VW breaks with German auto industry over efuels

The renewable energy debate is heating up in Germany, with Volkswagen and the German automotive lobby clashing publicly about the government’s proposed plan to implement the EU renewable energy directive. Europe’s biggest car manufacturer broke with the industry by calling the use of hydrogen in cars and trucks “nonsensical”. Meanwhile, the proposed plan also states that public support for palm oil-based biofuels would be phased out by 2026 - a move echoed in three other EU countries this month.

Under the plan of Germany’s federal environment ministry, a renewable transport energy credit market would be created to allow competition between electricity, biofuels and hydrogen as green transport fuels. It follows similar plans in France and mirrors the successful Dutch and Californian crediting mechanisms for electricity. The plan also includes a 2% efuels mandate for aviation, to be met by 2030.

The VDA rejected the plan, calling instead for hydrogen and efuels to be mandated for road transport. Its biggest member, Volkswagen, published its own response, calling hydrogen-powered cars and trucksa poor use of clean electricity. VW’s statement said the “so-called potential of these alternatives for liquid fuels is [...] massively overestimated”. It added that the production of synthetic fuels from surplus renewable energies was “complex, cost-intensive, not very climate-efficient and with low efficiency”.

In its statement, the VDA lobby group said it wants to see a much higher percentage of hydrogen and synthetic fuels than has been envisaged in the proposal of the German environment ministry. It believes the use of hydrogen “in all transport applications” is possible.

Jekaterina Boening, senior policy manager at T&E, said: “The VDA is living in a fantasy world and has just been called out by its biggest member. Its proposals for massive amounts of hydrogen and efuels to be used by cars and trucks are nonsensical indeed. It won’t happen and is simply meant to confuse politicians. The government needs to call their bluff. Pie-in-the-sky efuel schemes aren’t going to make the electric car revolution go away.”

Meanwhile, the German proposal says incentives for the use of biodiesel made from palm oil would end by 2026 - four years ahead of the EU’s phase-out date. The news was followed by a similar announcement in Denmark while the parliaments of France and Italy have said biofuels made from palm and soy should not be considered sustainable.

According to the latest available data from the EU Commission, biodiesel from palm is three times worse for the climate than regular diesel when indirect emissions are accounted for. Soy diesel is two times worse.

French MPs voted - against the advice of the government - to end tax incentives for the production of palm and soy-based biodiesel. Support for palm oil had already ceased in France this year, following the enactment of the 2019 fiscal law. If the new measures are made law, they would also end support for palm fatty acid distillate (PFAD), a by-product of palm oil, and soy biodiesel. Oil and gas multinational Total has lobbied hard to continue public incentives for PFADs, but campaigners say this would still drive new demand for palm and increase deforestation. Legislators have yet to finalise a date for the ban to kick in.

In the Danish parliament, political parties authorised the minister for climate to stop palm biodiesel from counting towards the national requirement to blend biofuels with diesel. While the measure will only apply for 2021, Danish NGOs said it sends a strong signal that deforestation impacts of biofuels will be considered in future renewable energy legislation.

Italian MPs have also signaled they will end public incentives for palm, including PFAD, and soy biodiesel. This week the Chamber of Deputies voted to stop support from 2023. The bill now goes to the senate to decide, and parliamentarians may yet bring the ban forward to 2021.

Cristina Mestre, biofuels manager at T&E, said: “Major European markets are planning to phase out palm oil diesel much faster than the EU’s 2030 deadline. Meanwhile Italy and France have just said they want no soy biodiesel. That’s exactly the kind of changes we need to see in the update of the EU’s renewable energy law next year. 

The moves to end the use of palm in our tanks enjoy widespread support among Europeans: more than half of adults surveyed want an earlier end than that set by the EU. According to a YouGov poll in seven European countries last month, one-third (34%) want an end as soon as possible, after being told about the EU decision to phase out support by 2030. Almost a quarter (22%) want to do it sooner than 2030.

When it comes to soy, more than half of Europeans polled (52%) support stopping the use of soy in diesel fuel. Soy biodiesel is two times worse for the climate than regular diesel.

Last year the European Union labelled palm oil diesel unsustainable and stated that it should not receive public support because it causes deforestation. According to the Renewable Energy Directive II, the use of palm oil in diesel will be gradually reduced from 2023 and should reach zero in 2030, with some exemptions. This law doesn’t phase out soy oil but allows member states to be more ambitious and stop the promotion of palm oil earlier and include soy oil in the phase-out.