DG Enterprise and Industry

Short-term Industrial Outlook

July 2014

Highlights: Positive trend developments continue in 2014

+

The EU motor vehicles sector continues to expand.

Sector experts are optimistic about the near future, especially regarding new orders.

Growth in the euro area is expected to be stronger in the third than the second quarter.

World prices for metals and minerals are lower than at any point since 2009; a possible warning
signal for the world economy but some EU manufacturers may be able to source cheaper inputs.

The first quarter of the year saw a continuation of the

positive trend observed in 2013 in EU manufacturing as
well as the individual sectors monitored in Figure 1.

trucks and components. Car production has remained

subdued, but in the first half of 2014 all EU carmakers
reported higher numbers of new registrations than the
same period last year.1

Figure 1. Positive trends continue from 2013 into 2014

Fabricated metal products also increased in 2013 and

into the first quarter this year, but output remained 17%
below pre-recession levels. Of the manufacturing sectors
monitored in Figure 1, only machinery and equipment
saw a drop in seasonally adjusted output from the fourth
quarter to the first quarter. It remains close to 15%
below pre-recession levels.
Figure 2. Short-term growth in most manufacturing sectors

Note: Percentage change of industrial production indices in different manufacturing industries relative to the level in the first quarter of 2008
Source: Own calculations based on seasonally adjusted Eurostat data

The production of pharmaceutical products and

preparations continues to expand and was 16% higher in
the first quarter than six years ago. The output of food
products and beverages remains very close to prerecession levels. The motor vehicles sector continued
the strong recovery of 2013: output in the first quarter
was merely 4% below output in early 2008, which is
remarkable considering the very sharp fall in output
experienced in 2008 and early 2009. The consecutive
output growth in the sector the last five quarters was
initially driven mainly by production of coaches, buses,

Source: Own calculations based on seasonally adjusted Eurostat data

European Automobile Manufacturers Association, press release 17 July 2014

This publication does not necessarily reflect the views or position of the European Commission

With some exceptions (clothing, tobacco products, chemicals, coke and refined petroleum products, electrical
equipment, machinery and transport equipment other
than motor vehicles), most manufacturing sectors are
above their output levels of May 2013 some even
above their 2008 levels. Beverages and motor vehicles
are approaching their pre-recession levels of output.

The short-term expectations of DG Enterprise and

Industrys sector experts are more upbeat than in the
recent past, especially regarding new orders. For copper
and the engineering sector the outlook is neutral. More
detailed assessments of the short-term prospects in the
sectors in Figure 3 can be found on page 5.

Turning to the matrix of aggregated manufacturing

sectors across Member States, the share of national
sectors with higher output than in early 2008 was 4
percentage points higher in the first quarter than the
preceding two quarters. In the second half of 2013,
slightly more than a quarter of national manufacturing
sectors were producing more than at the start of 2008;
at the start of this year the share had risen to almost one
in three. The forecast for the end of 2014 (based on a
switching-regime model) remains unchanged from the
April edition: 37 %. If confirmed by data, it means that
nearly two-thirds of all manufacturing sectors in
Member States would still not reach the production
volumes they achieved in early 2008.

Figure 3. Short-term outlook in key manufacturing sectors

Source: Questionnaire replies from DG ENTR units. Expected increases are

shown as positive except for increased inventories (shown as negative)

Table 1. Growing share of recovering manufacturing

sectors in Member States
Share of Member
State manufacturing
sectors with higher
output than in the
first quarter 2008

2013q3

2013q4

2014q1

28 %

28 %

32 %

Purchasing managers expectations

The most recent information from purchasing managers
in the euro area and other economies reflects more upbeat expectations, especially in Japan, China and the US.
For most economies shown in Figure 4, manufacturing
PMI was higher in June than in April and May. In the
euro area, along with Brazil and South Korea, manufacturing PMI dropped from April to May, and again
from May to June.

Source: Own calculations based on seasonally adjusted Eurostat data

Pharmaceutical products and preparations remains the

only manufacturing sector with higher production than
before the recession in virtually all Member States.
Notable exceptions include France, where the production of basic pharmaceutical products is higher and the
production of pharmaceutical preparations considerably
lower than before the recession, and the UK.

