Introduction
On 13 February 2023, changes were made to the Dutch Wet milieubeheer (Environment regulation Act, hereinafter: the Act) and the lower regulations based thereon, which will come into effect by 2025 at the latest. These changes took place following an update of the European Renewable Energy Directive (Directive on the promotion of the use of energy from renewable sources, hereinafter: RED). The RED imposes binding conditions on European Countries to take measures in the context of environmental protection. The latest changes concern the rules for carriers of fuels such as petrol, diesel, and fuel oil. Thus, the categories of carriers subject to the rules are expanded. This blog will discuss the main changes.
Reason for the changes
Following the European Climate Change Act, the European Union has set out targets in its Fit for 55-programme to contribute to a better climate and a healthier environment. Among other things, this programmes includes a legal obligation to reduce net emissions by at least 55% between now and 2030. Ultimately, the EU should be climate neutral by 2050.
About a quarter of CO2-emissions come from the traffic sector. By encouraging the use of renewable energy in transport, the government expects the sector will use less fossil fuels and thus reduce CO2-emissions. It has therefore legislated to implement this policy.
Jaarverplichting
The previous version of the Act (the version of the before the updates) contained an obligation on fuel suppliers in the transport sector (i.e. all traffic on land, thus exempting traffic through the seas or in the air) to bring the share of renewable energy sources of their fuel deliveries to at least 10% by 2030. They can do this by ensuring that each calendar year their deliveries of petrol, diesel and fuel oil are matched by sufficient deliveries of sustainable biofuels. Carriers may also count deliveries of electricity generated from renewable sources. This performance is called the ‘Jaarverplichting’ (annual renewable energy obligation).
Additionally, the previous version of the Act contained provisions requiring fuel suppliers to reduce greenhouse gas emissions in the total fuel chain – including foreign links – by 6% compared to 2010. Moreover, this reduction must be maintained beyond 2020. Companies do this using so-called renewable fuel units (hernieuwbare brandstofeenheden, hereinafter: HBE’s).
The changes that have been made - or will be made - are as follows: firstly, it stipulates that the share of renewable energy must be at least 14% of the total by 2030. So 4% has been added to that. An extension of the scope of the annual obligation has also been prescribed and the NEA's supervisory powers have been broadened. In addition, the share of biofuels from food and feed crops (for example, soybean oil) is capped at 6%. Biofuels from food and feed crops with a high risk of indirect land-use change are not allowed to increase at all and must be phased out until they no longer account for a share of fuels supplied at all by the end of 2030.
In addition, a new independent instrument has been introduced: the greenhouse gas reduction unit (broeikasgasreductie-eenheid, hereinafter: BKE). HBE’s will disappear and be replaced by BKE’s. The system of BKE’s has the advantage of providing an additional incentive to achieve an even higher reduction percentage in respect of biofuel products. On the other hand, all parties involved will have to switch to the new system, while in the meantime parties involved will be familiar with the 'old' system. However, this may not be too bad, because the system of BKE’s is similar to that of HBE’s.
An additional administrative burden is to be expected for companies supplying energy: the new system has to be introduced. The calculation of BKE's will take place using default values mentioned in the Dutch Richtlijn brandstofkwaliteit (the Dutch Fuel Quality Directive). If companies can prove that the actual greenhouse gas emissions from their biofuel chain are lower than the emissions assumed in the calculation, more BKE's will be credited to its account. However, companies should bear in mind that the calculation will be difficult to verify because most of the reduction takes place abroad. In that case, complicated models and calculations will have to underlie it. What is new is that the annual reduction is being extended: first it was only applicable to road vehicles running on petrol and diesel. Now it covers all road traffic, pleasure boats, inland navigation and fixed installations insofar as they use petrol and/or diesel as fuel, unless explicitly exempted in further regulations.
An example
Let's have a look at an example to see what obligations will fall on the operator of a barge. Let us assume that it releases about 750,000 litres of heavy fuel oil for consumption. Among other things, it must provide the following information: the destination of the fuel, the period corresponding to the excise declaration period, the volume in litres and information on any discrepancies with the excise declaration. A verifier then manages the entered renewable fuel declarations in the register. If fraud is suspected, the verifier reports it to the NEA. The NEA then checks whether the data is complete and truthful.
In this blog, you have read about the changes made as a result of RED-II. We have explained this with a brief example. Do you have questions about the new rules? Or do you have other transport law questions? If so, please feel free to contact one of our lawyers.