EC approves Italy's €4.7bn support for advanced biofuels and biogas

The European Commission has approved under EU State aid rules an Italian support scheme for advanced biofuels and biomethane, removing a potential obstacle to the deployment of a planned €4.7 billion for the scheme that will run from 2018 until 2022.  

The Italian scheme supports the production and distribution of advanced biofuels and advanced biomethane, which are second and third-generation biofuels, for use in the transport sector.

Because advanced biofuels and biomethane are much more costly to produce than fossil fuels, producers of advanced biomethane and biofuels are eligible for a premium that allows them to compensate for these higher costs and compete with fossil fuels in the transport sector.

According to an EC statement, the premium can be increased if producers also make investments to improve the distribution and liquefaction of advanced biomethane.

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

Under Italy’s scheme, farmers will get incentives to produce biofuel and biomethane from manure and other residues originating from their farming activities. In turn these biofuels and biomethane could be used to power farm machinery and vehicles.

Transport fuel retailers will be required to finance the Italian scheme and are obliged by law to include a certain percentage of advanced biofuels and biomethane in their fuel blends.

In view of this, the Commission concluded that the measure will help Italy reach its 2020 target for the use of renewable energy in transport, fight climate change and replace fossil fuels in the transport sector, and at the same time limit distortions in competition.

A recently-published map compiled by Gas Infrastructure Europe and the European Biogas Association lists just seven biogas/biomethane facilities in Italy, out of a total of 500 in the EU.