On the other hand, in the euro area, USA, Indonesia,

India, Japan and China, the index numbers remain well
above 50, a sign that purchasing managers expect rising
activity on those markets. Russian, Brazilian and Korean
purchasing managers in manufacturing appear to expect
decreasing economic activity on their markets.

The worst manufacturing sector in terms of number of

Member States with higher production than before the
crisis is other non-metallic mineral products, where output is lower than before the recession in all Member
States except Poland. The fragile state of the construction sector in several Member States is a likely cause, as
well as the availability of cheap imports from third
countries. Other manufacturing sectors where output
falls short of pre-recession levels in almost all Member
States include basic metals, coke and refined petroleum
products, textiles and clothing.

2 / 13

Figure 4. Falling optimism among euro area purchasing

managers in manufacturing

reflect changes in demand and supply and can give an

indication of future industrial activity.
Figure 5. Low world prices for metals and minerals

Note: Manufacturing PMI covers surveys of purchasing managers in

manufacturing companies. Values above 50 are indications of expectations of
increasing economic activity.

Source: World Bank Global Economic Monitor (2010=100)

Source: Markit Economics

As Figure 5 shows, the world market price index is falling

since late 2013 and now stands at a lower level than at
any time since 2009 a possible indication of a future
slowdown in the world economy. World market prices
are however influenced by many factors not related to
future economic activity: speculative buying and selling,
the supply situation, geopolitical developments, etc.

The US economy disappointed in the first quarter of year

as it shrank by 0.7 % (seasonally adjusted) from the
previous quarter its largest drop since exiting recession
in 2009 and the second largest drop in the first quarter
2014 of all OECD countries. One explanation for the surprisingly low first-quarter US GDP figure could be the unusually harsh winter conditions in parts of North
America earlier in the year. Meanwhile, US manufacturing output is expanding: it was 3.4 % higher in June than
in June 2013, while capacity utilisation in manufacturing
rose by 1.3 % over the same twelve months. 2

Turning specifically to 3-month future contracts in

copper and aluminium, Figure 6 shows that the fall in
the world market price index illustrated above coincides
with falling prices for 3-month future contracts in
copper, while 3-month contracts in aluminium are now
priced higher than at any time since early 2013. The decoupling first discussed in the April edition continues.

After growth of 1.4 % in the first quarter the lowest

quarterly growth rate since 2012 China's GDP grew by
2 % in the second quarter and appears to be on track to
reach the official target of 7.5 % growth in 2014. The
Japanese economy surprised forecasters by growing by
1.6 % in the first quarter, the highest quarterly growth
rate since 2011 and second only to Ireland (+2.7 %) and
Turkey (+1.7 %) among OECD countries. Meanwhile,
South Korean GDP grew by 0.9 % in the first quarter; the
same seasonally-adjusted growth rate as in the previous
quarter.

As in the previous figure, the price developments in

Figure 6 reflect more than just expectations of future
economic activity. In particular, the speculative element
in the pricing of futures should not be neglected.
Figure 6. Rising prices of 3-month aluminium futures

Metal prices
From a global perspective, because metals and minerals
are important inputs in manufacturing and construction,
their world market prices can be used as indicators of
global industrial activity. Price changes for these inputs

Federal Reserve statistical releases (2014), G.17 Industrial Production and

Capacity Utilization. Press release 16 July 2014.

Note: Prices are in USD/tonne. Copper prices are on the left axis and
aluminium prices on the right axis. Future settlement dates on horizontal axis.
Source: London Metal Exchange

3 / 13

Figure 8. Promising outlook for the euro area in Q3

Exports
Until early last year, international demand for EU
exports compensated for the weak domestic demand in
the EU, thereby keeping up the momentum of the
recovery. However, the strong growth in EU export
volumes seems now to have come to an end: after more
than twelve months of stagnating exports, volumes are
now more than 5 % lower than the peak in March 2013.
Until November last year, US exports and exports by
Asian economies other than Japan continued growing
along the same trajectories as before, but have since
fallen back slightly.

