Martynas Nagevičius. Diesel without biofuels: millions from taxpayers’ pockets for fuel suppliers

This simply requires that the diesel produced be stored in the state reserve and the diesel stored in the state reserve be sold at gas stations for at least three years without mixing it with biofuels. Although most of the petroleum product storage facilities in Lithuania, including the largest one, the Subačius Petroleum Storage Facility, have all the necessary equipment to mix petroleum diesel with biofuels.

Simply put, fuel suppliers that have oil in reserve no longer comply with the Renewable Energy Law, but instead follow the Law of Petroleum Products and State Petroleum Stocks, which does not state that petroleum products stored in reserve do not need to be mixed with biofuels before being sold on the market. need.

These and the fuel supplier tricks described below have led to a situation that will incur tens of millions of euros in additional budgetary costs for Lithuania for not meeting the targets of the EU Renewable Energy Directive. Not to mention that instead of creating added value for the Lithuanian economy through the production of biofuels from local raw materials, we are increasing Russia’s oil imports.

Lithuania – in the “tail” of the EU list

In mid-October, the European Commission presented a “Renewable Energy Development Progress Report”, which assessed the progress of all EU countries towards meeting their 2020 renewable energy development targets.

Both Lithuania and other EU countries have two binding directives:

achieve a country-specific share of renewable energy in total final energy consumption;

to get to 10%. the share of renewable energy sources in total final energy consumption only in the transport sector.

Lithuania is successfully managing the first task and has succeeded, first of all, by massively replacing fossil fuels with biofuels in the district heating sector. Here, Lithuania even exceeded its target and sold the surplus to Luxembourg. It is now planned to finance the development of renewable resource communities in Lithuania with the funds received from Luxembourg.

In terms of the share of renewable resources in the transport sector, Lithuania has lagged behind the EU for the last decade. In 2008, according to the size of the share of renewable resources in the transport sector, Lithuania was among the current 27 members of the EU 6, in 2009-10, in 2012-12, in 2015-19, in 2017-20 , in 2018 dropped to 23rd place. By 2020, we are in real danger from last 27th place.

So far, the Ministries of Energy, Communications and Environment have been reassuring, explaining that almost all EU countries will not reach 10%. the share of renewable energy in the transport sector, so it is unlikely that the European Commission will penalize anyone for not meeting the target.

However, the October report from the European Commission predicts that the share of renewable energy in the transport sector will reach 12.2%, 10% of the EU average. The share of renewable energy in the transport sector will undoubtedly be surpassed by 16 of the 27 EU countries. Of the remaining 11, three more, including our neighboring Poland, are “on the brink”, and the biggest lag from the minimum target of more than a quarter of what countries have committed to is projected for Cyprus, Luxembourg and .. Lithuania.

It is these countries, in particular, that have been approached by the European Commission, recommending not to wait for the sanctions of the European Commission, but to start negotiations with countries that go beyond the objectives of the EU for the purchase of statistical transfers.

Thus, the next government will have to seek additional tens of millions of euros and, therefore, in a very deficit budget to acquire statistical transfers from EU countries that have exceeded their targets for the share of renewable resources in the transport sector.

And it seems that we can pay more than we receive by selling a static surplus of total renewable resources to Luxembourg, as the supply of statistical transfers in the transport sector is lower. The Scandinavian countries – Sweden, Finland, as well as the Netherlands, Portugal, Malta, Germany, France and Croatia – will have the largest “surplus” of statistics in the transport sector. It is with the governments of these EU countries that we should already start negotiating the purchase of statistical transmission.

The delay was due to insufficient biofuel mixing

What happened? Why is Lithuania not fulfilling the task of sharing renewable resources in the transport sector?

Yes, Lithuania has relatively fewer electric vehicles that use electricity produced from renewable sources than Western European countries. This is not surprising, because so far in Lithuania, unlike many other EU countries, there has been no incentive to buy an electric car.

Until now, all efforts of the Government of Lithuania have been focused only on reducing the price of diesel fuel by setting the lowest possible excise duty on diesel fuel and encouraging buyers or users of electric cars only symbolically, with parking more cheap or the right to use bus lanes. There were no financial incentives for them in Lithuania until this year.

Municipalities were not encouraged to replace diesel buses with electric or biogas-powered buses. Regarding biogas, neither its production nor its consumption in transport was promoted in any way in Lithuania. All incentives are only in paper plans, in the Alternative Fuels Law. It is not surprising that the number of biogas-powered vehicles in Lithuania is exactly zero.

However, the furthest behind the established targets was formed by nothing less than the insufficient blending of biofuels with the biofuels sold in Lithuania. 89 percent. The renewable resources used in the transport sector in the EU are biofuels mixed with diesel and gasoline. Therefore, any reduction in the mix of biofuels with marketable fuels will lead to a very significant reduction in the share of renewable energy in the transport sector.

In Lithuania, until this year, before the Seimas passed an amendment to the Law on Energy from Renewable Resources, twice less bioethanol was mixed with sold gasoline than the car regulations allowed.

Defective order of three ministers

At the beginning of this article, the cunning of fuel suppliers has already been mentioned: not to mix biofuels with the diesel supplied to the market not directly from the refinery, but before keeping them in the State Reserve.

But that is not all. Until the spring of this year, there were no malicious mixtures of biodiesel with diesel sold in Lithuania for half a year. This was done for eight consecutive years on the basis of an order signed by three ministers of Environment, Energy and Transport in 2012, despite the fact that the Lithuanian Renewable Energy Law did not provide for any exemptions for fuel suppliers and clearly stated that fuel suppliers must blend these biofuels. , which guarantee good fuel quality both in summer and winter. And there has always been a market for those biofuels.

Apparently, this situation would have continued for a long time if the deputy of Seimas Simonas Gentvilas had not appealed to the Supreme Administrative Court of Lithuania, which overturned the order of three ministers in March this year for breaking the law. Unfortunately, in the first three months of this year, fuel suppliers in Lithuania sold diesel without biofuels. Unlike those Scandinavian countries that achieved all the objectives of the EU directive a few years ago.

In the fall of this year, AB Orlen Lietuva addressed the members of the Seimas, requesting the abolition of the obligation to mix biofuels during the cold season in the law itself. The proposal is based on the argument that high-quality, winter-blending biofuels raise the price of diesel by a fraction of a cent.

Of course, Orlen Lietuva does not calculate the alternative costs: payment for statistical transfers without mixing biofuels, fully understanding that these funds will be collected from the pockets of taxpayers and will not be included in the price of diesel. And it is important for the company that diesel is as cheap as possible and that its consumption in Lithuania does not decrease. Despite having no Lithuanian national interests. And despite the fact that tens of millions of taxpayers pay in euros.