Shell, VW Study Says Europe Needs to Spur Clean-Fuel Investment

Investment in biofuel for vehicles is being held back in Europe by a lack of targets through 2030, according to a report commissioned by companies including Royal Dutch Shell Plc (RDSA), Honda Motor Co. and Volkswagen AG. (VOW)

Development of advanced biofuels made from non-food crops is being affected, energy consultant E4tech said in the report, also produced on behalf of Daimler AG (DAI), Neste Oil Oyj (NES1V) and OMV AG. (OMV) As much as 20 percent of the European market in 2030 may be from advanced biofuels should incentives be implemented, it said.

“It is critical that Europe develops a framework within its 2030 climate and energy proposals that provides a level of incentives which stimulate the necessary investments in this important endeavor,” Matthew Tipper, vice president of alternative energies at Shell, said in an e-mailed statement.

Biofuels are mixed with conventional fuel to cut greenhouse gas emissions. First-generation fuel made from edible crops such as wheat and sugar has been blamed for pushing up food prices.

The European Union now requires that 10 percent of member states’ transportation uses biofuel by 2020. In September, it restricted the use of first-generation biofuels to 6 percent to spur companies to invest in researching non-food alternatives that are currently more difficult and expensive to produce.

A target for decarbonization of road transportation to 2030 and a goal on emission cuts from advanced biofuels would provide the industry with certainty there will be a market for the fuel, Ausilio Bauen, author of the report, said in a phone interview.

A range of biofuels may make up as much as 12 percent to 15 percent of energy in transportation by 2030, according to the report. That’s greenhouse emission savings of about 8 percent.

To contact the reporter on this story: Louise Downing in London at ldowning4@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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