Note: The bars represent changes from the same quarter the previous year
Source: Euroframe

Figure 7. Stagnating EU exports

Manufacturing output forecast for coming months

Figure 9. Higher EU manufacturing forecast

Note: Asia (except Japan) includes China, Bangladesh, Burma/Myanmar,

Cambodia, India, Indonesia, Laos, Macau, Malaysia, Mongolia, Nepal,
Pakistan, Papua New Guinea, Philippines, Sri Lanka, Thailand, Vietnam, Hong
Kong, South Korea, Singapore and Taiwan
Source: Own calculations based on CPB and Eurostat data (2010=100)

Euro area indicators

Note: The forecast (green) is made for the period May to December 2014
using a bivariate VAR model including industrial production and producer
prices
Source: Own calculations based on seasonally adjusted Eurostat data
(2010=100)

The Eurogrowth indicator, a leading indicator for the

euro area, suggests that growth in the current quarter
will be stronger than in the second quarter: from +0.9 %
(year on year) in the second quarter to +1.3 % in the
third.

The forecast for EU28 manufacturing has been revised

up from the previous edition and now predicts a continued expansion in the second half of 2014, followed by
a modest drop in manufacturing output in the final
quarter of the year.

4 / 13

However, the shipments to the civil engineering

segments are on a fairly low level due to weak
governments expenditures.

Sectoral Overview
Chemicals

Steel

EU chemicals production contracted 0.2 per cent during

2013 compared with 2012. However, production rose for
the eighth consecutive month since September 2013.
Output surged 2.8 per cent year-on-year in the first four
months 2014. Capacity utilisation in the first quarter
2014 was the highest level in three years. Expectations
of managers are slightly more positive for the third
quarter 2014 than for the second. On the whole, the
level of stocks of finished products is seen as adequate
and similar to the last quarter. Managers continue to see
the level of orders as normal but their expectations are
higher than for the last quarter, in other words confidence is increasing. Employment in 2013 went down by
1 % to 1.15 million and is forecast to remain stagnant at
the European level, even if it is increasing in some Member States. There is a broadly shared perception that the
main concerns of the European chemical industry will
continue to be: first, its high reliance on naphta as a
feedstock and the high costs of energy; second, though
the European recession is gradually receding (consumer
confidence is increasing, sales and consumption of
chemicals start to increase in sectors such as automotives, whose demand is of critical importance to the
chemicals sector) it is still uneven across Member States.

A moderate recovery in the steel sector is underway.

Preliminary data signal that all EU steel-using sectors
except for the construction industry and the mechanical
engineering sector registered a first positive growth in
activity since 2011. The outlook for 2014 and 2015
shows a gradual and rather cautious recovery of real
steel consumption in the EU, in line with activity in the
key steel-using sectors gaining traction again following
their disappointing performance in the past two years.
Prospects for 2014 are moderately positive with real
steel consumption expected to grow by less than 2 %. A
higher growth of 2.5 % is expected in 2015. Further
expected improvement in the financial and economic
framework should boost confidence and investment in
the EU's steel sector.

Aluminium
The energy cost differential with other continents
(Middle East, North America, etc.) continues to increase
the import dependency of the EU for aluminium (e.g.
primary production in the EU decreased again by 1%
during the first 5 months of this year). Regarding
aluminium scrap, the EU is still a net exporter of scrap
(+133.5 kt in Q1 2014) but the net exports decreased by
7% year-on-year. All in all, the scrap shortage in EU
remains a significant challenge. In total, the EU trade
balance for aluminium products (HS code 76) is in deficit
by 2.1 bn in Q1 2014, representing an increase of 4%
year-on-year. A strong euro compared to the dollar is
hampering exports of semi-fabricated aluminium
products (mainly rolled products). From the end-use
markets perspective, the transport and packaging
market are/remain good drivers for an increasing
aluminium demand. The recovery in the building and
construction market remains nonetheless quite
vulnerable. New constructions in the private sector help
to slightly improve the demand for extruded products.
5 / 13

biofuels.7 Subsequently, there were discussions about

the allegedly higher environmental impact of first
generation biofuels (when evaluated under a life-cycle
analysis), about the changes in land carbon stock8
associated with biofuel production, and the possible
negative effects on food security caused by competition
for food crops. This led the Commission to take action.

