Defined as the uninterrupted availability of energy sources at an affordable price, energy security is a concept that focuses on ensuring a stable and continuous supply of energy to meet the needs of individuals, businesses, industry, communities and countries.
The world has entered a critical decade for delivering a more secure, sustainable and affordable energy market. Yet the Russian war on Ukraine has exposed Europe’s vulnerability and we need a new energy security paradigm to maintain reliability and affordability while reducing emissions.
A necessary transition
The European Commission’s Green Deal published in 2019 sets out a detailed vision on how to make Europe the first climate-neutral continent by 2050. To achieve this objective, the Fit for 55 Package proposes a revision of all climate and energy regulations to enable achieving an emission reduction of at least 55 percent by 2030 compared to 1990 levels, a necessary to achieve climate neutrality by 2050. Because of its size and complexity related to the different transport modes it includes, the transport sector, responsible for over a quarter of Europe’s GHG emissions, is a critical sector to decarbonize.
The transition to renewable liquid fuels and technologies is on the way but today oil still accounts for 36 percent of the EU’s energy mix and the consumption of petroleum products in the transport sector represents around 350 Mtoe.
The share of fossil-based products will be progressively decreasing as a result of improved efficiency of conventional engine technologies, and the uptake of alternative technologies such as electrification, hydrogen and renewable fuels.
Fossil-based products will be progressively decreasing as a result of improved efficiency of conventional engine technologies, and the uptake of alternative technologies such as electrification, hydrogen and renewable fuels.
Liquid fuels, a key contributor to the EU’s security of supply
With the 2050 climate neutrality objective in mind, the European fuel manufacturing industry developed a potential pathway to contribute to reaching this objective. This pathway will enable the transition of transport fuels from fossil origin to sustainable liquid fuels made from feedstocks such as agriculture and forestry residues, municipal waste, and used cooking and industrial oils to produce sustainable advanced biofuels, and renewables including wind, solar, hydro and captured CO2 to produce synthetic fuels. These sustainable fuels have the potential to contribute to all transport sectors and, based on the European Commission’s scenarios, could represent up to 160 Mtoe in 2050.
Road transport regulations could put security of supply at risk
This progressive reduction in demand for liquid fuels and the shift from fossil to non-fossil feedstock will have a significant impact on the refining industry. Indeed, whereas a share of the existing refineries will be converted into biorefineries, and new value chains and production units will also appear closer to the feedstock location, a substantial number of the conventional refineries are likely to shut down.
A risk for shortages or delays in the deployment of other alternative technologies
This implies that in case the EU is not able to ensure the deployment of its infrastructure for electrification, or the battery supply for its electric light and heavy-duty fleets, as stressed by the European Court of Auditors in its latest report 15/2023, it could face a shortage of liquid fuels for the vehicles on the road and which lifetime is being extended.
Under the EU’s Oil Stocks Directive (2009/119/EC), EU countries must maintain emergency stocks of crude oil and/or petroleum products equal to at least 90 days of net imports or 61 days of consumption, whichever is higher. We have in the EU a strategic liquid fuels stocks equal to 1000 TWh.
A risk for Europe’s security and defense strategy
For the preparedness of its worst-case scenario, the EU and its allies need to have a liquid fuels supply availability equivalent to civilian peacetime fuel for transport consumption. This would, under the current regulatory decisions, only be met at 35 percent of the overall security and defense needs. Security of supply has become more important due to the security challenges at the borders of Europe.
No electricity storage capacity in the EU
Today, electricity storage technologies are still developing, and the deployment of large-scale grid systems required to compensate for the intermittency of renewables is currently limited. Insufficient energy storage capacity can further hinder the reliability of the energy system. One solution put forward at the moment, is using electric cars as grid storage. We have done the math, 200 million electric vehicles each with a 100KWh battery fully charged and will end up to only 20TWh stored, far from the current requirement for liquid fuels.
While the transition is essential for mitigating climate change, it can lead to a loss of energy diversity. Over-reliance on a single or limited number of energy sources increases vulnerability to supply disruptions. Sudden changes in energy availability or price fluctuations in renewable technologies can have a significant impact on energy security.
Over-reliance on a single or limited number of energy sources increases vulnerability to supply disruptions.
Europe needs a liquid fuels transition strategy
The pathway for growth in renewable liquid fuels production may not realize its potential due to the current policy outlook. Demand scenarios today are strongly linked to road transport and EU vehicle CO2 policies, vehicle sales and GDP. To maintain a larger renewable fuels capability, the retention of a significant long-term role for renewable liquid fuels in road transport, in particular HDVs, will be necessary. It could also create synergies for an accelerated scaling-up for sectors such as aviation and maritime, which will benefit economically from this lead market.
A stable regulatory framework is needed to trigger investor confidence to bring at scale low-carbon technologies and therefore ensuring energy security.
We call on policymakers to ensure the fuel manufacturers industry can establish a liquid fuels transition. A stable regulatory framework is needed to trigger investor confidence to bring at scale low-carbon technologies and therefore ensuring energy security.
