This goal stems from the binding national targets set for Finland by the European Union as regards emission reductions, and from the EU Fuel Quality Directive (FQD) and the Renewable Energy Directive (RED). A further motivation is the Finnish energy tax reform (1 January 2011) that gave a tax incentive to bio components meeting the sustainability criteria.
EU Renewable Energy Directive, Fuel Quality Directive, energy taxationThe Renewable Energy Directive (RED, 2009/28/EC) sets a binding obligation to increase the share of renewable energy in transport by 2020 to ten percent calculated on the fuel energy content. Moreover, the Directive contains detailed sustainability criteria for biofuels as well as minimum requirements for reducing their greenhouse gas emissions over the life cycle.
In the new national legislation on biofuel distribution requirements taking effect on 1 January 2011 Finland has pushed her target up to 20 percent. This is considered viable since Finland is able to increase her domestic biofuels production with new technologies so to benefit from the so called double credit mechanism provided by the Directive. The double credit biofuels will be manufactured from raw-materials such as waste, residue materials, non-food cellulosic plant materials and lignocellulose.
The Renewable Energy Directive is complemented by the Fuel Quality Directive (FQD, 2009/30/EC) the goal of which is to cut the carbon intensity of fuels by ten percent by 2020, six percent being the binding obligation and four percent coming from voluntary measures. The obligatory part of the reduction is achieved by increasing the proportion of biological components in fuels.
The Fuel Quality Directive defines the maximum amounts of bio components in fuels as follows: Petrol may contain up to 10% v/v ethanol and diesel up to 7% v/v FAME (Fatty Acid Methyl Ester), being typically biodiesel manufactured from rapeseed. These national obligations have been defined in the new Government Decree on Fuel Quality (1 January 2011).
The energy tax reform changed the basis of the Finnish fuel excise tax as from the first of January 2011: Fossil fuels and biofuels are subject to an energy content tax proportionate to their energy content, and to a carbon dioxide tax based on fuel's carbon dioxide emissions. Biofuels benefit from this reform.
Year 2011 and futureAs from 1 January 2011, the 95 E10 petrol containing 10% v/v ethanol is the principal petrol quality in Finland. The quality 98 E5 will continue to be available for vehicles that are not compatible with the new E10 petrol.
The biofuel minimum distribution requirements adopted in Finland do not automatically imply that after the introduction of the new E10 petrol, new petrol grades with even higher ethanol contents would instantaneously follow.
The biofuel minimum distribution requirements can be met by alternative measures, for instance by adding bio components to diesel or by increasing the use of E85 ethanol blends. If the bio components are manufactured from logging waste or refuse, the resulting emission reductions can be double credited. New petrol grades with 15-20% v/v ethanol will therefore not be needed for many years to come.