Policy Analysis
Biofuels: a turning point?
Launching the next wave of investment

In 2012, it issued a Proposal to modify the Fuel Quality

Directive and the Renewable Energy Directive to steer
investments towards advanced biofuels.9 The aim of the
proposal was to start a transition to biofuels that
delivers substantial GHG savings, including the CO2
accounting emissions derived from indirect land-use
change (ILUC).10 In addition, the Proposal pointed the
way to disincentivize the production of first generation
(food-based) biofuels.

After a rapid expansion in the second half of the last

decade, investment in biofuel production capacity has
stagnated in recent years. Recession, overcapacity, uncertainty surrounding future EU policies, long lead times
and the risk of negative returns have resulted in investors
withdrawing from the sector for the time being.
This analysis looks at the importance of policy and the
potential impact of the 2030 Climate and Energy
Framework on the EU biofuels sector.

The 2030 Climate and Energy Framework, issued at the

beginning of 2014, sets the ambitious goal for renewable
energy to contribute 27% of EUs energy consumption by
2030.11 It no longer includes a specific target for
renewables in transport. Instead it places the role of
advanced biofuels in a broader policy framework that
promotes their integrated development with energy
efficiency measures, deployment of electric vehicles and
other sustainable fuels. Such a holistic approach is also
in line with the Alternative Fuels Strategy.12 In addition,
the 2030 Framework highlights the importance of a costefficient development of renewable sources, flexibility
for Member States in their contribution to the EU GHG
reduction target, and a more important role given to
market competition among alternative technologies.

Climate Change Policy is a priority for the European

Union. Among the different strategies to tackle the
greenhouse gas (GHG) reduction goal, the transport
sector plays a crucial role. It is, in fact, the second
biggest source of greenhouse gas (GHG) emissions in the
EU after the energy industries.3
The 2008 Climate and Energy package recognized this
and set a specific target of renewable energy in
transport for 2020 (10%). Among others, biofuels were
targeted as an important technology to achieve the EU
emission reduction goals in the transport sectors.
Investment in biofuel capacity was promoted mainly by
two Directives. In 2003, the Biofuel Directive4 required
voluntary targets for Member States, with a suggested
target of 5.75% of total energy use in transport coming
from biofuels to be achieved by 2010. The Renewable
Energy Directive5 of 2009 (RED) set mandatory targets
for all Member States to achieve a minimum 10% share
of renewable energy in transport fuel by 2020. At the
same time, an amendment to the Fuel Quality Directive6
introduced a mandatory target to reduce the GHG
intensity of fuels in road transport and non-road mobile
machinery by 6% by 2020. The Commission expects a
significant contribution of biofuels towards achieving
these targets.

First generation biofuels are obtained from food crops and animal fats,
whereas advanced biofuels is a category grouping all fuels obtained from
ligno-cellulosic feedstock and other non-food crops, as well as from industrial
co-products. First generation biofuels risk creating direct competition with
food production, therefore putting pressure on food prices and creating issues
of food security. On the other hand, advanced biofuels are supposed to
compete only indirectly with food production, mainly through land use.
8

'Land carbon stock' refers to carbon dioxide from the atmosphere and the
oceans trapped in organic and inorganic compounds on land. The natural
exchange of carbon between terrestrial ecosystems and the atmosphere and
the oceans is modified by human activity, especially through deforestation
and land-use change. This alters the balance of carbon dioxide in the
atmosphere and leads to stronger GHG effects trapping solar energy.
9

The two Directives addressed biofuels at large, without

distinguishing between first generation and advanced

COM(2012) 595

10

ILUC refers to the increase of carbon emissions related to the land-use

change induced by the expansion of croplands for biofuels. If more profitable,
energy crops displace food crops. As a consequence, additional land is
brought into production.

Source: DG Climate Action (ec.europa.eu/clima/policies/transport/)

Directive 2003/30/EC
Directive 2009/28/EC
6
Directive 98/70/EC
4
5

6 / 13

11

COM(2014) 15

12

COM(2013) 17

Figure 2 depicts the evolution of growth rates in primary

production for selected renewable technologies. The
thin lines are the actual growth rate values, while the
thicker lines plot the general linear trends suggested by
the data points.

