AUSTRIA FAVORS FRENCH PROPOSAL ON BIOFUELS SUSTAINABILITY

UNCLAS VIENNA 001391

SIPDIS

EU/ERA FOR MATTHEW BEH
OES.EGC FOR DREW NELSON

E.O. 12958: N/A
TAGS: KGHG EAGR SENV ENRG TRGY EUN AU
SUBJECT: AUSTRIA FAVORS FRENCH PROPOSAL ON BIOFUELS SUSTAINABILITY
CRITERIA; MAINTAINS HIGH PRODUCTION GOALS

REF: STATE 98110


1. Embassy reps discussed biofuels sustainability with biofuels
experts Sonja Schantl and Heinz Bach in the Ministry of Agriculture,
Environment, Forestry and Water Management (who have the lead on
Austria's biofuels position within the EU). Our interlocutors told
us that ecological and social sustainability criteria for biofuels
production should be an "indispensable" part of the Climate and
Energy package. Austrian experts believe that such criteria are
already met in domestic production and probably in most other EU
countries, so sustainability criteria must focus on imported
feedstock processed into biofuels in the EU. This is particularly
important for third countries with tropical rainforests.


2. With regard to a deal on EU-wide sustainability criteria as
proposed by the French EU Presidency, Bach told us the GoA "could
live with" the two-phase approach. Under this plan only biofuels
delivering life-cycle CO2 savings of at least 35% over fossil fuels
would count in the first phase, with required savings of up to 50%
in the second production phase (as of 2017). Bach said the GoA
would reject the EU Parliament's Industry and Energy Committee vote
September 11 foreseeing an obligation for biofuels to offer at least
45% carbon emissions savings and 60% after 2015 because these goals
are "unrealistic".

BACKGROUND
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3. The outgoing government sees biofuels production as an important
contribution to greenhouse gas emissions reduction and is still
supporting the EU goal to raise biofuels to 10% of the fuels mix by
2020, despite criticism from environmental groups and some forces in
the European Parliament. Domestically, Austria set ambitious goals:
Since October 2007, the obligatory transport biofuels share is 4.3%,
and will be raised to 5.75% on October 1, 2008. The share of all
"alternative" fuels is planned to be 10% in 2010, and even 20% in

2020.


4. Austrian farmers welcome biofuels production as a market
opportunity, according to a presentation by the Austrian Agriculture
Chamber in June. At the end of 2007, bioethanol and biodiesel
capacity was 560,000 tons per annum, accounting for 3.5% of fuels
demand. Austria's productive capacity can be grow substantially to
meet additional demand since at present "only 5.4%" of cultivable
land in Austria is used for biofuels production and now that EU
set-aside restrictions have been lifted as of this year.
Agricultural lobbyists maintain that sustainability criteria are
already in place such as restrictions against over-fertilization,
measures to maintain biodiversity, and minimized shipping.


5. Former Austrian EU Commissioner for Agriculture, Franz Fischler,
now a lobbyist for bioethanol production, emphasizes that Austria is
self-sufficient on bioethanol production in terms of the 10% oil
substitution goal. With regard to biodiesel he is more critical:
Austria and the EU would have to import most of it, and sustainable
biodiesel production is a greater challenge than bioethanol
production. The EU should reconsider its biodiesel goals, Fischler
opines.

GIRARD-DICARLO#