Interview with Emmanuel Desplechin, Secretary-General of ePURE
Category: Insights

Interview with Emmanuel Desplechin, Secretary-General of ePURE

In a follow-up to HC Insider’s article ‘Fuelling the future: Carving a Road for Ethanol as a Transport Fuel’, we talk to Emmanuel Desplechin, Secretary-General of ePURE, the advocacy group for ethanol producers in Europe. As the European Union’s Renewable Energy Directive is being revised for the third time, Desplechin calls on the EU to do more to bolster the role of ethanol in particular and biofuels in general.

HC Insider: The European Union’s (EU) latest “Fit for 55” package unveiled in July 2021 has ambitions to reduce emissions in the bloc by 55% by 2030 compared to 1990 levels, notably through phasing-out the sales of new combustion engines vehicles by 2035. How do see the package?

Emmanuel Desplechin: The growth of ethanol as a transport fuel has come in response to the blending mandates set by the Renewable Energy Directive (RED), which is the main instrument regulating our sector. In fact, of all the uses of ethanol – food, beverage, and industrial use - the market that is growing the most is in transport.

Regarding the EU’s “Fit for 55” proposals, the interesting part is that finally the EU, has realised that efforts to decarbonise the economy should start with transport, the only sector where the emissions have kept increasing.

With that challenge in mind, we now need to decarbonise transport. One way of doing this if we want to make use of existing infrastructure and existing vehicles is to reduce the carbon intensity of the fuels. The ethanol that we produce saves on average 75% of emissions compared to petrol.

HC Insider: What opportunity does this offer to ethanol?

Emmanuel Desplechin: The EU has an ambitious package which is heavily focused on technologies in the sense that they are now pushing extremely hard for electric mobility and hydrogen. We do see however, that there is a need today and, in the future, for renewable liquid fuels given the fleet that we have today in Europe.

Even in the most optimistic scenario of the European Union, by 2030, we are talking of 80% of the fleet that will still be running on some liquid fuel. Even in EV segments, we have hybrid cars, which run on electricity but also on petrol in which you can put ethanol. That is the opportunity for ethanol to decrease the carbon intensity of transport fuels.

There are 15 members states that now have E10, plus the UK. But we still have quite several member states that have not rolled out E10. In other words, just by making E10 the standard petrol grade, we already could double the volumes of ethanol.

HC Insider: What does it take to boost the share of ethanol?

Emmanuel Desplechin: It takes a stable regulatory framework. The main obstacle to the rollout of ethanol over the past years is the fact that we have been changing regulation under the Renewable Energy Directive. It has been changing every three years, there has been a pattern. If member states do not have visibility beyond the next 15 months in terms of what the rules are going to be, not all of them will be so keen to decide to adopt E10.

Of course, now, the pressure is mounting. The higher the ambitions to decarbonise the transport sector, the less options member states have in a shorter timeframe.

The beauty of ethanol is that you do not have to change your existing infrastructure, unlike for electric vehicles for which you would need new infrastructure. The same goes with our cars. Petrol cars are on the road are already compatible with E10.

HC Insider: Your organisation consists mostly of ethanol producers, largely in sugar businesses, as well as commodities traders. What level of interest have you observed from oil majors in ethanol in Europe?

Emmanuel Desplechin: When it comes to major oil companies, we have not seen the same level of interest in investing in ethanol as for biodiesel. There is a reason for that. Europe is traditionally long in gasoline and short in diesel. If you have refinery in Europe, you therefore have excess of gasoline. Every litre of ethanol that you put on the market is another litre of gasoline that you will have to export or find a market outlet for. 

There has been more interest in biodiesel because European fuel suppliers have been importing diesel. So this way, they can cut on import needs.

However, majors such as Shell and BP are invested into cellulosic ethanol. There is no way we can reduce emissions by 2030 and achieve net zero by 2050 without biofuels and the oil majors have understood that.

HC Insider: Many predict a considerable drop in oil products demand in future notably due to aggressive penetration of electric vehicles. In such a landscape, is there really space for biofuels in general and ethanol in particular?

Emmanuel Desplechin: I agree that transport energy demand is expected to decrease. But that does not mean that we are not going to need renewable fuels like ethanol, or renewable diesel for that matter. It just means that in the remaining share of transport fuel consumption, the share of biofuels in transport will be greater. Experts are even advocating E20.

HC Insider: Aren’t there technical limits coming in the way?

Emmanuel Desplechin: There is a technical limit beyond E10, but it is just a regulatory barrier. In Brazil, every litre of gasoline contains 27 % of ethanol. They have E100, which is 100% ethanol consumed in flex-fuel vehicles which can run on petrol, ethanol, or a mix between the two. We have that in France as well with E85 which is used in specifically designed cars or retrofitted to run on petrol or E85.

HC Insider: What would it take to have that picture between 2030 and 2050?

Emmanuel Desplechin: Right now, we have an EU legislation that is extremely dogmatic about the solutions that it is proposing. It is all about electrification and it is not easy to achieve. The plans of the EU are extremely costly, especially when considering that on average people change cars every 10 years. We need all renewable, low carbon fuels that are possible. Ethanol is one of them because it is immediate, already available, cost-effective, compared to other solutions and socially inclusive.

HC Insider: How cost-effective is ethanol?

Emmanuel Desplechin: Of all the options we have at our disposal to decarbonise transport, ethanol is the most competitive options in terms of carbon abatement costs. It has no rival. But for ethanol to be competitive for consumers, we need an adequate taxation policy. Taxation today works on volume, on each euro per litre of fuel that is on the market.

Now, as you know, ethanol has an energy density that is much lower than petrol, in other words you need to refill at the pump more often. Because it is taxed on the equivalent weight of petrol, based on volumes, de facto, on an energy basis we are taxed more than petrol is. If you continue to tax ethanol which is more environmentally friendly than petrol, then of course consumers will not like it.

HC Insider: What would you like to see in the next package?

Emmanuel Desplechin: Firstly, we are extremely happy that the European Commission (EC) has made progress on several themes. We are satisfied with plans to move away from volume-based targets to GHG intensity target as part of the “Fit for 55” package. From a fuel perspective, that means renewables will be able to compete on a carbon-abatement cost basis.

What we are less happy about is giving mandates for second generation biofuels. We welcome this but not at the expense of first-generation biofuels. We want first generation ethanol to be able to gain market share, and on top on that, allow the growth of second-generation ethanol. In addition, the limit on first-generation biofuels, is far too low, we want that at 7% at EU level, compared to around 5% now.

Another thing we want is a serious revision of EC‘s policy on zero emission vehicle. The fact that we are looking purely and solely at tailpipe emissions is distorting competition between electric mobility technologies and biofuels. Labelling electric mobility as emission free, which it is not, ignores the contributions that biofuels like ethanol can make.

The EC is on the wrong side, by proposing mandates for fuels like advanced ethanol under the third Renewable Energy Directive, and at the same time, saying that by 2035, we will not be selling any cars running on liquid fuels. There is a mismatch.

HC Insider: What are your hopes and expectations from the next RED legislation?

Emmanuel Desplechin: I am hopeful that discussions with the EC will be more rational than dogmatic. We need to define a pathway that is realistic, and economically feasible. The yellow vests movement in France showed that streets can be a powerful instrument.

The EC only has a plan A. But what if consumers do not follow suit? What if we do not have enough material to build a battery? We may lose another ten years.
It is going to be a transition process. We need all the renewable sources to be able to contribute. It is not about having renewable electricity substitute renewable fuels. Just like it is not about replacing first-generation ethanol by second generation. It is about building a case for renewables so what we displace in the end is fossil fuels. - FS