Home NewsTechnology Europe EC approves €4.7bn public support scheme for advanced biomethane and biofuels in Italy

EC approves €4.7bn public support scheme for advanced biomethane and biofuels in Italy

The European Commission has approved under EU State aid rules an Italian support scheme for the production and distribution of advanced biofuels, including advanced biomethane.

The measure will contribute to reaching EU energy and climate change goals while limiting distortions of competition.

The Italian scheme supports 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 scheme has an indicative budget of €4.7 billion and will run from 2018 until 2022.

Advanced biofuels and biomethane are the most sustainable and environmentally friendly biofuels. They are produced from feedstock that do not require agricultural land for their production, such as waste, agricultural residues, and algae.

However, advanced biofuels and biomethane have much higher production costs than fossil fuels.

Under the scheme, producers of advanced biomethane and biofuels receive a premium which allows them to compensate for these higher costs and compete with fossil fuels in the transport sector. The premium can be increased if producers also make investments to improve the distribution and liquefaction of advanced biomethane.

The level of the premium will be updated each year in relation to the production costs to ensure that producers are not overcompensated.

The scheme will also incentivise farmers to produce biofuel and biomethane from manure and other residues originating from their farming activities and use them in turn to power their agricultural machines and vehicles.

The scheme will be financed by transport fuel retailers who are obliged by law to include a certain percentage of advanced biofuels and biomethane in their fuel blends.

Commissioner Margrethe Vestager, in charge of competition policy, 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’s 2014 Guidelines on State aid for environmental protection and energy allow Member States to support advanced biofuels under certain conditions.

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