Biofuel: a missed target for Romania

Biofuel has become a trendy word lately. Obtained naturally from agricultural products, environmentally friendly, biofuels are seen as a viable alternative to traditional combustibles.

That determined the European Union to plan a strategy to boost renewable energy consumption and production, which had each member state produce biofuels amounting to a minimum 2% of all fuels on domestic markets by the end of last year. The target was, however, missed.

The failure is valid for Romania as well, as here production is almost inexistent, companies demand facilities and the agriculture production cannot support the government’s targets.

The European EC/2003/30 directive dating May 2003 says the minimum percentage of biofuel (bioetanol and biodiesel) that must be brought on the market by each member state should be 2% by December 31, 2005, and 5.75% by the end of 2010.

Romania adopted the European directive in 2005, setting an objective to reach the 2% level by January 1, 2007 and the 5.75% threshold by 2010. But as the directive is not compulsory, it does not contain coercive measures.

The lack of coercive measures is confirmed by Vladimir Chirtes, a negotiator working for the Romanian EU Integration Ministry. He says “a report will be made at the end of 2006 and the tendency is that the targets become compulsory, taking into account the specifics of each member state”.

The same says Cristiana Ion, head on environmental issues with the Economy Ministry in Bucharest. She warns that tough talks are ongoing in the EU, sparked by the failure of member states to reach the set targets.

Meanwhile, Romanian companies complain about the lack of legislation when they argue why they did not contribute in any way to the effort of reaching the biofuel objectives.

According to Rompetrol vice-president Adrian Petrus, the 2005 Governmental Decision in this regard is lacking a whole lot of clear provisions. That is why Rompetrol will invest in this field only once the legislation becomes more favorable, he says.

The new legislation not only fails to provide compulsory terms, but also sets too short a deadline for the 2% objective, he explains, saying that the most important factor is the lack of facilities for producers as important investments are needed for the production of biofuels. His point of view is shared by Gheorghe Constantinescu, Senior Counsellor for the President of the OMV group.

Authorities in Bucharest say they did move in this regard. The Agriculture Ministry says it is trying to find a mechanism of subsidizing oil-producing crops, while the new Fiscal Codes provides excise exemption for biofuels.

Which is a lot, as some countries such as Germany and Austria did not fully exempt, but only cut biofuel excises, says Cristiana Ion.

The problem is, the new Fiscal Code applies only in January 1, 2007, when Romania will already be a member of the EU. And the EU Integration and Economy ministries believe it is impossible for Romania to fall in line with the EC directive by this date.