EU searches for alternative transport fuels

The rationale behind the bill, unveiled by the European Commission in January, is economic and environmental.

Transport in Europe is heavily dependent on imported oil, which accounts for 94 percent of energy consumed in transport, at a cost of €1 billion per day leading to high cost and risk of speculation. The commission says that investment in alternative fuels could bring savings of €4.2 billion per year by 2020.

Lawmakers also want alternative fuels to be part of a "gradual decarbonisation of transport," one of the key objectives of the bloc's so-called 2020 strategy of economic and environmental aspirations.

The commission says that its proposal is about solving a "chicken and egg" dilemma in transport, whereby a lack of infrastructure means that manufacturers do not build vehicles and vessels designed to use alternative fuels, the result of which is that there is little consumer demand or incentive to develop infrastructure.

"The market development of alternative fuels is still held back by technological and commercial short-comings, lack of consumer acceptance and missing adequate infrastructure," it says.

The proposal outlined by the EU executive is itself a hybrid.

The commission estimates that around €10 billion of infrastructural investment is needed to make the sector more attractive to consumers and sets out minimum infrastructure targets, which would be compulsory across the bloc, for electricity, hydrogen, and natural gas. How to do it, and who will pay for it, would still be questions for national governments.

Liquified petroleum gas (LPG), which is derived from crude oil and natural gas, is the most significant. It accounts for 3 percent of motor fuels and runs around 9 million cars across the EU. In terms of infrastructure it is also the most advanced, with 28,000 dispensing sites across the EU. LPG "might expand its market share but will likely remain a niche market," the commission suggests.

Meanwhile, compressed natural gas (CNG) currently powers 1 million cars in Europe with around 3,000 filling stations. But most observers contend that natural gas is best suited for commercial transport as an alternative to diesel rather than for everyday users doing the school run.

In the case of CNG and natural gas, the commission wants to see filling stations built based on a maximum distance rule, with one station per 150km for CNG, and one station per 400km for natural gas.

For its part, the European Liquified Petroleum Gas Association (AEGPL) argues that its network has been built up without mandatory targets.

Elsewhere, the electric industry continues to grapple with problems of high cost, low energy density and the heavy weight of batteries, despite EU targets to have 8-9 million electric vehicles on the road by 2020. The commission's main recommendation establishes minimum numbers of recharge points in each member state, at least 10 percent of which should be available for public use.

The plight of biofuels, seen by many as a miracle cure to overcome the EU's oil dependency just a few years ago, is a cautionary tale about the perils of politicians backing winners and then changing their minds.

Ten years ago biofuels were the main game in town, with politicians agreeing legislation requiring governments to ensure that the minimum share of biofuels sold on their markets. Existing EU law has a target to source 10 percent of transport fuel from biofuels by 2020 and biofuels are currently the most widely used alternative fuel in the transport market accounting for 4.4 percent of the market, according to research by the commission.

But the EU appears to have gone cool on extending the use of food turned into fuel.

MEPs have just voted (11 September) to tighten to rules on the use of biofuels to reach green targets amid concerns about negative environmental and social impacts.

Charles Peers, managing director of Alcogroup, which makes ethanol-based biofuel, says that the political uncertainty surrounding the use of biofuels has put off investors from putting more cash into a sector which supports 70,000 jobs.

MEPs on the Parliament's Transport committee will adopt their position on the alternative transport fuels directive in November and then face a race against time to reach a deal with national governments before next May's European elections. The timetable is tight as the legislative clock counts down.

At the moment, Europe's alternative fuels are, largely speaking, a set of niche products, battling for a share in a market dominated by petrol and diesel. The question is whether EU law will make a difference.