Why is the EU still sitting on the tech neutral fence?
Technology neutrality – or not prescribing one particular technology – sounds great in theory, but it comes with downsides. It’s a shame the EU can’t learn from its past mistakes with road transport and take a bolder route with shipping and aviation.
Aoife O’Leary speaking on the need for the EU to reconsider its technology neutral position at a recent SASHA Coalition event hosted by MEPs Gerben-Jan Gerbrandy and Jan-Christoph Oetjen at the European Parliament.
As a CEO, one insight I often remind myself is that to fail to make a decision is a decision in itself. Sadly, the EU has not picked up on this insight – but China has. And China is winning. Let me explain…
I’ve been working on policy to decarbonise shipping and aviation for over a decade, and while the emissions are still increasing, substantive gains have been made: we have an International Maritime Organization (IMO) deal; both sectors have EU fuel mandates; and international shipping is in the emissions trading system (ETS).
However, the IMO deal and the EU fuel mandates create a ‘demand pull’ in sectors where the winning technology – e-fuels – is not ready yet. Instead, we’ve created policies that will incentivise biofuels and LNG. It’s like we never learned any lessons from road vehicles.
What is technology neutrality?
Technology neutrality is a simple concept. It’s about setting goals for the outcome you want to achieve, and avoiding policies or regulations that single out or discriminate against certain technologies. Sounds great in theory, but it doesn’t always deliver the results you’d hope for.
Take road transport as an example. Back in the early 2000s the debate on road transport decarbonisation was whether electrification could ever decarbonise road transport. Many claimed it was impossible: much easier to focus on producing drop-in biofuels.
At the time we were aware of the many downsides of biofuels, and yet the EU decided not to pick electric vehicles as the winner but to go ahead with a “technology neutral” policy. This meant allowing the car industry to reduce carbon intensity through whatever means they chose.
Meanwhile in China, they just went ahead and invested in batteries and EV companies. Many of those early companies did not survive, but those that did now have the most cutting-edge technology and are causing all kinds of concern about Europe’s competitiveness.
While we have not “solved” road transport yet, at least we can all agree that EVs are the solution, and not biofuels. We’re now on a steady trajectory to EV-dominated roads – whereas in shipping and aviation the decarbonisation journey has only begun.
Three lessons we need to learn from the road transport sector
1. We need to tax fossil fuels
If it is too soon for demand pull requirements for aviation and shipping, then what regulation do I favour for those sectors? Pricing. Pure and simple. (Disclaimer: I do have an economics degree so admittedly I have been indoctrinated by the economics profession, but hear me out...)
In the EU we have been pricing road transport (aggressively) for quite some time. True, it has not led to the full decarbonisation of the sector, without EVs that was just not possible. But it generated a lot of government revenue, and it meant that road vehicles in the EU are much smaller on average (though admittedly now growing) than the equivalent US vehicles.
While we wait for the right fuels that will fully decarbonise the aviation and shipping sectors to appear, aggressive taxation is the way to go. For aviation and shipping, that means at a minimum putting international journeys in the EU Emissions Trading System.
2. Be realistic about the downsides of technology neutrality
The EU has at least taken the much-needed step to ban first generation biofuels or those biofuels made from food and feed crops. This is an essential bottom line as such crops cause deforestation and endanger food security.
However, the rest of the biofuel crop are not exactly without their own problems. Even “waste” biofuels – fuel produced from crop and other wastes can cause land use change and are very limited in supply, meaning they cannot be scaled to the amount needed for the shipping or aviation industries.
And this is one of the big problems with technology neutrality – we allow fuels to continue even when they have substantive negative impacts.
Three downsides of “technology neutrality”:
Technology neutrality relies on something to differentiate the options – in this case, it is usually lifecycle accounting (LCA). LCA is better than nothing, but it’s almost impossible to include all impacts of producing a fuel, from land use change to biodiversity impacts to any human rights implications. And it leaves out any focus on European competitiveness.
It encourages industry to take incremental steps rather than going all the way to zero. If you are an airline and you know you can continue to use SAF to 2070 under ReFuelEU, what is your incentive to invest in e-fuels? Or if you are Airbus, would you not find it much easier to just focus on producing 100% SAF-ready aircraft, rather than focusing your innovation on hydrogen and electric aircraft? Similarly on the maritime side: LNG and biofuels will be the choice of the industry for compliance for years to come unless there is a clear and sustained push for wind, efficiency, batteries and e-fuels.
It allows oil and gas to extend the life of production and refinery infrastructure by putting solar panels on the roof of their production facilities and point out how it helps to reduce carbon intensity. (I jest, but not very much.) But more seriously, it allows dodgy biofuels to continue and fossil gas to label itself as a “transition” fuel.
3. Pick winners
Which brings me to my suggestions for where the EU can pick winners and see home-grown industry take off (or set sail if you prefer the maritime metaphor):
Electric and hydrogen aircraft and maritime vessels, and;
Green hydrogen and green hydrogen-derived fuels.
Any criteria needs to look at more than carbon intensity. It also needs to take into account Europe’s competitiveness. Importing biofuels and LNG will not add to the EU’s (energy) security. Taking food or land that could be used for food and turning it into biofuels is just not a good idea. The EU can be the technology leader but for that we need to pick the above winners and fund their rollout and the necessary R&D.
And proactively plan for this transition. Let’s properly price fossil fuels to create a market to reduce emissions – but at the same time we need to ensure the right infrastructure for zero emissions is in place. A lot of that plan will be focused on the grid in places where we will need it for this transformation: airports and seaports. We need to ensure that we have the right electricity available at both.
So, the question I leave you with is this: is the EU brave enough to pick the winners? Policy must focus on future-proof technologies, not short-term stopgaps. It’s time the EU focused on its winners rather than sitting on the tech-neutral fence.
To find out more about why using biofuels to decarbonise EU shipping and aviation puts biodiversity at serious risk, read our Fuelling nature report.
