The EU needs to overcome regulatory uncertainty and provide more clarity on its biofuels policies before new investments are poured into greenfield projects across the 27-nation bloc, BP's Biofuels CEO Phil New said at an event in London Tuesday.
BP's 45% stake in Vivergo Fuels, which is currently commissioning a 420 million liters/year fuel in Salt End, UK, marks the end of a string of investments in new large-scale biofuel projects in Europe.
Vivergos is also partly owned by Associated British Foods, which has a 45% stake in the venture, while Dupont has 10%.
In 2014, the European Commission will present a review of its renewable energy policies, which is likely to include an assessment of the minimum greenhouse gas savings that biofuels should render and an evaluation on whether the bloc's targets can be met sustainably. The review will also contain a study on the impact of biofuels usage on food availability and prices.
Currently, the EU has a target to reach a 10% share of renewable energy in the transport sector by 2020.
New said there was "sufficient uncertainty" in the sector to prevent a new bout of investments before Brussels provides more clarity on its position on biofuels.
Several frustrated attempts by the European Commission to agree on how biofuels affect the use of highly biodiverse land has also being casting a cloud over investors' confidence in the sector, Phil New said.
The EU has been considering categorizing different biofuels according to their potential impact on land use, which could result in some biofuels being penalized based on their crop emissions.
This debate is centered on the assumption that the production of biofuels can displace land used for growing food crops. If farmers cut down rain forests or peatland to produce more food, it could unleash tons of greenhouse gases. The relatively new scientific concept is known as ILUC.
"We encourage regulators to provide clarity on ILUC so new investments can be made," he said.
"The dilemma we face is that the mandates are already in place and companies have to meet them. But a lack clarity [from Brussels] ends up interfering in the ability of companies to plan on how to meet those mandates. That's where the challenge lies. If Europe is not careful, this issue could grow larger."
New said Brussels has so far provided little direction on whether or how the ILUC concept will be applied to regulation.
