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EU renewable energy rules – review, public consultation

The EU is heading towards climate neutrality by 2050. Finland is setting more ambitious targets
and is aiming at climate neutrality by 2035. Within the context of Finland’s target, the chemical
industry in Finland announced its ambition towards climate neutrality already in early 2019, before the government set its targets. In June 2020 the chemical industry published a study that
sets the pathway to large greenhouse gas reductions and climate neutrality.

In the chemical industry carbon neutrality roadmap, greenhouse gas emission reductions are
taken into consideration from three different angles, reduction from processes (scope 1), energy
use (scope 2) and raw materials (scope 3). When looking at the solutions towards climate neutrality, a large toolbox of different technologies has been identified. Included in the toolbox are
utilizing low emission energy for process operations but also the production of low emission solutions to customer sectors. The chemical industry is affected by the Renewable Energy Directive
in many parts of the value chain.

To be able to reduce direct or indirect emissions relating to energy use or feedstock value chains,
low emission energy and feedstock sources are important tools in the box. The chemical industry
is both a large consumer of energy and a producer of different end products from low emission
resources, e.g. fuels and materials. The Renewable energy Directive has an impact on energy
use, product manufacturing and building end consumer markets of low emission energy products.

The EU Clean Energy Package has been lately adopted and is still partly in an implementation
phase in Member States. This means that the industry has already made investment plans and
decisions relying on the existing regulation. When the “fit for 55” -package is now revised and
slowly rolled out, it is of high importance to keep investment stability in mind. If a revision of the
Renewable Energy Directive will include a change in basic principles of the previous version of
the directive, it will most certainly create uncertainty in the market and postpone investments
with many years. In the revision of key legislation, it is of high importance to avoid creating investment uncertainty. A predictable and stable regulation environment is key for industry investments that contribute to climate action.

The chemical industry is a large consumer of energy. To be able to reduce greenhouse gas emissions from energy use, a broad set of low-emission, stable supply and globally price competitive
energy sources are needed. Climate neutral sources like synthetic and biobased fuels, nuclear
energy and combustion installations with carbon capture technologies are crucial for the climate
neutrality transformation. For processes that are not cost effectively decarbonized by electrification, the use of low emission fuels like biogas, biomass, biofuels, hydrogen, synthetic fuels or
circular fuels could be an option. The array of technologies is wide and the guiding principles for
utilization of these technologies should be market driven adaptation and cost effectiveness applied to all solutions. Political cherry picking of certain low emission technologies should not be
enhanced by policy instruments.

Energy price is of high importance, an increased target for renewable energy consumption by
2030 should not drive up energy prices and costs for industry. Furthermore the regional differences within the EU should be taken into consideration, for example in the North, where there
has been large efforts to cultivate forests for feedstock use, the sustainable utilization of biomass
should be a tool in the box to reach the ambitious targets of the Green Deal.

The chemical industry also manufactures a wide range of products from fuels to materials. The
utilization of low emission sources, like renewable, synthetic and circular feedstocks, in these
products, should be enabled by legislation. The chemical industry products are essential to enable e.g. hard to abate sectors like marine and aviation to take major steps forward in reducing
greenhouse gas emissions. Furthermore, the different multipliers in the transport sector between
different solutions to low emissions transportation, should be abolished. Double counting should
also be avoided. The main framework to promote low emission solutions should be robust GHG
accounting, for example lifecycle analysis. This would better promote technology neutrality and
thus contribute to the most important goal of reducing GHG emissions.

The main target of the Renewable Energy Directive should be to reduce GHG emissions. The way
forward must be technology neutral and based on a holistic view of the energy system, taking
into consideration all sectors. Furthermore, innovation and investments in new low emission
technologies should be incentivized. The revision of the Renewable Energy Directive presents an
opportunity to build a sound investing environment for industry companies for a longer
timeframe, even until 2050. The future energy system is about production and transmission and
both aspects should be taken into consideration. Especially transmission could become a bottle
neck for reaching climate neutrality.

To conclude
• RED overall target made indicative to provide enough flexibility for different regions
• RED target should be technology neutral and include all low emission technologies and
solutions, biogenic, synthetic or circular. The basis to reach GHG emissions reductions
should be technology neutrality and GHG accounting like lifecycle analysis
• RED should foremost target GHG reductions
• RED should have an overall target for low emission energy based on the GHG intensity of
the energy transport and production system without extra exemptions or multipliers, also
advancing technology neutrality. Double counting should be avoided at all times
• The GHG reduction potential of all low emission technologies should be fully exploited
• RED should incentivize industry to move into low emissions solutions, like Carbon Contracts for Difference (CCfD)

The Chemical Industry Federation of Finland (CIFF)