Mr. James Cogan:

I thank the Chairman, Deputy Pat Deering, and the committee members for inviting Ethanol Europe Renewables Limited to address the committee. As a member of the European Council, Ireland is currently deliberating on the recast Renewable Energy Directive, RED II, which is due to be finalised early in 2018. The stated goals of RED II are carbon reductions, energy independence and sustainable economic development. It is our view that the new directive should maintain and build on current targets for renewable energy in the transport sector. We also believe that it should allow safe effective European crop-based biofuels to contribute fully within this target, as such biofuels greatly contribute to the stated goals with no adverse side effects.

Ethanol Europe Renewables Limited is an Irish firm that produces the bioethanol used in petrol blending in Ireland and Europe. Our product helps countries reduce greenhouse gas emissions in transport and comply with their climate and energy commitments. Ethanol is made by converting the starch and sugar in grain and sugar beet crops into alcohol. Both European ethanol and its diesel counterpart that is made from rapeseed and sunflower oil are central to the health of the farm sector. Biofuels and agriculture are two sides of the same coin and legislation concerning biofuels should treat them as such.

Europe's tillage farmers now depend on biofuels for nearly €7 billion of annual income. That means €2,000 or more per annum for every tillage farmer in the Union. It is also the equivalent to over 10% of total Common Agricultural Policy, CAP, payments. The benefit accrues to all farmers in the form of a more robust demand for crops. There is no doubt that if biofuels demand were to increase our farmers could readily supply the additional crop volumes from existing land without unwanted knock-on effects.

An additional €10 billion to €15 billion go to rural economies in the form of salaries, tax payments and service purchases at the biorefineries that process the crops. Our plant alone has resulted in 2,000 new jobs since 2012, a tripling of the local authority tax takes and a rejuvenation of the surrounding region. As many as 200 other communities around Europe have benefitted similarly. Ireland could have several such biorefineries that process grain, beet and oilseed. It is not too late and the rationale is stronger than ever.

As an integral part of the production process the EU biofuels sector produces some 17 million tonnes of GMO-free protein rich animal feed annually. This is very valuable for Irish livestock producers and serves markets that demand the traceability of GMO-free produce. Without the co-produced biofuel sharing the costs to produce a domestic animal feed then the feed would not be viable. Our firm is leading the way in the production of ever higher quality feed under the Pannonia Gold brand.

The market for biofuels exists solely due to climate legislation. The fossil oil industry would not consent to new entries to the sector otherwise. There are three key legislative questions in the RED II directive. First, the current 10% target for renewable energy in transport. This target is the bedrock of climate legislation in transport today and hence the demand for European crops. The draft directive of the European Commission proposes dropping the target. Fuel distributors could dispense with biofuels in their petrol and diesel blends, which would result in a loss of farm incomes, rural employment and GMO-free animal feed. It would result in more climate damaging fossil oil on the roads too. Seven countries led by the Visegrád group have signed a declaration appealing to the Council to take proper account of the impact on farmers. Ireland and the Visegrád group are strong allies when it comes to trade talks that threaten farm livelihoods. RED II merits a similar unity. Therefore, the 10% target should be retained and built on.

Second, in RED II, there is a 7% cap on crop-based biofuels that the Commission draft would see dropped to 3.8% on a path to a total ban. This new cap might be reasonable if it applied only to biofuels that do not contribute to the climate, energy security and economic development goals of RED II or, indeed, if it applied only to biofuels that bring adverse side effects. However, it applies equally to safe effective biofuels.

The reasons the Commission cited for imposing the 7% cap in the first place, namely, land grabs and food price hikes, have been shown to be baseless in the case of EU sourced crop biofuels, and in the case of the new lower cap the new reasons are likewise baseless. The 7% cap should not be lowered for safe and effective biofuels.

Third, there is the opportunity to introduce standards to allow safe and effective crop biofuels be used above the 7% cap while barring the damaging biofuels which are easily identified and isolated. The Commission’s draft does not apply such standards. Standards should be introduced in RED II as crop-based biofuels represent the most cost-effective measure for decarbonising the transport sector during the period that will be required for electrical vehicles to replace the fleet.

As investors, our confidence was sorely rattled by the Brussels U-turn in transport renewables legislation since 2009 when the 10% target was put in place and then immediately put back on the table for amendment by way of this indiscriminate cap on crop-based biofuel. We cancelled our second biorefinery project, and several more as well, even though building works were already under way. The draft RED II assumes that hundreds of new investors will be found to build new biofuels factories for advanced biofuels that do not use conventional farm crops, but there is no evidence that investor confidence will be restored to even the slightest degree. In the lead-up to 2009, there were hundreds of biofuels business plans under evaluation in Europe. In the lead-up to 2018, there is none. Let us not throw away the European crop-based biofuels that give high greenhouse gas savings without adverse side effects. They are here already and are cost-effective. They will be needed in Ireland’s, and indeed the EU's, climate programme.

A consensus has developed over the last six months that the draft RED II is based on an incomplete analysis. The Commission’s regulatory scrutiny board twice issued a negative opinion on it and, indeed, there was no third opinion. The Impact Assessment Institute in Brussels found that "the policy to cap food-based biofuels for transport was assumed without supporting analysis". Likewise, the Cologne-based Nova Institute in September found that "the systematic discrimination against first generation biofuels of the current Commission proposal is in no way founded on scientific evidence". Finally, a few weeks ago the European Court of Auditors published a review in which it said "evidence based policy making" has become the second biggest challenge for achieving climate progress in Europe.

Ireland and the European Council have the opportunity to improve RED II in the coming weeks by keeping and building the overall target for transport renewables and by providing the right framework for the development of safe, effective, crop-based biofuels both as a climate solution and as an anchor of the rural economy.

I thank the committee for hearing this statement. We hope it has been of service.