Last month, representatives of the European Parliament and member states hammered out a deal on a revised 'fuel quality directive' that includes a legally-binding target to reduce greenhouse gas emissions from fuel production.
The CO2 target has the potential to cut demand in Europe for the most carbon-intensive oil production methods such as extraction of oil from tar sands and oil shale. California has adopted similar legislation.
A low carbon fuel standard in American and Europe would effectively create a secondary 'sub-prime' market for high carbon oil worldwide and would severely impact on the economic viability of such sources, which are expensive as well as extremely environmentally damaging to extract.
Importantly, the new law also obliges the oil industry to reduce so-called flaring and venting, two widespread practices causing unnecessary greenhouse gas emissions. And it contains specific incentives for electrification of transport - more use of plug-in hybrid and electric vehicles.
In principle this law makes quantitative targets for biofuels and other forms of alternative transport fuel superfluous. T&E has always argued its best to promote alternative fuels on their climate performance, rather than prescribe their volumes.
The future effect of the law in 'decarbonising' transport fuel crucially hangs on the way in which the carbon savings of biofuels are calculated. Both the fuel quality directive and a parallel EU demand that 10% of transport fuel comes from renewable sources (mostly biofuels) by 2020 refer to sustainability criteria that have not yet been agreed.
Throughout 2008, a long list of influential organisations and scientists have drawn attention to the impacts of additional land being required for other purposes, when existing agricultural land is converted to grow raw materials for biofuels. So-called 'indirect land use change' means many biofuels have an overall greater carbon impact than fuels derived from crude oil. So far the EU has refused to recognise the problem, and is pushing ahead with a target that doesn't account for indirect land use change, or allows huge exemptions for existing facilities or so-called 'second generation biofuels' - regardless of their real carbon impacts.
Download a T&E briefing with a full explanation of the Fuel Quality Directive.