Declining investment
A topic that has received little discussion is the dynamics
of biofuel investments, how they have responded to
policy, and where they stand now with respect to their
capacity to contribute to the increasingly more
ambitious targets set by the EU.

Figure 2: Growth rate of production in selected energy

sectors in the EU (2003- 2012)

Figure 1: EU biofuels capacity development (million

litres), 2003-2014

Source: Own elaboration based on EUROSTAT data

Source: Agra CEAS calculations based on F.O. Licht data

All renewable technologies considered show an overall

decreasing trend in their growth rates. The graph also
shows that the rate at which biofuel production declined
was much faster than for other renewable technologies,
like Solar Photovoltaic and Wind Power.

As shown in Figure 1, biofuel capacity investments in the

EU seem to have responded well to the policy incentives,
with a large (more than 5 times) increase in biofuel
capacity. This growth refers mainly to first generation
technologies: investment in advanced generation
biofuels began in 2008, but its size never grew to the
point of being comparable to its first generation
counterpart. After 2009, though, the trend slowed down
considerably. While part of the reasons behind the
decrease in investment might be due to the general
difficult economic conditions faced by the world
economy in 2009-2013, it is clear that policy discussions
have also limited certainty in this sector, thus making
investment more risky.

During the pre-recession period, the high fuel prices and

high demand made it attractive to look at alternative
investments in green technologies. The high fuel prices
contributed to the profitability of the projects, and, in
the EU, the way policy was being implemented (tax
exemption, subsidies) ensured good profitability
prospects for the sector. In 2009, oil prices dropped
dramatically. At the same time, demand for fuel started
to consistently decrease (see Figure 3). The two factors
together affected the opportunity cost of investing in
biofuels: the fuel price drop eroded profitability of
investments, and the drop in demand contributed to
shrinking the growth prospects of the market.

Analysis
Data show that there was an overall increase in the
production of biofuels between 2003 and 2012. This
increase is related to the increasing quota obligations set
by Member States to comply with the targets set in the
2009 Directive.13 None the less, the growth rate of
biofuel production is slowing down.

the time in combination (see ECOFYS 2011). The 2009 Directive set mandatory
national binding targets for Member States regarding the share of renewable
sources to have in their gross final consumption of energy in 2020, together
with an indicative trajectory (see Annex I of the Directive 2009/28/EC). As of
today, these targets are still valid, and the growth in production of biofuels
that we see in the data is mainly due to them.

13

In order to achieve the targets of the 2009 Directive, Members States

employed two instruments: quota obligations and tax exemptions, most of

7 / 13

Figure 3: Oil data in the EU

Policy directly affects the biofuel market through two

channels:
1. By setting specific supply obligations or target
quotas, it greatly contributes to the creation of
the demand;
2. Policy can also allocate direct grant schemes and
decide on tax or excise duty exemptions.
Through this channel, it acts on the supply side
by reducing costs for producers, or by
compensating for the difference between
production costs and the market price. It can
also be an instrument to ensure industry the
recoupment of investment costs.
When considered in parallel with the economic aspects
specific to biofuels, it becomes evident that policy
uncertainty can negatively affect investment dynamics:

Source: Own elaboration based on OECD and EUROSTAT data

Note: The relatively short time series for oil demand is due to lack of
data.

Another factor that should be taken into account in

order to explain the decline of biofuel investments and
production growth rates was the so-called 'shale gas
revolution'. Starting from 2006, natural gas prices
dropped dramatically where shale gas reserves were
exploited, which led to a widening spread between gas
prices in the US and the EU (the latter prices moving
closely to oil prices). In 2005, gas prices were around
0.022 EUR/kWh in both regions. By 2011, though, in the
EU they reached 0.035 EUR/kWh, while in the US they
dropped to 0.010 EUR/kWh.14 Biofuels and shale gas can
both be considered lower-carbon alternatives to
petroleum, and treated as competing products. Insofar
as energy companies make investment choices on a
global market15 and are resource-constrained, the shale
gas revolution can be seen as creating an attractive
investment alternative, with a growing market and little
regulation. This is an additional factor to the increasing
opportunity cost of investing in biofuels and contributes
to explaining the drop in the growth rate of production
and of investments.

