indirect land use change (iLUC) starting in 2011, culminating in the iLUC-directive adopted in 2015, an amendment to the RED I.
We managed to escape the threat of crop cased biofuels being phased out by 2016.
Then the European Commission prepared the RED II, a continuation of the RED with a 2030 perspective. Our industry was interested in having a 2030 target for transport and sufficient demand for crop-based biofuels. The RED II was approved end of 2018 – two years before the RED I expired -, and the outcome was acceptable: no phasing out or displacement of crop-based biofuels. And then, as you probably know, member states had to integrate this directive into national law which Germany did last year in 2021.
The national transposition of the RED II gave us an excellent pathway for 2030.
This was an achievement of two years of work on the German level. Half a year later, three ministers of the new government started criticizing the use of crops for biofuel production. They started their initiative against biofuels on the occasion of the war in Ukraine claiming that food is in short supply. Indeed there was uncertainty about food deliveries from Ukraine. But the real cause is the negative position of the Green party concerning biofuels and the political dispute with the Liberals.
The discussion about reducing the contribution of biofuels and phasing them out until 2030 is still ongoing, which creates uncertainty in the biofuels market. So it’s not exactly what we need when the industry is preparing for investments to secure the achievement of new targets, and it’s difficult.
On the other hand, there’s sort of a parallel world in Brussels: The European Commission
does not provide the necessary detailed regulations which the biofuel industry needs.
Those detailed regulations are still missing for the RED II, which was passed in 2018 and is now amended to become the RED III in 2023.
Four years after the adoption of the directive, the Commission did still not deliver important specifications. This makes it quite difficult to keep the overview, pursue a clear pathway, and make investment decisions.
Another example: the European Commission has still not finished the process of extending the list of feedstocks in Annex IX Part A and B.
As you can imagine, if you build a facility to process a certain feedstock, you need to know to which category your feedstock belongs, and does your product count as advanced biofuel or waste-based fuel.
This is crucial for your marketing.
And if there are changes, then this makes your calculation invalid because you thought of a certain market for waste-based and advanced biofuels but now with more feedstocks, the framework conditions change. And all this is uncertain at the moment. The choice of feedstock is decisive for your process or how easy or how hard is it to process this feedstock.
TER: Based on your perspective, What would you recommend as an appropriate legal framework to boost biofuel development in Germany and the European energy industry?
Baumann: It’s quite easy. The RED2 transposition into German law with the amendment of the GHG mandate was perfect. So we worked quite hard to get good framework conditions for the German biofuel industry. The regulation for advanced biofuels according to annex 9 part A provides a strong incentive to use those biofuels and to invest in production facilities as volumes above the sub mandate count twofold. This means that even when mineral oil companies have fulfilled their sub mandate for advanced biofuels, the market can still take these biofuels at relevant prices. This makes the German market a magnet for advanced biofuels.
The amended German regulation delivers security for the existing products because there’s enough space for those biofuels in the market until 2030. The GHG mandate increases every year to make sure there is sufficient demand for every technological option reducing GHG: electromobility, all sorts of biofuels, renewable hydrogen, and electricity-based fuels. They all count against this GHG mandate.
With the increasing GHG mandate, we avoid one renewable option displacing another. If we could tell a wish, we would say we’d like to continue this sort of legal framework beyond 2030. According to our estimates and other associations as well as scientific studies, there will be a need for renewable fuels beyond 2030. When fuel sales go down at some time due to electrification, you could use the biofuel volumes as higher blends like B 20, B 30, or pure biodiesel 100. You can concentrate this in certain sectors like heavy-duty vehicles, that means buses and trucks or agriculture machinery.
And there’s also maritime transport which will still use liquid and gas fuels for combustion engines. So I could imagine we need all of our biofuels still more than one decade.
There’s been a prospect for biofuels in transport for quite some time. In the long run, you can also use biofuels like ethanol, biodiesel, and biomethane as raw materials and building blocks for the chemical industry. Chemical Industry is also trying to reduce fossil feedstocks. So today, it’s nearly 100% fossil oil, mineral oil, and natural gas, so this has to be changed.
TER: What are the opportunities for integrating biofuels into the energy transition plan in Europe?
Baumann: Today, we are the only alternative fuel used in road traffic. So if you look today at the statistics, 95% of the decrease in GHG emissions in road transport is due to the use of biofuels.
Electromobility will increase its share but until 2029 or 2030, biofuels will be the biggest contribution to decarbonization and renewables in road transport. So that’s a huge contribution.
We still have a relatively low share of biofuels in the market, about 6 or 7% in Germany, but that’s by far the biggest contribution of renewables in road transport. So there’s no way to do without biofuels.
TER: Are there any ongoing projects you would like to share with us?
Baumann: I would invite you to contact our member companiesSeveral companies that are planning to invest
in advanced biofuel production. What we thought years ago was that advanced biofuels would be produced exclusively with new technologies. That’s also ongoing, for sure.
But our impression is that existing facilities are adapted to be able to use one of the feedstocks of annex IX-part A. So with minor modifications of the production process and the availability of advanced feedstocks, you can process it in your existing biofuel facility and you can try to increase the volume of those feedstocks.
But one must be clear that it is still necessary to keep the volumes of crop-based biofuels because we still rely on their decarbonization performance.
Whereas there is some space for production increase for crop-based biofuels and biofuels made from waste and residues from feedstocks according to annex IX-part B, the lion’s share of the increase will come from advanced biofuels.
Compared to the biodiesel sector, the production of biomethane for road transport is small in comparison but will continue to increase. Most of this biomethane is based on agricultural residues like manure and straw which qualifies for annex IX-part a.
There is a traditional production of biogas in rural areas of Germany which is used for electricity production in combined heat and power plants. Germany is the biggest European producer in this field. More biomethane facilities will be built or existing biogas plants will be transformed so that they can deliver to the grids and from the grid to road transport.
TER: Will bioenergy contribute to the fuels of the future in mobility, aviation, and shipping?
Baumann: Biofuels can be used in different modes of transport. Today biofuels are used practically exclusively in road transport. It will evolve in the maritime sector as well as in aviation.
It looks as if electromobility is rolled out a bit slower than we thought but several crises have happened such as the war, inflation, etc. Electromobility will gain its share in road transport and liquid and gas fuels will more and more focus on heavy-duty and off-road. The use of biofuels in Shipping will increase. And there’s also provision on the European level for aviation, which will start by 2025. Biokerosene will contribute to this target.
However, from our point of view, it doesn’t make sense to shift existing biofuels or feedstock for biofuels from one transport carrier to the other. We will still need biofuels for more than 10 years in road transport. It doesn’t make sense to switch these biofuels We need to make sure that new feedstocks are raised instead of moving the same feedstock from one use to another.
