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EU clears Italy’s $5.7bn biofuels support scheme

EBR Staff Writer Published 05 March 2018

The European Commission has approved Italy’s €4.7bn ($5.73bn) of public support for the production of advanced biomethane and biofuels.

The scheme, which is said to comply with the EU State aid rules, will support the production and distribution of advanced biofuels and advanced biomethane, also known as second and third-generation biofuels, for use in the transport sector.

The support scheme is planned to be run from 2018 to 2022.

European Commissioner for Competition Margrethe Vestager said: "This is yet another step towards greater use of renewable energy in Europe and helping Italy's transition to more environmentally friendly fuel sources.

“The scheme will encourage the production and consumption of advanced biofuels in Italy, while limiting distortions of competition."

The Commission expects the measures to contribute to EU’s energy and climate change goals.

Under the scheme, producers of advanced biomethane and biofuels will be given a premium to help them to compensate for these higher costs and compete with fossil fuels.

However, the premium can be increased if producers improve the distribution and liquefaction of advanced biomethane by making additional investments, the commission said.

In order to ensure that producers are not overcompensated, the premium level will be updated annually in relation to the production costs.

Additionally, farmers will be incentivized to produce biofuel and biomethane from manure and other residues and use them to power their agricultural machines and vehicles.

The Commission has concluded that the support scheme would help Italy in achieving its 2020 target renewable energy target in transport, fight climate change and replace fossil fuels in the transport sector.

Earlier, EU has set a 2020 target for its member states to have least 10% for the renewable energy share including liquid biofuels, hydrogen, biomethane, ‘green’ electricity, etc., in the transport sector.

Said to be environmentally friendly, the advanced biofuels and biomethane pose significantly lower risk of indirect CO2 emissions as they are produced from feed-based sources such as waste, agricultural residues, and algae.