For most biofuel technologies, production is not

cost-competitive without government support.
ECOFYS (2011) found that the long-run marginal
generation costs for biofuels were well above
the market price still in 2009 (see Figure 4).16 For
this reason, demand for biofuels is mainly policydriven;

Investments in biofuel capacity are highly

capital-intensive and require a long time to
break even.17 In addition, the lengthy lead times
from investment project to operative plant
(between 2.5 and 3.5 years)18, further stretches
the recoupment period.

The above-mentioned 2012 Proposal for an amendment

of the Fuel Quality and the Renewable Energy Directives
represented a change of direction with respect to
previous policy. While the ultimate objective remains
carbon emission reduction, the Proposal dictates new
ways in which such objectives will have to be achieved,
with profound consequences on the biofuel market and
investment dynamics.

Beyond the unfavourable economic conditions, the

slowdown of investments from 2011-2012 can also be
related more specifically to uncertainties in policy
developments.
16

14

The study considers long-run generation costs because they are relevant for
the economic decision whether to invest in a new plant or not. They comprise
operating costs and a capital recovery factor based on a 15-year timespan.

European Commission (2014)

17

'Financing Renewable Energy in the European Energy Market' (ECOFYS

2011) provides some estimates of the costs.

15

To support this assumption, consider, for example, Abengoa Bioenergy, the

leading European biofuel producer that operates production plants in Spain,
France, the Netherlands, but also in the USA and in Brazil.

18

8 / 13

F.O. Licht data

Figure 4: Long-run marginal generation costs (for the

year 2009) for various biofuel technologies in the EU

not yet fully exploited, but also that exploitation of this

idle additional capacity will not be supported by policy.
In addition to this, new considerable capacity
investments in advanced technologies will be required to
meet the policy-driven demand. At the same time, the
insufficient growth prospects in the market for first
generation biofuels imply that the industry will be
unable to recoup much of its investments,20 possibly
rendering further investments cumbersome.
On the supply side, changing sustainability criteria will
lead to changes in the allocation of subsidies, which will
affect production costs, as well as create uncertainty on
whether the current plants will continue to receive
supports for their full lifetime. In addition, the absence
of a credible long term commitment of policy makers
contributes to increasing investors reluctance to start
projects with big fixed costs and long development
periods.

Source: Financing Renewable Energy in the European Energy Market,

ECOFYS (2011)
Note: The figure shows the bandwidth of marginal costs estimated by
ECOFYS (2011) in relation to different scenarios (demand conditions,
technological options such as plant size and conversion technologies).
The vertical grey bar indicates the estimated bandwidth for fuel
market price, whereas the red bars show the estimated range of
marginal cost for the four alternative fuels considered.

The Proposal limited the contribution of first generation

biofuels towards the achievement of the 10% transport
target in the RED while increasing the premium for
advanced biofuels when accounting for the achievement
of the target. In so doing, it introduced a 'technology'
incentive, in parallel with the official emission target. In
fact, it modified incentives for investments into different
biofuel technologies, which in the past were considered
equivalent.

The way forward

This section has summarized the developments in
biofuel policy and shows how investments and growth in
production responded to them. The analysis suggests
that, beyond the negative economic conditions related
to the financial crisis and the possible impacts of the
shale gas revolution, the decline of investments in the
sector can be explained also using arguments related to
mutable policy choices.

This choice should open the market to investments,

therefore incentivizing growth of the sector, spurring
innovation, and promoting a leadership role for Europe
in advanced biofuel technologies. But the shift towards
innovative technologies may also increase uncertainty in
the market and delay investment decisions of risk-averse
agents.

Investments were hampered by uncertain policy signals

caused mainly by lack of scientific knowledge on the
contribution of different types of biofuels towards GHG
reductions and their impacts on food security.
The dynamics analysed seem to suggest that, when
there is a clear policy goal this can make a sector flourish
very rapidly. However, the experience with first
generation biofuels shows that picking a winner too
early might be risky. Additional policies should be
technology neutral and based on better scientific
knowledge.

The limitation of the contribution of first generation

biofuels to only 5% of the overall 10% target acted in
parallel with the decreasing fuel demand shown in
Figure 3 to reduce the growth prospects of the sector. As
shown in Figure 1, investments during the period 20032011 were heavy, leading to a share of 4.7% of biofuels
in road transport.19 The European Biodiesel Board
estimates that EU biodiesel production capacity in 2012
amounted to 23.5 million tonnes, while output was
8.6 million tonnes in 2011. This means that the heavy
investments in first generation production capacity are

19

The Commission recognizes the increasingly important

role that bio-based products are taking in the economy.
The 'Industrial Renaissance' Communication21 of January
2014 identified bio- based products as a fast-growing,
strategic area where to stimulate investment and
innovation. The Commission is also working on a

Estimation by EUROBSERVER (2013)

9 / 13

20

Biofuel Barometer EUROBSERVER (2013)

21

COM(2014)14

'Bioeconomy Strategy', within which biofuels are part of

a chain of high value-added bio-based products22. In this
context, advanced biofuels could become an important
driver of growth, contributing to the revival of the
European manufacturing sector and enhancing the
technological leadership of Europe in advanced
technologies
Better scientific knowledge, together with the more
important role of market competition for new energy
technologies identified by the 2030 Climate and Energy
Framework, should ensure the emergence of a costeffective solution for the emission reduction targets and
avoid the risk of technological lock-in for the future.
Whether biofuels are the solution to the emission
reduction targets in the transport sector will become
clear in future years with the development of technology
and the evolution of alternative energy products. But in
order to give advanced biofuels a chance to prove their
worth in this competition, it is important to ensure a
stable legal framework for the industry to invest in the
sector.
Policy should hence proceed following the ambitious
emission reduction lines drawn by the 2030 Climate and
Energy Framework, by setting technologically neutral
objectives which are coherent across sectors, and
ensuring a credible long term commitment from the
Institutions.

References
Agra CEAS Consulting. EU Biofuels Investment Development:
Impact of an Uncertain Policy Environment. Special Study.
2013
ECOFYS, Fraunhofer, TU Vienna, and Ernst&Young. Financing
Renewable Energy in the European Energy Market. 2011
EUROBSERVER. Biofuels Barometer. Systmes Solaires, July
2013
European Commission. European Commission Communication
- Innovating for Sustainable Growth: A Bioeconomy for Europe.
2012. COM(2012)60
European Commission. European Commission Communication
- Clean Power for Transport: A European alternative fuels
strategy. 2013. COM(2013)17
Europan Commission. Energy Economic Developments in
Europe. DG Economic and Financial Affairs, 2014
European Commission. European Commission Communication
- For a European Industrial Renaissance. 2014. COM(2014)14
Fuss S., Szolgayova J., Obersteiner M., Gusti M. Investment
under market and climate policy uncertainty. Applied Energy.
2008, Vol. 85
IRENA and IEA-ETSAP. Production of Liquid Biofuels,
Technology Brief. 2013
Kampman B., Verbeek R., van Grinsven A., van Mensch P.,
Croezen H., Patuleia A. Bringing Biofuels on the Market Options to Increase EU Biofuels Volumes Beyond the Current
Blending Limits. TNO and CE Delft, 2013
Laborde, D. Assessing the Land Use Change Consequences of
European Biofuel Policies. IFPRI, 2011

22

The Communication 'Innovating for Sustainable Growth: A Bioeconomy for

Europe' (COMM(2012)60) considers biomass in a comprehensive framework,
where it is used for the production of a wide range of products according to a
cascading principle. In such context, biofuels would be only one of a chain of
products obtained from biorefineries. Production in the biorefineries would
favour the highest value added and resource efficient products, while
contributing to the principle of a zero-waste society by fully utilizing biomass
along its industrial lifecycle.

10 / 13

The Short-term Industrial Outlook is prepared by a team from the unit Economic Analysis and Impact
Assessment in DG Enterprise and Industry. This edition was written by Tomas Brnnstrm (monitoring section)
and Irene Pappone (policy analysis).
This publication does not necessarily reflect the views or opinion of the European Commission.

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This table of industrial indicators, attached to STIO, is intended for monitoring purposes. It will be updated in April and October each year.

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